Waikato Business News July/August 2017

WAIKATO BUSINESS NEWS July/August 2017
5
Peacocke is coming
- ready or not
Mayor Andrew King with Prime Minister
Bill English and Finance Minister Steven
Joyce at the Housing Infrastructure Fund
announcement at Peacocke subdivision in
July. Photo: Hamilton City Council.
Hamilton City Council has won a big
Government loan to kick start the longproposed
new southern Hamilton suburb of
Peacocke, but now comes the real challenge
– figuring out how to pay it back without
starving growth elsewhere in the city.
By ANDREA FOX
Under immense pressure
to deliver land for new
housing – both from
Government housing policy
and city population growth -
and with the rolling farmland of
Peacocke long zoned and ready
to go, the council made a strong
case for a hand-up.
While some developers say
Peacocke won’t be enough and
ignores the chronic problem
of city boundaries to the north
constraining rampant demand,
city leaders are keen to get on
The Peacocke subdivision will ultimately add
another 8100 houses to Hamilton.
with a development that’s been
repeatedly pushed back for
years.
They’ve won an offer of
an interest-free $182 million
chunk of the Government’s $1
billion Housing Infrastructure
Fund plus a $90 million subsidy
from the New Zealand Transport
Agency to build Peacocke
infrastructure – water, pipes
and roads – ready for housing
developers.
Hamilton Mayor Andrew
King says unlocking Peacocke
is essential for Hamilton's future.
"We are one step closer to
delivering a promise we made
to Hamiltonians a long time ago
to develop Peacocke. It means
we can fast-track significant
and expensive infrastructure
development to within the next
five years.”
Peacocke would provide
3700 new houses over the next
10 years and 8100 within 30
years. Without the Government
loan, the council says Peacocke
will stay on the drawing board
for another decade or more because
the money cupboard is
bare.
With the 10 year loan offer
secured, now the council has to
make a detailed business case
for approval by councillors and
the Government. The public
will get a say on it. Developers
will be asked to sign agreements
confirming their funding contributions
towards the cost of the
required new bridge over the
Waikato River between Hillcrest
and Peacocke, roads and
waste water projects, hopefully
all in place within five years.
This then is the stage of the
Peacocke proposal where the
rubber meets the road.
Peacocke promoters and
politicians (it is election year
after all) were cockahoop about
Hamilton’s success. But the
money is just that - a loan. It
will need to be repaid.
Given recent headlines
about the council’s revenue
shortfall, how it plans to do that
will be closely scrutinised. Just
two days after the Government
announcement, a PricewaterhouseCoopers
report commissioned
by the council revealed a
$12 million rates hole is looming
and that councillors face
tough decisions on how to fill it.
The timing of developing
Peacocke runs parallel to councillors’
unenviable task of nutting
out the next 10 year financial
plan for the city, from 2018
to 2028. That job starts soon.
While Peacocke promoters may
counsel against confusing new
housing initiatives with a need
for rates increases, the fact is
the city’s explosive growth has
caught its leaders by surprise
and how to finance it is proving
tricky.
We are one step
closer to delivering
a promise we made
to Hamiltonians a
long time ago to
develop Peacocke.
It means we can
fast-track significant
and expensive
infrastructure
development to within
the next five years.”
- Andrew King
On the bright side, the total
loan doesn’t have to be repaid
for 10 years after the final
agreement is signed. Councillor
Geoff Taylor, who campaigned
for election last year on progressing
Peacocke, says the 10
year clock starts ticking on a
project-by-project completion
basis. Geoff doesn’t forsee the
need for rates increases to repay
the loan. He suggests developer
contributions will be an
important repayment funding
source. However he also makes
no bones about how tight Peacocke
will stretch the council’s
purse strings. There may
be nothing left for community
projects elsewhere, he says.
Also positive for the council’s
books is the way the total
$272 million loan would
be structured. All that landing
on the debt side of the ledger
would be a very bad look. But
the proposed subsidy arrangement
with NZTA means the
roading portion will be off the
books.
There are plenty of other
positives about kicking off
Peacocke, according to council
literature and business commentators.
The Waikato economy will
get a big boost, starting with
increased construction activity.
The council cites a study which
estimates that $1 invested in
construction activity generates
$3 in economic activity down
through wider sectors. Jobs and
increased labour productivity
are by-products of the multiplier
effect. Peacocke will provide
for major employment bases
such as Waikato University and
Waikato Hospital and the future
Tainui inland port.
The council says Peacocke’s
transport infrastructure
will benefit the whole region,
driving national and regional
economic development and
supporting new development
in the south of the city. It will
complement and enhance key
infrastructure and economic
projects such as the Waikato
Expressway, the Ruakura inland
port and logistics hubs,
spur the advance of the Southern
Links roading project, and
underscore complementary
roading and transport planning
opportunities with Tauranga
and Auckland.
New housing schemes such
as Peacocke create business,
says the council in a report
on its bid for the Government
loan. Studies commissioned by
the council indicated that the
retail area for Peacocke would
serve an estimated long-term
population of 27,000 people.
The district plan provides for a
suburban retail centre. A study
had indicated that similar-sized
suburban centres would generate
an estimated $75-78 million
in retail spend per centre by
2021 and up to $117 million by
2041.
Councillors and council
staff are strongly suggesting
Peacocke will regenerate and
revitalise the city business district.
But that could be drawing
the bow too long.
Waikato Chamber of Commerce
chief executive William
Durning is enthusiastic about
the Peacocke initiative, saying
it will further showcase the region’s
strengths, and provide a
“well-balanced” city with the
south already home to the region’s
airport and a growing
business community. He notes
Peacocke would complement a
proposed new medical school
near Waikato Hospital.
However echoing a major
developer, William says it will
take more than Peacocke to recharge
the CBD. That will take
high density housing and more
offices.
The business case for Peacocke
is due to be finished this
year. Whether its findings determine
Peacocke is financially
viable or not, councillors face
huge pressure to get to grips
with Hamilton’s growth explosion
and demand for new
housing.
With land supply fast
shrinking in the north and north
east and demand for sections
unabating, developers say Peacocke
will be just a punctuation
mark in the Hamilton future
growth story. They’re calling
on the city council to start
working now with Waikato
District Council and the Government
to shift and expand the
city’s northern boundaries.
Andrea Fox is a business
journalist. A former Waikato
Times business editor and
Fairfax business bureau senior
staffer. Contact email wordsbyandreafox@gmail.com.