Waipori Fund debated

The Dunedin City Council could switch the way it budgets for income from its Waipori Fund investments, despite concerns ratepayers could be left with a bill.

Councillors at Monday's 2013-14 pre-draft annual plan budget meeting considered a report on the fund by council finances and resources general manager Athol Stephens.

His report suggested the council could obtain more from the $74 million fund if the mix of investments in equities, bonds and a building was changed.

A stronger emphasis on property investments could generate an extra $350,000 a year for the council's coffers from 2013-14, he said.

It was a boost councillors were now already budgeting for, following other decisions made on Monday to accelerate stadium-related debt repayments.

The fund had, over the last decade, generated average yearly returns of nearly $3.2 million for the council, reducing rates by about 3% each year. The fund grew from $57.4 million to $74.5 million over that period.

Mr Stephens' report considered three options for the future of the fund, from selling the fund to pay back council debt, to lending funds directly to the council or investing more heavily in property providing higher returns.

Councillors supported the greater emphasis on property, but Cr Jinty MacTavish went further.

Instead of forecasting returns and budgeting for them, she wanted council staff to investigate taking proceeds from investments only after they were earned.

Her suggestion won support from deputy mayor Chris Staynes, although he doubted it could be implemented ''any time soon''.

Cr Syd Brown, chairman of the council's finance, strategy and development committee, was more concerned, saying it would be achievable only if the council took a ''breather'' from the fund's income for a year.

That would result in ratepayers facing an extra 4% rates hike to cover the shortfall from the fund for a year, he warned.

Cr Lee Vandervis suggested the fund could yet be cashed in to repay council debt, saying the council should look ''at what may be done with the Waipori Fund versus the debt that we carry''.

Cr MacTavish stuck to her guns, saying the change would remove risk and uncertainty for the council's budget.

However, she suggested a transition over years could also be investigated, to ease the burden on ratepayers.

''I would like to think we could do it sometime in the next decade,'' she said.

Cr MacTavish also asked for changes to the fund's policy document, including an emphasis on the need to protect its capital over the long term, to ensure the fund's survival.

Councillors voted to accept the recommendations, including Cr MacTavish's requests.

The change would be part of the draft annual plan to be released for public consultation in March.chris.morris@odt.co.nz

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