The debt of Dunedin City Council and its companies is expected to pass $1 billion in 2023 while Aurora Energy makes a major investment in its ageing network.
Dunedin City Holdings Ltd chairman Keith Cooper said the combined group debt was $793 million at the end of June this year and was forecast to hit $1.017 billion by June 2023.
"It is three years out, it is a forecast, and it is based on a lot of assumptions," Mr Cooper said as he presented councillors with statements of intent for the council-owned companies.
The increasing debt was principally driven by the council’s capital expenditure programme and the spending required by Aurora.
This comes after Aurora has said it would spend $383 million on its dilapidated assets over the next three years.
The modelling showed the group debt would likely remain over $1 billion for two to three years before easing off, Mr Cooper said.
Long-term forecasts from Aurora showed the company would continue to increase spending before it plateaued in 10 years.
However, the company’s long-term forecasts were based on expected growth which had not been retested since the disruption of Covid-19.
Aurora was "a capital hungry business" that needed to be funded and if growth happened in the region, that growth needed to be funded.
Under questioning, he said the council had been the "biggest other driver" of debt and further increases would also depend on the council’s spending.
Councillors unanimously agreed to receive the statements with no comment.
Cr Steve Walker queried a typo and a figure in Dunedin Airport’s statement Mr Cooper could not immediately explain. Cr Christine Garey asked about a Dunedin Venues opinion as to when international acts would return to Dunedin, to which Mr Cooper responded the company had formed its own view on that timeline.
Aside from Cr Lee Vandervis, who led the questioning, including seeking a confirmation the company was not borrowing to finance operations, no other councillors commented.
The company borrowed to cover costs associated with mothballing Dunedin Railways. The railway company wrote off "impaired assets" making the total hit about $4 million.
In a statement to the Otago Daily Times before the meeting, Mr Cooper said group debt comprised $243.5 million of council core debt and $549.5 million of company debt.
The group asset base at June 30, 2019 was valued at $4.3 billion, including $93 million in the Waipori Fund and $93 million of investment property.
The council group remained in a strong financial position including its ability to service debt costs.
This was confirmed by Standard & Poor’s credit ratings of AA and A-1plus ratings of Dunedin City Council and Dunedin City Treasury Ltd in its most recent review last December.
There had only been a 2.6% increase in the group debt from the companies’ draft statements of intent released for a March 9 meeting this year, when it was forecast to reach $991 million by June 2023.
The group sought a one-month extension on the statements to account for the impacts of Covid-19.
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Which means every man, woman and child in DCC's constituency will owe $7700.00. Plus interest.
Incompetence at all levels- from council to management. They blew their chance to sell assets when the prices were high. Now those assets have lost massive value as their income generation/market price has fallen. 'Playing the fiddle whilst Rome burns' but that is OK with the DCC as they can always increase our rates to cover their abilities.
Wish I could do pet vanity projects while my debt increases, with other peoples money.
Must be fun having no care for the ratepayers and just doing what you want regardless of the opinions of the locals with zero accountability
... let's not forget folks, $880,000.00 of that $1 billion has given the city the up-to-date and effective roading system in the southern hemisphere !!
... Next year debt will be over $2 billion, $1 of which will be spent on peanut shaped round-abouts, technicolour road paints and consultancy fees to determin the best colours to use.
Comon Hawkins you can doooooo it, just like the sports gear manufactures going phrase, Cull and Bidrose failed but was close. Be known as the Mayor who bankrupt Dunedin, Go down in History for not only bankrupting the town but for destroying it's roads parking as you do with your crazy ideas!!!! The whole town is behind you or watching from the side line, they may not all be with you but they are watching.
"Under questioning, he said the council had been the "biggest other driver" of debt and further increases would also depend on the council’s spending."
It is easy to blame our councillors past and present for this huge debt but it is clear they are just puppets (or possibly Muppets) having their strings pulled my corporate fat cats.
Other councils are no better, it's a broken system. Take the ORC for example, Port Otago has been making more money than they know what to do with but watch how the councillors will have to beg for more money from their corporate masters while the environmental degradation continues.
Hopefully the ODT can do a more in-depth independent analysis of these figures.
Socialist green agenda spending other people's money until the city falls. And meanwhile the lunatics in charge make sure STV is retained to keep them in power.
How much of this due to "car sales"?
At least someone here doesn't have a long memory or hold a grudge.....lol.
A very ungrateful community of constantly disgrunted citizens you lot have become! It's only a few million dollars, come on, give us a break! We're the DCC, well underqualified and beyond caring what you lot think. Besides, with ole mate STV.......it's not like we'll be going anywhere anytime soon......
Sorry all, I feel somewhat sarcastic at this time. I'll self flagellate to the satisfaction of the critics......
This is not good debt at all. Will our councillors ever do their duty.
Setev, I think some of them are doing there Duty Covertly but not for the people of Dunedin rather for this organisation https://iclei.org/en/our_network.html I expect that the personal gains of Jobs and the thought of more pay with this org in the future is a driver, Hawkins creating the new old boys club, follow me and we will look after you in years to come when I used Dunedin as my person springboard to get into this org.
A bunch of incompetent idiots playing with ratepayers money. Accountability is something they ignore.These people would struggle to manage their own finances let alone a City.A slush fund for overrated, overpaid civil servants.