LGFA Clarification of Relationships
The request was partially successful.
From: Andrew Mitchell
Dear Department of Internal Affairs,
Dear Enquiries / Mr Mark Butcher, CEO
You have not acknowledged receipt of [email address]
dated 19th September 2023, and so I repeat this:
Thankyou for your response.
In your response, you have stated;
“LGFA cannot seek to recover this amount from other local authorities.”
“Local authorities do not provide a guarantee of another local authority's debt.”
Your response also states;
“When LGFA borrows money, its obligations are guaranteed by most of the local authorities who participate in the LGFA borrowing structure (LGFA Guarantee).”
“If a guarantor fails to pay its pro-rata share of a demand under the LGFA Guarantee, the Security Trustee will make further demands on the other guarantors for payment of the unpaid amount on a pro-rata basis until the outstanding amounts are paid in full.”
It is worth noting here, that your ‘LGFA An Overview’ document on your website also states;
”…[a] council… [who is a guarantor], [provides] a guarantee [which] will be in favour of the obligations of LGFA. Any call under the guarantee will be allocated across *all the guarantors* on a pro rata basis in relation to their rates revenue.”
Your ‘Amendment and Restatement Deed (Guarantee and Indemnity)’ [document 3756987 v6] it states;
“…[LGFA] shall deliver a Demand to each Guarantor requiring the Guarantor to pay the proportion of the relevant amount…”
“…if one or more Guarantors fails to pay in full its Relevant Portion of a Relevant Amount… …the [LGFA] may deliver a further Demand to *each Guarantor other than the Defaulting Guarantors requiring that Non-Defaulting Guarantor to pay the proportion of the Shortfall Amount…”
“…for each Non-Defaulting Guarantor , its *Additional Relevant Proportion*…”
“…if one or more Non-Defaulting Guarantors fails to pay in full its Additional Relevant Proportion… …the [LGFA] may deliver a further Demand to each other Non-Defaulting Guarantor… …shall apply to the relevant shortfall amount *and such other Non-Defaulting Guarantors…”
“…continue to apply until the Relevant Amount has been paid in full to the [LGFA].”
My points and hence the questions are;
1. Your statements made in response to my original OIA seem incorrect; is it not true that whilst a council (Guarantor) may not be directly responsible for a “Defaulting Guarantor's” specific or actual debt, however a council (Guarantor) may receive a Demand as a Non-Defaulting Guarantor, and
2. To clarify my question around a councils protection from other defaulting Guarantors (question 4), and given clause 16.9(d) of the aforementioned deed, is there no limitation to the continuance of the Demand to Non-Defaulting Guarantors, OTHER THAN those specified in clause 3.4 (a) - (d) where the Demand is a proportion of the Relevant Amount based on a pro rata allocation of the rates revenue?
Department of Internal Affairs
Good afternoon Andrew,
Your previous request to the Department was transferred to the Local Government Funding Agency (LGFA) on 12 September. I attach again the notification sent to you, advising you of that transfer, and it is also included in the train of your request on FYI here https://fyi.org.nz/request/24025-lgfa-vs....
As your request was transferred to the Local Government Funding Agency, that agency will have received the notification of your follow up request, which you posted as a reply into the thread of your original request. To be clear - the Department of Internal Affairs did not receive a notification of a new request from you on 19 September.
I have consulted with the Local Government Funding Agency regarding a transfer of "is there no limitation to the continuance of the Demand to Non-Defaulting Guarantors, other than those specified in clause 3.4 (a) - (d) where the Demand is a proportion of the Relevant Amount based on a pro rata allocation of the rates revenue?" which appears to be the only eligible OIA question in your correspondence.
The Local Government Funding Agency has confirmed that they did in fact note your follow-up correspondence to their response at the time, and they will be responding directly in the thread you posted it. As they already have your request, transfer is unnecessary.
Therefore as the information you have requested is not held by the Department of Internal Affairs, and I am not aware of another agency that your request could be transferred to, I must refuse your request under section 18(g) of the Act.
You have the right to seek an investigation and review by the Ombudsman of this decision. Information about how to make a complaint is available at http://www.ombudsman.parliament.nz/ or Freephone 0800 802 602.
Noting that you have made a new request to the Department of Internal Affairs regarding follow up questions you have for a different agency, I have noted that FYI may not have included the Local Government Funding Authority as a responder yet and have sent an email to the service team to ask them to check that this authority is on the responder list. Please note that you are able to contact the Local Government Funding agency directly at [email address]. This address is also listed on their website.
Nāku noa, nā
Michelle Reed (she/her)
Lead Advisor Official Correspondence | Information Management and Privacy
He Ringa Manaaki | Workplace Services Group
He Pou Aronui | Organisational Capability and Services
Te Tari Taiwhenua | Department of Internal Affairs
Level 3, 45 Pipitea St | PO Box 805, Wellington 6140, New Zealand | http://www.dia.govt.nz/