CCO vs CCTO for GDC Community Housing

TRA Chairperson Rick Thorpe lays out the case for GDC community housing to be placed under a CCO rather than a CCTO… GDC will soon be consulting on the transfer of these properties to Gisborne Holdings Ltd.
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The Gisborne Herald is running an online poll this week asking residents if they support our social housing assets being transferred to Gisborne Holdings Ltd, the council’s CCTO (council-controlled trading organisation).
These housing assets had a value of $11 million in 2014. The current strategy of the council strongly favours putting these housing assets into GHL, and allowing GHL to borrow against them to pursue other commercial investments.
Council-controlled organisations come in two forms, the CCTO and the CCO. The CCTO option is strictly a commercial trading structure managed entirely by independent commercial directors who are expected to ensure all activities are profitable. The CCO option allows for a more balanced approach, with commercial directors bringing commercial discipline and experience to partner with council representatives.
The CCO option, like the council, is not expected to have a profit focus but a responsibility to balance the books.
This “not for profit” ideology is appropriate for activities that have a social, environmental or common-good intention, like social housing and forestry to protect our water supply etc. This is entirely consistent with how other councils around the country manage these activities.
To debate this issue we must first decide — are we as a community committed to providing a social housing service or aren’t we?
If we are, then surely the current social housing investment must be managed prudently and not put at risk as leverage for other strictly commercial investments.
If we are not, and the intention is to sell them, then surely the council should be up-front with the community and ensure the best value is realised for the ratepayers.
There is no reason why a CCO could not be formed, cost-effectively, to take over the management of these assets as part of the current structure, with one or two of the existing commercial directors from GHL appointed to partner with say two council representatives.
There are clearly other alternatives to the path the council currently appears determined to pursue that should be considered.
Rick Thorpe
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