Readers who haven’t encountered the concept should brace to hear more about the use of Special Purpose Vehicles (SPV).
An SPV is a legal entity created for a specific purpose, such as raising capital – the SPV then can be a funding structure, through which all investors (or investors under a given investment threshold) are pooled together into a single entity.
The NZ Productivity Commission last year said SPVs could help debt-burdened councils to supply the infrastructure needed to support housing development.
The idea is supported by the Auckland Business Chamber.
Just before Christmas, the government introduced legislation to give effect to it. The Infrastructure Funding and Financing Bill establishes a framework for the establishment of SPVs to fund infrastructure such as roads and sewers in “high-growth” councils.
Eric Crampton, chief economist at the New Zealand Initiative, described it as a linchpin of Phil Twyford’s vision for better-functioning housing markets. Continue reading “SPVs are hailed as a way of funding infrastructure for housing – but will they be open to public scrutiny?”