The Council is consulting on a proposal to establish a new port related Council-Controlled Organisation (CCO) for the purposes of developing, operating and maintaining the Whanganui Port and associated assets.
Once established, the Council intends to place the $12.3M of capital, approved under the 2019/20 Annual Plan for the port redevelopment, along with Harbour Endowment Portfolio into the CCO. Assets from the CCO along with $12.5M of Crown funding through the Provincial Growth Fund (PGF) will form part of a Special Purpose Vehicle (SPV) with the Council owning between 70-80% of the SPV with the Crown owning between 20-30%. The SPV will be responsible for investing capital from both the Council and the PGF in the port redevelopment and will have similar reporting requirement to that of a CCO.
The SPV will manage the Harbour Endowment Portfolio on the Council’s behalf with revenue being used for the purposes of developing, operating and maintaining the Whanganui Port and associated assets.
Background
In 2016, the Council received government funding through Accelerate25, the Whanganui-Manawatū regional growth study, to develop a plan for revitalising the port area.
In its 2019/20 Annual Plan, Whanganui Council decided to spend $12.3M on infrastructure requirements needed for port users. Council also sought additional funding of $12.5M from the Crown through the Provincial Growth Fund (PGF), which was confirmed on the 2 July 2020. As part of the conditions of Council receiving the PGF funding, Council is required to establish a Special Purpose Vehicle (SPV) to manage the port redevelopment and transfer the Harbour Endowment Assets to the SPV.
To give effect to the creation of the SPV, Council is proposing to establish a new port related Council-Controlled Organisation (CCO) for the purposes of developing, operating and maintaining the Whanganui Port and associated assets. Once established, Council intends to place the $12.3M of capital, approved under the 2019/20 Annual Plan for the port redevelopment, along with Harbour Endowment Portfolio, into the CCO. Assets from the CCO along with $12.5M of Crown funding through the PGF will form the SPV with Council owning between 70-80% of the SPV with the Crown owning between 20-30%.
The SPV will manage the Harbour Endowment Portfolio on Council’s behalf with revenue being used for the purposes of developing, operating and maintaining the Whanganui Port and associated assets.
Special Purpose Vehicle Structure
Indicative Special Purpose Vehicle structure for the port
Options
Option 1
The Council establishes a new port related CCO for the purposes of developing, operating and maintaining the Whanganui Port and associated assets. (Proposed)
This proposal involves the establishment of an entity (SPV) that will undertake the redevelopment and future management of the Port. The Council’s initial equity investment in the entity will comprise $12.3M in cash and Harbour land and other assets (including the Harbour Endowment land).
Advantages and Disadvantages
| Advantages |
Disadvantages |
- $12.5M of Crown funding for the port revitalisation project through the PGF fund is contingent on the formation of the SPV and will allow for the better provision of port infrastructure and the associated economic and community benefits.
- The formation of the CCO is required for the efficient and effective establishment of the SPV
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- Through the SPV structure Council will have a lower level of control on the overall Port Revitalisation Project than if it were the sole funder of the project; and
- There will be additional reporting requirements from Council to the Crown.
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Option 2
The Council does not establish a new port related CCO for the purposes of developing, operating and maintaining the Whanganui Port and associated assets.
Advantages and Disadvantages
| Advantages |
Disadvantages |
- Council retains a greater level of direct control of the overall Port Revitalisation Project with fewer reporting requirements
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- Crown funding for the port revitalisation project through the PGF fund is contingent on the formation of the SPV
- Council will need to either find alternative funding sources or accept a lower level of service for the port, which may not meet community expectations in relation to levels of service
- The formation of the CCO is required for the effective and efficient establishment of the SPV
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