Wellington Signs up to New Funding Agency

Wellington Mayor Celia Wade-Brown says the New Zealand Local Government Funding Agency Limited (LGFA) will provide a lower-cost source of finance for council projects.

Mayor Wade-Brown and Deputy Mayor Ian McKinnon have signed the necessary documents to formally confirm Wellington's role in the agency.

The LGFA will lower borrowing costs, Mayor Celia Wade-Brown says.
Wellington City Council, along with the Government and 17 other local authorities, has invested in the LGFA. Wellington City has made an initial capital investment of $2 million.

By using the LGFA, it is estimated the Council will make annual savings on its borrowings rising to between $370,000 and $740,000 by 2019 with the annual savings continuing in to the future.

Mayor Wade-Brown says the global financial crisis, especially as it hits Europe, has shown the importance of maintaining affordable access to funding. "The LGFA will increase our options for access to secure long-term funding."

The LGFA is a council-controlled organisation (COO) operating under the Local Government Act 2002. Its impact on New Zealand's capital markets will be significant, as it will provide investors with a new source of fixed-income securities rated at AA+ (domestic) by international ratings agencies Standard and Poor's and Fitch. These ratings are the same as those accorded the Government.

Councillor McKinnon says the establishment of the LGFA follows more than three years' work by key councils, including Wellington City, along with Local Government NZ and the Crown.

The LGFA has been established with six foundation directors:

• Craig Stobo (Independent Chair)
• Abbey Foote (Independent)
• Phil Cory-Wright (Independent)
• John Avery (Independent)
• Mark Butcher (Treasurer - Auckland Council)
• Paul Anderson (Corporate Services General Manager - Christchurch City Council)

Phil Combes, Deputy Secretary of the Treasury and Head of the NZ Debt Management Office, has been appointed Chief Executive of the LGFA. He will take up his Wellington-based role in the New Year.

The local authority shareholders are:

• Auckland Council
• Wellington, Christchurch, Tauranga and Hamilton cities
• Bay of Plenty and Greater Wellington regions
• Hastings, Masterton, New Plymouth, Otorohanga, Selwyn, South Taranaki, Tasman, Taupo, Waipa, Western Bay of Plenty and Whangarei districts.

The Government is a 20% shareholder. Additional councils have agreed to join in 2012.