New Plymouth’s $ 300 million nest egg and the mayor’s plan to throw away the key
ANDY JACKSON / stuff
New Plymouth Mayor Neil Holdom wants to make sure future generations can’t drain the council’s investment fund. (archive photo)
The mayor of New Plymouth has launched a proposal to lock in most of the district council’s $ 320 million investment fund and throw away the key.
The council’s perpetual investment fund, or PIF, was formed from the 2004 sale of its shares in the lines company Powerco and was originally worth $ 259 million.
Just four years later, the fund was valued at $ 324 million, but the global financial crisis and the annual disbursement of $ 20 million to council coffers drastically reduced the value of the fund, resulting in further restrictions on the amount. that the board could get out of it.
The fund now has a board of directors and the investment portfolio is subcontracted to Mercer Ltd. In March, the PIF was valued at $ 320 million, when it released $ 2.5 million to the board to offset rates. About $ 9 million is released each year.
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Mayor Neil Holdom has asked council staff to look into a possible bill from Parliament that would change the way money is used.
He wants to ensure that council payments never cut into the fund’s core capital and, as a hedge against potential council mergers, that only people living within the current New Plymouth district boundaries can benefit.
“The goal is to see if we can save this community wealth,” he said.
At the moment, it takes an agreement of 75% or more of the advisers to make the decision to withdraw any money from the fund, aside from annual payments, he said.
But that’s not safe enough for Holdom, who wants to prevent “an opportunistic bunch of politicians from coming in and opening it up and spending this money,” which should rise in value and provide benefits for generations to come.
CHRISTINA PERISCO / STUFF
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When it was raised during discussions over the long-term plan last week, two advisers spoke out against it – Sam Bennett and Dinnie Moeahu – but the vote was passed 13-2 in favor of staff reviewing it .
Bennett said he could understand the mayor’s motivation in trying to protect the fund from future politicians, but he was uncomfortable with “cutting it off right now.”
“I think by doing that it takes the right of my elected member to redeploy that money if necessary,” Bennett said.
Councilor Harry Duynhoven has seen the BIP go up and down over the years and, as mayor from 2010 to 2013, he was instrumental in reducing the money the council took out of the fund.
He was in favor of locking in the capital base, limiting advisers to only being able to use annual release payments.
But rather than using the money to offset the rates, he would like the money to be set aside. Then every few years the board could pay a $ 60 million or $ 70 million project in cash.
“There’s about $ 9 million going into rates each year, which we’ll have to gradually wean off, which would take a decade to do.”
Former mayor Peter Tivez, who was at the helm when the Powerco shares were sold, was also in favor of foreclosure of the capital base.
“I like the idea of locking it in place so we’re not spending the money today and we have a huge rate hike tomorrow,” he said.
But geographically, if there was a council merger, all areas should benefit, not just the New Plymouth district as it stands today, he said.