Christchurch City Council

Supplementary Agenda No.1

 

 

Notice of Meeting:

An ordinary meeting of the Christchurch City Council will be held on:

 

Date:                                     Thursday 24 March 2016

Time:                                    8.30am

Venue:                                 Council Chambers, Civic Offices,
53 Hereford Street, Christchurch

 

 

Membership

Chairperson

Deputy Chairperson

Members

Mayor Lianne Dalziel

Deputy Mayor Vicki Buck

Councillor Jimmy Chen

Councillor Phil Clearwater

Councillor Pauline Cotter

Councillor David East

Councillor Jamie Gough

Councillor Yani Johanson

Councillor Ali Jones

Councillor Paul Lonsdale

Councillor Glenn Livingstone

Councillor Raf Manji

Councillor Tim Scandrett

Councillor Andrew Turner

 

 

22 March 2016

 

 

 

Principal Advisor

Dr Karleen Edwards

Chief Executive

Tel: 941 8554

 

Jo Daly

Council Secretary

941 8581

Jo.Daly@ccc.govt.nz

www.ccc.govt.nz

Note:  The reports contained within this agenda are for consideration and should not be construed as Council policy unless and until adopted.  If you require further information relating to any reports, please contact the person named on the report.
Watch Council meetings live on the web:
http://councillive.ccc.govt.nz/live-stream

 


Council

24 March 2016

 

 


Council

24 March 2016

 

TABLE OF CONTENTS

 

25.     Resolution to Include Supplementary Reports...................................................................... 4

26.     Draft Annual Plan 2016/17....................................................................................................... 5

27.     Resolution to Exclude the Public........................................................................................... 61


Council

24 March 2016

 

 

25 Resolution to Include Supplementary Reports

1.       Background

1.1          Approval is sought to submit the following reports to the Council meeting on 24 March 2016:

26.   Draft Annual Plan 2016/17

28.   Regenerate Christchurch: Appointment of Directors

1.2          The reason, in terms of section 46A(7) of the Local Government Official Information and Meetings Act 1987, why the reports were not included on the main agenda is that they were not available at the time the agenda was prepared.

1.3          It is appropriate that the Council receive the reports at the current meeting.

2.       Recommendation

2.1          That the reports be received and considered at the Council meeting on 24 March 2016.

 

 


Council

24 March 2016

 

 

26.    Draft Annual Plan 2016/17

Reference:

16/119103

Contact:

Ian Thomson

Ian.thomson@ccc.govt.nz

941 6469

 

 

1.   Purpose of Report

1.1       To present for consideration and adoption:

a.            the Consultation Document, including the Audit New Zealand report, attached to this report;

b.            the information prepared for the draft 2016/17 Annual Plan and proposed amendments to the 2015/25 Long Term Plan, relied on by the content of the Consultation Document.

a.            the rate requirement of $415,129,000 (net of GST) for the 2016/17 year

b.            the consultation and engagement process outlined in this report.

 

 

2.   Staff Recommendations

That the Council:

1.         Approves and adopts the information contained in or referred to in the staff report and which provides the basis for the draft 2016/17 Annual Plan and the proposed amendments to the 2016/25 long Term Plan, including:

a.         the proposed annual budget and funding impact statement for 2016/17;

b.         any variation between the information in (a) above and the financial statements and funding impact statement included in the 2015/25 Long Term Plan for 2016/17;

c.         proposed changes to the Council's capital programme for 2016/17 and to the  levels of service provision for activities undertaken by the Council;

d.         proposed schedule of fees and charges for 2016/17;

e.         the amendments proposed for the 2015/25 Long Term Plan.

2.         Resolves that it is financially prudent for the Council to propose setting an unbalanced budget (as defined by the requirements of the Local Government (Financial Reporting and Prudence) Regulations 2014 in the 2020 (97%) and 2021 (99%) years of the amended 2015/25 Long term Plan.

3.         Approves the rate requirement of $415,129,000 (net of GST) for the 2016/17 year.

4.         Resolves that any funds borrowed and allocated to the Improvement Allowance/Betterment Fund will not be reimbursed nor re-allocated from the proceeds of the Council's global insurance settlement.

5.         Approves and adopts for public consultation the Consultation Document (see Appendix A) for the 2016/17 Annual Plan and proposed amendments to the 2015/25 Long Term Plan, including the Audit New Zealand report.

6.         Authorises Community Board members to be the Council's representatives for the purpose of receiving views presented by people to forums held by Community Boards during the consultation process (Section 83(1) (d) LGA 2002).

7.         Approves the following dates and timings for consultation:

a.         public notices in The Star, The Press and on the Council's website on Wednesday, 6 April 2016;

b.         all relevant documents and information made available at Council offices, libraries, service centres and on the Council's website on Wednesday, 6 April 2016;

c.         closing date for submissions:   5.00pm    Tuesday, 10 May 2016;

d.         the Council adopts the 2016/17 Annual Plan and amendments to the 2015/25 Long Term Plan by 30 June 2016.

8.         Authorises the General Manager Finance and Commercial to make any non-material changes to the documents and/or information attached to or referred to in the staff report.  

  

 

 

3.   Key Points

3.1       Procedural matters:

(a) the Council is required to prepare and adopt an Annual Plan for each financial year (section 95(1) Local Government Act 2002);

(b) the proposed Annual Plan includes significant and material differences from the content of the Council's Long Term Plan for the year to which the proposed Plan relates.  The Council must therefore consult with the community. 

(c) the Act defines a difference, variation, or departure as "material" if it could, itself or in conjunction with other differences, influence the decisions or assessments of those reading or responding to the Consultation Document (section 95A(5));

(d) it is the advice of staff that the following matters in the Draft 2016/17 Annual Plan, are materially different from the information in respect of those matters contained in the 2015/25 Long Term Plan for that year;

(i) a reduction in the level of capital expenditure,

(ii) lower borrowing,

(iii) a delay in further capital release and,

(iv) a lower increase in rates; 

(e) an effect of the proposed reduction in capital expenditure will be to alter the intended level of service provision for a number of activities to be undertaken by the Council, or on its behalf.  Some of these are significant, with projects being re-phased over a longer period of time than is currently contained in the 2015/25 Long Term Plan.

(f) this means amending the LTP to reflect these changes, in particular the Financial Strategy, the Infrastructure Strategy and the capital works programme. To do this the Council must use the special consultative procedure set out in section 83 of the LGA 2002, and set out its proposals in a Consultation document (section 93A).

(f) the Act also states that if proposals to amend a Long Term Plan and to adopt an Annual Plan are to be consulted on at the same time, only one Consultation Document is to be used and the special consultative procedure must be used for both matters;

 

 

3.2       The preparation of information for the proposed Draft 2016/17 Annual Plan:

3.2.1   The information for the Draft 2016/17 Annual Plan has been prepared in accordance with the requirements of the LGA 2002.  The information includes:

(a)    the proposed annual budget and funding impact statement for 2016/17;

(b)   any variation from the financial statements and funding impact statement included in the Council's 2015/25 Long Term Plan for 2016/17;

(c)    proposed changes to the Council's capital programme for 2016/17 and any significant changes to the level of service provision for activities undertaken by the Council;

(d)   proposed schedule of fees and charges for 2016/17.

3.2.2   The information has been prepared in accordance with the principles and procedures that apply to the preparation of the financial statements and funding impact statement included in the 2015/25 Long Term Plan. It contains appropriate references to the provisions in the LTP set out the Council's activities for the 2016/17 year.

3.2.3   The information also complies with the requirements set out in Part 2 of Schedule 10 of the LGA 2002 in respect of the information to be included in an Annual Plan.

 

Financial Overview

3.3      Amended Long Term Plan

Capital Programme:

3.3.1   The key change within the proposed amendment to the Long Term Plan, and the driver of all other changes is the reduction to the capital programme. Overall the ten year programme has reduced by $167 million, largely due to a reduction in the expected infrastructure repair cost.

3.3.2   After taking into account the $425 million shifted out of the 2015/16 year following the review of the deliverability of the programme, the Council plans to invest $3.86 billion in the capital programme over the remaining nine years of the Long Term Plan, an increase of $258 million over the amount in the Long Term Plan for the comparable period. The other significant change is the inclusion of the Northern Arterial project ($76 million) primarily in 2021 - 2023, (see Appendix C).

Impact on Funding Levers:

3.3.3   The changes above have allowed us to reconsider the mix of the three funding levers, capital release, borrowing, and rates, to achieve a fair and prudent funding outcome for ratepayers.

Capital Release:

3.3.4   It is proposed that the $750 million capital release programme be reduced to $600 million and that the outstanding $400 million be moved to 2017/18 ($200 million) and 2018/19 ($200 million). This deferral allows more time to gain further certainty as to both the amount and method of release required.

Borrowing:

3.3.5   The draft Amended Long Term Plan forecasts a net increase in debt of $749 million over the remaining nine years, an increase of $221 million on the Long Term Plan amount.  This is largely due to the retimed capital programme and capital release reduction. As opening debt was $201 million lower, cumulative debt at the end of 2024/25 is still planned to be $2.1 billion, just $18 million higher than the original Long Term Plan projected. The reduction in, and delay in borrowing has a positive financial impact on Council's interest costs and debt repayment requirements.

3.3.6   We are continuing to ensure prudent and sustainable financial management of our operations and will not borrow beyond our ability to service and repay that borrowing. 

Rate Increases:

3.3.7   The consequential reduction in interest and debt repayment costs have enabled rate increases to be reduced for the next three years to 5% per annum to existing ratepayers, a reduction of 4.9% over that period, and a reduction over the nine years of 4.35% compared to the original 2015/25 Long Term Plan.

 

3.4      Annual Plan

3.4.1   As a consequence of the amendments to the Long Term Plan, the draft 2016/17 Annual Plan differs significantly from what was proposed in the 2015-25 Long Term Plan.  In addition there were a number of outcomes in the 2015/16 year which varied from budget, the most significant of which was settlement of the insurance claim for $80 million more than was budgeted for.

3.4.2   The decision to smooth the capital programme for the 2016/17 year so that it is better aligned with our ability to deliver, coupled with the under-delivery of projects in the current year and the insurance settlement, has substantially reduced our need to borrow in this Annual Plan year.  As a result the remaining Capital Release has been reduced by $150 million and the release of the next $200 million deferred to start in 2017/18. In addition to the capital release deferral, new borrowing has reduced by $115.3 million in 2016/17.

3.4.3   These changes along with higher growth than was expected within the City's rating base has reduced rates to existing ratepayers from the 7.2% forecast in the Long Term Plan to 5.0%.  Full details of rates, including the total rating requirement for general and targeted rates, and indicative rates for individual properties, are provided in the Funding Impact Statement and Rating Policy section. (See website reference below).

Operating Revenue and Expenditure:

3.4.4   Other than the changes detailed below, we have held our budget within the inflation levels forecast by BERL (Business and Economic Research Limited - SOLGM commissions BERL to produce reports that will assist local authorities in their planning).

3.4.5   The main changes from the Long Term Plan 2015-25 to this 2016/17 Draft Annual Plan are:

·     $190 million decrease in dividends being deferral of $200 million of capital release offset by $9.7 million more in dividend and interest revenue

·     $10.1 million less in interest costs

·     $3 million in savings from the Fit for the Future restructure of Council staff

·     $2.9 million less in planned operating costs from the delayed opening of the new Central Library ($1.8 million) and Hornby Library (1.1 million)

Offset by:

·     $4 million to fund Regenerate Christchurch, a new partnership between the Council and Crown to lead regeneration in key areas, including central Christchurch, the residential red zone and New Brighton

·     $4.3 million more to complete the District Plan Review, of which $1.4 million can be recovered

·     $2 million towards alternative weed control

·     $3.9 million timing difference due to receiving insurance proceeds earlier than expected

·     $4.4 million for increased legal budget

 

More detail is included in Appendix B.

 

Surplus, operating deficits, and sustainability:

3.4.6   The draft Annual Plan for 2016/17 shows an accounting surplus of $90.3 million before revaluations of $510 million.  Under accounting standards Council is required to show all revenue, including earthquake-related recoveries, from central Government and NZ Transport Agency, as income for the year.  These revenues are considered capital in nature.

3.4.7   After adjusting for the capital revenues, Council will budget for an operating deficit of $26.7 million for earthquake response costs in the 2016/17 year, as indicated in the Long Term Plan. This is the last year that Council will borrow for these costs as they are expected to diminish to the level that can be rated for. Council do not consider that this anticipated operating deficit will undermine Council's financial sustainability.

3.4.8   Council continues to incur earthquake response costs although these significantly decrease after 2016/17. As per the 2015/25 Long Term Plan, Council intends to borrow $26.7 million in relation to these costs in 2016/17 in accordance with the existing and amended Financial Strategy. Council has ceased borrowing for indirect additional earthquake related costs and lost revenues from 2016/17.

Borrowing:

3.4.9   The draft Annual Plan estimates new borrowing in 2016/17 of $218.5 million, a decrease of $115.3 million on the Long Term Plan, primarily due to a higher opening cash position due to funds received from the insurance settlement and capital release, and the lower capital programme in the 2015/16 and 2016/17 years.  As a result of lower than planned borrowing, cumulative debt at the end of 2016/17 is planned to be $1,528 million, $330.2 million lower than the Long Term Plan projected amount.

3.4.10 In accordance with our financial strategy we will continue to ensure prudent and sustainable financial management of our operations and will not borrow beyond our ability to service and repay that borrowing. 

Capital programme funding and expenditure:

3.4.11 Council plan to invest $632.5 million in the capital programme in 2016/17, a reduction of $165.8 million over the amount in the Long Term Plan.  The decrease is due to the smoothing, mentioned above, and building in the latest cost estimate for the infrastructure rebuild. 

3.4.12 The capital programme is funded by earthquake recoveries, subsidies and grants for capital expenditure, development and financial contributions, the proceeds of asset sales and debt.  In 2016/17 the funding requirements are significantly lower due to the $165.8 million reduction and the under-delivery in the current year, as a result of which some insurance proceeds are still available.  It is because of this that the next tranche of capital release of $200 million has been delayed until 2017/18.

Financial Risk Management Strategy:

3.4.13 Council’s policies to assist in managing its financial risk, including liquidity and funding risk management, interest rate exposure and counterparty credit risk are unchanged in this draft Annual Plan.  An important element in assessing the value of Council’s risk management strategy is its five key financial ratios.  These are included within the Financial Prudence Benchmarks section, (refer website reference below). The Council anticipates staying well within its financial ratio limits for 2016/17. 

Level of Service:

3.4.14 The key impact of the proposed changes to the delivery of the capital programme are to the Transport and Three Waters services.  Within Transport the residual earthquake damage will take longer to address. To better reflect our levels of service, and so the community can monitor progress, it is proposed to add an additional level of service which measures the average roughness of the roading network. This measure will also allow the residents of Christchurch to benchmark our roads with those of other Councils.  Renewal works will be prioritised across the whole network to ensure that priorities are based on the delivery of the levels of service at the lowest lifecycle cost.

3.4.15 The Draft Annual Plan also contains a proposed reduction in the levels of service regarding ratepayer satisfaction with roading, as deformities in the pavement will remain for longer periods.

3.4.16 Within the Three Waters area the changes will not affect levels of service in the short to medium term. However they do increase the risk of failure.

3.4.17 Level of service amendments as per appendices E and F.

 

3.5      Fees and Charges:

3.5.1   It is proposed that changes are made to fees and charges.   As stated in the Consultation Document, in most cases they are going up to cover increased costs or inflation, and add less than a dollar or two to the amount paid.  In other cases, fees have been increased to cover the full cost of an individual service, so that other ratepayers are not covering the shortfall.

3.5.2   A range of new inspection fees for new activities are required under the provisions of the Food Act 2014.

3.5.3   It is also proposed to reduce fees where possible, for example for some residential building consents where there is no on-going need to recover set-up costs for new processes.         

 

3.6      Other

3.6.1   Since 2011 the Council has been allocating a portion of its new borrowing to the Improvement Allowance/Betterment Fund for the purpose of rebuilding some of its buildings and facilities to a better standard than they were in before the earthquakes.  A number of projects have been funded, ahead of insurance settlements.

3.6.2   In August 2014 the Council resolved that in respect of those projects any proceeds from insurance claims were to be applied to the allowance.  However, given that the Council has now reached a global settlement with its insurers and the required rebuilding work has been scheduled in the capital works programme, it is no longer necessary to maintain or reimburse the fund as originally proposed.

3.6.3   The amended Long Term Plan makes no provision for re-imbursement of the Improvement Allowance/Betterment Fund from the proceeds of the global insurance settlement.

3.6.4   The Capital Endowment Fund, which is subject to a report back to Council, has been assumed to continue in its current form with the majority of funds internally borrowed to reduce external Council borrowing.

 

3.7       The Consultation Document:

3.7.1   The purpose of the Consultation Document is to:

(a)    identify significant or material differences between the proposed 2016/17 Annual Plan and the content of the 2015/25 Long Term Plan for that year;

(b)   explain these matters in a way that can be readily understood by interested or affected people;

(c)    explain the Council's proposals to delay significant projects and the financial and service delivery implications of this.

3.7.2   As indicated earlier, the Council also proposes to amend its 2015/25 Long Term Plan.  This is because the proposed reduction in capital expenditure in 2016/17 will alter the intended level of service provision for a number of activities to be undertaken by the Council, or on its behalf.

3.7.3   The Consultation Document includes the details and reasons for this and the implications (including financial) of the proposed amendments.

 

3.8      The Consultation Process:

3.8.1   In preparing the process for community consultation, Council staff have followed the principles of consultation set out in section 82 of the LGA 2002, and the requirements of the special consultative procedure contained in section 83.

3.8.2   The following process is recommended by staff for engaging with affected, or interested people.  The objectives of the process (in accordance with the appropriate provisions of the Act) include:

(a)    providing reasonable access to relevant information;

(b)   encouraging people to present their views to the Council;

(c)    providing a reasonable opportunity for people to present their views to the Council in a manner and format that is appropriate to their preferences and needs, and in a way that enables interaction between people and the Council or its delegated representatives.

(d)   where appropriate, providing opportunities for people to present their view by way of audio link or audio-visual link.

3.8.3   The formal, public consultation period will run from Wednesday 6 April to Tuesday 10 May 2016. During this time the Council will seek the views of the community through a range of formal and informal channels. The public will have the opportunity to put in a formal submission during the consultation period but the Council will also accept social media comments via Twitter and Facebook and also free-form feedback via email to ccc-plan@ccc.govt.nz. The formal submission form will also be mirrored in a Facebook survey. All submissions or informal comments will be analysed and form part of the feedback provided to elected members as part of their decision making process.

3.8.4   The LGA 2002 enables the Council to appoint Community Board members as the Council's representatives for the purpose of hearing the community's views.

3.8.5   As a result, each Community Board will host public forums between 12 April and 30 April to specifically help identify local issues in the wards. These forums will be supported by staff and will have technical expertise available. It is envisaged that the views expressed at these forums will help inform the Community Board submissions.

3.8.6   Staff have recommended that the Council resolves to give Community Board members the appropriate delegation for this purpose.

3.8.7   During the week of 2 May, the Council will host two half day open days. These will be held at the Civic Offices on the 1st and 2nd floor public foyer areas. There will be a number of themed tables with Councillors present to listen to the conversation and seek additional information through questions to enhance their understanding of issues raised. Staff will be at each table as note-takers to capture feedback and subject matter experts will be available to "float" and contribute as required. Computer access will be available for those who wish to fill in a formal submission form at these sessions.

3.8.8   By invitation only, NGO and business facilitated workshops will be held on Tuesday 10th May. These will take the form of round table discussions and be solution focussed. Again, technical and support staff will be available.

3.8.9   The Community Boards will have an opportunity to speak to their submissions at a session to be held in the Council Chamber on the morning of Saturday 14 May. The public will have an opportunity to be heard in a formal setting in a "Last Chance" session on the afternoon of Saturday 14 May. The non-bookable session will commence at 1pm and five-minute speaking time slots will be allocated.

 

When

What

Thursday 24 March

Council adoption meeting to approve draft Annual Plan

Monday 4 April

Media release that Annual Plan is about to open for consultation

Wednesday 6 April

Consultation opens - media release, Facebook posts, Twitter. Facebook survey to mirror, Have Your Say, advertising online and newspaper. Publicity continues throughout the consultation period.

12 April - 30 April

Community Board Workshops

Tuesday 3 May

Media release and other publicity about consultation closing soon - one week to go.

Tuesday 10 May

Invitation only NGO and business workshops

Tuesday 10 May

Formal consultation period closes

Saturday 14 May

Community Board hearings and "last chance" public session

Tuesday 21 June

Council meeting to adopt the Annual Plan

 

 

The information prepared and relied on for the Consultation Document comprises the following documents:

·    Proposed Amendments to the 2015/25 Long Term Plan

·    Financial strategy;

·    Financial overview;

·    Funding impact statement;

·    Financial prudence benchmarks;

·    Planned capital programme;

·    Activities and services;

·    Financial statements;

·    Statement of accounting policies;

·    Significant forecasting assumptions;

·    Revenue and financing policy;

·    Rates remissions and rates postponement policy;

·    Reserves and trust funds;

·    Capital endowment fund;

 

The documents which together comprise the 2016/17 Draft Annual Plan:   

·    Financial overview;

·    Funding impact statement;

·    Rating policy; 

·    Financial prudence benchmarks;

·    Planned capital programme;

·    Financial statements;

·    Council fees and charges set under section 12;

·    Council fees and charges set under section 83;

·    Reserves and trust funds;

·    Capital endowment fund.

·    Infrastructure Strategy

 

 

Full versions of this information can be found at the following link;

www.ccc.govt.nz/annualplan

 

 

Attachments

No.

Title

Page

a  

Annual Plan 2016-17 Consultation Document v9 post ARMC Final Draft

15

b  

Proposed Changes to Operational Budgets

39

c  

Proposed Changes to Capital Programme

40

d  

Proposed Significant Changes to Fees and Charges

41

e  

Annual Plan 2016/17 and Amendment to Long Term Plan  2015-25 Level of Service amendments

46

f  

Annual Plan 2016/17 Level of Service amendments for non-LTP / internal activities

53

 

 

Signatories

Authors

Ian  Thomson

Peter Ryan

Bruce Moher

Diane Brandish

Peter Gudsell

Melissa Wilson

Boyd Kedzlie

Senior Legal Advisor - Governance

Head of Performance Management

Planning & Reporting Manager

Head of Financial Management

General Manager Finance & Commercial

Executive Assistant

Senior Business Analyst

Approved By

Peter Ryan

Diane Brandish

Peter Gudsell

Karleen Edwards

Head of Performance Management

Head of Financial Management

General Manager Finance & Commercial

Chief Executive

  


Council

24 March 2016

 

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Council

24 March 2016

 

 

27.  Resolution to Exclude the Public

Section 48, Local Government Official Information and Meetings Act 1987.

 

I move that the public be excluded from the following parts of the proceedings of this meeting, namely items listed overleaf.

 

Reason for passing this resolution: good reason to withhold exists under section 7.

Specific grounds under section 48(1) for the passing of this resolution: Section 48(1)(a)

 

Note

 

Section 48(4) of the Local Government Official Information and Meetings Act 1987 provides as follows:

 

“(4)     Every resolution to exclude the public shall be put at a time when the meeting is open to the public, and the text of that resolution (or copies thereof):

 

             (a)       Shall be available to any member of the public who is present; and

             (b)       Shall form part of the minutes of the local authority.”

 

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by Section 6 or Section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public are as follows:


Council

24 March 2016

 

 

ITEM NO.

GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED

SECTION

SUBCLAUSE AND REASON UNDER THE ACT

PLAIN ENGLISH REASON

WHEN REPORTS CAN BE RELEASED

28

Regenerate Christchurch: Appointment of Directors

s7(2)(a)

Protection of Privacy of Natural Persons

To maintain the privacy of the proposed appointees

Once the appointments have been confirmed by the Minister for Canterbury Earthquake Recovery.