Kawerau District Council is preparing to take out its first loan.

At a council meeting on Tuesday, councillors voted to join the Local Government Funding Agency, an agency that provides loans to most councils across the country.

Due to being a young town, established in 1953, the Kawerau council has never had to take out a loan except for two finance leases for the purchase of printers and telephones.

However, in the last few years the council has undertaken several significant projects such as the construction of Firmin Lodge, upgrades at the Maurie Kjar Memorial Pool complex, the new animal pound and residential developments that have seen funds run low in the council coffers.

While it expects to recoup some of these funds through the sale of homes at the residential developments, there will be some delay in paying for the construction of the homes and gaining the profit from selling them, therefore there may be some time when cashflow is low.

The council consulted the community through its annual plan process on whether it should join the LGFA and indicated it would likely borrow $2 million from the agency.

It received no submissions on the proposal.

If the council does not join the funding agency, it will likely need to take out a bank loan or overdraft in February or March next year.

Councillors' preferred to join LGFA as the duration of loan periods on offer are longer and the interest rates are lower.

Councillor David Sparks says the banking environment is 'ever-changing” and he doesn't have the confidence that in 10 or 15 years, it will be the same as now.

There was some discussion amongst councillors that council staff had not provided an adequate report containing the pros and cons of joining the LGFA, however, chief executive Russell George noted it had been discussed at length over Zoom during lockdown.

All councillors voted to join the LGFA. Both Whakatane and Opotiki district councils are members.