Dunedin diocese is taking steps to pay down its $10million debt through a 30-year repayment plan.
In a report on diocesan finances in the September edition of the diocese’s publication The Tablet, it was stated that the diocesan overdraft, as reported at the end of 2019, had been just under $10million. An offset agreement with the ANZ meant that no interest was paid on the debt, but this meant that most of the money invested by parishes and the diocese in the Catholic Development Fund “cannot provide an investment return”.
The report, written by the Diocesan Finance Committee, stated that the overdraft, which had been located in the diocese’s operating account, had been kept stable over the past three years. But now is the time “to proactively begin paying this debt off”.
“We have transferred the $10million debt into a new account, entitled the CDD Mortgage account, and we have created a 30-year mortgage repayment plan. Regular and graduated payments will be made into this account each month. As the ‘mortgage’ is paid down, our CDF funds will gradually be freed up and be able to be invested. The plan is to make these monthly payments from rental and investment income, an income we need to grow.
“The debt should not be our primary focus from now on.”
Under the heading “Lazy Assets”, the report noted that a past tendency to sell assets to cover expenses had meant that “we have very few diocesan and parish assets that can generate supplementary income”.
“Now is the time to start rebuilding our asset base,” the report added. “We are beginning to identify parish land and property that could be developed, so as to return an income. It is possible that we might be able to create joint ventures between the diocese and projects in parishes that will benefit the parish and diocesan income streams.”
The report discussed a goal (and steps to be taken to meet the goal) to generate sufficient investment income to see an eventual decrease in the level of the diocesan levy on parishes. The levy is currently set at 25 per cent of parish income, but the goal is to see this decrease to 20 per cent by 2024 and 17 per cent by 2030.
“This will mean more income is available for parish-based ministry,” the report stated.
It was added that no legacies or bequests would be used to pay down diocesan debt.
Under the heading “Impact of Covid-19”, the report stated that the diocese did not take the levy from parishes in May and June, and offered rent reductions for Moran Building and Martin’s Bay tenants.
“While we will record a loss over May and June, we did receive the wage subsidy for many of our staff.”
The report also noted that the introduction of a different funding formula for Holy Cross Seminary training in 2020 by New Zealand’s bishops meant that Dunedin diocese’s costs in this area “are significantly reduced”.
Diocese vicar general Fr Gerard Aynsley wrote that the purpose of the report was “to provide some clarity around diocesan finances and to provide some assurance and confidence in the diocese’s financial plan”.