Far North Council's conflict with own company

The relationship between council-owned company Far North Holdings and the Far North District Council is at times dysfunctional, according to a report obtained by the Advocate.
This year the council's Audit and Finance Committee asked accountancy firm Sumpter Baughen to conduct a review of Far North Holdings (FNHL). Among the questions the committee wanted answered were whether FNHL's $54 million in assets were in "appropriate ownership", whether the company was in a position to keep paying dividends to the council - currently $100,000 a month - and whether any assets should be sold off or acquired. The report highlights the conflict between the council and FNHL directors about the purpose of the company.
The council's view is that FNHL's key role is to operate assets and pay dividends to help offset rates.
The outgoing directors, on the other hand, saw their priority as developing infrastructure for the benefit of ratepayers. Doing so, however, meant lower dividends as FNHL effectively used the council as a funding source.
The company's 2010-12 Statement of Intent (SOI) described both roles, without spelling out which was the most important.
The report's authors called on the council and FNHL to work together to come up with a new SOI to clear up exactly what the company's priorities should be. A new SOI was on the drawing board. If FNHL's role was not clarified, tension would eventually come to a head over the vexed issue of Bay of Islands Airport funding.
The airport, near Kerikeri, is easily FNHL's biggest asset - but it loses money and needs a $5 million upgrade.
The authors said the relationship between the two bodies was "at times dysfunctional ... FNDC and FNHL appear to be working against each other, instead of working towards the same purpose".
As an example, the report cites FNHL going to court to get its rates reduced, even though those rates would have gone directly to its owner, the FNDC.
Decision-making by FNHL also had to be more transparent to reduce tension with the council.
The report suggests council criticism of a recent land-swap paving the way for a new Paihia fire station, for example, could have been avoided if FNHL had communicated the project's benefits via a business-feasibility study.
Since the report was written, the entire board of FNHL has been replaced. Its new chairman, Russell businessman and former Team New Zealand boss Ross Blackman, has pledged a closer relationship with the council.
However, he also put councillors on notice that they had to make it clear exactly what they wanted from FNHL.