Waikato Regional Council has received independent confirmation that funding conditions have been met enabling its $6 million contribution to help build a national cycling centre of excellence near Cambridge.
Last December the council finalised the terms and conditions which had to be met by the Home of Cycling Charitable Trust by June this year before the council would grant the $6 million.
The conditions related to project governance, probity, and funding, and were designed to protect the ratepayer contribution to the project.
In his report presented during the council’s long term plan deliberations today, Mark Renner of Hamilton law firm Tompkins Wake said the council could “reasonably conclude that the funding conditions have been or will be met”.
Deloitte, which undertook due diligence of the trust’s business plan, including funding, cashflows and capital expenditure during construction, also reported to the council.
Deloitte partner Doug Wilson said the trust had secured funding of $22.4 million, which represented 78 per cent of the total funding required. He said with the availability of a BNZ loan and underwrite agreements, the trust has sufficient funding to cover the total cost of the project. The trust has indicated it intends to continue fundraising activities, which should further improve the trust’s financial position, he said.
Mr Wilson concluded that “some risks remain as they do in all major capital projects..., but these can be appropriately managed”. The underwrite agreements and other funding arrangements, coupled with drawdown schedule which phases the payments during construction, means “the risk to WRC and ratepayer funds have been mitigated”.
Following consideration of the advice, councillors voted to include the $6 million contribution in the 2012-2022 Long Term Plan.
Deliberations on the long term plan are continuing and confirmation of the grant is expected tomorrow (Wednesday 30 May).
Once approved, rating for the project will begin in year one of the long term plan, with the funding coming from internal borrowing.
The trust will receive the funding over 15 months, receiving an initial $1.4 million on 1 July 2012. This will be followed by a further five drawdowns of $1.15 million each in October 2012, January 2013 and April 2013, $250,000 in July 2013 and $900,000 in October 2013.
Deloitte has confirmed that this schedule mitigates the council’s probity risk.
Sport New Zealand has confirmed its $7 million funding contribution to the $28.5 million facility, while Waipa District Council has confirmed its $1 million contribution.