Ratepayers are likely to have to bail Tauranga City Council out of property deals that are going south with the ongoing bad economy.
Council has purchased a range of property as investments with the intention that the full value including interest will be realised in the future.
But land values have since decreased meaning some of the investments, particularly the purchase of the 170 hectare Te Tumu development in Papamoa East, have reached a position where the value of the investment is less than the total accumulated debt for that investment.
Interest on the strategic property portfolio is also accumulating and is expected to be $1.4million for the 2014 year. This is all loan funded.
The land values are considered unlikely to increase, while rising interest continues to be added to debt levels as no other funding source exists.
A recommendation that ratepayers pay $1.4 million in interest in the 2013/14 year has been ‘left on the table' after councillors discussed the issues and amount in confidential during their discussion of the Draft Annual Plan on Tuesday.
The recommendation will be revisited on January 29, 2013.
The Te Tumu land was purchased as part of the now stalled Wairakei residential development planned for Papamoa East.
The Bell Road block of land was purchased for $15million in 2008 by Tauranga City Council and Western Bay of Plenty District Council with plans to sell the land back at a later date.
Other properties in the same boat are Route K, which has interest of $14 million loan funded. Budgeted interest on Route K for 2013/14 is $3.7 million. Council's share of capital costs for the Pyes Pa Bypass is $10 million and a further $1 million of interest was debt funded to June 30 2012. Interest expected to for 2013/14 is $734,000 all loan funded.
The staff recommendation flies in the face of repeatedly and loudly proclaimed statements by councillors that the city's developments would never become a cost against the ratepayers.
39 comments
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Posted on 28-11-2012 12:17 | By george36
Roll on election time!
BELL ROAD
Posted on 28-11-2012 12:24 | By YOGI
That deal of $15m or something was not "Land banking" at all, it was a deal to fund a poor developer and that developer could buy it back later "If he wanted to". Quite clearly he is not going to do that anytime soon so the ratepayers will be left with the 'baby' on that one well and truely. Would say that the rate saving is going to get soaked up and some as we go forward, like now you see it now you dont!
yours and mine
Posted on 28-11-2012 12:44 | By hapukafin
We can trust our city council to continue wasting rate payers money
Get rid of the lot
Posted on 28-11-2012 13:09 | By Real
As before a good example why I say fire the lot. Run a council not an investment portfolio or try and do business cause it's not working
So where are all
Posted on 28-11-2012 13:18 | By Sambo
the new Council members going to come from, time to put up, this crap has been going on for WAY to long, now its time to "pay the piper" so to speak, every bailout scenario comes back to the ratepayers, as they are the only ones that can help, and there is not much left there either, but now we are in the crap, ditching land at a loss, is not the answer if we can try to hang on to some of it for the future, BUT for to long there has been no consequences for basic bad decisions by these so called representatives of ours. As a commercial entity, get a board of 6 smart people together, and let them loose, 2 sitting members from the port board would help.
The thing that hurts most
Posted on 28-11-2012 13:40 | By PeteDashwood
...about this is that we have no recourse, no appeal, nothing we can do. (Well, we could change the Council, but the next lot will be no better...) How is it possible that an elected body can sit and play Monopoly with real money that isn't theirs? What qualifies them to be "land speculators" (or any other kind of speculator, for that matter?) If you or I invest in the Stock Market, or property, or any other form of risky, "non-gilt-edged" investment, we know the risk and it is our own money. And yet, a Council can treat the whole thing as a game, secure in the knowledge that if the return fails to eventuate, it is only Ratepayers money and that is a never-ending well. Is there any chance that we can EVER get a Council who takes their responsibility for "other people's money" seriously?
More money wasted by council
Posted on 28-11-2012 13:46 | By captainbirdseye
when are all the people of Tauranga going to get their heads out of the sand and vote in some councilors who are not only interested in the old boys network of friends and favors rather than the interests of people of Tauranga who pay their wages, stop playing with money that does not belong to you!!
Property Speculators
Posted on 28-11-2012 13:49 | By Fun in the Sun
To quote: "Council deputy chief executive Christine Jones said there came a point when the council had to stop capitalising loans (rolling the interest into the capital) and a stronger short-term financial strategy was needed." Translation to layman's speak if you can't afford it don't buy it. Council uses many fancy terms to explain why ratepayers wont have to fund their activities, the reality is ratepayers always underwrite the decisions.
WONDER WHO DID THE DEALS?
Posted on 28-11-2012 14:05 | By Schroden-Fraude Bob
Yet more cases of proven leadership, now that times are getting a bit tougher all the spin doctoring on some of these not so good deals get to the surface, how many more and of course no wonder rates are rocketing skyward at pace.
I do not see why
Posted on 28-11-2012 14:27 | By rosscoo
i do not see why us ratepayers should have to bail out anyone it is an investors deal that went bad so why should we risk having an increase in our rates for this type of bad deals.
Cannot trust a councillor!
Posted on 28-11-2012 14:20 | By wreck1080
Just like Helen Clark vowed never to ban smacking then did. Crosbys council promised this would not be a cost to ratepayers now it is. It should come out of their personal assets.
Another Council Stuff Up
Posted on 28-11-2012 14:52 | By Jitter
Oh dear, how sad too bad. This seems to be the TCC comment on this stuff up. No wonder they were so keen to reduce next years rates by $3.2 million dollars when they knew this killer punch was coming up. As george36 says roll on the next election and let's just hope that there are major changes to the make up of our concillors including the demise of the current Mayor. However knowing how apathetic people are, the majority will still probably vote for the same underhand hopeless clowns. Why don't good people stand for council ? Because they are too sensible to fall into the trap of having to run with the crowd.
Mounting evidence of councillors' affection for debt to the detriment of ratepayers
Posted on 28-11-2012 14:56 | By Rich
This article adds weight to the "These councillors are mismanaging ratepayers funds" thinking I had when reading the recent Sunlive article at the following URI: http://www.sunlive.co.nz/news/35097-32m-surplus-to-reduce-rates.html.
Watchdog
Posted on 28-11-2012 15:43 | By Watchdog
Council, the days of wasting our money are long gone. Get the fat out of any budget you have. Kill off all unimportant projects. Just stick to Waste, Water, Sewerage, and trim off your staff. Tauranga has slowed down and you need to act accordingly. If growth comes and is measurable then trim the cloth accordingly. There are a lot of people who use marketing-style words to promote Tauranga. That's fine but the average ratepayer does not need to have any costs shoved onto their plate. Zero Based Budgetting shoudl be teh answer. And if the budget for something is not all used up - well stick it back into teh Rates coffers. Don' t just use it up because it is there. From as far back as the 1970,s Ratepayers were seen as the Golden Cow to be milked whenever something had to be done. And for God's sake don't do up downtown Tauranga again. It's retail sector dying because of all the removal of free downtown parking. You have spent tens of millions of dollars and all we have is cafe's and Restaurants benefitting.
Fund themselves
Posted on 28-11-2012 15:27 | By The Sage
Yes run it like a business. Stop paying these tyre kickers like Priority One that have no accountable and produce nothing.
BAIL OUT?
Posted on 28-11-2012 15:29 | By YOGI
I think it looks more like a massive gash that is hemorrhaging profusely! There is no sign of a solution anytime soon to this mess.
incompetent
Posted on 28-11-2012 16:11 | By Captain Sensible
TCC think that they have a $3 million surplus yet they are almost $400 million in debt ( ie we rate payers have been put $400 million in debt by those clowns). What sort of double speak morons think that way? Normal people would say the debt would be reduced by $3 million. TCC are incompetent and in the real world, far removed from the Disneyland they play in, incompetency is rewarded with a sacking.
Can someone please??
Posted on 28-11-2012 16:40 | By Sambo
tell me how many of these shonky deals, have a direct link back to Stephen Town, all is starting to unravel, and this city paid him how much?? and we paid how much for Bay Park? and we paid how much??? it goes on, this city owes how much ?? per rate payer, lets do what Rodney Ratepayers have done, dont pay your rates, in numbers there is strength, and supposedly these people work for us,if so why do we not call the shots.
No one better to vote for.
Posted on 28-11-2012 19:44 | By dgk
I'd love to vote some people onto council that know what they're doing, but I don't see anyone putting their name forward.
Shocking
Posted on 28-11-2012 19:49 | By Colleen Spiro
Do we as ratepayers actually give permission to these muppets to invest in property.......Was it not long ago when the 10 year plan was discussed that they desperately wanted to sell pockets of land around the area, including the Brewers Field to pay off debt.....so this was one of them...
Class Action
Posted on 28-11-2012 21:03 | By R1Squid
Any lawyer specialising commercial law out there see a class action being successful? Mismanagement of public funds comes to mind.
@ SAMBO
Posted on 29-11-2012 02:16 | By PLONKER
All of these 'wonderful' deals go back to the era of Stuart's mate Stephen T, of course the grin of then is long gone and the grinding of the teeth kicks in ... @ CAPTAIN SENSIBLE, TCC debt is $465 million at 31/6/2012, not $406 million, it is actually a lot worse than any are saying.
@ KIAORA2U
Posted on 29-11-2012 02:21 | By PLONKER
yes not that long ago, it is true, they were messing around with a few crumbs here and there, but in the end these mangled deals where TCC can not get its hand up quick enough to throw away rates money meanwhile saying "that will never happen ...". Reminds me of what Mayor Crosby said, about Baypark before they purchased that "it will pay off itself, never cost ratepayers any money" well that is now sitting at over $20 million and that all adds to the debt as well.
Where the hell have all you Rip van Winkles been then ?
Posted on 29-11-2012 09:24 | By RORTSCAM
Haven't you been reading the continual financial criticism of TCC fiscal policy over the past 5 years at least. Instead of panning the so called 'naysayers' you should have supported them and made some inquiries.You have got what your apathy deserves with plenty more to come because many who are responsible for the mess still lurk at Tauranga Council HQ. ENJOY
vote
Posted on 29-11-2012 09:26 | By Capt_Kaveman
with your pen
do something
Posted on 29-11-2012 21:56 | By Sagitarius22
If ya don't like it, then get off your behinds and do something about it. This is democracy at it's best. Life is good when you manage to exploit the system. Fair is fair is fair is good for me when no-one is looking and you all blame the wrong people. yahahaha
@ SAGI-TARRED-US-22
Posted on 29-11-2012 23:10 | By PLONKER
Belated advice, looks to me that regardless of any and all good advice (external and not consultants) has always fallen on deaf ears. Not good for all of us now even though clear many could see it coming.
To Sagitarius22
Posted on 30-11-2012 05:33 | By Sambo
So would you rather pull down the "iron curtain" again and abide by the party line, this is NOT democracy at its best, but I do agree with you, about people standing up to be counted, apathy is rife!!!, so as I have said before, who will put themselves up for public inspection, to TRY and put some life back into this area, or make intelligent decisions for the betterment of the ratepayers, and lastly bring Mr Town back here to face the public scrutiny,
we never did get the full story, alot of smoke, but NO details, all was swept under a large carpet very quickly, but what goes around comes around Mr Crosby!!!
Missing the point
Posted on 30-11-2012 11:31 | By SpeakUp
Humming and harring, blaming others for inaction, musing about options or even living in hope for the next election (duh!) does NOTHING to change the Status Quo. Its the SYSTEMIC parasitism that is core of the problem. Lack of accountability coupled with no integrity is the basis of leeching bureaucracy. The system evolved from necessary societal service to a Moloch of rip-off artistry. Either the sheeple wake up and instigate change via elections or change will come in utter unsustainability and financial breakdown. How do YOU see the chances? "A nation of sheep will be governed by wolves." ---Edward R. Murrow---
out of touch with reality
Posted on 30-11-2012 13:29 | By Major Think
But who in their right mind would now want to come into council and FIX up that almost $400 million debt???? Major surgery is needed and the incumbants will slink away and let others fix their mess. They must be accountable. Earlier this year I was working in Exmouth, northern West Australia, and the taxi driver had four jobs including the non-paying job of Councillor ( expenses only on production of receipts ). Meanwhile in Tauranga, it's like a herd/flock/crash of clueless pigs thundering to the rate payer trough.
@ THINKER
Posted on 30-11-2012 22:50 | By TERMITE
Reality does for sure exist but not downtown at the CBD wehre all of these cunning plans are created.
@ to little THINK
Posted on 01-12-2012 12:34 | By PLONKER
The Council debt is about $467+ million at present, it is not $400 million as that was about a year ago.
AVALANCH
Posted on 06-12-2012 10:34 | By YOGI
Is to befall ratepayers, this is just the minor hint of what is to come.
WHERE DID ALL THE MONEY GO?
Posted on 06-12-2012 21:09 | By PLONKER
A bilout is only needed when there are no cookies left in the cookie jar to handout and play with at will. Perhaps this is a little more like a tantrum, almost like all the toys have been taken away now and nothing left to do but complain.
MADDIC RORT
Posted on 07-12-2012 01:28 | By PLONKER
This is on the same scale and nature and a lot quicker to I might add, looks to be a RORT where someone gets the benefits and others pay later, like when they find out. Then it is time for a Aussie Aussie Haka!
@ MAJOR THINK
Posted on 09-12-2012 16:20 | By PLONKER
When you say "out of touch" does not really fit in when you are talking about TCC, the actual fact of it now is that they are so far distant from reality and always have been that there is little chance of anything real coming out of City Hall, in fact the only way to change the path of all is to bring in something new. Sadly there is anti-social reaction to that from the warm nice cozy halls and corridors within.
REFLECTION OF WHOLE PICTURE
Posted on 12-12-2012 21:43 | By TERMITE
Looks like athe tip of the iceberg to me, TCC are way to good at hiding the real deals that they do behind closed doors, and way to silly to get the upper hand on just and average developer never mind a class act like this one.
BORROWED IT ALL
Posted on 19-12-2012 09:37 | By YOGI
I am more worried about the fact that TCC seem to be saying that someone has to "bail" them out, that means no money left in kitty to pay the bills.
ALL COUNCILS THE SAME
Posted on 26-12-2012 23:01 | By Crash test dummies
But no justification for it, Auckland with 1.5m people and 3.5bn of debt i bad at $2300 per person but Tauranga' debt pf $450m and 110,000 people is $4100 per person. Our rates aree $4500pa so not hard to figure out what Tauranga'a are going to be very oon indeed.
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