Central Coast Council is looking to obtain a $50M loan at a cheaper rate than the current loans that it is paying off.
In a report that didn’t get debated at the April 27 meeting of council, the Chief Financial Officer, Craig Norman, flagged an ”impending recession”.
The report’s recommendation that council authorise the Chief Executive Officer to present a loan proposal for councillors’ consideration at the meeting of May 25 for the sum of fifty million dollars was adopted by the exception method, when it was passed en masse with a swag of other items without debate.
The report said that council’s needs for borrowing stemmed from a number of operational requirements.
These included: retiring relatively expensive borrowings obtained by the former Wyong Shire and Gosford City Councils; Increasing capital expenditure to provide greater community infrastructure; and, the potential risk of reduced cash receipts from ratepayers impacted by the impending recession prompted by the COVID19 pandemic.
Council said it also needed to finance infrastructure with long useful lives such as water and sewer assets.
The last external borrowings Council initiated was in 2013-2014, for a sum of about $14.5M.
“Council has acted diligently over the past five years to reduce its expensive borrowings obtained by the former Councils at the time of the Global Financial Crisis,” the report to council said.
”Based on operational requirements listed above, it is time to start refinancing these borrowings to ensure that Council is maintaining its liquidity benchmarks as set out by the Office of Local Government.
”The Long Term Financial Plan in the 2020 Operational Plan provided a figure of $30M as a provisional borrowing amount for the year 2019/20, however it is proposed to increase this amount due to th additional needs raised above.
”Further, Council has proposed additional borrowings in the Operational Plan 2020/21 currently on exhibition.”
Later in the report it says: ”Council’s current weighted cost of debt is about 6 per cent and at this time, Council can access funds at a lower rate, lowering council’s overall borrowing cost.”
Agenda Item 4.5
Central Coast Council Meeting, April 27