Big question now is council response

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Opinion

The challenges of the past year that led to Gisborne Holdings Ltd’s board deciding they could not pay GHL’s council owner $2.5 million of anticipated income also seem to have helped unify their thinking. The directors didn’t appear to be entirely on the same page when GHL’s predicament was first outlined publicly at its AGM last year; at Thursday’s 2023 annual meeting there was clear unanimity.

That predicament is chiefly an owner that wants a steadily rising dividend stream to offset demands on ratepayers, and a portfolio of assets now worth $139 million that is poorly suited to delivering this.

Along with the impacts of Cyclone Gabrielle on GHL’s dominant asset, Tauwhareparae Farms, the board has undertaken a comprehensive review of its strategic position over the past year and has now delivered a draft five-year strategic plan to the council.

The board sees an opportunity to recycle capital into assets/rebuilding projects the community needs, potentially alongside iwi, Trust Tairāwhiti or Eastland Group, as well as investing in a managed fund that earns better returns than its current portfolio — a large farming operation, properties (mostly rented by Gisborne District Council), the Top 10 Holiday Park and the Wash’n Go auto wash.

GHL’s proposal put to the council is to review its ownership of all assets except the holiday park (5 percent of its assets by value). It expects the plan to be signed off in early November.

The big question is what the council thinks, especially with regard to the farms — ie, the majority position among councillors and the Mayor. We’ve been here before with previous councils where the majority has been against; a likely key determinant now would be any shared view among the five new Māori Ward councillors.

One other big difference from the discussion around this at last year’s AGM, when surging farm values due to a high carbon price — ie, for forestry conversion — were described by the GHL chairman as like being offered $100 for a $50 bill, was an indication any sale would likely involve the Crown and mana whenua.

After council consideration there would  be community consultation and the whole process, if going ahead, could take a few years.

GHL reduced its debt by $4.6m during the financial year, related to the properties it sold at Childers Road (part of the former St Mary’s site) and Banks Street (sold to the council for the stage two upgrade of the city’s wastewater treatment plant) as well as normal debt repayments.

That might not have sat well with its owner then denied a declared $2.5m of income from its commercial assets.

There was also mention at the AGM of a “dispute” with the council over a property.