Proposal to join the Local Government Funding Agency

Decision

Following a unanimous decision, Council agreed to join the Local Government Funding Agency (LGFA) as a guaranteeing-member. The motion, carried out at an Extraordinary Council Meeting on Tuesday 29 March, completed a four-week consultation period with residents, with no submissions received for Council's consideration.

For the full media release, click here.
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About the proposal

The Waimate District Council (the Council) is considering participating in the New Zealand Local Government Funding Agency (LGFA) scheme. The scheme is designed to allow local authorities to borrow funds at more favourable interest rates than the banking sector.

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, its primary purpose being to provide more efficient funding costs and diversified funding sources for New Zealand local authorities. The LGFA was established to raise debt on behalf of local authorities on terms that are more favourable to them than if they raised the debt directly. More information can be found on the LGFA website www.lgfa.co.nz

Our Council has historically had no or little external borrowing. We are now requiring external funding to meet all planned and anticipated projects, activities and capital investments. Council is proposing to participate in the LGFA scheme because it provides an opportunity to borrow at lower interest rates and provides greater certainty and duration of funding. Put simply, it just makes a lot of sense.

We are proposing that our participation is as a guaranteeing borrower whereby we will receive pricing that is 0.10% lower than what applies to non-guarantors. As a guarantor we will not be subject to the restriction of borrowing a maximum of $20 million from the LGFA. Joining the LGFA does not mean Council has any legal obligation to use LGFA for its borrowings. Council is free to borrow from whatever source is the cheapest or most suitable at the time of borrowing.

Should membership of the LGFA be confirmed then Council will need to amend its Liability Management and Investment Policies to expand the options of where funding can be secured from. The current policies, with the proposed changes, are included as supporting information for this consultation, available from our Council website.

Before any of this can happen though, we need to ask the community what they think. The proposal is outlined in this Consultation Document, along with an indication of Council’s preferred option and details on how to make a submission