DCC company dividends at maximum level

Dunedin City Council staff have given the city's elected representatives a clear message there is no more money to be squeezed from the council's group of companies.

The six companies - Citibus, Aurora Energy, Delta Utility Services, City Forests, Dunedin City Treasury and the Taieri Gorge Railway - have been paying increasing dividends to the city to offset rates in recent years.

But council chief executive Jim Harland said the next financial year was the last in which increases could be sustained.

In the last financial year, Dunedin City Holdings Ltd (DCHL) was able to contribute $20.7 million in dividends and cash payments to the council.

Mr Harland said in his report to the annual plan hearings committee DCHL had transferred increasing sums to the council over the past four years, to an agreed timetable.

The 2008-09 increase was $3.3 million, bringing the total transferred in that year to $23.1 million.

"These increasing steps have materially offset the impact of rates increases: 2009-10 is the last year this can be done."

Mr Harland said this week the companies had "a certain capacity" to provide dividends, but if that was pushed too hard, there was the possibility of cashflow and liquidity problems.

"We are conservative managers," Mr Harland said, and it was appropriate, and prudent, to leave the figures where they were for the decade.

Finance and corporate support general manager Athol Stephens said the dividend might be considered again in two or three years time, but for now it should be left as it was.

The pre-draft community plan document said from 2011-12, assuming the stadium proceeded, the cash from the companies would fall by $5 million per annum, a sum required to service stadium debt.

"In short, 2009-10 is the last year of the decade covered by this plan that [the] council can reasonably expect to see increases in council controlled trading organisations' contributions for offsetting rate increases."

 

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