Funds for dam revealed

AT ODDS: Regional council chairman Fenton Wilson (above, right) has confirmed cash gained from leasehold properties will fund the Ruataniwha Dam if it goes ahead. Napier MP Stuart Nash (above left) is calling the deal a "fire sale". PHOTOS/ FILE

Leasehold land cashflows sold by Hawke's Bay Regional Council to ACC will fund the Ruataniwha Dam if it goes ahead.

The trade was confirmed by council chairman Fenton Wilson, who said money from the $37 million sale of the council's income stream would be reinvested into the dam if its certain conditions were met.

"It will be reinvested into Ruataniwha, should it meet its conditions precedent," Mr Wilson confirmed.

This was supported by comments made by Hawke's Bay Regional Investment Company's (HBRIC) chief executive Andrew Newman.

"It [council] has sold the cash-flows for Napier leasehold land for 50 years and it has the cash in the bank," he said.

Napier MP Stuart Nash labelled the trade a "fire sale".

"They undersold it by $100 million," he said.

"They sold the income but kept the management so they provide management services to the leaseholders for quite a long time to come."

Mr Wilson said because it was governed under an act of parliament, the land could not be sold to anyone. If it were to sell the only people who could buy it were the residents.

"So it wasn't a sale or tradeable commodity or anything like, far from it," he said.

"In fact it has been an integral part of the council's portfolio for years and years.

People pay a rent on it, a lease rental which is determined every 21 years I think, but a means of releasing some of the capital of it was to sell the cashflows to ACC.

"So basically they have given us some money up front but the cashflows trickle into their coffers over the next number of years.

"So we have sold the cashflow."

He said the leasehold properties still remain in the council's care.

"Tenants don't see anything different and don't notice anything different," he said.

"We still bill them we still deal with their issues. We are still the first port of call if anyone has an issue with the leasehold property, so none of that has changed.

"All it is, is instead of the money trickling in over the next 50 years we have taken it upfront and ACC have purchased it basically, purchased the cashflow.

Mr Nash said the sale of the cashflow was a "travesty" because "good hardworking people of Napier" are going to lose out.

"Since 1989 the HBRC managed this, they sold the income for 50 years to subsidise this fire sale for the dam and as a consequence rates may go up, because the income from the residential portfolio subsidise rates," he said.

Mr Newman predicted the scheme "will be done [with]in months".

"I would expect all things being equal with one caveat and that is how long it takes the High Court to get through that judicial review of Forest & Bird that we are on track to have this deal done in the first quarter of next year," he said.

Mr Newman said HBRIC was well advanced with a series of institutional investors.

"We still have three in the mix and we are just working our way through the terms ultimately before we reach a preferred situation so that is a work in progress."

-Leasehold woes, p3

-Insight, p12-13