Southland District Council to borrow $67m as capital works program ramps up
Southland District Council takes out long-term loans for the first time.
Southland District Council plans to borrow more than $67 million this year as its capital works program ramps up.
So far, the board has used its cash reserves and short-term borrowings, but has now taken on long-term borrowings for the first time.
Many capital projects are underway in the council’s long-range plan, with assets such as roads and bridges needing renewal or replacement.
The council’s chief financial officer, Anne Robson, said the long-term borrowing was necessary to maintain service levels.
* Southland District Council finance boss: ‘Rates aren’t always fair’
* Tong says board not ‘deaf’ amid concerns over proposed rate hike
* Debt-ridden Kāpiti council’s investment plan is ‘unusual’, auditor-general warns
His report to councilors at a finance committee meeting on Friday proposes that the council borrow $67.1 million before the end of June with an average interest rate of 3.3%.
However, the total amount borrowed may vary depending on the course of the capital program, given the potential disruptions of the coronavirus pandemic.
A fund manager would be hired to invest some of the money, with the plan being for $41 million to initially go to the fund manager and the remaining $26 million to be used for capital work over the course of the year. ‘year.
Committee chair Bruce Robertson said the board would only need the full $67.1 million if it could complete its planned capital works program.
Given that, borrowing the $67 million would be a “good thing” because it meant the council was implementing the program, he said.
Robertson, after the meeting, said the money should be spent on roads, bridges, storm water and community assets such as playgrounds and halls.
“We need to spend this money so that Southland has the assets to maintain and grow its services.
“We have an extensive road network and community assets that need to be maintained. They are coming to the end of their cycle and we need to be able to renew them and we need to be able to borrow to do that.
The council’s long-range plan says its overall borrowing is expected to grow from $20 million to $197 million over the next decade, but that was based on the council owning its three waters – stormwater, sewage and drinking water.
Since then, the government has proposed that four major entities take control of the councils’ three waters.