Noosa Mayor Tony Wellington called it a “red letter day for ratepayers” in an announcement Council would use $10 million of its cash reserves to pay off a portion of a $27 million loan which it inherited at de-amalgamation, but at Council’s General Committee meeting Councillor Ingrid Jackson asked why it wasn’t paying off $20 million.
Cr Wellington said paying off $10m made “good sense” and left Council with “another $10 million in cash reserves for emergency purposes.”“We get a better bang for our buck by paying off these inherited higher interest rate loans than we would if we simply continued to invest the money at today’s interest rates,” he said.
“This decision should give ratepayers a level of comfort that their council is financially stable now and into the near future.”
However Cr Jackson said there would be more savings if Council paid $20 million off the loan which carries an interest rate of 6.29 per cent annual interest and if needed Council could borrow at a lower interest rate.
Noosa Council has loan borrowings of about $35 million, she said. Of this, $27 million is a historic loan at 6.29% interest for debt transferred to Council at de-amalgamation.
Meanwhile total cash on hand was $84 million at the last peak in February 2019.
Council’s total cash cycle fluctuates by $26 million on a bi-annual basis as rates are paid in February and August and then used to fund operating and capital expenditure.
Of the total cash reserves, which include a buffer of about $38 million including constrained levy funds, there is still another $20 million surplus cash which is not needed.
The Council staff recommended, based on Queensland Treasure Corporation analysis, that Council repay $10 million of the 6.29% interest loan.
