SWIF investment handed over to Trust

Date:

19 Jun 2014, 12:00 am

Categories:

News

South Waikato District Council may well be the only local authority in New Zealand to sign over a significant investment fund to an economic development Trust at a time when local government's future structure is being explored. Council plans to transfer $20 million from its South Waikato Investment Fund (SWIF) to an external trust to create a fund to be used for future economic and social development initiatives.

"It is a bold move by a brave Council," said Mayor Neil Sinclair, who spearheaded the concept. "Over the past year staff and other policy, tax and legal experts have investigated a host of options to best utilise Council's $20 million investment fund for economic and community development within the South Waikato."

A second trust called the South Waikato Development (DRIVE) Trust will also be established, to look for economic development opportunities in the district and link investors and business people. DRIVE will be given a start-up fund of $500,000 to undertake initiatives that will create jobs and economic wealth for district. Both the SWIF and the DRIVE trusts will consist of five to seven trustees each.

It is envisaged that the two trusts will work together. DRIVE will work with businesses to identify opportunities and then apply to SWIF to fund these initiatives. Other projects/opportunities, including those of a social development nature, will have the ability to approach the SWIF trust for funding. Having the two trusts will mean that the SWIF trust can concentrate on managing the investment fund and critiquing social and economic development proposals while DRIVE can get on looking for the opportunities that will create jobs and stimulate our economy.

Council will officially pass the resolution to transfer the funds on 19 June 2014 at which time a commemorative cheque will be handed over to mark this momentous decision. Ends: words 302

Above: Deputy Mayor Jenny Shattock and Mayor Neil Sinclair of the South Waikato District Council hand over a commemorative cheque to initial trustees Ian Elliot, John Cronin and Ben Smit.

Background/clarification

History

In 1994, Council received shares from Power Co. In 1998 Council sold the majority of the shares for $21.6 million, created the South Waikato Investment Fund (SWIF) and invested the proceeds according to Council's Investment Policy. The surplus earnings from the fund were used to subsidise general rates. Council also used $4.5million from the SWIF (and other reserves) towards community and economic development projects in 2006/07 (like the Waikato River Trails and the South Waikato Sport and Events Centre).

In the Long Term Plan (LTP) 2012-22, Council decided to gradually reduce the rate subsidy to zero by 2016-17 and use the SWIF for developing more jobs and promoting our District.

During the 2013-14 Annual Plan process, 83% of respondents wanted Council to establish an independent organisation to safeguard the money in case of amalgamation and to use it for economic and community development. Council has investigated this further with expert advice from strategic policy advisors, tax lawyers and legal professionals. Council proposed two options in a consultation document - retain the funding in Council or move the funding to an external body. There was overwhelming support from the consultation process to move the SWIF to an external body.

During the hearings and deliberations, Council resolved to move $20 million to the external trust. Council resolved to retain $5 million in-house to put to the community for projects and initiatives that had an economic and community development focus.

Currently

That process is underway. Consultation has occurred, 43 applications were received totalling over $13 million. Hearings and deliberations are complete and provisional decisions have been made. These decisions will be released very soon, once submitters have been notified in writing. At this time some submitters will be asked for additional information and other projects may be tagged with conditions; depending on some additional factors. Staff will be conducting this work over the coming couple of weeks.

Explanation of Trust Make up

Initial Trustees

The three trustees already appointed are the Initial Trustees for both SWIF and DRIVE Trusts. These trustees will only act in as Initial Trustees for a few months. Their role is to set up administration and processes, transfer the funding and arrange the sitting of the Appointment's Panel.

Appointment's Panel

This panel will consist of three Representatives from the Institute of Directors (that the Institute of Directors itself appoint); two Mayoral Representatives appointed by His Worship the Mayor Neil Sinclair and the sitting Chairperson of each Trust. Ian Elliot has been appointed Chairperson of DRIVE and John Cronin has been appointed Chairperson of SWIF. The two Mayoral representatives are Jenny Shattock and Herman van Rooijen.

SWIF Trust and DRIVE Trust

These two trusts will each consist of between five and seven members. They have yet to be appointed by the Appointments Panel. The term of appointment for the Trustees is specified in each Trust Deed.