Public comment invited on council funding options

Hutt City Council is considering joining the New Zealand Local Government Funding Agency. The agency, whose membership is voluntary, currently consists of 18 local authorities. It came into existence in December 2011 and aims to raise funds for councils at lower interest rates than would otherwise be possible. Rates to date have been about 13 basis points, or 0.013%, lower than normal market levels. On every $10 million borrowed, this amounts to an annual interest saving of $13,000.

There are three possible ways in which the council could participate in the agency. The council is therefore seeking public comment on which it should choose (a fourth option, on which it also invites comment, is not to participate at all). It could take part as:

1.    A principal shareholding local authority. Under this option, the council must invest a minimum of $100,000 in the agency and act as a guarantor of the agency.

2.    A guaranteeing local authority. There is no obligation to invest under this option, but the council can, if it wishes, borrow more than would be possible under option three. As in option one, it would act as a guarantor.

3.     A borrower. Under this option, the council would neither have to invest in the agency nor act as a guarantor, but it would be limited to borrowing a maximum of $20 million at any one time.

The deadline for submissions is August 31. For more information and to make submissions, go to www.huttcity.govt.nz/haveyoursay Inquiries to David Woltman on 04 570 6939 or at david.woltman@huttcity.govt.nz