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Crisis forces Christchurch to sell assets

Christchurch Mayor Lianne Dalziel says her council will look at “releasing capital” from the city’s investments.

She made the comment at a media conference this morning when releasing a Cameron Partners report into solutions for the city’s post-quake finances.

Ms Dalziel highlighted the value of city assets of $8.3 billion, with $2.6 billion of that owned by the commercial arm, Christchurch City Holdings.

“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.”

She says other options must be considered aside from reducing operational spending and government assistance.

Releasing capital is the only way the council can address uncertainty around its finances, she says.

Ms Dalziel says the council will be looking for options which ensure the city maintains strategic control of these assets, which may mean retaining 51% stakes.

Cameron Partners highlights current expenditure on council’s Canterbury Development Corporation and Christchurch, and Christchurch and Canterbury Tourism, which each take more than $5 million in annual funding; plus its events management company Vbase which has annual overheads of $9 million.

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

The Cameron Partners report says the council may need to find an additional $783 million to $883 million by 2019 – depending on the timing of delivering a convention centre and stadium, spending on infrastructure repairs, and the level of insurance recoveries. Options also include deferring anchor projects such as a proposed rugby stadium estimated to cost upwards of $500 million.

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.

On current forecasts the council would breach local government lending thresholds if it continues to fund all projects without either “releasing capital”, massive rates rises.

Traditionally, residents and councillors have shunned the sale of the city’s stakes in Lyttelton Port, the airport, Orion lines company, City Care, and the bus company.

c.hutch@clear.net.nz

More by Chris Hutching

Comments and questions
6

Partial Asset Sales eh... by a Labour Mayor too no less...

It must be heart breaking for her to have to live within a budget and simply not be able to borrow Millions more, spend like a drunken sailor like her socialist comrade and other Labour Mayor in Auckland does.

Still, at least she will learn all about "living within your means" and then she can pass on the education to her friends/comrades/colleagues in Labour & the Greens for them to also learn.

Your rants are as predictable as they are boring and wrong. There are plenty of times when a government, council, business, or private citizen may find it prudent to spend more than they bring in for a while. For example, we've just had a global economic downturn where government revenues are lower than normal, and a major earthquake after which costs are much higher than normal. It makes perfect sense to spend more during the bad times and pay it back during the good. Which is exactly why Labour paid down the debt during the boom in the 2000's, and National is now borrowing during the downturn.

Unfortunately you don't seem to let facts get in the way of your rabidly religious ideology and hatred of anything even slightly "left-leaning".

"Which is exactly why Labour paid down the debt during the boom in the 2000's, "

Which was why Cullen was bragging about leaving the fiscal cupboard bare for the incoming National government...

As inconvenient as history might be for you, no amount of wishful thinking otherwise can alter the facts of Labour's attitude and woeful ineptitude when it comes to anything to do with money - except to not pay their fair share - eh Mr. McCarten.

Dave you said "...spend more during the bad times and pay it back during the good. "

Guess you did not read this part of the article:

“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.”

You thinking of letting the council use your own credit card and rack up a few mil? They will pay it back. Honest!

Hope Rob Cameron didn't get paid a fee for this dribble. The report states the obvious. Ngai Tahu will buy the Airport which it has always wanted. Game over

It is obvious, but that doesn't mean it's not worth saying. Other people have made the same point and the CCC hasn't taken a blind bit of notice. If this report causes them to finally do so, then it's worth every cent (which would itself be a singular outcome where the CCC is concerned).