Petition won't stop quarry purchase, says Kirton

Ruapehu Bulletin, Volume 13, Issue 636, 14 May 1996, Page 1

Petition won't stop quarry purchase, says Kirton

Ruapehu District Council mayor Weston Kirton has submitted the following press release in response to efforts to block the raising of a $3M loan to set up a holding company that will then purchase a taumarunui quarry (see story at left, and P2): The Council has become aware that a petition is being circulated demanding a loan poll in relation to the proposal to raise a loan for a sum of up to $3 million to finance the Ruapehu District Council' s shareholding in its holding company which will own both Ruapehu Construction Limited and the quarry to be purchased from Byfords which will be owned by Ruapehu Quarries Limited. The proposal to purchase the quarry is currently being finalised. This proposal was being funded by a separate loan which has already been confirmed by the Council and is being put in place. Demanding a poll on the holding company now will not block the purchase of the quarry. It will in fact have the effect of costing the council

a substantial amount of money on an ongoing basis. This is because the new loan is being raised to fund the council's investment in a taxable activity and the amount of the loan will be returned to the council by the holding company as payment for RCL. When the amount is returned, which will be immediately after it is raised, it will be used to repay other public debt already existing such as water and sewer loans which are nondeductible for income tax purchases. The new loan will be deductible for income tax purposes and therefore the RDC Group, including its companies, will be able to claim full deductibility of the interest paid on the loan at 33 cents in the dollar on the principal sum of $3 million. The saving to the council would be thus in the vicinity of $90,000 annually. This clearly is a considerable advantage and savings to the ratepayers Turn to Page 2

Petition won't stop purchase: Kirton

FROMPAGEl and should not be foregone because there is a mistaken belief the loan is related to the financing of the quarry. I stress again that the loan replaces existing public debt and doesnot add to it. The total of public debt owed by the Council therefore stays the same as it was before the raising of this particular loan. Ruapehu mayor, Weston Kirton