Tauranga City Council borrowing cap raised to support growth

Tauranga Mayor Mahé Drysdale at a Tauranga City Council meeting. Photo / David Hall

The Local Government Funding Agency has confirmed a higher borrowing limit for Tauranga City Council.

In a statement, the council said this reflected that the city’s high population growth may mean the council needs to borrow more to deliver infrastructure in a timely way.

The council could previously borrow up to 2.8 times its annual revenue. The new cap will be 3.5 times revenue.

This would apply if the council had to respond to unforeseen events, or had an identified need to enable development of new growth areas sooner than expected, to cater for population growth and provide the new houses the city needs.

Mayor Mahé Drysdale said the council would stick to a future internal limit of 3.3 to ensure borrowing capacity is available if it is required.

It would not immediately take on more debt.

“The LGFA decision simply means we can call upon additional loan funding, if or when necessary, but at this stage, we don’t foresee a need for that in the next year.”

Debt decisions would be made in a “planned and measured way” through three-yearly long-term plans and in the interim years, annual plans.

“Next year’s Annual Plan is currently out for consultation and does not envision any change in our existing borrowing limit, which caps council debt at 2.8 times our annual revenue.

“In fact, we are predicting that the city’s overall net debt will be $81 million less than planned.”