Hiking council debt for recovery

Gisborne District Council building

Gisborne District Council’s 2024-2027 Financial Strategy has been officially adopted to be included as part of the 2024-2027 Three Year Plan consultation document.

Councillors, sitting as Sustainable Tairāwhiti on Wednesday, briefly debated the draft strategy. Mayor Rehette Stoltz said the matter was straightforward as it had been discussed (and previously reported) many times before.

Replying to a question from councillor Colin Alder about whether the Government’s policy of 7.5 percent spending cuts in the public sector had “flowed through”, chief executive Nedine Thatcher Swann said they had not.

Cr Alder also asked if the council’s $15 million share of buying out 63 category 3 Future of Severely Affected Land houses (after Cyclone Gabrielle) would need to be updated.

Mayor Stoltz said it was an ongoing matter that would be updated.

The draft strategy was available for the public to view, she said. It showed how the council received its funding and how “we plan to look after it”.

“It’s about meeting the costs and maintaining our full services, and also protecting our environment in a financially sustainable way.”

The draft strategy for the next three years includes a higher initial spend in year one to address immediate recovery needs, with a proposed average rates increase of 11.3 percent.

Subsequently, the overall rates increase will be capped at 9.8 percent and 8.4 percent.

Major capital projects include roading emergency works, flood protection projects and the buyout of Category 3 homes.

The council’s debt will be kept below the draft strategy’s debt limit of 175 percent of income.

Over the next three years, the council plans to increase its net debt to $232 million — $82m more than the maximum of $150m set in its 2021-2031 Long-Term Plan.

Those additional loans are considered necessary to cover cyclone recovery costs.

Debt has been forecast out for 10 years, with a staff report on the 2024-2027 Financial Strategy saying the extended view was crucial for understanding what the council’s financial position was likely to be beyond 2027.

It assumes that three waters services will remain under council control throughout the 10-year period, enabling the council to show the full cost of services that it, and ultimately the community, is facing.

Peak debt over the 10-year span is forecast to be $247m in 2028-2029, decreasing to an anticipated $220m by the end of 2034.

The debt forecast assumes that starting from 2027-2028, a significant portion of council roading costs will fit within the NZ Transport Agency Waka Kotahi higher subsidised emergency assistance grant.

The debt forecast does not include potential costs that may arise for a new alternative water supply site. “Until we complete our investigation and modelling over the next three years, we cannot accurately forecast what this may cost.”

The consultation period is from March 20 to April 19, with public hearings due on May 15 and 16. Council deliberations will be held on May 30 and adoption of the 2024-2027 Three Year Plan is due on June 27.