Wellington City Council (WCC) is the second local authority to raise funding utilising the Infrastrucrure Funding and Financing (IFF) Act.
The transaction reached financial close in August 2023 with $400million of IFF funding being provided to Wellington City Council to support the construction of a new wastewater treatment facility for Wellington.
The Sludge Minimisation Facility is a transformative infrastructure project aimed at providing a long-term, sustainable, and resilient approach to the treatment of Wellington’s wastewater.
| Programme | Infrastructure Funding and Financing |
| Project Owner | Wellington City Council |
| Equity Owner | IFF Holdings Limited |
| Infrastructure Type | Wastewater |
| Levy Payers | City Wide – WCC ratepayers |
| IFF Funding Provided | $400m |
| Debt Raised | $440m |
| Financiers | China Construction Bank (CCB) Accident Compensation Corporation (ACC) ANZ Bank New Zealand Limited (ANZ) Commonwealth Bank of Australia (CBA) Industrial and Commercial Bank of China Limited (ICBC) |
| Debt Term | 30-year long term debt from syndicate of lenders, including 30+ year floating to fixed rate interest rate swaps |
Forecast Levy Amounts in first levy year (FY25)
Residential rating unit connected to SMF: ~$71 for $1.0m CV property
Commercial rating unit connected to SMF: ~$100 for $1.0m CV property
Residential properties not connected to the SMF: ~$18 for $1.0m CV property
Commercial properties not connected to the SMF: ~$27 for $1.0m CV property
Debt Financing Structure
The market-leading debt financing structure involved a blend of thirty-year non-recourse fixed-rate debt and medium-term floating rate bank debt. To further hedge against potential market fluctuations, a thirty-year full tenor hedge was also put in place to mitigate risks associated with long-term borrowing costs.
Infrastructure Funded: Sludge Minimisation Facility
The new Sludge Minimisation Facility will be world class and will:
- provide a long-term, sustainable, and resilient approach to the treatment of Wellington wastewater, which includes supporting growth beyond the current connections;
- generate long-term cost savings through efficient waste processing and certain financing terms; and
- reduce carbon emissions associated with the current treatment process by 28%, solid waste sent to landfill by 80%, and overall power consumption emissions by 36% while facilitating the production of biogas used for bio-energy generation.
The transaction was awarded ‘2024 Debt Deal of the Year’ at the Institute of Finance Professionals New Zealand (INFINZ) finance awards. Judges recognised the transaction as ‘impressive for pushing the boundaries of tenor of funding and risk management. This innovative and well-structured deal is an excellent place setter for New Zealand’s quest for affordable, sustainable, and intergenerational infrastructure funding”
Click here for more information on the IFF Model.
