Buying Banks St properties for plant extension

A109 Light Utility Helicopter flight with mayor Gisborne City from the air in November 2023.

Gisborne district councillors have decided to buy two Banks Street sites, where the wastewater treatment plant (WWTP) extension will be built, from Gisborne Holdings Ltd (GHL) in a decision councillor Bill Burdett describes as “sound commercial sense”.

Councillors sitting as the finance and performance committee accepted a staff recommendation to purchase numbers 25 and 27 Banks Street, which are valued at $1.63 million, by raising loans.

The wastewater plant extension will be built on these sections, with council ownership being seen as improving the financial benefits to both itself and GHL (collectively known as The Group).

It would otherwise cost The Group “significantly more” if council was to lease the land from GHL and once the wastewater extension is built the only way to capture commercial returns would be by “passive land valuations”.

Other options before councillors, but not recommended by staff, were the existing situation of leasing the land from GHL, or for the council to lease for a short term and to review the situation “in a few years”.

Cr Burdett said it was important for the council to control the critical asset.

All the land where the existing wastewater plant was located was owned by the council.

Cr Meredith Akuhata-Brown asked how the recommendation would require rates to rise to cover interest and principal payments.

Council chief financial officer Pauline Foreman said the effect on rates would be less than if the properties were leased.

Cr Pat Seymour drew attention to the recommendation from Ms Foreman that the costs of interest and principal would be lower than any payments owed to GHL.

Councillors agreed to approve a forecast debt for 2020-2021 of $95.7m to enable purchase of the Banks Street properties although that was outside the debt threshold of $85m for years 1, 2 and 3 of the 2018-2028 long-term plan.

They agreed not to amend the debt threshold over that period as there is a higher debt provision of $105m in year 4 to accommodate costs from the WWTP disinfection stage.