The Local Government Funding Agency (LGFA) has confirmed a higher borrowing limit for Tauranga City Council, reflecting the fact that the city’s high growth may mean the Council needs to borrow more to deliver infrastructure in a timely way. 

Mayor Mahé Drysdale says the increased borrowing limit will not mean the Council will be taking on more debt immediately. 

“The higher limit will enable the Council to make better decisions on when to provide new infrastructure to cater for our growing population,” Mahé explains.

“We will still make any debt decisions in a planned and measured way though, through our three-yearly long-term plans and in the interim years, through annual plans. 

“Next year’s annual plan is currently out for consultation and does not envision any change in our existing borrowing limit, which caps Council debt at 2.8 times our annual revenue. In fact, we are predicting that the city’s overall net debt will be $81 million less than planned.”

Mahé says the new arrangement with LGFA would give the Council the ability to borrow up to 3.5 times its annual revenue, if it has to respond to unforeseen events, or there is an identified need to enable the development of new growth areas sooner than expected, to cater for population growth and provide the new houses the city needs. However, the Council would maintain a future internal debt limit of 3.3 times its revenue, to ensure borrowing capacity is available if it is required.

“The LGFA decision simply means we can call upon additional loan funding, if or when necessary, but at this stage, we don’t foresee a need for that in the next year.”

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