Six projects worth more than NZ$4bn (US$3.4bn) at various stages of bidding are currently in the market and more than NZ$2bn worth of projects have been signed since 2012. Roads, schools, prisons and social housing have all become PPP projects and it is only a matter of time before the health sector will use PPPs to build new hospitals.
The three shortlisted bidders for NZ’s third schools PPP will submit requests for proposals (RFPs) this week. The bidders are Creative Learning (John Laing Investments and Downer), New Learning Consortium (Macquarie and Fletcher Building) and ShapED (Morrison & Co and Hawkins Construction).
The successful tenderer will build primary schools at Scott Point, Kumeu and Flat Bush in Auckland, and at Sylvester in Hamilton, and rebuild Shirley Boys’ High School and Avonside Girls’ High School, and co-locate them on a new site in Christchurch. The project has a 25-year concession and is worth about NZ$200m. Bell Gully is the legal adviser and KPMG the financial adviser.
The business case for the 1,500 bed Waikeria Prison on the North Island is set to be given to the government this month and it will be a PPP project. PwC is handling the business case. Expressions of interest could be called for in December. Waikeria is the country’s largest prison site covering 1,200 hectares. The project is expected to cost about NZ$500m.
By far the biggest potential PPP project will be the NZ$1.5bn-plus Auckland light rail project. The scheme has received several green lights and a decision to use a PPP procurement method is expected before the end of the year.
A new innovative project is the SkyPath PPP, which aims to build a cycling and walking pathway across Auckland harbour that is connected to the existing Auckland Harbour bridge and will cost around NZ$33m.
The project is somewhat like an unsolicited bid, with Morrisons’ Public Infrastructure Fund (PIP) having been advising the Auckland Council and being prepared to finance the project. The PPP would mean that the construction, operation and maintenance of SkyPath would be financed and delivered by the PIP Fund for the contract period and there would be an admission charge for its users.
The council would provide a limited underwriting of the revenue. This means if minimum revenue streams from fares, sponsorship etc are not met, the council would need to top up funds to meet a pre-agreed amount.
In return, if profits reach a certain level, the council and the Auckland Harbour Bridge Pathway Trust will receive a share in these. Auckland Council would receive ownership rights and obligations at the end of the contract period. A decision on the go-ahead is expected this month.
The need for social housing and the availability of council land in various jurisdictions is creating opportunities for social housing PPPs in which the private sector is offered the land in exchange for building social as well as private homes and managing both. The government is committed to transferring between 1,000 and 2,000 properties to registered community housing providers this year under its Social Housing Reform Programme.
The Tamaki Redevelopment Company is expected to call for EoIs from private investors to provide a mix of social and private housing in Auckland’s eastern suburbs. The Tāmaki Regeneration programme will transform 170 hectares of suburban land to deliver more than 7,500 new quality homes and other community facilities.
Alongside the housing renewal, the newly formed Tāmaki Housing will use a fresh and innovative approach that centres on responsiveness to social housing tenants. The project is expected to cost more than NZ$700m.
New Zealand’s largest non-government social housing provider, Accessible Properties New Zealand, is targeting to close the country’s first social housing public private partnership in March next year.
Accessible Properties was selected in August as the preferred bidder to buy and manage more than 1,000 houses owned by Housing New Zealand in Tauranga, the largest city in the Bay of Plenty region in the north island of New Zealand.
Accessible Properties is a New Zealand-based registered charity, a registered community housing provider and the country’s largest non-government social housing provider. It is a wholly owned subsidiary of IHC New Zealand, and already manages more than 1,600 properties including 500 in the Waikato/Bay of Plenty including Tauranga. Westpac is the lead bank on the deal worth about NZ$300m.
Traditional PPPs are on the agenda with the New Zealand Transport Agency signing the contract last month with Northern Express, the successful bidder of the 18.5km Puhoi to Warkworth toll road.
The Pūhoi to Warkworth motorway forms the first section of the government’s Pūhoi to Wellsford Road of National Significance, aimed at enabling economic growth by providing a safer and more reliable transport link for the region.
Northern Express, comprising Accident Compensation Corporation, Public Infrastructure Partners II LP (managed by Morrison & Co PIP Ltd), Acciona Concesiones S.L. and Fletcher Building, was named as the preferred bidder in August. Under the PPP contract, the Northern Express Group will finance, design, construct, manage and maintain the Pūhoi to Warkworth motorway for 25 years on an availability payment basis.
ANZ, Westpac, China Construction Bank (CCB), United Overseas Bank (UOB), DZ Bank and Accident Compensation Corporation (ACC) are arranging the project financing on the NZ$500m seven-year loan. The margins are in the 170bp-plus range and the deal provides continuing evidence that if the transaction is big enough foreign lenders are prepared to come into a project.
