The Christchurch City Council says if it does not sell shares in some of its assets, rates could double in five years. Its debt has jumped to $1.2 billion, up from the $900 million it announced in August.
Councillors were locked in a private meeting for much of this afternoon, discussing various options for reducing debt and bolstering funds to meet the costs of rebuilding the South Island city's earthquake-damaged infrastructure.
The potential deficit the council faced has ballooned since the release of a report from financial auditors Cameron Partners in August, which said it was $883 million in shortfall.
Mayor Lianne Dalziel said today the council intended to raise $550 million from Christchurch City Holdings Limited and council-owned trading organisations. She said the budget blow-out was partly due to the reality that insurers were unlikely to pay the full settlement the council initially relied on.
Ms Dalziel said the funds would be raised by the sale of 34 percent of the Lyttleton Port and 9 percent of its stake in Christchurch International Airport, among other options. Assets being considered also included lines company Orion.
Councillor Raf Manji said the decision to sell assets was a tough one, but would stop rates from soaring. "If we do nothing now they will probably double within five years."
Mr Manji said he expected lots of interest in the assets from investors, so the council could choose the best option.
The mayor said a final decision would only be made after full public consultation. The long-term plan would be released at the beginning of next year, followed by hearings and public submissions.
Rebuilding the city
The council agreed unanimously to set up a Development Authority to speed up the city's recovery from damaging earthquakes in 2011.
The authority's functions would include strategic decision-making and would be at arm's length from the council.
It would focus on procuring private investment, while looking at how to get as much as possible from council funding in public private partnerships.
Staff advisers were expected to prepare a report by the end of January for further consideration.