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Auckland Council plans to borrow money via a green bond programme to help fund infrastructure projects

Auckland Council plans to borrow money via a green bond programme to help fund infrastructure projects

Auckland Council is eyeing an issue of green bonds to help fund infrastructure projects.

The Council says staff will establish a green bond programme and consider issuing New Zealand dollar denominated green bonds later this year as part of its ongoing borrowing programme.

"Green bonds are vehicles for raising funds which are invested in projects with positive environmental and sustainability impacts. These bonds allow Auckland Council to diversify the pool of funds available by tapping into investors who wish to fund ‘green’ infrastructure assets and projects," Auckland Council says.

"Green bonds are becoming an increasingly popular funding method of both local authorities and sovereign governments internationally. In establishing a green bond framework, Auckland is likely to be the first council in New Zealand and will join other C40 Cities Toronto, Johannesburg and Mexico City that are leading the way in green financing."

Councillor Ross Clow, who chairs Auckland Council's finance and performance committee, says investment in public transport infrastructure to reduce traffic congestion and emissions, plus investment in water infrastructure for healthier waterways are the types of projects that interest green investors.

International Finance Corporation, a member of the World Bank Group, last year issued New Zealand's first green bond borrowing $100 million. There's more on green bonds from Investopedia here.

And there's an Auckland Council investor update available here

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Damn it. The issue is that rates have been suppressed by howling boomers for far too long, they should be on the order of 1-2% of land values. It's time to make the beneficiaries of this city pay for those benefits. Increase rates to pay for the infrastructure that this city needs. That's the only way to make housing more affordable, rents more manageable and to recapture the capital gains created by the development and growth of this city.

It would be disastrous to make it so people could neither afford their houses nor be able to sell.

I don't believe that my rates or council debt (= future rates) have been suppressed.

Nah, it's about importing hundreds of thousands of people in too short a timeframe.

That and the council spending money like it's water, and then saying they don't have any.

Hmm not sure if you view is a bit simplistic? So to clarify are you saying "tax" existing ratepayers to fund new infrastructure needed for new housing developments? Cant say I agree with that, mainly because this "increase in wealth" is a paper exercise ie if someone's pay cheque has also not gone up by the same % gains then they get hammered for a gain they get no benefit from. Hence why I prefer a CGT and not a land tax in this instance.

Now what I do have a concern over is if there is a push to increase debt so as to avoid an increase in rates that is needed. Doing this sort of thing just can kicks down pain the road and stores an even bigger problem ie the capital and interest have to be paid for.

Ocelot: who should pay for the infrastructure the city needs? How about Kiwi Aucklanders pay for the fraction required for extra Kiwis in Auckland and immigrants pay an extra immiration fee for the infrastructure that they require. So if say 30% of Auckland's growth is due to NZ citizens then they pay increased rates and the remaining 70% is paid as back-dated immigration charges. Since immigration enthusiastic economists are always claiming immigrants are a bonus to our economy then they really ought to have the money.

The bonds only make sense if the funding rate is similar to standard Council borrowing, otherwise its simply making the debt load higher. Ratepayers are still on the hook to pay the bonds back.

Presume these are also seen as "off the books" in terms of Council financial limits?

One of the main issues is that local (& central ) government spending is still not efficient enough. Every $ spent should go through a business case assessment proportionate to the expenditure.

Central government should legislate to require:
- local government spends on essentials first (water, roads etc)
- proportionate business case assessments
- the immigration rate to be set at a sustainable level & given to the RBNZ as a a macroprudential tool to manage price stability along with the OCR.

I believe the AC has already maxed out its legal credit limit so I also presume Green Bonds will be off the debt books. This would place ratepayers (and hence all Auckland's current and future citizens) in a potentially hazardous situation just so the short-term politicians can please the ignorant masses long enough to survive another election.

Dont EVER be fooled by nice or fancy sounding names.

There is nothing Green about a new Tarmacadam Double carriageway Highway running past your back yard no matter how you package it.

Bonds and funds were issued by Lehman Brothers in 2007 with names like Enhanced Leverage Fund should have been called The Leveraged up to your eyeballs Fund as it consisted of 100% LTV non -performing mortgages on homes to unemployed folk .