Auckland Council’s Finance and Performance Committee will next week make a decision on whether to deliver the SkyPath project through a public private partnership (PPP).

If councillors agree to the recommended PPP option, it would be the first partnership of its kind for significant infrastructure in Auckland by the council.

The PPP would be with H.R.L Morrison and Co’s Public Infrastructure Partnership Fund (the PIP Fund).

The PPP would mean that the construction, operation and maintenance of SkyPath would be financed and delivered by the PIP Fund for the contract period and there would be an admission charge for users of SkyPath.

The council would provide a limited underwrite of the revenue. This means if minimum revenue streams from fares, sponsorship etc are not met, council would need to top-up funds to meet a pre-agreed amount. In turn, if profits reach a certain level, council and the Auckland Harbour Bridge Pathway Trust will receive a share in these.

Auckland Council would also receive ownership rights and obligations at the end of the contract period.

Ahead of their recommendation, members of the Finance and Performance Committee will consider two reports relating to SkyPath: a project update and a report that evaluates and recommends the use of a PPP to deliver the project. The reports areavailable online from today.

The Finance and Performance Committee will meet on 21 July. The Governing Body will then formalise the decisions of the committee at its 28 July meeting.

Questions & Answers

Q:   Where can I find the council reports and business report for the proposed PPP?

A:   The report is publicly available onhttp://infocouncil.aucklandcouncil.govt.nz/.

Q:   Why are parts of the Business Report and Procurement Plan attachments blacked out?

A:   Some of the decisions in relation to the public private partnership were originally going to be discussed as a confidential agenda item. This was because the business report contains information provided to council on a confidential basis due to it being commercially sensitive, and because the commercial negotiations remain live. However, due to the high public interest in this project and council’s desire to be transparent as possible, it was decided decisions would all be made in public and commercially sensitive information would be redacted.

Q:   What is a PPP?

A:   A public private partnership or PPP is a procurement option for financing and delivering public infrastructure projects. A PPP must be more cost effective than standard delivery, and strikes an appropriate risk and reward balance for both the public and private sector.

Q:   When was it agreed the partner would be H.R.L Morrison and Co’s Public Infrastructure Partnership Fund (the PIP Fund)?

A:   Thirteen potential private partners were contacted by Ernst & Young in 2011-12 as part of contestability analysis and market soundings. The PIP Fund was identified as the only interested private sector partner through this work.

In December 2013, staff presented a number of procurement options to council’s Governing Body and sought approval to proceed with negotiations with the interested private sector party (the PIP Fund).  The Governing Body resolved that the project was worthy of proceeding with and authorised the Chief Executive to progress negotiations with the PIP Fund under a non-binding Heads of Agreement, and report back to council on the recommended procurement option and preferred partner before entering into any binding agreement.  

Q:   What is NZTA’s role?

A:   The New Zealand Transport Agency (NZTA) is the custodian of the Auckland Harbour Bridge and would need to provide a licence to occupy for SkyPath to be attached to the bridge.  This would be like the AJ Hackett bungy jump facility.

Q:   Does the project need resource consent?

A:  As well as funding, the project does need resource consent to proceed. A resource consent was granted in July 2015, however the decision was appealed by three parties. The appeal is currently progressing through the Environment Court process, with one party recently withdrawing their appeal.

Q:   What is the expected patronage to be?

A:   The forecast patronage was prepared in 2013 by an independent market research company using conservative assumptions and on the basis that user fares would be charged. This patronage work was presented to the Governing Body in December 2013.

It was considered appropriate to take a conservative (low) analysis of the potential patronage to manage Council’s risks in relation to the limited underwrite. These conservative numbers are used in council’s financial modelling.**

The results of the patronage review for adults* are summarised in the table below with the projections for Years 1, 5 and 20.

Table 1: Expected conservative patronage numbers

*The patronage reviews excluded children.

**Council’s financial modelling also includes other revenue sources such as sponsorship which contribute to the project financing.

About SkyPath

SkyPath is a proposal initiated by the Auckland Harbour Bridge Pathway Trust to construct a combined pedestrian and cycle pathway across the Waitematā Harbour.

The project would complete a critical gap in Auckland’s walking and cycling network.

It is proposed to be 4m wide (and 6m wide at the five viewing platforms) and fixed to the eastern clip-on lane of the Auckland Harbour Bridge.

It would be accessed via Northcote Point at the northern end of the bridge, and Westhaven in the south.

It would connect to other cycling and walking facilities at each end.

SkyPath would be used by commuters, recreational users and tourists. It would be a major attraction for residents and visitors to Auckland, offering a unique perspective of the Waitematā Harbour. 

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