Asset sales mooted to pay for rebuild

MARC GREENHILL
Last updated 05:00 05/12/2013

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Asset sales may be back on the agenda as the Christchurch City Council seeks to avoid a financial crisis over its likely earthquake insurance shortfall.

It emerged this week that the council may have to revisit its multibillion-dollar rebuild cost-share deal with the Crown because of overly optimistic predictions about its earthquake insurance payouts.

An agreement with insurer Civic Assurance on whether several of its key facilities - including AMI Stadium and the Christchurch Central Library - are repairs or rebuilds has not been reached and the council was banking on using the proceeds to help pay its share of central-city rebuild costs.

Canterbury Employers' Chamber of Commerce chief executive Peter Townsend said yesterday the council should explore all options, including asset sales or revising anchor project construction timelines - outcomes finance committee chairman Raf Manji did not rule out.

"[The council] needs to look at how much it's prepared to borrow, how much it's prepared to raise through rates, and whether or not it can realise cash through asset sales in the whole context of what is in the best interests of the wider community," Townsend said.

Manji would not be drawn on the possibility of asset sales because he had not reviewed the council's investment arm, Christchurch City Holdings Ltd.

"Until we've had a really close look at [the assets] I couldn't say, but everything will be on the table and we'll just have to do what we need to do to stay within our budgets and live within our means," he said.

The council planned to take a "prudent and very responsible approach" to its finances and had made it "very clear" to staff that rates should not increase.

"Whatever we need to do, we will do. We will live within our means and we cut our cloth according to the money that we have," Manji said.

It was "too early" to speculate about the possibility of renegotiating the cost-sharing agreement while the financial audit was ongoing.

He said "high-level" information from the audit would be known before Christmas, and greater detail would be available by February or March.

Mayor Lianne Dalziel said the previous council's commitment to the agreement regardless of the outcome of insurance negotiations was "irresponsible".

She had not been aware the "heart" of the arrangement - the council committing to its share of costs regardless of insurance proceeds - was signed by former chief executive Tony Marryatt and Christchurch Central Development Unit director Warwick Isaacs after the initial agreement.

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Dalziel would not comment on whether the agreement should be renegotiated but said assets sales were unlikely.

The council had to give the community "reassurance and direction" and could wait for insurance issues to be resolved before starting projects, she said.

Cr Yani Johanson, who voted against the cost-sharing agreement, said it was "premature" to suggest it should be renegotiated .

The stadium was one project that could be deferred and the metro sports facility had been delayed by a year already, he said.

- The Press

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