An investment portfolio to support Napier’s rates funding.

Developing a commercial investment portfolio for Napier is a new proposal being put to residents for their views in Napier City Council’s Three-Year Plan 2024-27 consultation.

A Council Controlled Trading Organisation (CCTO) could manage the city’s investment assets and create an inter-generational investment that will benefit current and future generations of Napier residents.

Napier Mayor Kirsten Wise says the current financial challenges mean Council must think boldly and differently.

“We can’t expect to see different results if we keep doing things the same way. We’re setting Napier up for a more financially sustainable future by managing our investment assets, like Parklands property development, in a way that maximises their financial return.”

CCTOs exist for the purpose of making a profit. They are a good fit for managing Council investments because they are at arm’s length from elected politicians. This removes the ability for individual councillors to influence investment decisions.

“Our ultimate goal is to reduce our reliance on rates funding. Continuous high rates increases are not sustainable for our community. We need to find new avenues of income to fund the services and facilities our residents want and need from us.”

Potential returns from actively managing Council’s investment assets are expected to be significant over the long term. In 2025/26, the portfolio is conservatively estimated to generate a $5 million return. Returns are expected to grow year on year, with around $8 million worth of income from property and cash assets in 2034/35.

“To put this in context, five million dollars is equal to the rates funding we use to run our sportsgrounds for a year. Eight million dollars equates to the rates funding for Napier’s two libraries over 18 months. We expect to be generating this amount of money every year,” says Mayor Wise.

These aren’t the total returns, as some funds would be reinvested to make more income. In around ten years’ time, the percentage of rates saved per property is expected to be around 5%.

Council is proposing that the CCTO initially focuses on its commercial assets. These include the leasehold property portfolio, residential homes that are not part of the community housing portfolio, and land development in the Parklands subdivision. Council would always be responsible for deciding which investment assets should be managed by the CCTO, and these would not include core social obligations such as parks and libraries.

“I see real benefits in having some of our commercial assets managed by a CCTO. We would gain access to investment professionals who are experts in their field. We would have the chance to acquire property development income and investment assets that we wouldn’t otherwise be able to without the CCTO’s professional expertise.”

Council would set out its expectations of the CCTO through a formal document called a Letter of Expectations.

Mayor Wise explains: “The CCTO would be accountable to us as a council and to the community of Napier. Like with our shareholding in the Hawke’s Bay Airport CCO, this proposed new organisation would report back to us regularly.”

“I’m really excited about the prospect of Napier becoming a more financially sustainable city through this proposal, and I encourage everyone to have their say.”

Submissions on this and other matters in the Three-Year Plan consultation can be made at sayitnapier.nz by Friday 26 April.