At a media briefing last week on the Auditor-general's critical report on Delta Utility land purchases, and subsequent losses in Central Otago are (from left) Dunedin Mayor Dave Cull, DCC chief executive Dr Sue Bidrose and DCHL chairman Graham Crombie. Photo by Peter McIntosh.
International rating agency Standard and Poor's (S&P) has
left the Dunedin City Council's credit rating unchanged in
the wake of a critical report on council-controlled Delta
Utility's unsuccessful foray into Central Otago property
S&P said in a statement yesterday its rating on the DCC,
of AA/Stable/A-1+, was unaffected following the
Auditor-general's release of an inquiry into property
investments by Delta Utility, at Luggate and Jacks Point, the
latter near Queenstown.
An S&P downgrade rating means an organisation's risk
profile increases and borrowing money becomes more expensive.
Delta spent $14.17 million on the properties in 2008-09, but
now expected to book a loss of in a range of $6.4
million-$8.7 million; to be confirmed by the end of the year,
Auditor-general Lyn Provost said in her report, which has
taken a year to complete.
S&P said yesterday its unchanged DCC ratings reflected
its view that there was a ''low likelihood'' that the
Auditor-general's inquiry would report significant adverse
findings on the council's current management structure.
In 2012, the DCC reviewed the governance arrangements of its
council-controlled trading organisations and took steps to
strengthen their management and oversight, S&P said.
Also, in 2013 the DCC appointed a group chief financial
officer with an expanded role, including the provision of
financial advice and support to the board of Dunedin City
Holdings Ltd (DCHL).
''This new role should, in our view, help strengthen the
organisation and improve the co-ordination of financial
management between the council and DCHL,'' S&P said.
While the Auditor-general credited Delta for considering the
investments cautiously and carefully, and avoiding conflicts
of interest, it listed failings which contributed to the
Delta had failed to adequately assess the investment risks,
take appropriate advice, and there were breaches of the Local
Government Act and the Companies Act.
Delta's directors were cleared of any conflict of interest or