Long Term Community Plan 2012-2022 - Hurunui District Council

Hurunui Community Long Term Plan 2012 - 2022
in the LTP, the limit of the debt that could be taken on is $42.5
million.
Year
100% of Total
Income
10% of Total
Equity
2012/2013 (Year 1) $30.3 million $34.2 million
2013/2014 (Year 2) $31.6 million $34.6 million
2014/2015 (Year 3) $32.9 million $35.2 million
2015/2016 (Year 4) $34.3 million $37.7 million
2016/2017 (Year 5) $35.4 million $38.2 million
2017/2018 (Year 6) $36.5 million $38.9 million
2018/2019 (Year 7) $37.9 million $42.0 million
2019/2020 (Year 8) $39.2 million $42.7 million
2020/2021 (Year 9) $40.7 million $43.8 million
2021/2022 (Year 10) $42.5 million $47.5 million
The policy also provides for the total amount of interest
expenses shall be no more than 5% of total revenue and no
more than 10% of annual rates income. Based on the maximum
of $42.5 million in income, the total interest cost can be no
more than $2.13 million.
Year
5% of total
income
10% of total
annual rates
income
2012/2013 (Year 1) $1.52 million $1.36 million
2013/2014 (Year 2) $1.58 million $1.45 million
2014/2015 (Year 3) $1.65 million $1.53 million
2015/2016 (Year 4) $1.72 million $1.59 million
2016/2017 (Year 5) $1.78 million $1.65 million
2017/2018 (Year 6) $1.83 million $1.70 million
2018/2019 (Year 7) $1.90 million $1.75 million
Holding a Debenture Trust Deed provides us with security for a
range of different funding options:
• Registered Bank Debt
• Use of the Local Government Funding Agency
• Issuing Council Debt directly to the market
Further information is available in the External Liability
Management Policy.
Implications of Hurunui’s Financial Strategy
Assessment of our ability to provide and maintain existing levels
of service and to meet additional demands for service within
those rate increase limits:
We face potential issues in the future in regards to the level
of funding that is expected to be provided for roading from
NZTA as discussed previously in this Financial Strategy. It
has been estimated that the difference over the ten years
between what was scheduled in the AMP and what has
been provided in the LTP amounts to a total of $18 million.
Assessment of our ability to provide and maintain existing levels
of service and to meet additional demands for service within
those debt limits:
As listed in the table above, we are not contemplating
taking on debt greater than $22.5 million and the
maximum amount of interest expected to be charged on
the external debt is budgeted at less than $1.4 million.
Therefore, with the exception of the Roading Network
due to circumstances outlined earlier, our assessment is
that we do have the ability to maintain the existing levels
of service and to meet additional demands for service
within those debt limits.
2019/2020 (Year 8) $1.97 million $1.82 million
2020/2021 (Year 9) $2.04 million $1.90 million
2021/2022 (Year 10) $2.13 million $1.98 million
Security for Borrowing
Prior to taking on debt for the first time in September 2010, we
prepared a Debenture Trust Deed and selected Perpetual Trust
as our Trustee. The Debenture Trust Deed is a standard security
document for Councils. The key security available is that a charge
can be made against the rates of the Council to repay debt so
the market perspective on this is that a Debenture Trust Deed
provides a low level of risk for an investor or funding provider,
which in turn should allow for lower interest rates.
31