They say that you should learn something new every day. I’ve just come across Sec 115 of the Local Government Act 2002 which clarifies that local bodies can use rates as security for their borrowings. It also sates that if a receiver is appointed with respect to borrowings then:
The receiver may, without further authority than this section, assess and collect in each financial year a rate under this section to recover sufficient funds to meet—
(a) the payment of the local authority’s commitments in respect of the loan or incidental arrangement during that year; and
(b) the reasonable costs of administering, assessing, and collecting the rate.
How does this relate to the dam?
Financiers borrow against security, or cash flow, or both. Given that the dam has yet to prove itself economically viable, and I doubt that it ever will, any financiers will be lending against security. (try doing that with you mortgage and see how far you get) The only security I see the HBRIC being able to offer is the dam itself and it’s other major asset, the Port.
However it would be a brave lender who was prepared to put HBRIC into receivership, and an even braver council who would offer the Port as security in the first place. The people of Hawkes Bay have an attachment to thier Port and do not whish to see it sold.
Therefore I suspect that the financiers will be offered a guarantee from HBRC secured against future rates via Sec 115.
Sec 115 means receivers – who have not been elected – can force us, the rate payers to pay for the dam. Not something that is mentioned in all the propoganda.
All this is just rumor and innuendo though. Something I am quite happy to put out in public because that’s all we’ve got to go on.