Friday, 7 April 2017
Proceeds of Forestry Sale
At the 6 April Council meeting, councillors received an
investment plan to manage the proceeds from the sale of some forestry assets
earlier this year.
The proceeds of the sale came to $6.6 million, which less
forestry debt and costs, left around $5 million available for investment.
Following the adoption of the investment plan, elected
members agreed to withdrawing 3% or around $150,000 a year to subsidise rates
annually - this equates to approximately $10 off the UAGC (this is the Uniform
Annual General Charge Part of your rates bill).
The subsidy is of course dependent on how market conditions
are affecting the investment, but provides for the fund growing at least at the
rate of inflation, whilst still providing income to offset rates.
Council started reviewing its forestry portfolio in October
2014, on the basis that forestry is an investment and getting the best return
for our ratepayers is critical.
Following expert advice a sale process was initiated and
tenders closed on 4 November 2016.
In total 12 tenders were received and Council accepted the
offers from two tenderers, Dunedin City Forests and Niagara on the following
lots; Hillend, Milton, Lawrence, Kaitangata, Slopedown, and Port Molyneux.
Together these two tenders added up to $6.6 million and were
considered to be strong offers.
Late last year, Mayor Bryan Cadogan said the sale of
forestry was another example of Council's determination to pursue efficiencies
and the intention was the proceeds of the sale would be ring-fenced to help
offset rates for generations to come.
Consequently, the net proceeds from the sale were protected
so they cannot be used for any other purpose except investment to provide an
annual return to ratepayers.
Individual offers for the Invertiel, Heriot and Tapanui
forestry lots were not considered high enough to accept and Council has
recently requested further analysis about whether to re-market the lots or
retain until ready to harvest.
Chief Executive Steve Hill
0800 801 340