Joining the Local Government Funding Agency is “reasonably urgent” and must be done to aid the Waitaki district’s recovery post-Covid-19, Waitaki District Council chief financial officer Paul Hope says.
At a meeting of the full Waitaki District Council this week, councillors moved in favour of aligning the council with the agency as a non-guaranteed member, which meant the amount it could borrow was capped at $20million.
The council had not planned to join the council-controlled organisation that helps finance the local government sector before the next long term plan development process next year, as at the time it was not anticipated the council would have to borrow from external sources.
However, commitments to invest in infrastructure and other areas for longer than anticipated meant that changed.
Those included loans to the Observatory Village Lifecare Ltd ($8 million); the Kurow-Duntroon Irrigation Company (up tp $3 million); investment in the Oamaru Harbour to meet the objectives set out in the long term plan; investment in the Hamnak water and Moeraki sewer development projects; urgent maintenance at the North Otago Museum and Forrester Gallery, and decisions to bring forward the development of a second reservoir at the Oamaru Water Treatment Plant to improve water supply and security, and extend the term of the council’s North Otago Irrigation Company loan.
While a report to councillors from Mr Hope, who considered the matter “reasonably urgent”, said council officers agreed it “could have met its funding needs for the coming financial year from its existing bank facilities”, but the “potential impact of Covid-19 and council’s desire to support the community and stimulate the economy means that that approach is no longer financially prudent or desirable”.
“Circumstances have changed,” he said at the meeting.
“It seems appropriate to join this organisation as quickly as possible. There is very clear benefits for membership for councils.”
Waitaki Mayor Gary Kircher also supported the move.
“It’s certainly important to note that we are a net borrower. We have got quite a bit of money loaned out and being able to borrow in at a low rate and lend out at a higher rate has been quite good for the ratepayer, and it’s quite easy to support this on that basis.”
Councillors also moved to go out for public consultation on the issue and amend its Liability Management and Investment Policy where needed.