Council seeks $22m grant for port
A multimillion-dollar application will go to the Government’s Provincial Growth Fund for the proposed redevelopment of Port Tarakohe in Golden Bay.
However, at just over $22 million, the requested grant is lower than the $28.3m initially proposed as a PGF contribution to the project.
Under a revised financial model, Tasman District Council is set to provide, via loan funding, a capital contribution of $3.36m, while an industry contribution of $2.84m is indicated.
Huge growth in the mussel industry is the focus of the draft business case, though other industrial uses for the port have been factored in, including the movement of dolomite and quarry rock.
The revised financial model also proposes TDC loan funds operational working capital of up to $2.6m for the council-owned port.
Tasman district councillors on Thursday agreed to instruct staff to make the PGF application and loan fund the proposed council capital and operational working capital contributions. They also instructed staff to include a general rate contribution of $25,000 in the Annual Plan 2020-21 draft budgets, and agreed in principle to increased fees and charges at Port Tarakohe.
Council finance boss Mike Drummond told councillors that the revised financial model ‘‘addresses the shared nature of the port between recreational and commercial activities, the need to have a level of co-funding in order to support the application to the Provincial Growth Fund, and also the council debt that is needed’’.
‘‘That translates into additional fees and charges that will be required,’’ Drummond said.
Those increased fees are earmarked to be as much as 7.5 per cent higher in 2020-21 and 2021-22.
However, Drummond said the fees and charges were set annually. ‘‘That means that if the . . . volumes over the wharf increase faster than what were set out within the plan, then those increases can potentially be moderated.’’ Agreements still needed to be negotiated over the cofunding from industry.
In a report, Drummond says the council will have to bring forward funding from 2022-23 and fund an extra $2.1m of capital expenditure above what was forecast in the initial three years of the Long Term Plan 2018-28.
The council’s financial strategy includes a $200m limit on net debt, a figure TDC projects it will get close to within the 2018-28 LTP period.
Councillor Dean McNamara asked what projects would be ‘‘undelivered’’ to accommodate the council bringing forward its port spending. Drummond said he believed the council had sufficient headroom under its $200m limit to ‘‘accommodate this level of debt coming onto our books earlier’’.
McNamara questioned the urgency of the Port Tarakohe project, when it would be years before the mussel industry was in ‘‘full swing’’.
Drummond said the timing was due to a ‘‘window of opportunity’’ offered by the PGF.
‘‘The business case quite clearly demonstrates that if council had to loan fund those developments, we could not put a business case together that would leave fees and charges or the port in a financially viable situation,’’ he said.
‘‘This is, I believe, a one-off opportunity to leverage central government funding.’’
Deputy mayor Tim King said the decision was whether to put in an application to the PGF, and the council would not be committed to proceed.
However, Councillor David Ogilvie said it was more than an application. ‘‘It seems to me we are making a commitment to the project here, not just a commitment to the application.’’
Drummond said submitting the application to the PGF ‘‘does carry a commitment in principle’’. However, the Port Tarakohe project was still subject to a revised business case, with a decision on the necessary agreements including any conditions that might be attached to a PGF grant.
Councillor Mark Greening said there was concern around the council table about the risk exposure to ratepayers ‘‘if those rose-tinted glasses of marine farming expansion do not eventuate’’.
There was also a concern about whether marine farmers had ‘‘real skin in the game’’, he said. ‘‘Why are they not prepared to put the additional funding in? Why are we still funding this gap?’’
The council could end up with ‘‘an overcapitalised asset with no guarantee of increase in tonnage, paying for the additional opex, a la increased fees, and capital costs and this has downstream costs,’’ Greening said.
He proposed that industry fund the difference between the PGF grant and the project cost. However, his suggestion was never put to the vote, as the original resolution passed.
‘‘This is, I believe, a one-off opportunity to leverage central government funding.’’ Mike Drummond, Tasman District Council corporate services manager