The CCTO is now known as Ahuriri Investments Management Ltd (AIM) and will begin operating from 1 July 2025. Council is currently identifying the assets that will be managed by AIM.
AIM will manage a long-term investment portfolio to build Council’s financial resilience over many decades. It will help us to rely less on rates to fund activities. Background information on the CCTO’s development and purpose can be read on pages 20-23 in our Three-Year Plan 2024-27 Consultation Document.
Since then, Council has agreed on the principles, values, and governance structure for the investment portfolio and AIM. A draft Statement of Expectations has been developed, which describes Council’s boundaries and expectations of the investment portfolio and AIM. A Statement of Investment Policies and Objectives has also been developed. Among other things, this includes policies for ethical investing and Council’s appetite for investment risk.
Additionally, Council has approved the first group of assets to be managed by AIM. These are Napier City Council’s 26% shareholding in Hawke’s Bay Airport, Parklands development land, leasehold land and various other surplus properties. Further decisions on assets are still to be made.
The investment portfolio will deliver an ongoing income source to Council. So, it’s important the value of the investment portfolio is protected to ensure future generations benefit from the income and growth of the assets. To achieve this, we are proposing to designate the value of the investment portfolio as a ‘Strategic Asset’. A strategic asset is one that is vital to Council in delivering services or helping to achieve any outcome important to community wellbeing. Napier City Council’s Strategic Assets are listed in our draft Significance & Engagement Policy in the supporting documents section. They include things such as roads, pipes and facilities.
Under this option, any future council would be unable to withdraw from the investment portfolio beyond the inflation-adjusted net value without first consulting the community.
The initial value will be agreed to by the current Council as at 1 July 2025. The value will then increase each year according to the inflation rate at that time. As more assets are added to the portfolio in future, its inflation-adjusted net value will be adjusted. The portfolio’s inflation-adjusted net value will be part of AIM’s regular reporting requirements and will be publicly available in Council’s statutory reporting.
Listing the portfolio’s value as a Strategic Group of Assets adds a layer of protection to Council decision making that balances short-term financial needs with building long-term benefit. It will reassure the community, and Council itself, that withdrawing from the investment portfolio will be less likely to be influenced by political decision making. It will ensure residents have a say on any proposal to withdraw investments that would reduce the value of the portfolio below a certain amount.
Ratepayers will benefit from a growing investment if we specify that investments can’t be withdrawn beyond a certain value without community input. Future generations will have a larger ongoing dividend that Council can use to fund services and activities.
Although the portfolio’s value will be protected, AIM will still be able to readily buy and sell individual assets within the portfolio. This means AIM can ensure the best balance of assets to reduce risk and maximise the portfolio’s return. Assets within the investment portfolio that are listed individually as Strategic Assets would still need to be consulted on before sale, even if the value of their sale does not go beyond the specified net value.
Although this option reduces the ability for politics to influence investment decision making, this also makes it harder for Council to quickly access funds where they are needed urgently, such as in an emergency response. This is due to the requirement to consult before withdrawing assets beyond the specified portfolio value.
Under this option, the investment portfolio’s value and the ability to withdraw investments to fund activities will have less protection from the political will of any future council. The community’s views would not need to be considered first, meaning a higher proportion of the portfolio’s assets could be withdrawn more readily. This creates the risk of the portfolio’s value steadily reducing over time. Investment dividends would decrease, meaning Council would have to rely more on rates to fund its services and activities.
Just like a retirement savings fund, it is important that the ‘nest egg’ is not taken from too often, to ensure the best chance of good financial returns for the community.
Have your sayPlease provide your feedback in the form below before 5pm, Wednesday 30 April.
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OPTION 1: Protect the inflation-adjusted value of Council’s investment portfolio by listing it as a Strategic Group of Assets.