Council moves to secure windfall
2 September 2016
A short-term borrowing arrangement will return a $100,000-plus windfall to Waipa District Council.
The Council has taken advantage of a favourable difference in borrowing and investment interest rates. The borrowing is through the Local Government Funding Agency (LGFA). The LGFA is owned by New Zealand councils and allows shareholding councils to access funds at low interest rates.
Earlier this week an Executive Committee of Council, acting under urgency to secure the deal, authorised the borrowing and investment of $21.5 million at fixed rates of interest for six months. The money will be invested with highly-rated banks in line with Council's investment policy.
When it expires in February 2017 the money will be returned firstly to the Council, then to the LGFA in full. But the interest earned from the investment will be returned to the Council and used for the benefit of Waipa district ratepayers.
Waipa District Council entered into a similar financial arrangement in 2012, securing $70,000 in additional interest revenue.
Chief financial officer Ken Morris said Waipa could take advantage of such opportunities because of its relatively low debt levels and strong cash balances. The unaudited draft annual report released earlier this month showed Waipa's end-of-year debt was $13.2 million with a cash balance of $15.5 million. The annual report will be formally adopted by Council later this month.
For the financial year to June 30 2016, Waipa District Council earned $587,000 from investment funds. Money from this latest investment will be reflected in the 2016/2017 annual accounts.
Media enquiries, contact Jeanette Tyrrell (on behalf of council) 027 507 7599