Council overdraft hits $2.7m in July

Renovations to the Forrester Gallery, among numerous other projects, have contributed to the...
Renovations to the Forrester Gallery, among numerous other projects, have contributed to the Council shortfall. Photo: ODT files
The Waitaki District Council was up to $2.7million in overdraft in July.

Council accounting manager Ian Wells this week told councillors that as a short-term measure the council arranged for the use of a longstanding borrowing facility with the Bank of New Zealand, and raised the council's overdraft limit from $750,000 to $3million.

The council had "historically low available funds" at present, he said.

His report to the finance, audit and risk committee meeting on Tuesday states lending to the Observatory Retirement Village Trust and the Kurow-Duntroon Irrigation Company; increased funding for the Waitaki Resource Recovery Trust; and spending on the 34km water pipeline from Oamaru to Hampden and on the Forrester Gallery were all contributing factors to the present financial position.

The committee recommended the council adopt a treasury strategy for 2019-20 that would invest available funds to maximise returns and choose cost-effective arrangements "to limit external borrowings".

Cr Peter Garvan warned fellow councillors of the lure and danger of external loans.

"Once you've cracked the precedent, you can borrow $3million, you can borrow $6million, you can borrow $9million," he said.

In June, the Otago Daily Times reported upcoming harbour projects could require the council to take on an external loan for the first time in five years.

Council finance and corporate development group manager Paul Hope said at the time the council's quarterly treasury report reflected a recently adopted treasury strategy to keep "as little cash" as possible in accounts that paid no interest.

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