OIA24-CB309
03/12/2024
P Robins
[email address]
Dear P Robins,
Thank you for your email of 4 November 2024 requesting the following information under the
Of icial Information Act 1982 (the Act):
I request briefings: HUD2024-005273, REP 24-8-731, GSR-24-17724, "Market-led
proposals for major projects," GSR-24-17673.
I release to you five documents with some information withheld under the following sections of the
Act:
Section of Act Reason to withhold
9(2)(a)
To protect the privacy of natural persons.
9(2)(j)
To enable a Minister of the Crown or any public service agency or organisation
holding the information to carry on, without prejudice or disadvantage,
negotiations (including commercial and industrial negotiations)
9(2)(f)(iv)
To maintain the constitutional conventions for the time being which protect the
confidentiality of advice tendered by Ministers of the Crown and officials. The
release of this information is likely to prejudice the ability of government to
consider advice and the wider public interest of ef ective government would not
be served.
The briefing GSR-24-17724 is withheld in full under section 9(2)(f)(iv) of the Act, to maintain the
constitutional conventions for the time being which protect the confidentiality of advice tendered by
Ministers of the Crown and Officials.
The briefing T2024/2580
Progress Update | Market-led proposals for major projects: guidelines for
submission and assessment is being withheld under section 18(d) as the final version is published
on the Treasury website here:
https://tinyurl.com/nhd5t6fe
In terms of section 9(1) of the Act, I am satisfied that, in the circumstances, the decision to withhold
information under section 9 of the Act is not outweighed by other considerations that render it
desirable to make the information available in the public interest.
You have the right to seek an investigation and review of my response by the Ombudsman, in
accordance with section 28(3) of the Act. The relevant details can be found on the Ombudsman’s
website at:
https://www.ombudsman.parliament.nz/
Yours sincerely
Hon Chris Bishop
Minister of Housing
2
Annex 1: Document schedule
Documents released – OIA24-CB309
Item Date
Document
Section of the
Act applied
1. 4 October 2024 GSR-24-17673 – Hamilton City Council – Request for
9(2)(a)
IAF Funding Agreement Variation
9(2)(j)
2. 7 October 2024 HUD2024-005273 - Tāmaki Redevelopment Company 9(2)(a)
Limited: Resolution in Lieu of Annual Shareholders'
Meeting
3. 9 October 2024 REP 24-8-731 – Providing Recoverable Financial
9(2)(f)(iv)
Assistance for Pet Bonds and
TITLE WITHHELD
3
GSR-24-17673
4 October 2024
Hon Chris Bishop, Minister of Housing
Hon Nicola Willis, Minister of Finance
cc:
Simon Moutter, Board Chair
Hamilton City Council request for IAF Funding
Agreement Variation
Recommendations
It is recommended that you:
a) Note Hamilton City Council has contracted Infrastructure
Acceleration Fund (IAF) funding of $150.6 million to deliver
Noted
infrastructure to enable 4,140 dwellings.
b) Note that Council has formally requested a variation to its
Funding Agreement, to remove the Active Mode River
Crossing Bridge (the Bridge) and to reallocate the
Noted
$31.5 million of IAF funding to the around $37 million Bulk
Water Connections (BWC) project.
c) Note that Council resolved to defer construction on the IAF-
funded Active Mode River Crossing Bridge (the Bridge)
($31.5 million) in their Long-Term Plan (LTP) (pending
approval of this variation request) in order to prioritise delivery
Noted
of water assets and to keep rate increases below
25.5 percent.
d) Note that under terms of the IAF Funding Agreement, there is
no option related to this request that allows for termination or
partial-termination and/or a return of funds to the Crown at
Noted
this time.
e) Approve one of the two options in relation to this variation
request:
a.
Option 1: Status Quo – do not approve the request for
variation and leave the IAF Funding Agreement as is.
This would result in the Council amending their LTP to
Approve /
reintroduce the walking and cycling Bridge into the capital
Not
works programme for delivery in advance of the BWC
approved
project. This option has potential for some of the
(Option 1)
$31.5 mil ion of IAF funding to be returned to the Crown
sometime in the next three-five years if Council fails to
deliver the Bridge as per the contracted milestones.
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation 2
b. Option 2: Approve the request for variation – allowing
$31.5 mil ion of IAF-funding to be reallocated from the
Approved /
Bridge to the BWC project. This option would enable the
Not
Council to commence delivery of critical water
approved
infrastructure immediately.
(Option 2)
f) Note that, Kāinga Ora recommends Option 2 as it better
aligns with government priorities to focus on delivery of the
most critical infrastructure and the purpose of the IAF to
Noted
support acceleration of enabling infrastructure and housing.
g) Note that the Ministry for Housing and Urban Development
recommends Option 2 as it better aligns with both the
government’s priorities and core purpose of the IAF to
Noted
accelerate delivery of infrastructure and housing.
h) Note that the Treasury recommends Ministers select Option 1
(status quo), due to concern that a precedent that wil be set
and lead to future, similar requests from other IAF funding
Noted
recipients.
________________________
Caroline McDowall
General Manager, Commercial
Noted/Approved/Not Approved/Other
Noted/Approved/Not Approved/Other
Hon Chris Bishop
Hon Nicola Willis
Minister of Housing
Minister of Finance
Date
Date
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation 3
Purpose
1. This briefing seeks a decision on a request from Hamilton City Council (the Council) to
reallocate IAF funding from an Active Mode River Crossing Bridge (the Bridge) to the
Bulk Water Connections (BWC) project, currently recognised in the IAF funding
agreement as being non-IAF funded.
Executive Summary
2. The Council has made a formal request for variation to its IAF funding agreement to
contractually remove the Bridge from the Agreement and reallocate $31.5 mil ion of
IAF funding to the BWC project, which has been costed at around $37 million.
3. Mayor Paula Southgate and Deputy Mayor Angela O’Leary wrote to Minister Bishop in
May 2024 requesting “in principle” support for the reallocation of funding to seek
assurance through development of their LTP. Minister Bishop responded to that letter
stating that he could not provide a view at that time and that the process set out in the
funding agreement needed to be followed. That process is now complete and
recommendations to Ministers have been made in this briefing to support decision-
making.
4. The Council has made this request “
in light of the challenging financial environment
being experienced across the country, the need to focus on core infrastructure, and
high rates rises for the council.” Council has also indicated that this request is a
demonstration of local government taking action to align with central government
policy.
5. The Council considered other options to address funding the BWC project. However,
requesting reallocation from the IAF-supported bridge project proved to be the most
realistic and efficient solution.
6. The IAF Team has worked closely with Council to fully understand the request and
drivers behind it. HUD and Treasury have been consulted on the request for variation
throughout the assessment process and have also provided their recommendations to
Ministers:
a. Kāinga Ora recommends Option 2. The assessment of the IAF Team is that
reallocation of the funds to the BWC project is reasonable on the basis that it
further accelerates the timeframe for enabling dwellings in central city
Hamilton, the Bridge is no longer aligned with central Government policy (nor
the desires of the community and housing developers) and wil no longer
create the anticipated connectivity (walking and cycling paths) if delivered.
b. HUD recommends Option 2, on the basis it supports the IAF's core purpose of
accelerating infrastructure and housing delivery, while stil aligning with key
government objectives, including maximizing value from Crown investments,
priorities identified in the 2024 Government Policy Statement on Land
Transport GPS-LT, and supporting essential infrastructure over nice-to-haves.
c. Treasury recommends Option 1 and notes that a substantial amount of IAF
funding has already been allocated in Hamilton to water infrastructure with
$117 million agreed towards “Three Waters IAF Funded Enabling Infrastructure
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation 4
Project(s)” and due to concern that a precedent that wil be set leading to
future, similar requests from other IAF funding recipients.
Background
7. The IAF is designed to ‘bridge’ the funding gap between what councils can afford and
how much infrastructure costs, while also requiring developers to pay their fair share.
8. IAF funding supports councils to deliver the critical infrastructure projects necessary to
enable housing developments that would otherwise not proceed at al , or would be
progressed many years into the future, delaying housing growth and development.
9. IAF Funding Agreements include all of the infrastructure projects necessary to enable
the agreed housing outcomes. For the IAF-funded projects, the agreement sets out
the specific deliverables and milestones to be achieved throughout the planning,
design, consenting and construction of the infrastructure projects. Funding amounts
are attributed to various milestones and are paid in arrears as milestones are
achieved.
10. IAF Funding is capped at a specific amount within each funding agreement with
Councils bearing all cost risk related to co-funding and cost overruns. Councils are
also responsible for recovering development contributions for all IAF-funded
infrastructure projects.
11. An overview of the IAF was provided to joint Ministers in August by the Ministry for
Housing and Urban Development (HUD) (
HUD2024-005138).
Decision making related to the IAF
12. Kāinga Ora administers the IAF as an agent of the Crown1. In this role, Kāinga Ora is
bound by both the IAF agency agreement (which was agreed between Kāinga Ora
and the Crown in November 2022), and its usual obligations as a Crown Entity under
the Kāinga Ora – Homes and Communities Act 2019. HUD is responsible for
managing the IAF agency agreement on behalf of the Crown.
13. Under the terms of the agency agreement and as the Crown’s agent, Kāinga Ora is
required to get written permission from the Crown (i.e. the Ministers of Housing and
Finance) for any material variations to a funding agreement, and material variations to
the scope of any IAF-funded infrastructure.
14. What constitutes a “material variation to the scope” of any IAF-funded infrastructure
has not been defined. Work on a Change Control Framework (CCF) to clarify this point
and clearly set out the delegations related to IAF agreements, is being led by HUD
and has been underway for over a year. HUD is working toward end of November to
have Ministers’ endorsement of the CCF.
15. Due to the time-sensitive nature of this request and urgency for the Council2, the IAF
Team has elected to escalate this request to Joint Ministers while the CCF is finalised.
1 This is different from when Kāinga Ora acts in its usual role as a Crown Entity.
2 Hamilton City Council has stopped work on the Bridge and is not progressing work on the BWC project until
a decision has been made on this variation. Council made a decision in principle to base their 2024-34 LTP
on the Bridge being removed from the Funding Agreement and the BWC project being bought forward to
Year 1 therefore, if this variation is not approved, Council need to urgently amend their LTP to include the
Bridge and push the BWC project out to commence in Year 3 or possibly 4. The timing is also urgent as
Council needs certainly so that they can commence physical works on the BWC this construction season.
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation
5
P029 Central City – Hamilton
$150.6 million IAF funding | 4,140 dwellings enabled
16. Hamilton City Council has been contracted to receive $150.6 mil ion of IAF funding for
several infrastructure projects to support intensification of Hamilton’s central city,
including $31.5 mil ion of IAF funding to progress the Bridge across the Waikato River
for walking and cycling. The total cost of this project, including co-funding, is
approximately $41.8 million.
17. The Council originally applied for ~$330 mil ion of IAF funding to support the ~$500
mil ion capital works programme required to enable more than 4,000 dwellings over
the next 10-15 years in central city Hamilton. However, through the multi-stage
process and negotiations, the Council received roughly half of their original request.
18. The IAF-funded infrastructure projects included in the IAF funding agreement are
reflective of Government policies and priorities at the time of signing. It is important to
note that all infrastructure projects necessary to enable the housing outcomes
(whether funded by the IAF or not) are included in the Agreement to acknowledge that
all are required as a package, to enable the dwellings and to place the obligation on
the Council to deliver the full infrastructure solution.
19. Additionally, seven developers have entered into housing outcomes agreements with
the Council and Kāinga Ora, which includes commitments to use reasonable
endeavours to deliver approximately 2,200 dwellings in the central city, once the
enabling infrastructure is complete.
Council’s Long-Term Plan
20. Council’s 30-Year Infrastructure Strategy includes $4.4 bil ion of unfunded
infrastructure within the first 10 years of the plan for projects that are needed but
Council cannot afford within the current financial constraints and debt limits.
21. The Council concluded their 2024-2034 Long-Term Plan (LTP) deliberations on 6 June
2024. Significant community feedback was received and the final, adopted LTP
included average rates increases of 16.5 percent (originally proposed to be 25.5
percent) in 2024/25, and an overall cumulative increase of 72 percent over years one
to five. Major changes that were made to the final budget included:
a. Reductions of around $282 mil ion in years one to five of the capital
programme including deferrals of $172 mil ion of projects into later years; and
b. Savings of $33 mil ion over 10 years through personnel reductions to back-
office functions and cuts to consultant budgets. This is in addition to savings of
$94 mil ion over 10 years made through the Chief Executive’s Future Fit
Programme.
c. A substantial increase / reallocation of LTP funding towards critical
infrastructure to support growth in the central city from $129 million to
$275 million, with the majority of this for critical waters infrastructure.
22. Council received strong feedback from the community, hapū and key developers
(including all seven developers who have signed IAF housing outcomes agreements)
regarding the Bridge project, with the majority opposed or seeking its delay, given the
Council’s constrained financial situation and the need to focus on more critical
infrastructure.
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation
6
23. Given the above, as well as the current Government direction relating to walking and
cycling paths and water reform, the Council resolved to pursue a variation request to
reprioritise $31.5 mil ion of IAF funding from the Bridge project into the more critical
BWC project, allowing the BWC project to be delivered alongside the IAF-funded
Ruakiwi Reservoir project. The variation request has been reflected in Council's
adopted LTP (subject to ministerial decision).
Discussion
Why was the Bridge funded?
24. Inclusion of the Bridge as an IAF-funded project is reflective of the previous
government’s transport and urban development policy to provide increased transport
choices for a growing population, amenity benefit, and influence market desirability
within the area, providing direct access to greenspace at Parana Park for existing and
newly intensified housing areas.
25. At the time of signing the IAF Agreements, the Council was planning for the previous
Government’s three waters reform programme, which involved handover of
maintenance and delivery of their water assets to a new entity. As such, the Council
opted to apply for IAF funding for the Bridge on the assumption that the BWC project
would be funded and delivered by a separate entity.
What has changed?
26. The main drivers for the variation request include the changes in Government policy
regarding transport and waters, the challenging economic environment, high rates
increases forecasted by the Council, and the subsequent need for the Council to
reprioritise their capital programme to focus on critical infrastructure.
27. The recent National Land Transport Programme transport decisions have also
validated the Council’s approach in their LTP to seek reallocation of IAF funding, as no
new walking or cycling infrastructure investment was approved to provide connectivity
to the Bridge, should the project be delivered.
28. It has been acknowledged by the Council that the Bridge project is not critical to
achieving housing outcomes in the short term but is critical to maximising housing
outcomes in the long term. As such, the Council will reconsider inclusion of the Bridge
through each new LTP.
Considering the Council’s request 29. The variation request from the Council aligns with the Government’s direction to
optimise public funds to deliver best value for money and focus on delivering the most
critical infrastructure. Delivery of the Bridge project is no longer aligned with the
Government Policy Statement on Transport, which the Council has recognised and is
seeking this variation to align local government delivery with central Government
policy.
30. Should the variation be approved, the IAF Team wil immediately commence work with
the Council to implement the variation, by way of an agreed delivery plan. This would
allow work on the BWC project to commence immediately, be delivered alongside the
$90 mil ion IAF-funded Ruakiwi Reservoir and result in housing outcomes being
achieved two to three years earlier than originally planned.
31. The Council has been clear that should the request for variation not be approved, it
will recommence work on the Bridge project under the existing terms of the IAF
Funding Agreement. This wil require amending the LTP and subsequent
communications to the community and key stakeholders.
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation
7
32. It is important to note that the request for variation does not provide an immediate
option for termination, in full or in part, of the IAF funding agreement and/or returning
funds to the Crown. The only instances in which funds can be returned to the Crown is
if an IAF agreement is fully or partially terminated. The key ground for termination is
the funding recipient being in material breach of their obligations and cannot remedy
the breach to the satisfaction of Kāinga Ora. Otherwise, the return of funds would
need to be negotiated with the funding recipient.
33. In circumstances where a material breach has occurred, the IAF team is obligated to
act reasonably and would assess a remediation plan proposed by the Council. This
variation request is, to an extent, seen by the IAF team as a mitigation to avoiding a
future material breach by the funding recipient of its obligation to deliver the Bridge.
The IAF team has assessed this as a reasonable solution under terms of the IAF
agreement, to enable the housing outcomes to be achieved (and accelerated).
34. It should be noted that any and all requests for variations from Councils to the IAF
team are reviewed and assessed on a case-by-case basis. Due to the complex nature
of infrastructure delivery and individual nuances related to each of the projects and
developments, we do not consider that the decision made in relation to this request
will set a precedent in relation to other IAF Agreements. The circumstances, parties
involved and the reasons for requesting variations wil always be unique to the specific
project, and the IAF team is obligated to work in good faith and act reasonably, when
considering the request.
35. Should a decision to reallocate funding from the Bridge project to the BWC project be
seen or perceived as setting a precedent, this would be consistent with government
policy to support councils to redirect funding into the most critical infrastructure
projects and consistent with the objectives of the IAF programme to unlock housing
development.
36. Council’s strategic analysis on the IAF variation request is included in Appendix B.
Material Variations - Options
37. There are two possible options in response to the request from Hamilton City Council
to vary their IAF Funding Agreement. A table set ing out the options, the benefits and
the risks associated with each is included below.
38. It is important to note that other options have been explored and considered and were
ruled out including:
a. funding from Council balance sheet. This option was considered by Council
however, given the financial constraints through the LTP process and the
already substantial increase to the capital works programme within the central
city (increasing from $129 million to $275 million), this could not be achieved.
b. utilising the Infrastructure Funding and Finance (IFF) Act to finance the BWC
project. The Council and Crown Infrastructure Partners spent time working
together on this option in 2022, however, it did not progress due to affordability
considerations with a backdrop of un-precedented rates increases, and
concern about increasing borrowing and the associated costs to do so.
c. how Local Water Done Well might be able to support resolution. Due to time
for implementation and uncertainty of the programme of works, this is a sub-
optimal option for ensuring the infrastructure is delivered as soon as possible.
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation
8
43. The IAF team recognises that the return of funds to the Crown and delivery of critical
infrastructure to enable housing are both key priorities for the Government however, it
is currently unclear which priority takes precedence in relation to IAF agreements.
44. Given the alignment of the variation request to the Government’s direction to optimise
public funds to deliver best value for money and focus on delivering critical
infrastructure to support housing growth, combined with the purpose of the IAF to
support councils to accelerate the delivery of critical infrastructure to enable housing,
Kāinga Ora recommends Option 2, to approve the request for variation.
45. The IAF team does not recommend choosing Option 1 (status quo) as it does not
support acceleration of infrastructure and housing delivery and the possibility of
eventual return of funds to the Crown is uncertain.
Position of the Ministry for Housing and Urban Development in relation to the variation
request
46. The Ministry for Housing and Urban Development (HUD) support Option 2 and have
provided their reasoning below:
a. Council has commit ed to building the walking and cycling bridge if Ministers
decline this variation request. Therefore, Ministers options are to either: (a)
reconfirm Crown funds for a walking and cycling bridge that won’t be
connected to a wider network for some time (Option 1), or (b) reallocate those
funds to critical water infrastructure improvements, which are currently
unfunded but are critical to achieving agreed housing outcomes (Option 2).
b. As such, HUD recommends Option 2, on the basis it supports the IAF's core
purpose of accelerating infrastructure and housing delivery, while still aligning
with key government objectives, including:
i. Maximizing value from Crown investments.
ii. Priorities identified in the 2024 Government Policy Statement on Land
Transport GPS-LT.
iii. Supporting essential infrastructure over nice-to-haves.
c. HUD acknowledges that the IAF is not well aligned with the government’s
Going for Housing Growth policy as it does not promote growth paying for
growth. HUD wil provide further advice on the role of the IAF in the future
system as part of the advice that evaluates existing government funds and
programmes, which is due to be provided to Ministers on 17 October 2024.
Position of the Treasury in relation to the variation request
47. The Treasury supports retaining the status quo (Option 1) and have provided their
reasoning below:
a. The Treasury recommends that Joint Ministers should decline the request by
Hamilton City Council to reallocate $31.5m in Bridge funding to the Bulk Water
Connections project (Option 2). Treasury notes that a substantial amount of
IAF funding has already been allocated in Hamilton to water infrastructure with
$117m agreed towards “Three Waters IAF Funded Enabling Infrastructure
Project(s)”.
b. At present, there is no formal policy regarding the removal of an agreed IAF-
funded project and the reallocation of funding to a non-IAF funded project.
Treasury considers that the adoption of Option 2 could set a precedent,
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation
11
opening the door to a greater number of Councils requesting modifications to
their agreements.
c. Treasury is concerned that future change requests may also include proposals
to manage financial overruns in projects funded by the IAF. Council
responsibility for cost overruns is a key control for the IAF and preserving this
through taking a strong stance on modifications generally should be a priority.
Should councils fail to meet obligations or contracts be terminated Treasury’s
first best advice is funding is returned to the centre to allow cross portfolio
trade-offs.
d. Treasury considers that the change control framework currently in
development by HUD and Kāinga Ora is critical to ensuring a consistent
approach to managing change requests going forward. We recommend that
work to complete the change control framework is prioritised for approval by
Joint Ministers.
Next Steps
48. If you approve Council’s request, Kāinga Ora wil work with Council to progress the
variation. If you do not approve the request, the IAF agreement wil remain as status
quo.
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation
12
Appendix B: Hamilton City Council Central City IAF Variation
See attached document as provided by Hamilton City Council
[GSR-24-17673] Hamilton City Council - Request for IAF Funding Agreement Variation 16
Exec Summary
Benefits of the variation
• The primary benefit of this variation is to provide better value for money for both Government and our community from the IAF Partnership
• The variation pivots investment into essential core infrastructure rather than investment into a
walking and cycling bridge which is less critical right now
• If Council had signed an IAF Agreement under the new Government’s policy environment, it would have looked like this variation
• Council remains committed to enabling development of 4,140 homes in the central city by 2035
• The IAF negotiations identified over $500m of investment was needed to fully enable housing outcomes in the central city
• The variation will not cost Government any more than the $150.6m already committed in the IAF Agreement – it transfers $31.5m from the walking and cycling
bridge to critical waters infrastructure
• Our developers, community and iwi agree with the variation
• The variation timing as proposed, allows Council to unlock the full benefits of the IAF reservoir much earlier than previously proposed
• These benefits include increased resilience and firefighting capability, leading to faster consenting which are significant matters to building developer confidence
• Approval of the variation preserving the full $150.6m funding commitment, combined with Councils increased funding commitment focused on core waters
infrastructure preserves the integrity of the partnership and will provide market confidence for development to reach the agreed housing outcome of over 4000
homes in the quickest possible manner
• All other aspects of the IAF Agreement are tracking well, but it is critical timing wise to get a formal answer to our request for the variation if we are to be ready
with the infrastructure that is urgently required to keep growth moving forward.
September 2024
2
Exec Summary
What is the variation and why propose it?
• The
walking and cycling bridge was a good fit with the previous Governments transport policy when the agreement was signed in November 2022
• The
walking and cycling bridge was to be part of a cycling network with connections to other new cycling infrastructure that relied on co-investment
through the NLTP
• Very soon after signing the IAF Agreement, Government policy began to significantly change with the new coalition Governments increased focus on value
for money
• The views of our community also changed in line with the Government policy shift, and they have expressed a preference for core rather than perceived
‘nice to haves’
• The recent NLTP transport funding decisions have validated the variation approach to reconsider how to invest the $150.6m given that no new cycling
infrastructure investment was approved and the IAF bridge would become known as the ‘biking bridge to nowhere’.
• Also, after signing the IAF Agreement the IFF proposal to provide $50m for
bulk water connections and contingency was abandoned making them
unfunded
• Council has requested a variation to change the contract to include the
bulk water connections instead of the
walking and cycling bridge
• The IAF Agreement says that “
territorial authorities should not use the IAF funding to displace long-term plan funding and should be co-investing in the
Enabling Infrastructure Projects”
• In proposing the variation, Council has anticipated this by committing significantly more funding for core infrastructure in the long-term plan decisions (after
the IAF Agreement was signed).
September 2024
5
Exec Summary
What happens if the variation is not approved preserving the full $150.6m?
• In deciding the 2024-34 Long-Term Plan, Council resolved to revert back to the status quo IAF contract position to
proceed with constructing the
walking and cycling bridge if the variation was not approved
• Council would need to work closely with Government on a communications plan as to why Council and Government
are jointly progressing with the approx. $40m
walking and cycling bridge in this current economic and revised
transport policy environment
• This communication would extend to local community, iwi and central city developers who did not support
investment into the
walking and cycling bridge at this time.
September 2024
6
Background
Supporting info
Community views
• 100% of IAF developers > don’t do bridge now, waters needed
• Iwi partners > don’t do bridge now, reprioritise funding
• 52% community opposed to bridge, 16% neutral/‘not now’, 24% supportive
• Other developers feedback through LTP hearings
September 2024
10
Recap - Timeline
Late Jan/Feb 2024
Informal discussions with Kāinga Ora
20 Feb
PX Council meeting > resolution to investigate variation
Mar-Apr
HCC and Kāinga Ora on options
Engage with Iwi and IAF Developers
22 May
Bridge design & construct tender paused, IAF claim for bridge expenses paused
4-6 June
LTP deliberations meeting > PX decision on bridge option
10 June
KO advised of Council decision > work commenced on Minister briefing info
4 July
LTP Adopted reflecting bridge variation
- September 2024
Work due to commence on bulk water mains under variation scenario
- October 2024
First draft for LTP Amendment prepared for final draft November
Minister decision and associated certainty is overdue and now critical to enable us to deliver
September 2024
11
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07 8 3 8 6699
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@hamilton_city_nz
SJ Hamilton
City Council
hamilton.govt . nz
Te kaunihera o Kirikiriroa
Purpose
1.
You are asked to sign the attached shareholder resolution in lieu of holding an annual
shareholder meeting for Tāmaki Redevelopment Company Ltd (TRC), relating to
FY2023/24.
2.
You are provided with some brief commentary on TRC’s 2023/2024 Annual Report
and instructions for tabling in the House.
Background
3.
TRC is a company established under Schedule 4A of the Public Finance Act 1989. It is
majority-owned by the Crown, with the Minister of Finance and the Minister of Housing
holding 29.5% each for a total of 59% Crown ownership. Auckland Council holds the
remaining 41% of shares.
4.
The Companies Act 1993 (Act) requires a board to call an annual meeting of
shareholders not later than six months after the balance date of the company
(31 December 2024 in this case). Shareholders have the option to make a resolution
in lieu of this meeting (section 122 of the Act). TRC’s Constitution confirms this
requirement (clause 25.1).
5.
It is uncommon for shareholders of Schedule 4A companies to hold an annual
meeting.
6.
The Associate Minister of Finance Hon Shane Jones has delegations for “day-to-day
responsibilities, functions and powers as a shareholder”, including attending an annual
meeting of shareholders. In accordance with these delegations, this advice requests
his signature on the resolution in lieu of an annual shareholder meeting.
7.
The Minister of Finance has retained responsibility for receiving planning and reporting
documents, including the Annual Report.
2023/24 Annual Report
8.
TRC provided its 2023/24 Annual Report to you on 3 October 2024. The Annual
Report enables assessment of TRC’s performance against its 2021-2025 Statement of
Intent (SOI) and 2023/24 Statement of Performance Expectations (SPE).
Presenting the Annual Report to the House
9.
Under the Crown Entities Act 2004, the responsible Minister is required to present
TRC’s 2023/24 Annual Report to the House within 5 working days of receiving the
report, or, if Parliament is not in session, as soon as possible after the commencement
of the next session of Parliament. In this instance, the report must be presented on15
October 2024. This can be done by either the Minister of Finance or the Minister of
Housing.
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10.
Ministers do not have a role in approving the Annual Report. The audit process
ensures that the performance reporting is accurate. The Annual Report cannot be
changed after the audit report is issued and the statements of responsibility are
signed.
11.
TRC is required to publish the Annual Report on its website as soon as practicable
after it has been presented to the House, but not later than 10 working days after
responsible Ministers received the report.
12.
There is low risk that the publication or presentation of the Annual Report will attract
comment.
13.
Having reviewed the 2023/24 Annual Report, the Ministry of Housing and Urban
Development (HUD), the Treasury, and Auckland Council do not believe an annual
meeting of shareholders is required. We therefore recommend you sign the attached
shareholders’ resolution in lieu of the meeting (Annex A).
Performance in 2023/24
14.
TRC has met its 2023/24 SPE targets for housing delivery, tenancy management,
social regeneration, economic regeneration and placemaking. However, assessing
outcomes from TRC’s non-housing activities remains challenging.
15.
There were delays to early works which will delay housing delivery from 2025/26
onwards. The emerging issue of housing delays is primarily a matter for the Crown
shareholders, because housing delivery is funded through a Crown appropriation and
because the delays are primarily driven by alignment with Kāinga Ora infrastructure
delivery. HUD is seeking further information from TRC and Kāinga Ora about how the
delays have occurred and what is being done to mitigate them and prevent similar
issues recurring.
16.
If shareholding Ministers would like to discuss housing delivery risks with Auckland
Council, HUD recommends this is done through engagement on the Letter of
Expectations for 2025/26. HUD will provide advice on the Letter of Expectations by
early 2025.
Delivery performance – housing completion targets met but delays in early works will impact
later years
17.
TRC met 20 out of 21 SPE output measures for 2023/24, with one measure relating to
neighbourhood designs not assessed because no new neighbourhood designs were
developed in 2023/24. Three of the five targets for projects enabling outyear housing
delivery were met.
18.
TRC was appropriated $870 million in equity funding through Budget 2023 for the
Tāmaki Regeneration Programme, including delivery of 726 social and affordable
homes. This Annual Report covers the first year of delivery against the targets set for
this funding. TRC met the SPE targets of 39 public homes and 11 affordable homes
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TRC’s interventions. However, they will still provide an indication of TRC’s impact over
the medium to long term.
Financial performance
23.
TRC had an EBITDAF deficit of $7.681 million against a budgeted deficit of
$4.924 million. Variations against forecast are largely related to changing timelines for
development activity. This follows from a similar deficit of $5.203m in 2022/23. HUD
considers these deficits reasonable in the context of managing down a series of
surpluses through 2018-2022 mainly driven by delivery delays and challenges in
forecasting due to the impacts of the COVID-19 pandemic.
24.
Asset management cost escalation is a key financial risk for TRC, with utilities and
insurance costs increasing by $1.790 million (13.5%) from 2022/23. TRC reviewed its
approach to repairs and maintenance in 2023/24, following an overspend in the first
quarter. Changes were successfully implemented, with the year-end spend slightly
under forecast, but it is likely that maintenance costs will continue to increase over
time. Delays to the development programme also increase maintenance costs, as
aging homes remain in the TRC portfolio for longer.
The asset revaluation reserve held by TRC’s subsidiary Tāmaki Regeneration Limited
declined to $986.707 million, a drop of $213 million (18%) from 2022/23. This shift
reflects wider market conditions and returns asset values to 2021 levels (as shown in
the graph below).
Graph 2: TRL asset revaluation reserve
TRL asset revaluation reserve ($m)
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2019
2020
2021
2022
2023
2024
25.
The revaluation of properties affects TRL’s balance sheet but does not affect its
financial sustainability or solvency. The majority of TRL’s assets were transferred from
HNZ in 2016, rather than purchased, and TRL has no debt to service.
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Organisational performance
26.
HUD is aware that TRC has been increasing the maturity of its housing delivery
processes and governance, as well as improving processes for working with
Kāinga Ora around infrastructure and housing delivery. This has given HUD more
transparency about drivers for delays and more visibility of emerging issues.
Consultation
27.
The Treasury and Auckland Council have been consulted on this briefing.
Next steps
28.
HUD will seek Auckland Council’s approval of the shareholders’ resolution in lieu of an
annual meeting, then provide the completed resolution to TRC.
Annexes
Annex A: Shareholders’ Resolution in Lieu of an Annual Meeting
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IN-CONFIDENCE
Report
Date:
9 October 2024
Security Level: Budget
Sensitive
To:
Hon Chris Bishop, Minister of Housing
cc:
Hon Louise Upston, Minister for Social Development and
Employment
Hon Tama Potaka, Associate Minister of Housing
File Reference:
REP/24/8/731
Providing recoverable financial assistance for pet
bonds and s9(2)(f)(iv)
Purpose of the report
1 This report provides you with advice on:
1.1 providing recoverable financial assistance under the Housing Support
Programme (HS Programme) to assist lower income households with
the proposed pet bond (Part A)
1.2 s9(2)(f)(iv)
1.3 addressing two minor and technical amendments to the HS Programme
(Part C).
Executive summary
2
In May 2024, you requested further advice on extending Housing Support
Products (HSPs) to include recoverable grants to cover the proposed pet bond
and s9(2)(f)(iv)
[REP/24/5/428 refers].
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Providing recoverable assistance for pet bonds
3
The Residential Tenancies Amendment Bill (RTA Amendment Bill) which
proposes to introduce pet bonds to assist households with pets in obtaining
private rental accommodation, is currently before the House. If passed, it is
expected that pet bonds will be implemented from late 2025. The proposed
pet bond will be a maximum of two weeks’ rent, meaning that the total cost
of obtaining a new tenancy for a household with a pet will be up to the
equivalent of eight weeks’ rent (four weeks’ general bond, two weeks’ rent in
advance and two weeks’ pet bond).
4
The Ministry of Social Development (MSD) does not support pet-related costs
through existing financial assistance programmes. A HSP Bond Grant can be
paid twice in a 52-week period to an eligible household, though MSD can only
pay a total of four weeks’ bond in respect of the commencement of a specific
tenancy. This could include two weeks’ pet bond, but MSD would be unable
to pay the full amount of most client’s pet and general bonds combined,
unless their landlord was to charge less than the maximum amount of general
bond.
5
If the RTA Amendment Bill is passed and the HS Programme is not amended
to provide recoverable assistance for a full pet bond, this could result in
increased demand for hardship assistance across existing MSD programmes.
While these hardship payments are more tightly targeted than HSPs, and a
pet bond would not be within scope, financial hardship resulting from having
to pay a pet bond might result in payments of hardship assistance for other
essential needs.
6
It is recommended that the HS Programme be amended to accommodate the
inclusion of pet bonds in the RTA. The detailed design and legislative changes
required to achieve this can be worked through once the RTA Amendment Bill
has been passed. This will, however, have an estimated cost in Budget 2025
of $21.697m over the five-year forecast period1. This is likely to require
funding from reprioritisation or savings outside of MSD, as no funding is
available within MSD to support this initiative.
1 This assumes 75 percent of landlords will accept tenants with pets (the current acceptance rate is
12 – 15 percent). The Ministry of Housing and Urban Development (HUD) considers the proportion
of landlords agreeing to pets in rental properties will increase slowly over time. However, MSD is
accounting for the risk that landlords will accept pets in rentals more quickly.
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s9(2)(f)(iv)
3
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s9(2)(f)(iv)
12
13
Technical amendments
14 We have identified two minor issues not identified during the development of
the HS Programme in 2024. We recommend that you agree to progress two
technical changes to correct these issues when the HS Programme is next
amended.
Next Steps
15 If you agree to extend recoverable assistance to cover pet bonds and/or s9(2)
(f)(iv)
we will provide you with a draft Cabinet
paper for consideration in November 2024. We will also provide further advice
on implementation, including timeframes for amendments to the HS
Programme.
s9(2)(f)(iv)
16
Recommended actions
It is recommended that you:
Recoverable assistance for pet bonds
1
note that MSD can provide recoverable assistance with pet bonds under the
existing HS Programme, however, the total amount of assistance for all bond
payments is limited to the equivalent of four weeks’ rent at the
commencement of a new tenancy, meaning in most cases there will be no
entitlement remaining to assist with a pet bond, once recoverable assistance
has been provided for the general bond
2
note that you could seek to amend the HS Programme to allow MSD to grant
recoverable assistance for pet bonds of up to two weeks’ rent, in addition to
the current recoverable assistance of up to four weeks’ rent for the general
bond for eligible households
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3
note that amending the HS Programme to make specific provision for pet
bonds is estimated to result in additional recoverable grants totalling
$72.324m over five years (the Budget 2025 forecast period), which would
require new funding of $21.697m in the 2025 Budget (assuming that a
portion of recoverable grants are never recovered)
4
note that providing financial assistance for pet bonds does not change MSD’s
longstanding policy position of not providing assistance for pet-related costs,
and financial assistance for pet bonds will only be provided under the HS
Programme for the purpose of a household obtaining accommodation
EITHER: (recommended)
4.1
agree to seek agreement from Cabinet to amend the HS Programme to
allow MSD to provide recoverable assistance, subject to future funding
being available, to eligible households for a pet bond (equivalent of up
to two weeks’ rent), in addition to the current provision for recoverable
assistance for the general bond (equivalent of up to four weeks’ rent)
4.2
note that this change is estimated to require new funding in Budget
2025 of $21.697m3 over the Budget 2025 forecast period (as a
proportion of recoverable grants are never recovered)
4.3
note that no funding to offset the cost of this change is available for
reallocation from within Vote Social Development, and if you wish to
proceed with this change, the funding would need to be identified from
elsewhere
AGREE / DISAGREE
OR
4.4
agree to make no change to the HS Programme, meaning that in most
cases MSD will not be able to provide recoverable assistance with pet
bonds, as the maximum entitlement for bond payments (equivalent to
four weeks’ rent) will be utilised by the provision of recoverable
assistance with the general bond
3 Please see paragraphs 40-44 for costings and assumptions.
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4.5
note that a lack of recoverable assistance with pet bonds under the HS
Programme may result in an increase in demand for hardship assistance
under other MSD programmes, from low income households who have
used their available resources to fund a pet bond and as a result are
unable to meet their immediate and essential costs
AGREE / DISAGREE
s9(2)(f)(iv)
Minor amendments to the Housing Support Programme
10
note that MSD is currently unable to pay bond increases under the HS
Programme when a client’s rent increases, as clause 20(d) requires a client to
be ‘entering into or renewing an RTA agreement’
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11
agree to an amendment to the HS Programme to allow for recoverable bond
grants to be paid for bond increases that can occur during a tenancy, as the
result of a rent increase
AGREE / DISAGREE
12
note that some non-RTA tenancies can have disputes referred to the Tenancy
Tribunal, however, the current HS Programme does not allow for Tenancy
Tribunal decisions to be considered by MSD in making an Accommodation
Security Cover Grant payable
13
agree to an amendment to the HS Programme to allow the Accommodation
Security Cover Grant to cover costs that the Tenancy Tribunal has determined
that a former resident is required to pay.
AGREE/DISAGREE
9 October 2024
Alex McKenzie
Date
Policy Manager
Housing Policy
Hon Chris Bishop
Date
Minister of Housing
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The Housing Support Programme was amended in May 2024
18 Housing Support Products (HSPs) provide low and middle-income households
recoverable financial assistance4 to help them obtain and retain
accommodation.
19 MSD implemented the first phase of changes to reform HSPs on 13 March
2023. This included a new recoverable assistance programme for people
living in private accommodation covered by the Residential Tenancies Act
1986 (RTA), covering costs such as bond, rent in advance and rent arrears.
20 On 26 May 2024, you approved changes to the Housing Support Programme
(HS Programme) to expand recoverable financial assistance to those in
accommodation not covered by the RTA [REP/24/5/428 refers]5. You also
requested further advice on:
• expanding HSPs to include costs towards the Government’s proposed pet
bond
• s9(2)(f)(iv)
Part A: Recoverable assistance for pet bonds
New pet bond provisions in the RTA will have a
disproportionate financial impact on low income tenants
21 In April 2024, you announced plans to introduce pet bonds to assist
households with pets to obtain private rental accommodation, where they
might otherwise be unable to obtain housing due to having a pet.
22 The RTA Amendment Bill is currently before Select Committee and includes
provisions that are intended to make it easier for tenants to keep pets in
rental properties. For example, landlords will be able to require a pet bond of
up to two weeks’ rent, and tenants will be liable for all pet-related damage
beyond fair wear and tear. We understand the intention, subject to passage of
the legislation, is that pet bonds will be implemented in late 2025.
23 Once the pet bond provisions come into force, there will be additional costs
for some tenants with pets to obtain a private tenancy because they may
need to pay for a pet bond. This will disproportionately impact lower-income
4 MSD also has the non-recoverable Transition to Alternative Housing Grant. This is a one off grant
to incentivise social housing tenants who are ready and able to rent in the private housing market,
to move out of social housing and into a private rental under the RTA.
5 These changes came into effect on 1 July 2024.
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households, as these households are more likely to rent than own a home
and use a large portion of their income to secure a rental property. We
understand that following implementation, a pet bond could only be applied
to tenants entering into new tenancies, meaning we do not expect existing
pet owners in tenancies to be affected by this change immediately.
24 Kāinga Ora is a pet friendly landlord, s9(2)(f)(iv)
.
Since April 2019, Kāinga Ora has not charged a general bond to new tenants
s9(2)(f)(iv)
Recoverable assistance for pet bonds can be paid under the
HS Programme, but the total amount is capped and is
unlikely to cover both general and pet bonds
25 MSD’s legal advice is that the current definition of 'bond' in the HS
Programme is wide enough to cover pet bonds, as defined in the RTA
Amendment Bill, although we note this could be subject to change as the Bill
progresses. Pet bonds would therefore be able to be included in an application
for recoverable assistance under the HS Programme’s bond grant.
26 Despite this, the HS Programme only allows clients to receive a maximum of
four weeks’ rent per bond grant. While two bond grants can be made in a 52-
week period, these two grants cannot be made for a simultaneous period (i.e.
for the commencement of one tenancy). This means MSD would only be able
to pay the full amount of a tenant’s pet and general bonds combined if the
landlord were to charge less than the maximum amount of bond.6
27 It is more likely, however, that a landlord will charge the full four weeks’ rent
for a general bond, and full two weeks’ pet bond. The HS Programme
providing for the Bond Grant does not distinguish between pet and general
bond, therefore MSD would be able to make a grant for either, but this would
be unlikely to cover the full amount a landlord is charging.
28 Under the status quo, tenants are likely to be charged for a pet bond whether
there is financial support available or not, meaning that if the bond grant is
unable to cover the full extent of bond-related costs (i.e. general plus pet),
tenants might use their available resources to cover pet bond costs, and then
have insufficient resources remaining to cover essential weekly expenses
6 For example, if the landlord charged four weeks’ bond in total, comprising two weeks’ general
bond, and two weeks’ pet bond, or three weeks’ general bond and one week pet bond, then a bond
grant could pay for the total bond.
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(such as food). A lack of financial support for pet bonds could therefore result
in increased demand for hardship assistance, though hardship programmes
are more tightly targeted than the HS Programme.
29 If low income households are unable to secure a rental without all or part of a
pet or general bond, there is also the potential for increased applications for
emergency, transitional or social housing (noting, however, that it is rare for
emergency housing and transitional housing providers to allow pets, therefore
this risk is considered low).
We recommend amending the HS Programme to specifically
provide for recoverable pet bond assistance
30 As an alternative to the status quo, we have identified two other options for
progressing work on pet bonds:
30.1 amending the HS Programme to provide for two weeks’ pet bond, in
addition to the existing four weeks’ general bond (
recommended)
30.2 amending the HS Programme to specifically exclude payment of
financial assistance for pet bonds (this change would be required prior
to the RTA changes in late 2025, so that pet bonds as defined under the
RTA Amendment Bill are excluded).
31 Amending the HS Programme to include pet bonds at their full amount is our
recommended approach, subject to the availability of funding. This would
align the HS Programme with government priorities around introducing pet
bonds, and with the RTA, by the time that pet bonds are implemented in late
2025.
32 Although households would incur higher debt for pet bonds, financial
assistance for pet bonds could give some low and middle income households
more housing options. This would make it easier for low to middle income
households to obtain suitable accommodation, and could prevent some
households from needing temporary housing support, or becoming homeless.
Risks include potentially raising expectations that other pet-related
costs could be met, and increasing the level of debt to government
33 If you agree to amend the HS Programme to provide for pet bonds, there are
some risks to be aware of.
34 If the Bond Grant amount is extended to include the full two week pet bond in
addition to the current four weeks’ bond, it will increase the amount of debt a
client will have to repay, and the amount of private debt to government. The
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increased debt may also take longer to be repaid,7 thereby increasing financial
strain on some tenants. The policy intent of the HS Programme is, however, to
support people to obtain and retain accommodation.
35 The provision of financial assistance for pet bonds could incentivise some low
and middle income households to take on a pet, or declare they have a pet,
therefore increasing demand for assistance.
36 As with the status quo option, providing specific assistance for pet bonds
could potentially create an expectation that other pet-related costs (e.g. vet
bills) be covered by hardship programmes. MSD currently does not, and will
continue not to, provide any type of assistance to specifically support pet-
related costs, as these are not considered essential items. Providing financial
assistance for pet bonds will be tied to the HS Programme. This is to ensure
that MSD will only grant financial assistance for pet bonds to obtain
accommodation, and not grant assistance for pet-related costs such as vet
bills.
37 Amending the HS Programme to provide for pet bonds has a cost estimated at
$21.697m over the Budget 2025 period, which would require new or
reprioritised funding (see paragraphs 41 - 47 below). Implementing the
change will also take time - at least 12 months from the RTA Amendment Bill
being enacted to progress the change (see discussion at paragraphs 48 - 52
below).
An alternative option is to amend the HS Programme to
exclude pet bonds, but we do not recommend this
38 Should you prefer not to make recoverable assistance available for pet bonds,
an option is to amend the HS Programme to specifically exclude pet bonds.
39 The option of excluding pet bonds from the HS Programme has the advantage
of avoiding raising expectations, or potentially setting a precedent, for any
payment of pet-related costs. It would also avoid any additional financial cost
from providing pet bond assistance. On the other hand, if low income
households are unable to get financial assistance for pet bonds, some of the
costs may be borne elsewhere and there could be an increase in applications
for financial assistance (this also applies to the status quo option). For
7 Repayments of recoverable assistance are set at a rate affordable to the client. Most commonly,
repayments for recoverable assistance are set up by a deduction offset from any financial assistance
a client is receiving from MSD. People not receiving ongoing financial assistance from MSD can
choose to either make payments from their bank account, or by direct wage deduction (with their
employer’s agreement).
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example, people may use their available funds to pay a pet bond to obtain a
rental property, but then need to seek hardship assistance (such as a food
grant). As with the status quo, this approach could potentially increase
applications for hardship assistance, including housing-related financial
assistance, if people are unable to obtain a tenancy because they cannot get
financial assistance for a pet bond. It could also potentially increase numbers
applying for social housing (or temporary housing), noting that in the latter
case it is rare for emergency housing and transitional housing providers to
allow pets.
40 We consider the disadvantages of amending the HS Programme to exclude pet
bonds outweigh the benefits. Implementing this approach would likely involve
similar timeframes to the option of including financial assistance for pet bonds
(i.e. 12 months from the date of RTA amendments being enacted), as the HS
Programme would still require amendment. Although there would not be an IT
cost involved with this option, MSD would also need to appropriately prioritise
this work against other work.
Providing recoverable financial assistance for pet bonds will
require new or reprioritised funding in Budget 2025
41 MSD does not currently record how many clients have pets. However,
according to the 2020 Companion Animals in New Zealand report, more than
half of New Zealand households that do not currently have a companion
animal would like to have one, with the two most significant barriers to pet
ownership being an unsuitable home or lifestyle (37 percent) and living in
rented accommodation where pets are not allowed (33 percent). The report
also states that 57 percent of households who do not work, or earn less than
$40,000 per year, own a pet.8
42 MSD has estimated that extending financial assistance to cover pet bonds
would result in additional recoverable grants to the value of $72.324m over
the Budget 2025 forecast period, at a cost of $21.697m (see assumptions
below). This would require new Budget funding, or reprioritisation from
elsewhere, as MSD does not have the funding to support this change for
Budget 2025.
43 The estimated fiscal impact is calculated based on the average bond amount
that MSD grants, and assumes that:
8 Companion Animals in New Zealand report, 2020, Companion Animals Report, 2020.
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43.1 30 percent of recoverable assistance is not recovered (in line with prior
costings). This cost estimate may be an over estimate, particularly in
the short term, as it depends how quickly landlords adopt the new pet
bond provisions, and uptake could be slow to start with. The Ministry of
Housing and Urban Development (HUD) considers MSD should model a
range of cost increases based on lower percentages, reflecting a slow
increase over time. However, MSD has accounted for the risk that
landlords might embrace pet bonds more quickly, and used a
conservative estimate that 75 percent of landlords accept pets in
rentals
43.2
the growth of bonds granted since the implementation of Phase One of
the HS Programme reforms in 2023 will continue to increase, as will
rent costs in the short to medium term, but growth is expected to flat
line from about 2027-2028.
44 Prior to the introduction of pet bonds, MSD will need to make IT system
changes so that recoverable expenditure on pet bonds can be recorded
separately from recoverable expenditure on general bonds. These costs are
not currently funded and there may be other operational costs. Due to the
complexities and potential risks around providing financial assistance for pet
bonds (see paragraphs 33-37 above), operational practices will also need to
be revised.
s9(2)(f)(iv)
45
It will take time to amend the HS Programme to provide
assistance for pet bonds
46 Subject to the passing of the RTA Amendment Bill, we understand that pet
bonds will not come into force until late 2025. A tentative delivery time to
implement changes to the HS Programme would be a minimum of 12 months.
47 Once you have indicated your preferred approach, and MSD has done further
work to understand how any changes can be made, MSD will provide you
further advice about the proposed timeline for delivery and any impacts on
project prioritisation. Some impacts cannot be identified until further policy
design work has been completed as they will depend on the solution proposed
and impacts on system processes and IT.
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48 Any changes made to the HS Programme will require you to seek Cabinet
agreement and to signal the increased costs relating to the changes.
49 Should you prefer not to make recoverable assistance available to low and
middle-income households to assist with pet bonds, we would recommend
that, for clarity, the HS Programme is amended prior to the introduction of pet
bonds in late 2025, to specifically exclude the pet bonds that will be defined
under the amended RTA from the HS Programme.
50 If you prefer to make no changes at this time, the status quo will continue
with MSD only able to pay pet bonds from the general bond (see paragraphs
25 to 29), noting that this will be unlikely to cover the full amount, and that
there are risks involved.
s9(2)(f)(iv)
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s9(2)(f)(iv)
s9(2)(f)(iv)
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s9(2)(f)(iv)
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s9(2)(f)(iv)
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s9(2)(f)(iv)
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s9(2)(f)(iv)
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s9(2)(f)(iv)
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s9(2)(f)(iv)
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s9(2)(f)(iv)
Part C: Technical amendments
We have also identified two minor issues with the HS
Programme which we recommend correcting at the next
opportunity
84 We recommend that you agree to progress two minor changes, when the HS
Programme is next amended. These are:
84.1 allowing an additional recoverable grant for a bond to be made if a
tenant is required to increase their bond during their tenancy
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84.2 amending the Accommodation Security Cover Grant to allow the grant
to cover costs that the Tenancy Tribunal has determined a former
tenant is required to pay the accommodation provider.
85 Because the changes are minor they are not expected to have a measurable
impact on HSP expenditure.
86 If you decide to amend the HS Programme to recognise pet bonds (either by
amending to provide specific financial assistance, as recommended, or by
excluding pet bonds or s9(2)(f)(iv)
the two minor changes could be progressed at that time.
The HS Programme does not currently allow grants to be made for
bond increases, should rent increase during a tenancy
87 The RTA allows for rent and bond to be increased in certain circumstances. To
align with the purpose of HSPs (to retain accommodation) the HSP Bond Grant
should allow for equivalent increases to bond during the course of a tenancy.
When rent is increased a landlord may request an increase in the bond to
reflect the higher rent. Some landlords will request this, and others will not.
88 Currently, MSD is unable to pay for bond increases under the HS programme
as clause 20(d) requires a client to be ‘entering into or renewing an RTA
agreement’. This was not identified when developing the recent amendments
to the Programme. To enable bond grants to be paid in this situation, an
amendment is needed to the HS programme.
89 A bond payment for an increase in bond would not be counted towards the
two bond grants in a 52-week period, unless MSD did not pay a bond grant for
the original bond, but a client is now applying due to the bond top-up
required.
The Accommodation Security Cover Grant does not currently cover
costs determined by the Tenancy Tribunal
90 Some non-RTA tenancies can still have disputes referred to the Tenancy
Tribunal, where parties to the agreement have contracted into all or any of the
jurisdiction and powers of the Tenancy Tribunal under the RTA. However, the
current HS Programme does not allow for decisions made by the Tenancy
Tribunal to be considered by MSD in making an Accommodation Security
Cover Grant payable (it only specifies the Disputes Tribunal and court orders).
91 Section 8 of the RTA sets out that people who the RTA would not usually apply
to (i.e. if their type of accommodation is excluded under sub-sections 5 - 7 of
the RTA), are able to contract in to all, or part of the RTA. This includes
choosing to contract into all or any of the jurisdiction and powers of the
Tenancy Tribunal under the Act.
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92 To address this, an amendment is needed to clause 25(1)(e)(ii) of the HS
Programme to enable security cover grants to be paid in circumstances where
parties have contracted into the jurisdiction of the Tenancy Tribunal, and the
Tenancy Tribunal has made an order requiring the payment of the former
resident’s outstanding costs.
Next steps
93 If you agree to extend recoverable assistance to cover pet bonds
(recommendation 4.1) s9(2)(f)(iv)
we will provide you with a draft Cabinet paper for
submission in November 2024, as well as further advice on implementation,
including timeframes for any amendments to the HS Programme.
s9(2)(f)(iv)
94
95 If you agree to recommendations 11 and 13, we will include these as minor
amendments in the next amendment to the HS Programme.
File ref: REP/24/8/731
Authors: Matt Shipp, Policy Analyst, and Jacqueline MacKenzie, Senior Policy
Analyst, Housing Policy
Responsible manager: Alex McKenzie, Housing Policy Manager
24
IN-CONFIDENCE
s9(2)(f)(iv)
25
IN-CONFIDENCE
s9(2)(f)(iv)
26
Document Outline
