Infrastructure Funding and Financing Act 2020 used for Wellington City Council’s new sludge minimisation facility

sludge

Published 10 Aug 23

The Government has authorised the Infrastructure Funding and Financing (Wellington Sludge Minimisation Facility Levy) Order 2023, which enables a Special Purpose Vehicle (SPV) owned by Crown Infrastructure Partners (CIP) to provide up to $400 million of funding towards the construction costs of Wellington City Council’s new sludge minimisation facility.

Sewage sludge is a natural and unavoidable by-product of the wastewater treatment process. Wellington’s new sludge minimisation facility is intended to reduce the volume of solid waste sludge going into the Southern Landfill and help Wellington City Council achieve its waste minimisation and emissions reduction goals. 

This is the second time the model enabled by the Infrastructure Funding and Financing Act 2020 has been used. The first was by Tauranga City Council for it’s Western Bay of Plenty Transport Systems Plan. 

Raising funds through an annual levy 

The finance raised by a SPV will sit off Wellington City Council's balance sheet and will be funded by a new annual levy charged to the beneficiaries of the infrastructure (i.e. Wellington City Council ratepayers). The levy commences on 1 July 2024 and concludes on 30 June 2057, with the finance intended to be repaid over the first 30 years. 

The levy applies to all properties within the Wellington City Council rating area, excluding protected Māori land.  

The levy will apply differentially to properties that will have their wastewater treated by the sludge minimisation facility, and properties that will not. 

This approach means that approximately 95% of the proposed levy will be charged to properties that are connected to the sludge minimisation facility, while the remaining 5% will be charged to properties not connected to the sludge minimisation facility. This is to reflect that the benefit of using the facility is attributed to users of the sludge minimisation facility, and that non connected properties still receive benefits from the facility, such as ensuring that Wellington City Council can achieve their waste minimisation and carbon emission goals. 

Levies for a residential property will include a fixed amount, and a variable amount based on capital value (CV) of the property. However, levies for a commercial property will be based on just the CV of the property. 

The levy will start out at a lower amount when the sludge minimisation facility is being built.  

In the 2027/28 levy year (after construction is expected to be completed), a $1 million CV residential property would be expected to be charged an annual levy of $326 if connected to the facility, and $85 if not.  

Levies for commercial properties in 2027 are expected to be $483 per million of CV if connected to the facility and $126 per million of CV if not.