Last week’s decision by the Waitaki District Council to offer a conditional loan facility of up to $17 million to the North Otago Irrigation Company has no impact on council’s depreciation reserve fund, according to WDC chief financial officer, Paul Hope.
Mr Hope said while the reserves are to be invested in the irrigation company, the fund remains intact until it is required by council for its intended purpose of renewing district infrastructure.
During debate on whether to go ahead with the loan last week, Cr Hugh Perkins said that councillors had been provided with a forecast of funds required over the next few years from the depreciation reserve. He commented that a loan facility of $17 million would reduce funds to $500,000 which was “too low in those early years”.
Mr Hope said this comment referred to the amount of cash on hand that council would have at its lowest point in August 2016 if everything it was aware of, including a potential loan facility for the development of the hospital hill retirement village, went ahead.
He said forecasting cashflow to drop to $500,000 was a worst case scenario and a quarterly rates instalment valued at $3.5-$4 million would be received soon after this low point.
“We’ve got $13.5 million on deposit and in investments and we’ve still got lines of credit if there was a disaster in the district,” Mr Hope said.
“We would certainly have money available to address immediate needs and in the event of a disaster it would take months before significant repair work was undertaken.”
“Financial assistance would also be available from the crown.”
“It would need to be a catastrophic event for it to be a concern.”
By LINDA MCCARTHY