Councils still owed more than $1m after fire merger

Otago councils have been left out of pocket by more than $1 million in loans to the Otago Regional Fire Authority following its switch to Fire and Emergency New Zealand.

During the setting up of the Otago Regional Fire Authority (ORFA) in 2014, each council in Otago transferred ownership of its operational assets by way of a loan to ORFA.

The five councils were Clutha, Central Otago, Queenstown-Lakes and Waitaki district councils and the Dunedin City Council.

The loans were equal to the book value of the assets in each district and totalled $1,162,591, excluding GST.

Operational assets of ORFA were transferred to Fire and Emergency New Zealand (Fenz) last July, leaving the setup loans of ORFA still outstanding to four of the five councils.

Queenstown-Lakes District Council chief executive Mike Theelen said the council had not approached Fenz regarding the outstanding $267,290.

"We are aware that other councils are in discussions with Fenz and we await the outcome of these discussions with a view to [our council] being treated in a similar way.''

Mr Theelan said the council did not expect the operational assets loan would be repaid.

There had been no official council discussions in relation to the loans.

Clutha District Council regulatory services group manager David Campbell expected the loans from the councils to be sorted out when ORFA was "wound up''.

"We're still waiting on it to be wound up and a decision on what is to happen to those loans.''

CDC's $34,491 loan was on the "lower end'' of the scale, Mr Campbell said.

A Waitaki District Council spokeswoman said there was an outstanding balance of $285,145.08 owed to the council at June 30 this year and interest was not being charged.

She said the question had been asked of Fenz whether any of the councils in New Zealand would be reimbursed.

The Mayoral Forum was still awaiting a response.

The council will consider what action to take both at regional level and at a district level based on the response from Fenz, the spokeswoman said.

WDC had only discussed the outstanding loans in councillor briefings.

A Dunedin City Council spokeswoman acknowledged it had a loan with ORFA.

However the sum was not outstanding, the spokeswoman said.

Under the terms of deed agreement, it was not to be repaid until June 2018 at the earliest.

CODC corporate services executive manager Bernard Murphy said the loans were discussed at the last Mayoral Forum. Fenz was asked to provide feedback on the issue.

Options are to be presented to the council and it had not formally discussed the loans. Some options presented in CODC meeting agendas included whether the council should pursue recovering the $426,988 or write it off.

One of the disadvantages of seeking the outstanding figure was noted as being inconsistent with other councils' "more passive approach''. However the item was withdrawn from later meetings.

Further information was to be sought from other the other councils, the October meeting agenda stated.

Whether Fenz will pay the outstanding loans remains unclear. In response to several questions including whether councils could expect the loans to be repaid and when, whether there were any meetings or negotiations planned, Fenz chief financial officer Brett Warwick said any decisions on loans would be made in discussion with the councils.


 

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