New funding model secures $400 million for Moa Point Sludge Minimisation Facility

Wellington City Council is the second council to use the model enabled by the Infrastructure Funding and Financing Act 2020 (IFF Act), with approval being given to raise up to $400 million to fund the construction of the SMF at Moa Point.

Sludge is the solid waste produced from the wastewater treatment process. It contains microbiological contaminants that need to be disposed of carefully. Its high moisture content means it is difficult and expensive to transport and dispose of.

Currently, one million litres of wastewater sludge are piped to the Southern Landfill sludge dewatering plant each day. The sludge is then partially dried, and about 45 tonnes of solid by-product is disposed of in the landfill each day.

The new facility is a critical piece of infrastructure for Wellington City. It will reduce the volume of sludge produced by our city by up to 80 percent per year, cater for population growth and development, and allow Wellington City Council to dramatically reduce waste to landfill and the associated greenhouse gas emissions.

Deputy Mayor Laurie Foon says this is a great news for the city’s zero-waste strategy. “It’s not a popular topic of conversation, but no-one can pooh-pooh the fact this new facility will reduce carbon emissions by 60 percent!

“This massive infrastructure project is the first facility of its type in New Zealand, and will reduce the carbon emissions from the current treatment and processing process, plus contribute further to our 2030 goal of reducing general waste going to the landfill by 50 percent.”

Council’s Chief Infrastructure Officer Siobhan Procter says Wellington City Council proposed this project, and Central Government has enabled it.

“This is one of the most complex projects we will deliver in the coming years, and is crucial in supporting the Council’s goal of being a net zero carbon capital by 2050, and is also a critical component of the region’s waste minimisation strategy.

“To provide a visual example of its worth, this facility will reduce the volume of treated sludge by the equivalent of 11 Olympic-sized swimming pools, per year. The equivalent of 2,300 average tipper trucks.”

The facility will also improve the quality of the biosolids being produced. The current sludge is smelly and unstable, whereas the new ‘Grade A’ biosolids can be harnessed in alternative ways, such as industrial fuels or horticultural soil conditioners. Treated disinfected wastewater will also be used in the treatment process, which means the use of drinking water from Wellington’s supply will be vastly reduced.

The Infrastructure Funding and Finance Act 2020

The IFF Act enables infrastructure projects to be delivered free of local authorities’ financing constraints. 

The use of the IFF Act has enabled $400m to be raised for the construction of the SMF by a special purpose vehicle (SPV) owned by Crown Infrastructure Partners. The finance raised will stay off Wellington City Council’s balance sheet, providing flexibility to fund other infrastructure and community amenity projects within existing borrowing limits.

The finance raised by the SPV will be repaid through a levy on all properties (excluding protected Māori land) across the city, reflecting that all residents and businesses will benefit from the SMF. However, properties that will be directly connected to the facility will pay a higher levy than properties that will not have their wastewater treated by the facility.

The levy will start being charged in 2024 and is intended to be charged for 30 years, spreading the costs over the life of the new facility.

A $1 million Capital Value (CV) residential property that is directly connected to the facility would be expected to be charged an annual levy of around $326 once the facility is up and running in 2027/28. For residential properties that are not directly connected, the levy will be around $85 per annum. Levies for commercial properties will be in the region of $483 per $1million of CV if directly connected to the facility and $126 per million of CV if not.

The decision to use the IFF Act to finance the SMF was consulted on through the 2021 - 2031 Long-term Plan process.