ICC city block cash boosted to $46m
Invercargill City Councillors have agreed to increase its city block investment to $46 million, although there are some details to be sorted around its shareholding in the development.
The council had already committed up to $30m into the development which will see an innercity Invercargill block demolished and rebuilt.
However, when fellow investor Geoff Thomson pulled out of the project it left a $21m shortfall for Invercargill Central Ltd to find to complete stages 1, 2, and 3 of the development.
Councillors have agreed to repurpose the $5m initially earmarked for potential design changes and add another $16m to cover that $21m shortfall.
At the council meeting councillors Toni Biddle, Darren Ludlow Nobby Clark, Rebecca Amundsen, and Lindsay Abbott, all raised questions about what that would now mean for council’s shareholding.
The council’s company Invercargill City Holdings Ltd currently has a 49 per cent share in Invercargill Central Ltd, with O’Donnell CBD Ltd the other major shareholder.
Council’s finance director Dave Foster said it was his understanding that at $46m the council’s slice of the pie would increase to 54 per cent.
Biddle asked if that meant Invercargill Central Ltd would become a Council Controlled Organisation [CCO].
CCOs are organisations in which councils have the responsibility to appoint at least 50 per cent of the board of directors.
Foster said it was a decision for council to make whether it would take ‘‘just plain equity and have all the shares stand equally’’.
‘‘That would mean you would get an equal share of any distribution, you would stand entirely equal to all other shareholders on all matters.
‘‘Or the option is for council to agree for it not to be a CCO by changing the nature of the equity that council would take.’’
Foster said there were a lot of things that could be protected if the council didn’t want it to be a CCO. However, he said the big question was; ‘‘why would you not want it to be a CCO?’’
‘‘If you are comfortable for it not to be a CCO then you are going to take a different style of share.’’
Biddle asked if Foster thought it should be a CCO.
‘‘That is my feeling, to be quite honest. If you are going to take more than a 50 per cent holding I can see no reason why you would want any of that to be regarded secondary to other shareholders,’’ Foster said.
Cr Abbott asked if the 54 per cent shareholding figure that Foster raised had been discussed with the other shareholder, O’Donnell CBD Ltd.
At that point in the meeting chief executive, Clare Hadley suggested councillors go into public excluded to have a conversation around negotiations and ensure councillors understood the situation.
It was agreed to remove the public from the meeting.
When the public was invited back Cr Ludlow said the council had taken the opportunity to make sure it’s clear on what it was voting for and felt everyone had satisfied themselves that they had clarity. The recommendations, which included investing the additional $16m, were voted in favour by the councillors.
Another recommendation was that Hadley and the deputy chairperson of Invercargill City Holdings Ltd be given authority to enter into binding agreements on behalf of the council.
The council has applied to the Government for funding from the ‘‘shovel ready fund’’ to help with the city block investment.
If that application was successful council won’t have to invest all of the extra $16m agreed to.