Funding for a key road project that could enable more homes in Tauranga has been declined by the New Zealand Transport Agency.

The business case for the $164 million Cameron Rd stage two project has not been endorsed by the NZTA board.

Under the stage two plans, the road between 17th Ave and State Highway 29 would be upgraded, with new cycle and bus lanes added.

The ageing sewerage infrastructure would also be improved to allow for more housing capacity.

The NZTA board said the project was unlikely to be prioritised in the National Land Transport Programme for 2024-2027 because it didn’t align with the new Government Policy Statement on Transport, which sets out the coalition’s priorities.

NZTA requested Tauranga City Council do more work on the proposal.

Mayor Mahé Drysdale says the project is a key driver to deliver more homes in Tauranga. Bay of Plenty Times photo / Alex Cairns

Mayor Mahé Drysdale said if the council didn’t go ahead with this project, the consequences would be far-reaching.

The project was a “key driver” to enable growth in Tauranga, he said in a statement.

“Without the right infrastructure – improved roads and upgrades to our ageing water supply and wastewater network – we are not going to be able to meet the demand for new houses.”

Without support from the Government, council might have to look at cancelling, delaying, or redirecting funds from other projects, Drysdale said.

“We are already starting to see the success of Cameron Rd stage one, with monitoring showing more commuters are using a range of travel modes, including public transport.”

At a meeting on Monday, council strategy, growth and governance manager Christine Jones said Cameron Rd stage two would provide a key transport link for the city.

Tauranga City Council strategy, growth and governance general manager Christine Jones. Bay of Plenty Times photo / Alex Cairns

It was particularly important for the Western Corridor, which could have 25,000 homes in the long term, to link with Cameron Rd through to Mount Maunganui, said Jones.

Cameron Rd stage one was finished but the full benefits of it couldn’t be achieved until stage two was completed, she said, and there would be no safe separated cycleway past 17th Ave, so people were less likely to cycle.

For people to choose the bus over their car, buses need to be faster. This would be achieved with priority bus lanes along the entire road, Jones said.

The $110m stage one suffered a $25m budget blowout and delays that impacted business along the road.

Many businesses took a financial hit because of the roadworks and loss of parking.

Councillor Steve Morris asked what the council had learnt from stage one to ensure businesses didn’t face similar impacts during stage two.

Tauranga City Council chief executive Marty Grenfell. Bay of Plenty Times photo / Alex Cairns

Chief executive Marty Grenfell said the council could have done better delivering the project.

Stage one was developed as part of the Government’s shovel-ready projects, said Grenfell.

In August 2020, the council gained $45m from the Government’s Crown Infrastructure Partners fund, the money was contingent on physical work starting within a year of approval.

Staff pulled the project’s cost estimates and plan together in a “very short time”, he said.

The commission had the project reviewed and one of the recommendations was to establish a dedicated major projects unit, which the council had done, said Grenfell.

The unit was overseen by a panel of three senior transport experts, he said.

“Cameron Rd stage one, which came in at around $110m, is the largest transport project that this city has ever managed.”

The Cameron Rd stage one project caused disruptions to businesses. Bay of Plenty Times photo / Alex Cairns

If the funding for stage two isn’t secured it could also risk the $68m Infrastructure Acceleration Fund (IAF) grant from the Crown.

The IAF is for infrastructure that enables increased housing supply.

Jones said the benefits of the project need to be delivered to ensure IAF support.

Drysdale said the IAF funding was important and helped to deliver value for money.

It was better to deliver as one, rather than digging up Cameron Rd to upgrade the water pipes then redoing it again to improve the road, he said.

A business case that aligned more with the new Government Policy Statement would be brought to council for approval and be submitted to NZTA in early 2025.

LDR is local body journalism co-funded by RNZ and NZ On Air.