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Can the council wait 10 years for GHL to grow?

Opinion Piece

A call from outgoing Gisborne Holdings Ltd chairman Bob Proudfoot for the council to allow GHL to grow its asset base could be contrary to what the District Council wants to achieve from its trading operation in the near term.

The self-described “cheeky” advice came at the conclusion of GHL’s annual meeting held in conjunction with the council’s final meeting of the year — a formal event that usually consists of a standard-format agenda. At the end, however, Mr Proudfoot chose to make some comments under the heading “the chairman’s last word”.

He asked the council to allow GHL to grow its now almost $100 million asset base in a similar way Eastland Community Trust had.

While GHL would continue to make its annual distribution to the council in accordance with its statement of intent, or better, he “seriously” advised the council to grant a period of at least 10 years for GHL to “mature” its asset base and distribution potential.

GHL has expanded over the four years Mr Proudfoot has been its chairman. From being solely the parent company of the 11,000ha Tauwhareparae Farms, GHL had a major development when the ownership of municipal property was transferred to it in 2015 — principally the controversial building of new offices in Fitzherbert Street.

Next the council transferred to GHL the vehicle testing station and Waikanae Beach Holiday Park, where it is in the process of a staged $8m development including a newly-opened pool. Both exceeded their income targets this year.

Now the council is considering a third transfer phase that includes its community housing (GHL already manages the 120 units), Gisborne Airport, some forestry holdings, quarries and other property . . . but has increasingly sounded as though it might have other plans for at least some of these assets.

The council has major financial challenges and a stated goal of increasing non-rates earnings — a big part of which would have to come from its commercial arm.

Can it wait 10 years for GHL to hopefully deliver a big step-up in distributions?