FINANCIAL DISASTER AHEAD FOR WELLINGTON'S RATEPAYERS- BRYAN PEPPERELL SPEAKS OUT
Mayor Prendergast has recently stated .."The City has $5.8 billion worth of assets. Our debt is just 4 % of our total assets. Council has agreed to borrow up to $20 million a year to pay for new assets." This statement from Mayor Prendergast about the value of the city's assets in relationship to debt shows just why we are heading for a meltdown.
The Mayor has steadily sold off the city's performing assets, beginning with Capital Power and the parking buildings, and moving onto ground leases. Of the performing assets, only the Airport share is left, unless we sell Council housing and abandon our commitment to the poor and our pending agreement with the Labour Government to foot the badly needed revamp and modernisation of the housing stock.
It appears Mayor Prendergast hasn't understood the value of a performing asset as opposed the city's depreciating assets making up most of the 5.8 billion dollars of the city's book value.
This is not the first time I've been critical on the Mayor's spin on Council's debt but this week I wish to expand on what is a serious problem as I see it. I'm of the opinion that the real estate market is over valued up to 40 percent. That's a bubble, but added to that is the fact that many people, with the encouragement of the banks, have borrowed against their over valued properties and spent on consumer items such as cars, and white-ware, along with other home improvements, like a new kitchen. Its been a consumer boom that has been financed on credit. Credit based on an over valued real estate market.
The first speed wobbles came with the rates differential. The Mayor's trusted lieutenant Deputy Shaw called a halt to the wealth transfer, fearing electoral consequences. It would mean an 8 percent rise to the residents and a 2 percent rise to business. In the meantime murmurings were becoming louder over developers taking control of the Council.
A symbolic action was deemed necessary.Commercial mayhem would continue in the Central Business District as with subdivisions. The talk of an overheated residential property sector became louder and interest rates continued to climb.
With the help of an uncritical media sufficient consent could be manufactured to see the City through it's current crisis and unattended growing debt (currently at $290.775 million and leaping to $354.829 million gross borrowings in 2008/09). This is set against an unsustainable economy with climate change demanding less productivity.We are headed for a meltdown.
posted by pepptalk at 1:54 PM
2 Comments:
'Meltdown' eh Pepp?
I really believe you are softening the situation more than a little.
If one looks at the points you raise and extrapolate a year - maybe two - of the present course of events, we find parallels with the beginning of the last Great Depression. I refer to over-inflated investment markets - including housing - and incredibly high levels of personal debt pervading nearly every household.
That, unfortunately, is a fact and damn the 'spin doctors' (paid liars) who still tell us everything's 'OK' & we're looking at a'Soft Landing' - whatever the Hell THAT means.
Meanwhile, Mayor Prendergast is doing Nero impressions - still fiddling while Rome burns.
Now borrowing flat-out, with no idea how to repay the debt, she has realised there's an election coming and she should be seen to be making some kind of effort to prop-up Wellington's ailing infrastructure.
Are we as voters really that STUPID?
Will we let her & her sycophants on Council be re-elected, only to watch as they go back to their wily-ways post election?
Do voters want more debt and sky-rocketing Rates, for no real gain?
At least there's a real challenge for the Mayoralty this year.
For God's sake get in Pepp!
We need you!!
From: Jack Ruben
Sent: Wednesday, 30 May 2007 3:54 p.m.
To: Bryan Pepperell
Subject: Re: Emailing: viewtopic.htm
Bryan,
Well done for yet again drawing attention to the folly of mayor Prendergast and her cabal, past and present, for selling off Council's revenue earning assets, and then squandering the proceeds. This applies equally to previous mayors Wilde and Blumsky.
When Fran Wilde sold off Capital Power against our wishes, she trumpeted in the (then) Evening Post "Wellingtonians rejoice, - no more rates rises for the next ten years" Yeah right! She simply moved on without a backward glance. She and cllrs Prendergast, Nicholls, Armstrong, Foster & co had sold off a wonderful revenue-earning asset.
Then Prendergast and cronies sold off our revenue-earning carparks to a group who immediately onsold it for plus/minus $5 million dollars profit. Council owned carparks were a vital part of the inner-city's viability, now lost for ever.
Then she and cabal sold off revenue-earning ground leases, and are now looking for other assets to sell. My guess is attempts will soon be made to privatise our water to facilitate sale to yet another group, resulting in unaffordable water rates. Just ask Auckland!
What the mayor is unable to comprehend is that a city, business or individual can be "asset rich and cash poor". A person can own a million dollar boat and not be able to afford the fuel to use it. We can value our roads, drains and pavements at whatever figure we like, but they cannot be sold to pay off debts.
Consider the commercial experience of Wilde, Blumsky and Prendergast............. non existent!
In October, we only need to replace Prendergast and four of her inner circle of sycophants, and can save for our children what is left of our wonderful city and waterfront.
If we lose this last opportunity because of apathy or indifference, it will be too late. These next years are the most vital in Wellington's recent history.
Keep up the fight, Pepp!
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