Cromwell Community Board responds re: their $14 million reserve fund
- by Peter Newport :
- Feb 15,2019
Crux raised some questions recently about the large scale of reserves held by the Cromwell Community Board - $14 million - linked to the fact that the CCB also plans to increases rates by 12%, in spite of these reserves.
We've now received a response from CCB Chairman Neil Gillespie, earlier this week. We publish his responses below (in red) but still feel that there is some ambiguity around how all of this adds up.
Crux appreciates Mr Gillespie's response and recognises that this is a complex issue that needs a bit of time to understand. We'll take a further look and report on this matter in the future.
- · Why does the CCB have $14 million in reserves? How long has it taken for this amount to accumulate and why has (apparently) so little been spent? - accumulated over the years largely as a result of investments made by the Board in property that has been realised.
- · · Why would you increase your rates by 12.2% if you have such healthy reserves? - rates are generally to cover the cost of the day to day living expenses for services provided to the community/ratepayer by the Board. Increases could be funded from reserves but the receiver of the services they relate to wouldn't be paying the true cost and eventually the reserve fund would be depleted and then the cost of any previous increases would have to come from the ratepayer.
- · · How would “high level plans” cost anywhere near $3.5 million and who would this money go to? How Waas this amount calculated - by whom? - The 3.5 million is a staff estimate for a series of Council initiated plan changes to the operative Central Otago District Plan and also for design work on Council civic facilities and arts culture and heritage centre buildings that could be required once the Masterplan is approved. The amount is included in the Annual Plan subject to approval of the Cromwell Masterplan and an amendment to the Long Term Plan (LTP). Further financial analysis is currently being undertaken and this will be presented to the Cromwell Community Board in a full report on the Masterplan. When the masterplan is adopted, a separate consultation exercise will commence on the amendment to the LTP, and at that stage the community will have the opportunity to lodge submissions on the funding options. This is a timing issue because the Masterplan is not yet approved, and if an amount in not included in the Annual Plan for 19/20 that would delay commencement of any work for a year.
- · · How could increased depreciation (a non cash item) produce the need to raise CCB rates? - generally depreciation is cash funded by Council so that the funds are available when the assets that have worn out need replaced.
- · Where can we find full accounts for the CCB? - included in the Council annual reports and as reported at CCB meetings.