Loans and liabilities
Kevin Wells (letters, October 3) asked “does the council use ratepayers properties as security for loans and [deputy chief executive] Ken Morris replied “No, council does not own the properties”.
The council only see our properties as rating units. As I understand it, if our council were to go into receivership , all debt owed to the Local Government Funding Agency could be put onto our rates. Similarly if a council in another area who also borrow from the LGFA should not be able to repay the loans, that debt could also go onto rates throughout the country. So the fact that so many councils have taken on so much debt, for so many things ratepayers do not want and have had little say on, should be a worry to all ratepayers. Most would not be able to pay all these extra rates, so our properties could be sold to recover money owed on loans
Norma Mackie
Cambridge
Council deputy chief executive Ken Morris responds:
Ken Morris
Our borrowings are secured via a Debenture Trust Deed. This mechanism is used right across the New Zealand Local Government sector. There are prudential limits on council’s level of borrowing, for instance through debt covenant provisions which are set and closely monitored.
These provisions ensure ours, and other council’s, debt levels don’t get to the point where there is any significant risk of default. Furthermore, Waipā District Council has a strong AA- credit rating with a stable outlook by international rating agency Fitch. It has held this rating for seven years in a row.
Letters to Editor
