Rescue chopper loan approved
The Northland Regional Council has confirmed it will loan $9.6 million to help the Northland Emergency Services Trust (NEST) fund two rescue helicopters for the region.
Councillors at their monthly meeting in Whangarei on August 22 voted in favour of providing the loan, under which NEST could access low interest cash the council can borrow via the Local Government Funding Agency.
Council Deputy Chairman David Sinclair says today's decision could save NEST – and indirectly the community – more than $600,000 in interest payments over the life of the loan if the trust were to borrow the full $9.6M and comes after 'overwhelming' public support for the move.
With two of the trust's existing choppers almost 40 years old, it's keen to replace them with two Sikorsky S-76C++ models, buying one outright and leasing the other with the option to purchase.
Councillor Sinclair says under the loan arrangement, the council will initially provide the trust with $4.5M in the current financial year, allowing it to buy the first chopper.
To buy that chopper, NEST will also supply USD$1.6M from its Helicopter Replacement Fund as well as a contribution from the sale of its existing chopper.
That, coupled with other security measures, 'significantly' reduces the risk to council as collectively they mean if NEST were to default on the loan, the new chopper could be sold and council would most likely recoup its money.
The agreement also provides for NEST to borrow another $5.1M for a second chopper in the 2019/20 financial year, but only if it can first secure new contracts to provide services to the National Ambulance Sector Office (NASO) and the Northland District Health Board (DHB).
Councillor Sinclair says the timing and conditions surrounding the latter loan are because NEST's existing contracts with both parties expire in late 2018.
He says in arriving at today's loan decision, the council had sought a range of community views.
During a recent fortnight-long public consultation period on the proposed loan proposal, the council had received 453 submissions; 424 in favour of the loan, 25 disagreeing with it and four which did not indicate a clear preference.
"A very clear majority of submitters were supportive, in large part due to the invaluable service NEST offers, particularly to some of the region's more remote areas."
Councillor Sinclair says given the security and other measures put in place to protect ratepayers' interests, he and his fellow councillors were collectively comfortable the decision to offer the loan was the correct one.
He says while providing the loans would tie up about half of council's current low interest borrowing capacity, they would have no impact on people's rates.
"Effectively, this loan is simply another practical way we can support NEST and the provision of emergency air rescue services in Northland."