Future funding of Napier Port's development, protecting investments, and getting more bang for the Hawke's Bay ratepayer's buck have been addressed in a new report, which will affect what happens in the region until 2028.

Yesterday the Hawke's Bay Regional Council released the findings of its capital structure review, which has analysed its commercial investments and those of its investment arm - the Hawke's Bay Regional Investment Company (HBRIC).

These findings will feed into the council's Long Term Plan 2018-2028 process next year.

The council had been looking into ways to increase income from its investment portfolio to reduce pressure on rates, and ways to fund upcoming major development needs at Napier Port – with the report including nine funding options to support the port's growth.


Council chair Rex Graham said they had some big funding challenges ahead to address pressing regional environmental needs and a growing export economy.

"To achieve both, we need to think differently about how we make our investments work for our community," he said.

He was one member of the capital structure review panel - which also included representatives from council, HBRIC, Napier Port and independent advisers – who presented the report this week.

Another was HBRIC chair Chris Tremain, who said even without funding pressures between the port and the council, the review highlighted there were risks and lost income opportunities around council having all its eggs in one basket with Napier Port.

"Like all businesses, the port faces a number of commercial risks and, as the Canterbury and Kaikoura earthquakes have demonstrated, there are natural disaster risks too.

"Diversifying our investment portfolio to reduce risk and try to make more money for the community makes sense."

Napier Port is currently HBRC's largest income-generating asset. It provides an annual dividend of about $10 million which significantly subsidises rates for the region, Mr Graham said.

It is expected to require $275m over the next decade to "underpin Hawke's Bay's economy" – including an additional $125m wharf for which the resource consent application was recently lodged.


Due to Hawke's Bay's steady economic growth and the subsequent need for development at the port to cater for that growth, Napier Port's debt is about $83m.

Even with the forecast growth the port had signalled it could not "prudently" fund major infrastructure development on its own without dividend relief from council or some form of capital investment.

So the report investigated a range of options to fund port development. The panel was asked to undertake more work with Napier Port and HBRIC on five options - which included funding port developments through the port increasing prices or introducing a levy on port users, or that council charged ratepayers a special levy.

Other options included introducing a minority investment partner to the port, listing the port on the NZX with council retaining a majority ownership, or the port being leased to another party, with council/HBRIC maintaining ownership of port assets.

It was decided other options investigated could "result in less than optimal outcomes".

The council resolved it preferred not to provide further capital to meet Napier Port's growth needs, not to increase debt to imprudent levels on Napier Port's balance sheet, and to maintain dividend income from HBRIC and Napier Port.

It also resolved not to sell strategic assets to fund business as usual operating costs.

This report was discussed during a public-excluded portion of a council meeting yesterday - the last public one of 2017.

A statement released after this stated council's three priorities were enhancing the environment, building community resilience, and supporting Hawke's Bay's economy.

Mr Graham said the council had a series of significant decisions to make as part of the Long Term Plan and hearing the views of the community on the options was a top priority.

"We know there will be a lot of public interest. The community should be confident that we will be talking to them more and we will be listening to what they tell us. This is just the start of an important conversation about the future of our great region."

While campaigning for re-election, councillor Neil Kirton had been a staunch advocate for such a review.

Yesterday he said ratepayers now had the opportunity to fully understand all the issues before the port as the region's "most strategic asset, and the challenge of ensuring its future".

Retaining the overriding control of the port within the council had been a "bottom line".