Council to Join Local Government Funding Agency
Following a unanimous decision, the Waimate District Council will join the Local Government Funding Agency (LGFA) as a guaranteeing-member, with the process expected to be formalised in the coming months.
The motion, carried at an Extraordinary Council Meeting on Tuesday (29 March), completes a fourweek consultation period with residents, with no submissions received for Council’s consideration.
The LGFA is a Council-Controlled Organisation (CCO) operating under the Local Government Act 2002 which specialises in financing the New Zealand local government sector. The Agency was established to raise debt on behalf of local authorities, allowing Council to borrow funds at more favourable interest rates than the banking sector.
Commenting on the decision to join, Waimate District Mayor Craig Rowley said;
“Historically, our Council has had no or little external borrowing. However, we are now requiring external funding to meet all planned and anticipated projects, activities and capital investments, so having the opportunity to borrow at lower interest rates with a greater certainty and duration of funding just makes a lot of sense,” Mayor Rowley said.
“It should also be pointed out that joining the LGFA does not mean Council has any legal obligation to use LGFA for its borrowings, Council will continue to be free to borrow from whatever source is the cheapest, or most suitable at the time.”
As part of the decision to join, Council have now amended its Liability Management and Investment Policies to expand the options of where funding can be secured from. The existing policies did not have provision for this.
As a guaranteeing-member, Council will be able to borrow funds at a margin approximately 2.6% less than regular bank facilities, producing substantial savings.
For more information on the LGFA, visit www.lgfa.co.nz