Financial Strategy Capital Expenditure The Council currently has assets worth almost $1.6 billion. During the next 10 years the Council is planning to undertake capital expenditure of: $120 million to meet additional demand (including vested assets) $189 million to improve the levels of service $216 million to replace existing asset $525 million in total The graph below shows the amounts being spent on each capital expenditure category to meet community expectations (levels of service), replacement of existing assets and growth over the Long Term Plan. External Debt External debt is only raised after development contributions, reserves and other funding sources have been used. Despite using external debt as a last resort, gross borrowing is proposed to increase from the $96 million shown in the 2017-18 Annual Plan to $270.8 million in the 2023-24 year, before decreasing to $214.5 million in 2027-28 year, to fund a $525 million capital program. Note these values are Gross Debt, as Council plans to continue to hold at least $12 million of investments as part of its disaster recovery planning and has borrowed on behalf of the 100% owned MDC Holdings Ltd Group, which includes Port Marlborough NZ Ltd and Marlborough Airport Ltd. The graph below shows the trend over the Long Term Plan for each year’s rates, borrowings and capital expenditure. This graph includes an allowance for price movements based on the BERL forecasts. This graph clearly shows the capital In each Activity section there is a list of major capital projects planned over the 10 years expenditure programme is linked to a corresponding movement in loans required to fund of the Long Term Plan. A number of these projects have been spread out to coincide this work. with growth, need and/or affordability. Capital Funding Sources The following graph shows the capital funding sources planned to fund the capital expenditure. 2018-2028 Long Term Plan Page 164