Council seeks further $5m hike to debt cap

Series of changes proposed for draft LTP.

Series of changes proposed for draft LTP.

Gisborne District Council’s debt cap will be lifted $30 million to $85m, with a further rise to a maximum of $105m in year four of the draft 2018-2028 Long-Term Plan, if a staff recommendation is adopted tomorrow.

The finance and audit committee is being asked to approve bigger debt increases than have been consulted on for the draft Long-Term Plan (LTP), which proposed the debt cap move from $55m to $80m from the July 1 start of the LTP, then $100m from 2022.

The 2017/18 annual plan budgeted for a closing debt position of $49.5m, but council borrowing was now forecast to be $1.75m higher at $51.25m at the end of June due to end-of-year provisions and to allow for $4.8m of budget carryovers across 10 projects that would not be completed by July 2018.

Raising the debt cap is one of several changes that chief financial officer Pauline Foreman is recommending the council make that are separate from the LTP consultation programme.

There were also specific areas where asset managers were concerned with critical health and safety risks, such as vehicle replacements over the course of the LTP. New information from an independent fleet management company meant an extra $300,000 a year should be set aside for each of the final three years of the LTP.

The committee is also told that the draft LTP did not account for the Government’s plan to raise the minimum wage to $20 by 2021, so provision had been made to allow an increase of $35,000 annually from 2021.

Renegotiation of the lease for Awarua, the main council offices, meant rental costs had to be increased. Additional dividend revenue from Gisborne Holdings Ltd was allowed for to offset this.

The report also says that the proposal to have an extra city ward councillor, which the council has submitted to the Local Government Commission, would require an extra $40,000 a year (stating how this would effect the coming year’s rate rise, by 0.07 percent, was meant as an illustration only) from after the 2019 election, if approved.

Proposed changes would also allow corrections to be made to the LTP so that it would align with the Regional Land Transport Programme. Adjustments were mostly inflationary changes to operational costs and capital projects in years two and three of the LTP.

To questions from The Herald, Mrs Foreman said the actual forecast increase in debt was $6m.

The main reason the debt cap had been increased was a combination of a slightly higher opening debt at the start of the LTP and the carryover of projects that were to have been completed before the start of the LTP.

At the time the draft 2018/2028 was adopted a number of capital projects were not going to go ahead. These projects were now forecast to be completed.

The slightly higher opening debt was not a result of the end-of-year forecast surplus being $5.4m less than budgeted. That was primarily due to the expectation of about $6m in capital grants for the Olympic Pool and Lawson Field Theatre, projects that had now shifted into the 2018-2028 LTP.

The council was not considering moving to a living wage. This term was used in error, the report should have read “increase to the minimum wage”.

Gisborne District Council’s debt cap will be lifted $30 million to $85m, with a further rise to a maximum of $105m in year four of the draft 2018-2028 Long-Term Plan, if a staff recommendation is adopted tomorrow.

The finance and audit committee is being asked to approve bigger debt increases than have been consulted on for the draft Long-Term Plan (LTP), which proposed the debt cap move from $55m to $80m from the July 1 start of the LTP, then $100m from 2022.

The 2017/18 annual plan budgeted for a closing debt position of $49.5m, but council borrowing was now forecast to be $1.75m higher at $51.25m at the end of June due to end-of-year provisions and to allow for $4.8m of budget carryovers across 10 projects that would not be completed by July 2018.

Raising the debt cap is one of several changes that chief financial officer Pauline Foreman is recommending the council make that are separate from the LTP consultation programme.

There were also specific areas where asset managers were concerned with critical health and safety risks, such as vehicle replacements over the course of the LTP. New information from an independent fleet management company meant an extra $300,000 a year should be set aside for each of the final three years of the LTP.

The committee is also told that the draft LTP did not account for the Government’s plan to raise the minimum wage to $20 by 2021, so provision had been made to allow an increase of $35,000 annually from 2021.

Renegotiation of the lease for Awarua, the main council offices, meant rental costs had to be increased. Additional dividend revenue from Gisborne Holdings Ltd was allowed for to offset this.

The report also says that the proposal to have an extra city ward councillor, which the council has submitted to the Local Government Commission, would require an extra $40,000 a year (stating how this would effect the coming year’s rate rise, by 0.07 percent, was meant as an illustration only) from after the 2019 election, if approved.

Proposed changes would also allow corrections to be made to the LTP so that it would align with the Regional Land Transport Programme. Adjustments were mostly inflationary changes to operational costs and capital projects in years two and three of the LTP.

To questions from The Herald, Mrs Foreman said the actual forecast increase in debt was $6m.

The main reason the debt cap had been increased was a combination of a slightly higher opening debt at the start of the LTP and the carryover of projects that were to have been completed before the start of the LTP.

At the time the draft 2018/2028 was adopted a number of capital projects were not going to go ahead. These projects were now forecast to be completed.

The slightly higher opening debt was not a result of the end-of-year forecast surplus being $5.4m less than budgeted. That was primarily due to the expectation of about $6m in capital grants for the Olympic Pool and Lawson Field Theatre, projects that had now shifted into the 2018-2028 LTP.

The council was not considering moving to a living wage. This term was used in error, the report should have read “increase to the minimum wage”.

Your email address will not be published. Comments will display after being approved by a staff member. Comments may be edited for clarity.

Poll

  • Voting please wait...
    Your vote has been cast. Reloading page...
    Do you support the new identity and wellbeing focus of Trust Tairawhiti (formerly Eastland Community Trust)?