Where EXACTLY did the $350 million raised by Auckland City Council through ‘Secured Fixed Rate Bonds’ go? asks Lisa Prager.

Ms Lisa Prager

85 Garnet Road

Westmere

Auckland   1022

Dear Ms Prager

Local Government Official Information and Meetings Act 1987

Re: Secured Fixed Rate Bonds

 

I refer to your letter dated 27 January 2011, which we received on 28 January 2011, requesting information about Secured Fixed Rate Bonds.

Please note the following response to each question raised:

1. Please confirm the total amount raised through the Secured Fixed Rate Bond, which closed on 19 March 2010?

Auckland City Council raised $350 million on 24 March 2010 via a retail bond issue.

2. How much of this Bond offer has been spent?

All the cash received on the bond issue has been utilised.  Council is a net borrower therefore does not hold significant cash for long periods.

3. What has the money been spent on?

The use of the bond issue proceeds was outlined on pages 7 and 17 in the investment statement dated 17 February 2010 (attached).

The use of proceeds was for general financing requirements of the Auckland City Council, including debt retirement and capital expenditure. In addition, Auckland City Council on-lent some of the net proceeds of this bond offer to other existing councils in the Auckland region. I  This was to avoid the need for those councils to undertake their own debt raising, thereby coordinating a borrowing programme across the region.  On-lending to the other councils reflected the announcement by the Auckland Transition Agency that the borrowing and treasury functions of the existing councils would be integrated during the transition to the new Auckland Council.

Please state in full the amount of the net proceeds of the bond issue which was used for debt retirement by Auckland City Council.

Please state in full the amount of the net proceeds of the bond issue which was used for capital expenditure by Auckland City Council.

Please state the amount of the net proceeds of the bond issue which was on-lent to other councils prior to the amalgamation

Please state the amount of the net proceeds of the bond issue which was not used once amalgamation took place.

4. Name the companies’, contractors and subcontractors who have received funds from this source?

Council manages its treasury and cash flow on a council-wide basis.  Specific cash inflows are not tracked to specific cash outflows (apart from tagged funds), therefore council cannot identify individual third parties that would have received the cash from the bond issue.

Please answer this question properly in the spirt it was put i.e

It does not seem appropriate, legal or true that an organization of the size  of the Auckland Council can say that  ” Specific cash inflows are not tracked to specific cash outflows” (apart from tagged funds), therefore council cannot identify individual third parties that would have received the cash from the bond issue.

Under my original OIA I wish this questioned to be answered in full, I also expect question 5 answered in full.

5. Name the amount received and the projects related to each company?

Please see response to question 4 above.

6. Where and when was this information made public?

Re: Answers 4,5 &6 Please note it was clear that my original questions asked “Where and when” were answers to question 4 and 5 made public. NOT WHERE OR WHEN Was DETAILS OF THE SHARE OFFER MADE PUBLIC! Please answer question 6 as it was asked.

6.Where and When was information made public about the projects that received funding and the companies involved!

(THE INFORMATION BELOW IS NOT ANSWERING THE QUESTION) The entire thrust of this OIA is about where funds raised from the bond offer have been spent . NOT on the floating of the offer!

The information on the retail bond issue was made public on a few occasions these are as follows;

Intention to make a new retail bond issue was announced by NZX on 24 December 2009.

The issue document (Investment Statement) had the details of the bond issue, dated 17 February 2010.

When the bonds were issued, there was an NZX announcement on 24 March 2010.

It was included in the quotation notice for the NZX as per the NZX announcement on 24 March 2010.

Information on council’s retail bond issues are also available on the councils website. HYPERLINK “http://www.aucklandcity.govt.nz/council/services/retailbonds/default.asp” http://www.aucklandcity.govt.nz/council/services/retailbonds/default.asp

7. How is information made public about the amount raised and how it is spent?

Please ee response to question six above.

8. Will the Mayor Len Brown uphold his election promise to open the books to the public? Clearly this questions inferred ” when and how will this info” be made public” I find the response arrogant and glib. Please answer when will and how will  the mayor make public his election promise to open the books!

Yes

9. Will the Mayor Len Brown fulfill his election promise to undertake line-by-line analias of where our public money is going before agreeing to a rate rise? Again I find your response arrogant and glib.

Questions 9. inferred “when and how will the mayor fulfill his election promise to undertake line-by-line analysis of where our public money is going before agreeing to a rate rise!

Yes

10. What possible reason could the Auckland Council expect to raise the rates when the public has already underwritten or gone Guarantor for a total of $350,000,000?

Rising inflation, increases to ongoing debt servicing costs,

Answer 3. suggests that  debt retirement was one use of the bond issue funds, therefore indicate exactly how much debt was retired and how much is still being serviced. What funds where spent on goods and services, what companies received funds/cash/payment from this source. (Not a hard question to answer)

and any increase in the level of service provided by council or an increase service provide by the council.

Please details what increase of services has occurred. Please note these two sentences mean exactly the same thing, I am surprised that this sentenced was not edited!

are the primary drivers for rates increases by council. Any increases to these variables (please detail what variables you mean) will require council to raise rates to meet its day to day obligations. The $350 million proceeds received by Auckland City Council in March 2010 from the retail bond issue has been completely utilised as discussed in question 3 above. (Detail question 3 as requested showing full utilization of the total funds of $350,000,000)

If you have any further queries please contact me on 301 3810, quoting Official Information Request No. 9000107451.

Yours sincerely

Nicole Miell

Information Advisor

Public Information Office