Debt carrier could drive growth

City leaders are eyeing up a new scheme to grow Hamilton without drowning its books in debt.

The alternative emerged on Sunday when the Government announced the creation of Crown Infrastructure Partners – a company to build and own infrastructure in growth areas – and gave it a $600 million injection.

The first projects off the rank will be in north and south Auckland but if Hamilton City Council can get in on the action then it could free up money, Cr Dave Macpherson says.

Debt from the company’s projects will sit on its balance sheet, which is a bonus for councils hitting their limits.

That’s the main reason the council is keen for more detail.

‘‘The big thing about it is, it gets debt off our books for infrastructure that we need,’’ Macpherson said.

‘‘[If it’s available to us] that’s great because we can get on with more than we’d planned before.’’

When council sinks money into an expensive infrastructure project, it uses up space under the debt cap and can jeopardise projects such as theatres and swimming pools, the growth and infrastructure committee chairman said.

Hamilton has already got one government boost through the Housing Infrastructure Fund: a $272m interest-free loan to get the southwestern Peacocke area ready for housing.

Combine that with shifting off associated debt to Crown Infrastructure Partners and council would be in a good place, Macpherson said, so it will be pressing for details.

If council can use it for some of the Peacocke infrastructure, the Rotokauri development could hap- pen earlier – and maybe the company could help there too.

Under Crown Infrastructure Partners, the company will build and own the infrastructure and councils will have the option of buying it back at a later stage.

‘‘I don’t care who owns [the infrastructure] as long as it’s there,’’ Macpherson said.

Mayor Andrew King sees the Government’s move as the missing link for councils to keep developing ‘‘when our debt-to-revenue ratios don’t let us’’.

And while there’s little detail available at the moment, he said it has the power to change where Hamilton City Council is going with its long-term plan.

Offsetting debt means councils can start development that will eventually bring income through development levies and rates, he said.

The company is starting with infrastructure for two Auckland housing projects but Government has said it will be used in other fast-growing centres.

The Government might look to organisations such as the NZ Super Fund, ACC or iwi to invest in Infrastructure Partners, HCC chief executive Richard Briggs said.

‘‘Ultimately the central government and a third party will meet the costs and there will be some form of return that makes it a worthwhile investment for those third parties that get involved. It may well be a combination of development contributions, which relate to that infrastructure anyway, and some form of rating. But my understanding is they have yet to get right down to the nitty gritty of that detail.’’

Hamilton City Council will keep talking to government ministers and treasury to work out whether it could be used in Hamilton. House values in Hamilton have gone up 9.5 per cent in the year to June 2017. But the average value of $539,000 is still more affordable than Tauranga or Auckland, a growth indicator report from Hamilton City Council says. Most suburbs had fewer sales in the year to April 2017, apart from Newstead and Peacocke. Hamiltonians are happy to spend on food and alcohol, council data shows. People in the city spent $666m in those areas in 2016, a growth indicator report from Hamilton City Council said. That represents almost 40 per cent of retail spending in the city that year. The next-biggest spending category was furniture and appliances ($279m, or 16 per cent).