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Auckland Super City is in debt to the tune of $4 billion - the equivalent of about $8000 for each of the region's half a million ratepayers.

The debt had been steadily growing under the previous eight councils and includes $1.2 billion managed by Watercare Services to build and maintain the city's water assets.

What's more, the Auckland Council is looking to increase its debt from $2.8 billion (which excludes the Watercare figure) to $3.6 billion over the next three years to fund its existing programme of capital works. There is no money in the financially strapped budget for new projects, such as Mayor Len Brown's $2 billion inner city rail loop and a cruise ship terminal.

Chief finance officer Andrew McKenzie said the council, with more than $30 billion of assets, could borrow the money to build the rail loop so long as the mayor, councillors and ratepayers were prepared to pay the interest bill.

Unlike the Government, whose borrowing programme was influenced by economic activity and tax revenue, the Auckland Council had fixed revenue from property rates and only borrowed for capital works, he said.

Mr McKenzie said the council had a very large capital programme budgeted over the next three years, including $1.4 billion of work in the coming 2011-2012 year. This would be paid from rates, debt and other revenue sources, such as development contributions.

At about 12 per cent of revenue, the council's debt repayment of $202 million in the coming year was a "significant cost" that required careful management, Mr McKenzie said.

The debt was managed by a treasury team to obtain the lowest interest rates, refinance 144 individual debts ranging from 14 days to 2028 and maintain a good credit rating. Last December, the council raised a $600 million stand-by loan to help the new Super City manage its cashflow, but so far it has not been needed.

The council is also waiting for a law change to allow councils to borrow in foreign currency - a move Mr McKenzie promoted in 2008 as finance boss at Auckland City. Mayor John Banks called the idea too risky at the time of the international economic crisis. Mr McKenzie and council treasurer Mark Butcher say borrowing offshore would lead to slightly cheaper costs. They said the risks of currency fluctuations would be managed through hedging.