$9.6m loan for Northland Emergency Services Trust choppers

Northland could have two new emergency choppers in the air within two years thanks to a Northland Regional Council package of nearly $10 million.

Council members voted at the council's monthly meeting in Whangarei yesterday to borrow $9.6 million to on-lend to Northland Emergency Services Trust (NEST).

The deal will give NEST access to low-interest cash that the council can borrow via the Local Government Funding Agency, and enable the trust to seal the deal to acquire two choppers that are available now.

NEST chairman Paul Ahlers said the chance to replace its two nearly 40-year old choppers with two later-model Sikorsky S-76 Cs, buying one outright and leasing the other with the option to purchase, had come out of the blue.

NEST's major sponsor, the council had suggested the loan idea rather than see the trust miss out on a good deal.

The motion to approve the full loan amount in two instalments should NEST wish to take it up returned a divided vote at yesterday's meeting and passed on the chairman Bill Shepherd's casting vote.

John Bain did not abstain from voting, the former chairman of NEST, saying there was no conflict of interest as he had not been involved with the organisation for two years.

Mr Ahlers said the trust - which already relies on donations, sponsorship and public fundraising to cover operational costs - would mount a public fundraising campaign to repay the council.

He said the public sector loan was "not high risk".

"We've done due diligence, and that's partly why we've decided not to buy two aircraft at this stage.

"We really need to be financially prudent. We have this option, but it's not a slam dunk yet."

Loan security measures, to reduce the risk to ratepayers should NEST default, include the council being able to sell the new chopper to recoup its money.

Under the arrangement, the council will provide NEST with $4.5 million in the current financial year to buy the first chopper.

NEST will stump up with US$1.6 million from its Helicopter Replacement Fund, plus a contribution from the sale of one of its two current helicopters.

The agreement also provides for NEST to borrow another $5.1 million for a second chopper in the 2019-20 financial year - if it can first secure new contracts with the National Ambulance Sector Office (NASO) and the Northland District Health Board (DHB).

Mr Ahlers said the timing and conditions of the second-stage loan were to fit in with those current contracts expiring in late 2018, and was reliant on their renewal.

Newer helicopters would give access to the latest technology and avionics and the opportunity to fly a longer range, he said.

Council deputy chairman David Sinclair said the council's decision to help out could save NEST more than $600,000 in interest payments over the life of the loan, should it borrow the full $9.6 million.

He said given the security and other measure in place to protect ratepayers' interests, councillors were "collectively comfortable the decision to offer the loan was the correct one".

The loans would tie up about half the council's current low-interest borrowing capacity but would have no impact on people's rates, Mr Sinclair said.

"Effectively, this loan is simply another practical way we can support NEST and the provision of emergency air rescue services in Northland."

During a recent two-week call for the public's opinion on the loan proposal, the council received 453 submissions; 424 in favour, 25 disagreeing with it and four which did not indicate a clear preference.