Christchurch City Council releases milestone report

Christchurch City Council today released a milestone report on options for managing the financial challenges and maximising the opportunities arising from the earthquakes.

The Cameron Partners report says the Council may need to find an additional $783 million to $883 million by 2019. The total amount of extra funding required will depend on issues such as the planning of anchor projects, spending on infrastructure repairs, and the level of insurance payments.

Options Cameron Partners proposed for closing the funding gap include increasing rates, borrowing more, maximising insurance payments, and freeing up capital from its commercial assets.

Mayor Lianne Dalziel commissioned the Cameron Partners report and the earlier KordaMentha report as part of an “opening the books” exercise to clarify the Council’s true financial position.

She says the latest report shows that, despite the tough choices ahead, the Council has a strong balance sheet.

“We have gross assets worth $8.3 billion, with $2.6 billion of that owned by our commercial arm, Christchurch City Holdings Ltd. But we also have reduced revenues as a result of the earthquakes, as well as unsustainably high debt levels. We can’t borrow any more.

“This means we must look at all available options to solve the potential shortfall in funding. We need to come up with a carefully considered and robust financial strategy that protects the future economic and social health of Christchurch.”

The Mayor says it is clear as well as other options, such as reducing operational spending and government assistance, releasing capital is the only way the Council can address uncertainty around its finances.

“From the financial reports we have received, and subsequent analysis of those reports, we would be looking at releasing up to $400million from CCHL. Measured against the $8.3 billion Council balance sheet, we believe this is a moderate but prudent proposal.”

She says the Council will be looking for options which ensure the city maintains strategic control of its key infrastructure assets – Christchurch International Airport, the Lyttelton Port Company and electricity supplier, Orion.

The Mayor says that before any decision is made about releasing capital from the city’s commercial assets, public consultation is vital. The period of consultation will begin on 4 September, the fourth anniversary of the earthquake sequence.

“Creating financial certainty will attract much-needed investment in the rebuild. We want to work alongside Canterbury Earthquake Recovery Authority (CERA) to scope the possibilities for a one-stop landing point for both local and foreign investors.

“This would help speed recovery by providing a long-term focal point for economic development and a clear and stable point of entry for private capital. It could also act as a focal point for joint venture, private and public investment and could take a proactive approach to development projects that can drive economic, social or special interest outcomes.”

The Mayor and CEO also intend to invite an expert advisory group/ think tank to work with the Council on developing a Long Term Plan that will shape the city over the next decade and beyond.

Council Chief Executive Karleen Edwards will also be working together with CERA and Treasury on a review aimed at resolving the outstanding issues about the timing of, and relative contributions to the repair of horizontal infrastructure. “In the spirit of cooperation 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,” Lianne Dalziel says.

“Christchurch will be a safe haven and a place of opportunity where any thing is possible. We can’t afford to sit on the sidelines any longer. We need to make this happen. I am convinced that, with the support of all the communities that make up our city and central government standing alongside us, we can and will.”

A full copy of the report is available on the Council's website at www.ccc.govt.nz

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