About the Kāpiti Resilience and Kāpiti Growth Funds
In 2018, as part of developing a new Long Term Plan (2018-35) for the Kāpiti District, Council approved two new investment funds be set up to be named:
- the Kāpiti Resilience Fund and
- the Kāpiti Growth Fund.
Plans for establishing these proposed long-term investment funds were set aside in early 2019, following a decision at the Council meeting of 24 January 2019. The funds were removed from the Council’s 2019/20 Annual Plan. Read the paper explaining this decision.
Read the Mayor's announcement about the decision not to proceed.
Background to the concept for the funds
The proposed funds were designed to allow Council to fund projects that would normally be challenging to manage – for example, in the case of natural disaster emergencies or for special projects that support the economic growth of the District.
Because Kāpiti doesn’t have the assets some other councils have, like ports or lines companies, using tools like investment funds was identified as a way other than rates for Council to fiscally manage some of the District’s challenging environmental and economic issues, while helping to keep rates as affordable as possible for its communities.
Similar funding approaches are used by other councils throughout New Zealand. These range from smaller funds like Masterton’s $1.7m to New Plymouth’s $280m. In Kāpiti, the initial investment in each managed fund was expected to be $10million per fund.
Purpose of each intended fund
Kāpiti has significant hazards posed by earthquakes and climate change with stormwater, landslips and coastal erosion issues attracting ever-increasing insurance costs. Meanwhile, the District is in a growth phase, partly stimulated by the new expressways through our region. This growth needs the support of the right infrastructure and is an opportunity to further build business and create local employment.
- The resilience fund was intended to fund resilience-focused projects in the case of an emergency.
- As an example, it could help smooth out the impact of increasing insurance-related costs for Council assets due to natural disaster management.
- The growth fund was intended to enhance funding available for projects that encourage businesses and recreational/visitor attractions to the Kāpiti District.
- This could include investments in strategic assets that would make a positive, long-term contribution to supporting the District’s growth.
Managing the investments
- These funds were to be investments managed by professionals and aimed at getting a return over the long-term - similar to the way funds like Kiwisaver work.
- The experts who advised Council are highly experienced financial advisors with many years spent working in the New Zealand Super Fund.
- To help guide any future management of the funds, Council adopted its own draft Investment Policy Statement.
- Adopted on Thursday 16 August 2018, it set out the Council’s investment philosophy, expectations, objectives and guidelines to help ensure any investment portfolio was monitored and managed appropriately.
Background to the investigation into the funds
Long Term Plan 2018-38 - Our financial strategy (including Council’s approach to investment – see page 16)
February 2018 – public workshop introducing the Kāpiti Resilience Fund
June 2018 – post consultation workshops discussing the funds and decisions on core components of LTP, including formal approval of the funds.
5 July – Operations and Finance Committee approves Treasury Management Policy update
28 June Council meeting – Long Term Plan 2018-38 adopted
16 August – draft investment policy adopted
24 January 2019 - Council agrees to cease work on the proposed establishment of the two funds.