City asset sales back on the table
Consultants are being hired to review the Christchurch City Council's asset holdings as the cash-strapped organisation looks at how it can raise more money to pay its share of rebuild costs.
Strategic asset sales were ruled out by the previous council, but the new chairman of the council's finance committee, Cr Raf Manji, yesterday told The Press the council needed to explore all options for raising extra cash as it could not afford to borrow any more money.
It might need more money if the budgeted proceeds from insurance fall short and the rebuild costs escalate as financial experts predict.
Manji said that within the next couple of weeks consultants would begin a major review of the council's holding company, Christchurch City Holdings Ltd (CCHL), and the investments it was charged with managing.
The consultants would look at how the council could get extra capital from its investments, some of which were only returning the council a small dividend despite strong capital growth.
"We may look at some assets and say we might get more cash out of them by selling them, or we may believe we should hang on to all our assets because the dividend stream is so good," Manji said.
"What is clear is that there are lots of way of keeping control of an organisation without having to own it. "
The public would be consulted before any decisions were made.
An audit of the council's finances by KordaMentha, an advisory firm specialising in insolvencies and corporate recovery, is being done as part of Mayor Lianne Dalziel's pre-election pledge to open the council's books.
Interim findings released before Christmas revealed some significant issues, particularly around how much the council was expecting to receive in insurance payouts and how much it had budgeted for repairs to the city's horizontal infrastructure.
In the Three Year Plan (TYP) approved last year, the council assumed insurance claims would fund about $1 billion of the rebuild. So far, it has been paid just under $300 million.
KordaMentha has suggested the council needs to reprioritise its spending and look at how it can raise more money without going further into debt.
Manji was confident the strategic review of CCHL, coupled with KordaMentha's work, would identify ways of improving the council's financial health in the medium to long term.
Short-term, the council's budget was under strain and there would be no new spending in the draft 2014/15 Annual Plan, he said.
It was possible that some projects scheduled for the coming financial year would have to be deferred and some levels of service reviewed, but Manji said he was determined not to hike rates beyond the 6.5 per cent projected in the TYP.
The draft Annual Plan is due to be released for public consultation next month. KordaMentha is due to deliver the final findings of its audit by March 1.