Multi-Party Funding Policy

This page relates to the 2024-27 National Land Transport Programme.

Introduction

This is the NZ Transport Agency Waka Kotahi (NZTA) policy on multi-party funding.

Date of issue: December 2021 | Last updated August 2023 | NZTA may review and amend investment policies at any time, including in response to any changes in the Government Policy Statement on land transport.

Purpose

The Multi-Party Funding Policy aims to achieve an equitable sharing of costs to reflect both public and private benefits from investments funded from the National Land Transport Fund (NLTF).

Definition of terms

Activity (as defined in section 5(1) of the Land Transport Management Act 2003):

(a) means a land transport output or capital project; and

(b) includes any combination of activities.

Land Transport Management Act 2003 section 5(1)(external link)

Funding assistance rates (FAR) are the contribution, in percentage terms, that we (NZTA as investor) make available from the NLTF to approved organisations for the delivery of transport solutions.

2024–27 NLTP funding assistance rates

Supplementary funds are funds from a third party for transport investments additional to that provided by an approved organisation and the NLTF. This can include government funding via mechanisms such as grants, special purpose funds and levies. Further explanation is available at the NZTA National Land Transport Programme funding sources policy.

National Land Transport Programme Funding Sources Policy

Third parties comprise individuals, organisations, industry bodies or developers with a shared pecuniary interest in transport developments that are not approved organisations.

Value capture is the public recovery of a portion of increased property and other value created as a result of transport infrastructure investment by use of levies or other methods to recoup costs.

Betterment is a form of value capture and refers to the increase in value of land following the construction or improvement of an adjoining road. Under the terms of the Local Government Act 1974 section 326, the owner of the land may be required to make a betterment payment to the council.

Local Government Act 1974 section 326(external link)

Multi-party funding agreement is a written agreement relating to a project that involves more than one organisation providing funding in respect of that project. The agreement may include terms such as the roles and responsibilities of the parties, relationship matters, land issues, location, timing of works and funding obligations of the parties. It may also cover betterment, mitigation costs, value capture and in-kind contributions (for example of land) and detail necessary mitigation measures required by the developer (for example a section of new road, slip lane, intersection/accessway upgrades as well as the vesting of assets). A multi-party funding agreement may also be referred to as a cost-sharing agreement or be part of a more general multi-party agreement.

Sub-divisional roads are roads and transport links such as rights of way and off-road cycleways planned and constructed within a subdivision that have not been vested and accepted by the relevant local authority as part of the local authority’s transport network ownership.

Policy context

NZTA investment principles provide an overarching direction for our investment decisions, including that we (NZTA as investor) must ensure an equitable sharing of costs to reflect both public and private benefits. NZTA (for its own activities) and approved organisations are required to consider alternative ways of financing and funding for major projects and consider the impact of such actions on the expected value of investment.

Investment principles

Government is seeking broader outcomes that will necessitate involvement in strategic collaborations with other agencies and other funding sources for activities. This may warrant funding arrangements between multiple parties that specify governance, funding, relationship and other commitments.

Policy statement

Where an activity involves multiple funders, or a third party benefitting from an activity, funding arrangements should be in place prior to seeking our (NZTA as investor) funding approval for implementation. These can be by way of a memorandum of understanding that reflects the parties’ intent at an early stage and/or a multi-party funding agreement to record the parties’ agreement to contributions that reflect an equitable split based on assessment of public and private benefits in respect of the activity.

Multi-party funding arrangements need to address eligibility and other investment requirements from the NLTF. NLTF funding cannot be used for elements of an activity that are solely for private benefit, commercial benefit, or for a higher level of service than the NLTF would normally fund.

Multi-party funding arrangements with a developer or landowner must reflect specific policies regarding development and legal requirements that apply to the funding of transport activities related to the development. For example: the Resource Management Act 1991 requires that a developer should seek to avoid, remedy or mitigate adverse impacts of development (part 3, section 17).

We may enter cost-sharing arrangements when mitigation works required for development lead to identifiable additional benefits to the wider transport network (for example, addressing a pre-existing safety risk) or outcomes sought in the Government Policy Statement on land transport (GPS).

Government Policy Statement on land transport(external link)

Funding considerations

The funding assistance rates (FAR) policy provides funding assistance arrangements between us and an approved organisation. A memorandum of understanding or multi-party funding agreement is not required for these usual arrangements.

We encourage approved organisations and NZTA (for its own activities) to discuss with us the development of multi-party funding arrangements where benefits arise to a third party, or where they propose to share costs in a different way from that contemplated in the FAR policy, or where they require funding contributions from a third party.

The Monetised benefits and costs manual and Land Transport Benefits Framework measures manual are useful tools for the calculation of public benefits and business case development that can provide an evidence base for cost-sharing and multi-party funding arrangements. 

Funding Assistance Rates (FAR) Policy

Monetised benefits and costs manual

Land Transport Benefits Framework measures manual

The following guidance will assist in the development of multi-party funding arrangements and investment decisions where there are multiple participants or beneficiaries:

• If there are no wider public benefits private developers are expected to fund the full cost of the activity required as a direct result of their development and its effects on the network as per our policy on sub-divisional roads. Once vested into an approved organisation’s ownership, ongoing operations and maintenance can be funded from the NLTF as part of an approved organisation’s operations and maintenance programme.
  Sub-Divisional Roads Policy

• We will consider funding activities from the NLTF when they are within the scope of eligible activities, are of sufficient national priority and funds are available. We expect that third parties will fund transport activities in proportion to the benefits they receive.
• If an approved organisation or a developer or NZTA (for its own activities) would like to accelerate the progression of an activity already identified in the National Land Transport Programme, they are expected to bear any costs and risks associated with this acceleration.
• In situations where multiple parties have signed a multi-party funding agreement and there is supplementary funding from an additional party, unless otherwise agreed, we and the approved organisation will share any funding and/or any cost reduction arising from supplementary funding. This will usually be in the same proportion as the parties’ respective shares of the funding required for the investment it relates to. For example, if the investment has a FAR of 51% from us and 49% from the approved organisation, we would receive 51% of the supplementary payment.
• A developer will not be liable for the operational or maintenance costs of infrastructure constructed on the state highway; however, there will be quality standards which need to be met to ensure effective and efficient operation and future maintenance standards operated by NZTA (for its own activities) can be achieved, for example the One Network Framework and/or any other standard that may be required in the future.

Multi-party funding agreements

A multi-party funding agreement may specify:

• relationship and governance arrangements
• all aspects of investigation, design and construction by phase
• third party or supplementary funding (for example betterment, value capture and mitigation arrangements)
• cost-sharing arrangements that reflect the equitable cost sharing on the basis of public and private benefit or unusual funding assistance arrangements
• any designation, alterations to designation, outline plan resource consents and quality audits
• arrangements for ownership or transfer of ownership, and any change in designation (such as a revocation of a state highway)
• service level agreements that have an annual expenditure with both the third party and us (NZTA as investor)
• management of risks, including changes to scope or costs.