Loan vote provides certainty
Stage two of the North Otago Irrigation Company's (NOIC) irrigation scheme is one step closer to becoming a reality.
At its meeting on Wednesday, the Waitaki District Council unanimously agreed in principle to extend the company's investment from the council to $22 million, from $12.5m, and extend the term of the loan from 2016 to 2022.
A final decision will not be made until September 17, which allows the NOIC to do due diligence and negotiate what the terms of the loan will be, including the interest rate.
In 2006, the council loaned the NOIC $10m, which has accrued $2.5m in interest, to expand infrastructure for stage two of its already 10,000-hectare irrigation scheme.
Stage two of the project covers a further 10,000ha.
Waitaki Mayor Gary Kircher said ratepayers would benefit from an increased return on the loan. The money would earn more interest than if it was sitting in a bank account.
"Essentially, it's an investment deal, but it's an investment in our community instead of a bank. There is some risk in it, but on the other hand, if stage two goes ahead there will be significant benefits through economic growth.
"[NOIC] will be able to pay the full loan at the end of the term but will pay interest back as they go, so it's a bit like a bank loan."
Kircher said the decision on the loan would be "the biggest" the council would make from an economic point of view this term.
He said it gave North Otago farmers more assurance that stage two of the scheme would go ahead, and also "made sure" farming options other than dairying were viable.
While dairying is a vital part of the North Otago economy and has grown significantly in recent years, Kircher said he did not want to see it dominate the landscape.
"We don't want to see wholesale dairy conversions to the whole region. We want to see that diversity in our farming is maintained."
The NOIC scheme covers downlands around North Otago as well as areas in the Waiareka and Waitaki valleys.
A recent social and economic benefit report showed there had been a $48m increase in gross domestic product in the local economy and the creation of 274 jobs since the scheme commenced in late 2006.
- The Timaru Herald