Sale of council assets mooted

Photo: ODT files
Photo: ODT files
Asset sales will be back on the table when the Dunedin City Council considers how to pay for future projects not yet in its budget, councillors have been told.

Council chief executive Sue Bidrose said yesterday potential options such as the sale of council companies, investment properties or cashing in the Waipori Fund would be considered during budget discussions next year.

The comment came after Dr Bidrose floated the possibility again during this week’s full council meeting, as councillors voted to lift the ability of the council group to borrow from $850 million to almost $1 billion.

The increase, supported by most councillors at Tuesday’s meeting, would allow the council and its companies to collectively borrow up to $975 million, although a specific council resolution would be needed to go beyond $927 million.

The extra headroom was needed as spending by the council and its companies was already forecast to push group debt up from $691 million this year to $927 million by 2022.

But, on Tuesday, Dr Bidrose told councillors lifting the debt ceiling would not be enough, and other steps - including asset sales - would also need to be considered by councillors as part of future spending discussions.

Councillors had considered selling investment properties before, to help offset the need to take on more debt, but had ruled it out.

Despite that, such a move would be put on the table again for councillors to consider as part of future deliberations, she said.

The investment property portfolio, including a factory in Auckland and a Bunnings building in Wellington, was together worth $93.5 million.

Dr Bidrose said it would take time to get such properties ‘‘sale ready’’, to maximise any profit, and councillors would need to consider any sales against the returns the properties generated for the council.

That needed a ‘‘thorough’’ analysis of the pros and cons, she said.

A report to Tuesday’s meeting by council financial and commercial general manager David Tombs, detailing the need to lift the debt ceiling, also said decisions about selling investment properties were ‘‘complex’’ and needed to be considered separately from the debt issue.

However, Dr Bidrose said other asset sales could also be considered again, including the future ownership of council companies and even the use of the council’s $92.7 million Waipori Fund.

The fund was generating investment returns for the council, which also needed to be considered as well, but cashing it in would be an option to be considered in future, she indicated.

All the pros and cons of asset sales compared to extra debt would need to be considered, and councillors would have to decide, she warned them.

Budget forecasts predict spending by the council and its companies on a variety of projects — like Aurora’s network upgrade — will push group debt up by almost $100 million a year over the next three years.

However, the council still has major unbudgeted expenses ahead, Dr Bidrose cautioned.

It had accelerated millions of dollars of spending on infrastructure renewals by bringing it forward from later years, which was ‘‘great’’, but councillors would now have to decide whether to add more money to the budget for those later years — and how to pay for it.

The council also had projects ahead, such as the need to commission a replacement for the Green Island landfill, which were yet to be budgeted.

Estimates of what that project alone could cost the council have ranged, from $20 million-$30 million suggested by staff to a figure of $100 million floated by Cr Jim O’Malley earlier this year.

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The most destructive force in history: debt.

Pawning your Gran's jewels isn't going to save you.

Finally some sense from the DCC- selling its surplus assets outside Dunedin. One would need to ask why were they done in the first place? We should benefit Dunedin assets first with our rates not some Auckland, or Christchurch real estate agent, lawyers etc. Further, Mr Tombs, were not all these "investments" funeded from debt?- so how can a decision be made without reference to that debt?. Shows the level of competency in this department.

For sale, one stadium, hardly used, would suit hobby showman with deep pockets.

Typically when companies look at ways to save money they look at layoffs and reductions in pay. Has this been considered? Didn't think so! Why would the council vote itself a pay raise given the debt levels? How does Bidrose justify her exuberant pay package given the cities debt level? Maybe its time to cut back on the number of people who work for DCC?

The level of economic incompetence on display would be hilarious if it was on a comedy show. Unfortunately this is reality.
When you sell off the assets which make money you are left with those that don't. And when you spend those short term gains on frivolities such as ego bridges and bike lanes, you are left with the the bill and reduced income to pay the bill off.

So in 3 to 5 years time council will once again be forcing massive rate increases onto long suffering citizens. For what? Ideological fantasies and ego projects.

Yes, and 5 years ago property here was largely very much affordable, as were the rates. It will all be covered by another round of exhuberant QV property valuation increases, so technically DCC can say they have only had meagre rates increases. Unless ofcourse they significantly lower the Capital Rate percentage on our statements....and we know the chances of that happening once they've sold grandma's jewels. Smoke, mirrors, strobelights and bridges to nowhere will continue to wow and mystify the masses. A lot can happen in 3 to 5 years, including DCC pay increases.

Someone else we all know did this, said the proceeds were going to go towards schools and hospitals.......
Did they?, Middlemore anyone....
Schools kept getting closed down.
Lets hope if our (rate payers) assets get sold then the proceeds don't go towards frivolities such as ego bridges and closing down streets but towards things like power pole replacement so we are not lumbered with the costs.

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