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Christchurch City Council welcomes today’s establishment of the New Zealand Local Government Funding Agency (LGFA), which will help local councils save money on borrowings.
The LGFA is a partnership between 18 councils across the country and Central Government with the aim of providing lower-cost funding for local authorities.
Christchurch City Council General Manager Corporate Services Paul Anderson says the Council has been involved with the setting-up of the new agency since the start of the project in June 2009.
Mr Anderson says that by pooling all their borrowing capacity, councils will be able to secure lower interest rates and reduce interest costs when borrowing.
“The Council will save money on interest payments by being part of this agency. For Christchurch City Council, with existing total debt of $576 million, this means savings of up to $2.2 million in the first year if all debt was refinanced with the LGFA,” Mr Anderson says.
“This is great news for Christchurch, for local government across the country and for New Zealand’s capital markets as it will provide investors with a new source of fixed income securities rated at AA+ (domestic) by international rating agencies Standard and Poors and Fitch.”
Christchurch Mayor Bob Parker says it is good to see the funding partnership established.
“I know our staff have been involved in investigations into this initiative for the past two years and it is great to see their work come to fruition.
“In the current economic climate, any potential for the city to save money must be vigorously pursued. This is a smart move that will benefit our city now and in the long term.”
The LGFA is owned by 18 local authorities and Central Government and was incorporated today (7 December 2011). It is a Council Controlled Organisation operating under the Local Government Act 2002. Christchurch City Council has joined the scheme as a Principal Shareholding Local Authority and has provided establishment capital of $2.0 million. This will be offset by dividends paid by the agency and will have no impact on rates.
The company has been established with six foundation directors. The company’s directors are Craig Stobo (Independent Chair), Abby Foote (Independent), Phil Cory-Wright (Independent), John Avery (Independent), Mark Butcher (Treasurer Auckland Council) and Paul Anderson (General Manager Corporate Services Christchurch City Council).
Further background on the LGFA is available on the Local Government New Zealand website www.lgnz.co.nz