Christchurch City Council has revealed today that it
faces a funding black hole of up to $900 million to help
rebuild the earthquake-wrecked city, and is set to start public
consultation on "at least a partial" sale of its assets.
An independent probe into the council's coffers has found
that if the rebuild is to continue at a satisfactory pace,
and for it to meet its debt requirements over the next five
years, the council needs more money.
It can't borrow any more, and today the council said the only
way it could bridge the funding gap without hitting
ratepayers with a 20 per cent rates rise is by "releasing
capita" from its assets.
Mayor Lianne Dalziel said that after reviewing the Cameron
Report, the second audit of the council's financial position,
the local authority would look to release up to $400 million
from its commercial arm, Christchurch City Holdings Ltd
The holding company has $2.6 billion of assets, including
power company Orion, Christchurch International Airport and
the Lyttelton Port Company.
Ms Dalziel said that while they needed to "look at all
available option" to solve the shortfall, she vowed to
"ensure the city maintains strategic control" of those key
The mayor said that before any decision was made about
releasing any capital from its assets, they would need public
consultation -- a process that will begin on September 4 --
the fourth anniversary of the start of the devastating
"From the financial reports we have received, and subsequent
analysis of those reports, we would be looking at releasing
up to $400 million from CCHL," Ms Dalziel said.
"Measured against the $8.3 billion council balance sheet, we
believe this is a moderate but prudent proposal."
The Cameron Partners report finds that the financial reasons
for the council owning the majority of its commercial assets
are "weak" and there is considerable scope for partial sale
where the council retains control.
It further says forecasts show at least $256 million in extra
funding is needed by 2019, which includes "headroom" of an
extra $150 million to cover unexpected expenses, like further
Mayor Dalziel said swift action was needed.
"We can't afford to sit on the sidelines any longer. We need
to make this happen," she said.
The report also warns of a coming rates rise, saying the
currently rate levels are low compared to Auckland and
The findings come in the second of two independent financial
audits ordered by Ms Dalziel last year vowing to "open the
The first report, by Australian financial consultants
KordaMentha, warned the council faced a $534 million rebuild
That report suggested five options: reducing rebuild costs;
negotiating with the Crown for more money; increasing council
rates; cutting spending; improving the performance of
investments or assets, or selling them off.
In a cost-sharing agreement put in place during the tenure of
the previous council, the Government has already agreed to
contribute $2.9 billion to the rebuild the council's share is
Today, the council's chief executive Karleen Edwards and
chief financial officer Peter Gudsell said they would also
need to work alongside the Government "as it is a major
current and future funder and investor" in Christchurch.
"In the spirit of co-operation, we will be working closely
with the Crown to ensure our budget processes and priorities
are fully aligned and that they promote the regeneration of
the city as a whole," Ms Dalziel said.