Council approves release of asset transfer document

Proposes to transfer two assets to its wholly-owned, council-controlled organisation GHL on July 1.

Proposes to transfer two assets to its wholly-owned, council-controlled organisation GHL on July 1.

A PROPOSED public discussion document on the transfer of the Waikanae Beach Top 10 Holiday Park and Vehicle Testing Station to Gisborne Holdings Ltd does not tell the whole story, says councillor Amber Dunn.

But the majority of councillors disagreed and approved the release of the document. The council is proposing to transfer the two assets to its wholly-owned, council-controlled organisation GHL on July 1, 2016.

The consultation document was released today and the consultation period is until Friday, June 3.

In a separate decision, the council decided to delay the appointment of another director with commercial experience to the board of GHL until the transfer of the assets was completed. This would likely coincide with the annual appointment of directors in August-September.

Amber Dunn said her primary concern with the document was that she did not think it was telling the whole story.

“I think we should be sharing the not-so-rosy aspects of this deal” she said.

For example, it should state that immediately upon the transfer the council would lose a flow of income of more than half a million dollars. That loss was from internal charges and distributions, and it would be offset by organisational efficiencies and savings within current budgets.

The council should also state, as was said in the report from consultants PWC, that in the short term the GHL distributions to the council were not going to change as a result of these transfers.

No business plans

Also they should say that in the short term the council was not expected to receive any improved profits from the testing station, or the holiday park, and that there were no business plans to show how the council would improve their profitability.

“If we acknowledge those aspects it paints quite a different picture and it had me asking why aren’t we delaying the transfer until the GHL income actually covers our loss of income to the council,” she said. “To me that makes a lot more sense.

“Shift the assets to a purely commercial space after we can ensure that the dividend covers that cost. I would really like to see that consultation document give the full story to the public.”

Chief executive Judy Campbell said GHL had said to the council that the dividend would increase to the point where while it did not cover the overhead, it covered the profit that would have come from the commercial entities.

“The overhead is not the company’s problem. the overhead is the council’s problem and specifically my problem,” she said.

Operations group manager Barry Vryenhoek said the operating expense savings required was looking at this stage at being somewhere between $43,000 and $134,000, which was a lot better than the original figures.

He hoped it was going to be even better by the time the dividend was paid. To be fair to GHL it was probably a bit early for them to develop their business plan because of the uncertainty, he said.

This now provided certainty and would allow the council to look at this on a quarterly or six-monthly basis through its performance, audit and risk committee.

There was little the council had invested in these two assets and it was unrealistic to think the council would invest in them through ratepayer or loan funding.

“That is the discussion, that we may be actually constraining these two potential assets in the current market,” he said.

Craig Bauld said the council should remember that the feedback that would come in was not a popularity contest. It was about the arguments people made and the worth of them.

A PROPOSED public discussion document on the transfer of the Waikanae Beach Top 10 Holiday Park and Vehicle Testing Station to Gisborne Holdings Ltd does not tell the whole story, says councillor Amber Dunn.

But the majority of councillors disagreed and approved the release of the document. The council is proposing to transfer the two assets to its wholly-owned, council-controlled organisation GHL on July 1, 2016.

The consultation document was released today and the consultation period is until Friday, June 3.

In a separate decision, the council decided to delay the appointment of another director with commercial experience to the board of GHL until the transfer of the assets was completed. This would likely coincide with the annual appointment of directors in August-September.

Amber Dunn said her primary concern with the document was that she did not think it was telling the whole story.

“I think we should be sharing the not-so-rosy aspects of this deal” she said.

For example, it should state that immediately upon the transfer the council would lose a flow of income of more than half a million dollars. That loss was from internal charges and distributions, and it would be offset by organisational efficiencies and savings within current budgets.

The council should also state, as was said in the report from consultants PWC, that in the short term the GHL distributions to the council were not going to change as a result of these transfers.

No business plans

Also they should say that in the short term the council was not expected to receive any improved profits from the testing station, or the holiday park, and that there were no business plans to show how the council would improve their profitability.

“If we acknowledge those aspects it paints quite a different picture and it had me asking why aren’t we delaying the transfer until the GHL income actually covers our loss of income to the council,” she said. “To me that makes a lot more sense.

“Shift the assets to a purely commercial space after we can ensure that the dividend covers that cost. I would really like to see that consultation document give the full story to the public.”

Chief executive Judy Campbell said GHL had said to the council that the dividend would increase to the point where while it did not cover the overhead, it covered the profit that would have come from the commercial entities.

“The overhead is not the company’s problem. the overhead is the council’s problem and specifically my problem,” she said.

Operations group manager Barry Vryenhoek said the operating expense savings required was looking at this stage at being somewhere between $43,000 and $134,000, which was a lot better than the original figures.

He hoped it was going to be even better by the time the dividend was paid. To be fair to GHL it was probably a bit early for them to develop their business plan because of the uncertainty, he said.

This now provided certainty and would allow the council to look at this on a quarterly or six-monthly basis through its performance, audit and risk committee.

There was little the council had invested in these two assets and it was unrealistic to think the council would invest in them through ratepayer or loan funding.

“That is the discussion, that we may be actually constraining these two potential assets in the current market,” he said.

Craig Bauld said the council should remember that the feedback that would come in was not a popularity contest. It was about the arguments people made and the worth of them.

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