The city council is denying claims accountant Ian Stevenson made about its finances during this week's annual plan submissions process.

A statement from council communications manager Frank Begley repeats the council claim that as reported in the Audited 2012 Annual Report, Tauranga has a net debt to income ratio of 243 per cent compared to treasury limit of 250 per cent – not 273 per cent as claimed by Ian.

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Ian says the council's real debt is about $460million as confirmed to him by interim CEO Leigh Auton in February.

'According to the audited accounts $168million is the revenue and no one's ever contested that,” says Ian. 'And the debt is $460million.”

Ian says divide 460 by 168 and the answer is 2.73809, or close to 274.

If the council is saying the ratio is 243, that can be obtained by multiplying168 x 2.43 which is 408.

'That gives you debt of $408million and that's not what the annual accounts say. Where in the audited balance sheet is there $400million in debt?

'That's why I quoted the interest bearing debt. You can't take the cash and ignore the derivatives.

'The derivatives are interest bearing debt and it has to be paid sooner or later. It is a real debt. If it wasn't, it wouldn't be in there.”

Page 161 of the city's annual report shows the consolidate debt of the derivative financial instrument is $38.265million.

Ian's best guess without any information from the city council, is the derivative interest rate swaps are where the council is trying to reduce its interest costs and also gain some certainty in the longer term five to ten years out, of what the interest rates should be, says Ian. But the price is risk.

'You are playing a little bit of Russian Roulette and trying to balance a liability with an asset and trying to come up with a win if you can.”

Frank Begley says Tauranga City Council has net external debt per rateable property of $7,669 not $14,580 per ratepayer as claimed by Ian in his submissions on the draft annual plan.

The city's current net external debt per household is with $460 million debt, $9583. The debt per household total of $14,580 is obtained by adding the complete Southern Pipeline cost to the current debt figure.

'What I have done is project forward the Southern Pipeline, and they are going to borrow all the money, because there is no cash in the bank,” says Ian.

'That's why I wanted to confirm the $460million, and that's just the mortgage. The balance sheet shows $50-60million or more of day to day creditors.

'We are just talking about the interest bearing debt, the longer term debt, not the day to day.”