Archive | Finance

Manukau council opens second bond issue

Published 30 August 2009

Manukau City Council has decided on a further retail bond issue for $100 million after the success of a $90 million issue in July.

 

Mayor Len Brown said the previous bond issue, filled within 11 working days, was for mum-&-dad investors: “To a great extent, these were the people who invested in this bond offer and it shows New Zealanders are prepared to invest their hard-earned cash in their own communities.

 

“We believe that Auckland’s growth & success is a worthwhile investment. We are confident that, in this bond offer, ordinary New Zealanders, including those who missed out last time, share our belief and will again show their confidence in the community and take advantage of this opportunity.”

 

The council approved the bond issue at its meeting on Thursday. Finance director Dave Foster said it had also been discussed with & approved by the Auckland Transition Agency, which is managing the Auckland governance restructure.

 

The bonds are for 4 & 6 years, the same as the previous issue. The offer opened on 28 August and closes on Wednesday 23 September. It has a minimum investment of around $10,000.

 

Mr Foster said: “This bond issue will support the funding needs of the Auckland region as a whole, and brings another opportunity for the wider community to invest in the region’s future growth & development.”

 

The bonds are secured over the rates of the city through a debenture trust deed. They will have first ranking, alongside other council debt secured under that trust deed.

 

A detailed description of the security – including the effect of the Auckland regional governance reorganisation – is set out in the investment statement for the bonds. The arranger is BNZ Capital.

                                                                                

Want to comment? Go to the forum.

                                                                                              

Attribution: Council release, story written by Bob Dey for the Bob Dey Property Report.

Continue Reading

Rates apportionment case goes to Privy Council

Hearing set for 3-4 July

Local Government New Zealand said today it would appeal the Court of Appeal decision in the “apportionments case” to the Privy Council.

“This case is a challenge to the way the Valuer-General & his predecessors have classified blocks of flats, shops & similar properties for rating purposes. The Valuer-General believes that a block of flats should be treated as a single ‘separate property’ for rating purposes, whereas Local Government NZ believes each flat or shop should be a ‘separate property’ in its own right.

“The issues in the case are complex, but what it really comes down to is one single question. Should valuation legislation be about rating equity or convenience for the valuer,” Local Government NZ chief executive Peter Winder said.

Local Government NZ succeeded in most of its case in the High Court in 1999, but the Court of Appeal overturned that judgment in 2000.

Mr Winder said the outcome was important for the downstream consequences on past rating methods.

58 of New Zealand’s 74 local bodies have made uniform charges on each flat or shop in a block of shops, but some ratepayers have advice that only a charge per block can be made.

Mr Winder said the case was not about the legality of the charges themselves but about the way properties have been valued.

“If we are successful this will automatically resolve the issue. If we are not successful then I predict that further litigation will follow to determine whether the charges were lawful.”

In the event that councils do have to refund rates, the 58 councils could be liable to make refunds of at least $36 million to the owners of about 12,000 properties.

The other three parties that joined with Local Government NZ to bring the case have not decided whether or not to join the appeal, but will do so in the next month. The case will be funded by the 58 affected councils.

Local Government NZ has retained Auckland QC Alan Galbraith to present the appeal, provisionally set down for 3-4 July. Local Government NZ doesn’t expect a decision until August or September.

Mr Winder said the affected councils had been advised not to make any refunds while the case is before the courts. He said $36 million amounted to about 2% of the rate take nationally, but some councils could be up for as much as 6% of their rates if the case goes against them.

Continue Reading

Privy Council rules in favour of councils on rates

$36 million of paid rates can’t be clawed back

The Privy Council has ended a 5-year rating valuation dispute by ruling that occupation, not the existence of a separate title, is the prime determinant of a separate property for rating purposes.

The ruling means councils around the country won’t have to hand back rates levied on individual shops or flats, which could have cost them $36 million.

North Shore City Council said a decision the other way would have cost it $5.9 million.

The ruling has historic effect — rewriting of the Rating Act means that from 1 July 2003 a block of flats or shops will be regarded as a single property, but that if a council wants to it can charge each shop or flat in a block separately.

Local Government NZ & 3 councils appealed against the way the Valuer-general had directed that certain properties be treated for valuation purposes.

Most of the country’s 74 city and district councils had been levying uniform annual charges on each flat or shop, but protesting ratepayers claimed only a single charge could be levied over the entire block. By ruling that occupation is the prime determinant, the Privy Council has deemed that each shop or flat in a block is a separate property and can be charged.

Local Government NZ chief executive Peter Winder said the Privy Council deciison was significant for 2 reasons. “It means that local authorities need not refund any of the rates that were under challenge. And just as importantly it gives a clear directive that the primary consideration in rating & valuation law is the promotion of a fair & equitable rating system rather than what is convenient.”

Continue Reading
WordPress Appliance - Powered by TurnKey Linux