For all details on this decision see pages 58–59 of the consultation document, Securing our future.
Significant proposals 1: Should we set up a council-controlled organisation (CCO)?
We want to set up a structure now to be able to manage activities for the district in the future, including initiatives that could generate income to reduce our dependence on rates.
What are the options?
We recommend: We should set up a CCO
A CCO could be used for a range of activities. It would be the best way to run commercial assets in the most efficient and cost-effective manner. The accountable legal structure of a CCO would also give us a secure way to explore opportunities for generating other income to reduce our dependence on rates.
No - We should not set up a CCO
CCOs are used by councils throughout the country to independently run activities from housing and transport to economic development and events. They are used particularly to run services where a more commercial focus is required. They can also hold assets and generate income. A CCO with a profit objective is known as a council-controlled trading organisation (CCTO).
CCOs have been part of the local government sector for almost 20 years, and about half of all local authorities have a CCO. Sometimes councils set up CCOs for a particular activity and sometimes they are set up for the future.
Sometimes they are an ‘umbrella’ for several activities. For example, Greater Wellington Regional Council has a holding company that includes ownership of their interests in CentrePort, rail rolling stock (trains), and their commercial property (office buildings).
How could a CCO work for Kāpiti?
We’re proposing the establishment of a CCO in the form of a holding company. It would have an independent board of directors reporting to Council and would operate to Council requirements.
If, and when, we had specific activities that we consider could be managed by this company, we would undertake a specific consultation with the community on that proposal before any action was taken. This decision now is about setting up a structure that we could use in the future, subject to consultation.
Setting up a council-controlled organisation (CCO):
- goal is to set up a structure now that we could activate in the future
- a CCO could be in the form of a holding company
- it would have an independent board of directors reporting to Council
- a CCO with a profit objective – a council-controlled trading organisation – could be used for activities that generated income for the district
- we would consult with the community on any activities that could be managed by the CCO.
Cost - The costs involved in setting up the legal structure of a CCO are minor, as it is only an administrative process. It would be funded from the Council’s existing operational budget.
Timing - If Council decides to establish a CCO, we would aim to start the process in 2021/22.