A plan to loan the Stratford A&P Association over $7 million has been endorsed by Stratford District Council, but public feedback is being sought before a final decision is made.
At last week's Audit and Risk Committee meeting, committee members endorsed an earlier decision by the mayor and councillors regarding a potential loan of $7,180,000 to the A&P Association for the purchase and development of two land parcels.
That earlier decision, made in September, was to release for consultation a report on the proposal asking for public feedback on the project before a final decision is made by council.
The Audit and Risk Committee received a decision report from Stratford District Council's corporate services director Tiffany Radich, asking for endorsement on the proposed decision by council to borrow the $7,180,000 to then on-lend to the Stratford A&P Association.
Committee members, including newly appointed committee chairman Philip Jones, were told there were significant financial and political risks to be considered, with the most significant financial risk being if the A&P Association was to be unable to make the loan repayments and council would have to sell the land or assume ownership of it as a result.
The proposed loan is for the development of a multi-use facility for equestrian, motoring and sporting activities with the potential to develop a regional outdoor event centre.
The report said the development is temporarily known as the Stratford Park Project but to go ahead needs council's help. That help could come in the form of a loan, with the council able to access significantly lower interest rates on a loan than the A&P Association could itself. Council would then on-lend that money to the A&P Association.
At the Audit and Risk Committee meeting, members debated the merits of the idea, with concern expressed about the level of risk involved.
Councillor Peter Dalziel said he had many concerns regarding the project.
"Key information has not been disclosed ... we are going to consent without seeing any financial analysis."
He said the timeframe was being set by the A&P Association and the current land owners who wanted to sell, leading to what he termed "the tail wagging the dog".
He said the community needed to be fully informed about the level of risk involved.
"I think the risks should be more explicitly stated in the consultation document."
Mayor Neil Volzke said he saw three main risks. They were the risk to council's reputation if the project failed or went "pear shaped", the risk the A&P Association was unable to repay the loan and the potential risk to council's ability for future borrowing once such a large loan was taken.
Despite these risks, the project was something council was keen to support, he said, and the decision to send it out for public consultation had already been made by the full council.
The role of the Audit and Risk Committee was to endorse that decision if it deemed it acceptable, and the committee had the option of adding recommendations or questions to be considered before the final decision was made after public feedback was received he said.
The report warned "there is a high risk that the A&P Association is unable to repay the loan when it falls due as the new debt would make up 75 per cent of the association's assets. It is highly unlikely that the A&P Association would have the ability to source funds to repay the debt in full."
This risk would be mitigated by council holding security over the two properties being purchased as well as the property the A&P Association already owns. The three properties together have a combined land value of $6,950,000 according to a 2020 valuation the association had requested.
Councillor Dalziel said there was "not a big market for showgrounds" should the land end up being claimed by council in the event of the loan repayments not being met.
The Audit and Risk Committee voted in favour of endorsing the proposed decision as long as certain requirements were met . These requirements included receiving a detailed business case containing a feasibility study on repayments, an economic assessment report supporting the business case, and a second valuation being received.
The proposal is now out for public consultation before the final decision is made by council. Information on the consultation is available on the Stratford District Council website.
A public meeting will be held on Thursday, October 22 at the Stratford War Memorial Centre at 7pm, at which the A&P Association will be presenting their vision for the project.
Public feedback needs to be received before 4.30pm on Thursday, November 5. Feedback can be made online, by post or by email. Details are available on the council website as well as in this week's Stratford Press.
Disclaimer: Ilona Hanne is married to the CEO of Stratford District Council.