Hastings ratepayers will benefit after council secured a very favourable interest rate on a loan from the newly created Local Government Funding Agency (LGFA).
A $15m, seven year loan to fund Council's infrastructure and capital works programmes and renew existing borrowings has been secured at a margin that is significantly lower than council would have achieved, had it gone to the capital markets in its own right.
Chief Financial Officer Tony Gray says "Had council borrowed the $15m from capital markets in its own name, ratepayers would have been saddled with additional costs of around $145,000 per annum over the life of the loan."
Mr Gray says "The fiscal problems in Europe and the challenging domestic and international
markets are increasing the pressure on bank margins. It is very pleasing that, even though the LGFA has only recently commenced operations, it is able to borrow at rates which are well below what banks can achieve. These savings can then be passed on to the shareholding councils which helps keep funding costs down for ratepayers, thereby reducing upwards pressure on rates."
The LGFA was incorporated on December 1st 2011 and aims to provide more efficient funding costs and diversified funding sources for shareholding local authorities. The Government, Hastings District Council, and 17 other councils from around the country are the initial shareholders in the LGFA.
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