Proceeds of Forestry Sale


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

Page reviewed: 07 Apr 2017 12:19pm