Tamaki project gets $200M govt loan, mandate to build 7,500 Auckland homes
By Jonathan Underhill
April 30 (BusinessDesk) - Tamaki Redevelopment Co, a property development venture between central government and Auckland Council, has been given a $200 million loan and a mandate to build 7,500 homes over 15 years, financed via property sales and rent from former Housing NZ tenants.
The company, whose directors include John Sax, the founder of Southpark Group, one of Auckland's biggest industrial landowners, and Martin Udale, former chief of McConnell Properties, whose projects include the 188 home Point Ridge development in Albany Heights, will become one of the city's biggest landlords with the transfer by March 31, next year, of 2,800 Housing NZ properties in Glen Innes, Panmure and Point England. It is chaired by Brian Donnelly, executive director of the NZ Housing Foundation.
Tamaki Redevelopment will redevelop the Housing NZ properties, using the land for higher-density housing of which 2,800 will be subsidised social-housing rentals for tenants assessed by the Ministry of Social Development. The remaining 4,700 could be sold, generating $3.4 billion based on the median Auckland house price of $720,000. Actual prices would be lower, however, as the intention is to develop "affordable" homes within reach of first home buyers.
The Tamaki Regeneration Programme, as the development is known, is a two-stage project, according to the heads of agreement. In the first, which will be funded via the issue of $8.5 million of shares to shareholders, the company will produce a strategic framework, statement of intent and a business plan for approval by the council and the government. The HoA requires the company to consult and engage with the local community, including iwi, Pacific and other community groups, council local boards, district health boards and NGOs. Stakeholders also include the private sector - local businesses, developers and construction firms.
Development options in stage two will have regard to "a range of contracting, commercial partnerships and other innovative delivery mechanisms," the agreement says. It will also have regard to the government's objective of growing "third sector housing providers," the potential use of Maori contractors, Maori housing aspirations, and opportunities for "mixed tenure and mixed ownership models of housing provision." That could include large-scale procurement via public-private partnerships, the company said.
The transfer of Housing NZ properties is separate to the Government’s plans to sell 1000 to 2000 of its state housing stock, Finance Minister Bill English and Housing Minister Nick Smith said in a statement.
"Over half of the new houses will be sold to help offset construction costs, and the remainder will be retained as social housing," English said. “Driving through some of the deprived areas of Tāmaki makes plain why the Government is determined to do a better job of social housing. It also illustrates the development opportunities in some of the HNZC-dominated suburbs in Auckland."
Annual house price inflation in Auckland reached almost 17 percent last month and the central bank has estimated the city faces a shortfall of between 15,000 and 20,000 properties to meet population growth as the country experiences record migration. The shortfall has spurred a series of initiatives between the council and central government including designated special housing zones.
Tamaki Redevelopment is a public benefit entity for purposes of financial reporting standards and will be audited by the Controller and Auditor-General. the $200 million government loan is repayable after five years and is on commercial terms.