About Gisborne Holdings Ltd
Gisborne Holdings Ltd (GHL) is a 100% council-owned subsidiary. It means Gisborne District Council owns this company. It's managed by an independent board of directors.
Council set up GHL originally to hold some of our commercial operations and act as our commercial arm. Council owns Tauwhareparae Farms Ltd which sits under GHL.
For more information about GHL visit their website(external link)
Transfer municipal building assets to GHL
In September 2015 we consulted with the community on the proposal to transfer the ownership and control of our municipal buildings to GHL. We received 7 submissions - 6 opposing and one in support.
At the Council meeting on 22 October 2015 Council agreed to transfer the municipal building asset to GHL. The recommendation went through 9 votes to 5.
As part of the proposal GHL will:
- rebuild the Fitzherbert Street building complex
- provide temporary accommodation for staff during the rebuild
- lease the buildings back to Council once constructed
- manage the relocation of staff back to the site
- manage all municipal buildings including land at Fitzherbert Street, Te Puia Springs, Banks Street and Dunstan Road.
An amendment to the 2015-2025 Long Term Plan has been completed. The amendment was required as our municipal buildings are a strategic asset.
About the transfer.
Why did we transfer the municipal buildings to GHL?
By transferring the municipal building to GHL, Council can cover costs for temporary accommodation, staff relocation and the rebuild without affecting rates increases and Council's debt levels.
The costs to build may increase due to inflation and extra rental accommodation costs if there's delays in the rebuild.
We looked at a number of options and the proposal to transfer to GHL was considered to be the best option in the long-term.
The benefits are that GHL is a commercially operated trading company and any profits come back to Council as it is 100% owned by us.
It's expected that GHL will manage the municipal buildings and generate income which will in turn be returned to Council as dividends. This will help to keep rates increases to a minimum.
Council also can influence GHL through its formal statement of intent process each year. This allows Council to have some input in the future direction of GHL. See GHL financial documents
See document 2Q
Why did Council transfer all the municipal buildings and not just Fitzherbert Street?
Fitzherbert Street is one of 4 municipal buildings that make up part of the asset.
For GHL to operate the municipal buildings efficiently, it’s best to operate all four building sites to be a more commercially viable option for them.
Control of the asset will go to GHL and the sites will be leased back to Council at a commercial rate.
How is GHL looking after the asset for us?
GHL will own the asset but Council will own all of GHL. GHL have control over the asset but only within the constraints of the governance documents set by Council.
The governance documents control what GHL can and cannot do. These are the company constitution, the Statement of Intent, the Owners Letter of Expectation, the Memorandum of Understanding and the various lease agreements GHL has with Council. For example, the land transferred to GHL is only able to be used for municipal purposes.
Councillors have ensured the assets are protected and will be maintained within the requirements of these formal agreements.
Would the transfer to GHL be permanent?
GHL is 100% owned by Council. At any point in time, councillors can decide to transfer it back.
What are the benefits and risks of this arrangement?
- the asset remains within a council-owned company.
- increase in costs of rebuild and relocation are met by GHL and not Council meaning no direct negative impact on rates or debt.
- GHL is a commercial operation, so this should enhance the efficiency and operation of the municipal building management and operations.
- The transfer of the municipal buildings asset would enables GHL to leverage this asset to expand into more revenue generating activities in the long-term.
- Risks involve the transfer of control to another entity (GHL) that Council would manage through a series of formal agreements and a close working relationship.
How will it affect my rates now and in the future?
There is no negative impact on rates.