In response to an article in the HB Today on Saturday – Dam Plan needs bridging finance – I sent the following email to all HBRC councillors and CCd the HB Today which published it as a letter today. This article was published on Monday – Farmers sign up to water scheme
When I was a young man learning my trade as a banker there were a number of key wisdoms I was taught when lending money. I doubt that these wisdoms have changed.
1/ What is the money borrowed being used for?
2/ Are the chances of being repaid good?
3/ What security is required?
It is hard to ascertain exactly what purpose HBRIC intends using the $4,000,000 requested for. What exactly are “costs for the RWSS project incurred by delays to the consenting process”? I think that it behoves you to drill down and enquire as to what these expected costs are for before making any decision to approve additional funding.
There has already been some $13,000,000 spent by HBRIC. I understood that the total budget was originally $12,000,00. Are they suggesting that they require an additional 30% of this figure?
There is still sufficient doubt that there will be a workable proposition any time soon. HBRIC’s report to council claims that “We expect a decision on this arrangement by the end of March”on the Conservation Land ‘swap’. I think it behoves you to question this statement. Whilst a decision maybe forthcoming by the end of March, it is unlikely to be finalised. I would suggest that there is a very high probability that any decision will be subject to appeal, which is likely to delay a final decision significantly.
As soon as I hear the words debt and HBRIC mentioned in the same sentence it raises concerns about the ongoing security of HBRIC’s only current significant asset, the Port of Napier. It is this asset that allows HBRC the cash flow to complete it’s good works and any decision that could potentially put the Ports ownership at risk should not be taken lightly. What happens if HBRIC comes back for another $4,000,000?
I believe that the proposition that has been put to you for a decision on Wednesday is far too light on detail for you to make a well informed decision. I would expect that you will instruct HBRIC to provide you with far more detail with respect to their intentions before voting on item 17.