Strategy and Finance Committee

Agenda

 

 

Notice of Meeting:

An ordinary meeting of the Strategy and Finance Committee will be held on:

 

Date:                                     Thursday 15 September 2016

Time:                                    1.00pm

Venue:                                 Committee Room 1, Level 2, Civic Offices,
53 Hereford Street, Christchurch

 

 

Membership

Chairperson

Deputy Chairperson

Members

Councillor Raf Manji

Mayor Lianne Dalziel

Deputy Mayor Vicki Buck

Councillor Jimmy Chen

Councillor Phil Clearwater

Councillor Jamie Gough

Councillor Yani Johanson

Councillor Andrew Turner

 

 

7 September 2016

 

 

 

Principal Advisor

Peter  Gudsell

General Manager Finance and Commercial

Tel: 941 8528

 

Margaret Henderson

Committee Advisor

941 8185

margaret.henderson@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.
To view copies of Agendas and Minutes, visit:
www.ccc.govt.nz/Council/meetingminutes/agendas/index

 


Strategy and Finance Committee

15 September 2016

 

 

Strategy and Finance Committee - Terms of Reference

 

Chair

Councillor Manji

Membership

Mayor Dalziel (Deputy Chair), Deputy Mayor Buck, Cr Chen, Cr Clearwater (as Chair of Infrastructure, Transport and Environment Committee), Cr Gough, Cr Turner (as Chair of Communities, Housing and Economic Development), Cr Johanson

Quorum

Half of the members if the number of members (including vacancies) is even, or a majority of members if the number of members (including vacancies) is odd.

Meeting Cycle

To be separately considered

Reports To

Council

 

Responsibilities

·         Review as appropriate and make recommendations to the Council on Financial Strategy and

Performance,  Investment  and  Borrowing,  Insurance  matters  and all Council Controlled Organisations

·         Managing  relationships  with  Canterbury  Development  Corporation  (CDC)  and Christchurch and Canterbury Tourism (CCT) and other major organisations

·         Developing policy and strategy in relation to long term plan and other activities as listed above

·         Monitoring earthquake recovery related to the committees specified activities

·         Considering   recommendations   from   Council’s   Subcommittees,   Community

·         Boards,  the  public,  stakeholders  and  providers  in  relation  to  strategy  and finance planning, delivery and operation

·         Making  decisions  with  regard  for  the  requirements  of  Sections  76  –  81  of  the Local Government Act 2002 where it has the authority from Council to do so, or recommendations to Council where a Council decision is required.

 

Long Term Plan Activities

·         Strategic Planning and Monitoring of

­          central city planning and policy

­          land use planning (including financial and planning assumptions)

­          urban development strategy (including the Land Use Recovery Plan)

­          urban design planning and policy

­          urban regeneration planning and policy; and

­          other strategic issues

·         Performance management and reporting

·         Development contributions

·         Transition process with the Canterbury Earthquake Recovery Authority

·         Manage Iwi and Maori relationships

·         Plus

­          Monitoring and reporting on anchor projects

­          Monitoring and review of CERA recovery programmes

­          External liaison with central government agencies, CERA, the Earthquake Commission and the Insurance community

­          Council Controlled organisations

­          Liaison with EQC and Insurance companies

 

 

Delegations

Nil.

 


Strategy and Finance Committee

15 September 2016

 

Part A        Matters Requiring a Council Decision

Part B         Reports for Information

Part C         Decisions Under Delegation

 

 

TABLE OF CONTENTS

 

C       1.       Apologies.......................................................................................................................... 5

B       2.       Declarations of Interest................................................................................................... 5

C       3.       Confirmation of Previous Minutes................................................................................. 5

B       4.       Deputations by Appointment........................................................................................ 5

B       5.       Presentation of Petitions................................................................................................ 5

STAFF REPORTS

A       6.       Development Contributions Policy 2015 - Proposed Amendments (2016).............. 13

A       7.       Final 2017-19 Statements of Intent for Council Controlled Organisations ............. 47

A       8.       Chairperson's Report: Capital Endowment Fund Working Group.......................... 167

C       9.       Resolution to Exclude the Public............................................................................... 184  

 

 


Strategy and Finance Committee

15 September 2016

 

 

1.   Apologies

At the close of the agenda no apologies had been received.

2.   Declarations of Interest

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as an elected representative and any private or other external interest they might have.

3.   Confirmation of Previous Minutes

That the minutes of the Strategy and Finance Committee meeting held on Thursday, 18 August 2016 be confirmed (refer page 6).

4.   Deputations by Appointment

4.1

Riccarton/Wigram Community Board

 

Mike Mora, Chairperson of the Riccarton/Wigram Community Board, will address the Committee in support of the Board’s submission on the Development Contributions Policy 2015 – Proposed Amendments 2016 report.

 

5.   Presentation of Petitions

There were no petitions received at the time the agenda was prepared.  


Strategy and Finance Committee

15 September 2016

 

 

 

Strategy and Finance Committee

Open Minutes

 

 

Date:                                     Thursday 18 August 2016

Time:                                    1.05pm

Venue:                                 Committee Room 1, Level 2, Civic Offices,
53 Hereford Street, Christchurch

 

 

Present

Chairperson

Deputy Chairperson

Members

Councillor Raf Manji

Mayor Lianne Dalziel

Deputy Mayor Vicki Buck

Councillor Jimmy Chen

Councillor Phil Clearwater

Councillor Jamie Gough

Councillor Tim Scandrett for item 17

Councillor Andrew Turner

 

 

15 August 2016

 

 

 

Principal Advisor

Peter  Gudsell

General Manager Finance and Commercial

Tel: 941 8528

 

Margaret Henderson

Committee Advisor

941 8185

margaret.henderson@ccc.govt.nz

www.ccc.govt.nz

To view copies of Agendas and Minutes, visit:
www.ccc.govt.nz/Council/meetingminutes/agendas/index

 


Part A        Matters Requiring a Council Decision

Part B         Reports for Information

Part C         Decisions Under Delegation

 

 

 

The agenda was dealt with in the following order.

 

1.   Apologies

Part C

 

 

Committee Resolved SFCM/2016/00055

It was resolved on the motion of Councillor Clearwater, seconded by Councillor Turner that the apology from Councillor Turner  be accepted.

Councillor Clearwater/Councillor Turner                                                                                                           Carried

 

2.   Declarations of Interest

Part B

Deputy Mayor Buck and Councillors Gough and Turner declared an interest in Item 9.

 

3.   Confirmation of Previous Minutes

Part C

Committee Resolved SFCM/2016/00056

That the minutes of the Strategy and Finance Committee meeting held on Tuesday, 12 July 2016 be confirmed.

Councillor Chen/Councillor Turner                                                                                                                       Carried

 


 

 

4.   Deputations by Appointment

Part B

T

4.1       David Wilson

             David Wilson, a local resident, addressed the Committee in relation to the Rates Issues for Properties Affected by District Plan Changes report (Item 6 of these minutes) and concerns regarding the rating classification of his property.

 

4.2       Awatea Resident's Association

             Kay Stieller, Secretary, and Milton Durham, of the Awatea Residents’ Association addressed the Committee in relation to the Rates Issues for Properties Affected by District Plan Changes report (Item 6 of these minutes) and rating issues in the South Awatea area.

 

 

5.      Presentation of Petitions

Part B

There was no presentation of petitions.

 

6.   Rates Issues for Properties Affected by District Plan Changes

 

Committee Comment

The Committee considered the report and the information presented by deputations from Mr Wilson and the Awatea Resident’s Association (Refer Item 4 of these minutes)  and decided to recommend that the Council adopt Option 3 of the report.

 

Staff Recommendations

That the Strategy and Finance Committee recommend that the Council:

1.      Decline a rates remission to properties within North-West Review Area 3 for the 2015, 2016, and 2017 rating years, on the grounds that, despite the highly unusual extent of market value movements experienced by these properties, such movement is an inherent risk of ownership and so should not be adjusted for through the rates system until the next general rates revaluation is applied to rates in 2017/18.

 

Committee Recommendation SFCM/2016/00057

Part A

That the Council:

1.    Adopt Option 3 – Provide a 50 percent rate remission to Area 3 properties, of the staff report.

 

2.    Request that staff provide a report back on rating issues raised by the Awatea Resident’s Association.

Councillor Manji/Councillor Gough                                                                                                                      Carried

 

7.   Transitional City Projects - Property Owner Incentive Programme

 

Committee Recommendation SFCM/2016/00058

(Staff recommendation accepted without change.)

Part A

That the Council:

1.         Approve continuation of the Transitional City Projects – Property Owner Incentive Programme for a further two years with the following recommended changes:

             a.      Permit the allocation of this incentive to qualifying properties in identified regeneration areas including the Central City and Suburban Centres with approval by the Unit Manager Urban Design, Regeneration and Heritage.

Councillor Clearwater/Councillor Gough                                                                                                           Carried

 

8.   Central City Biannual Report - January to June 2016

 

Staff Recommendations

That the Strategy and Finance Committee:

1.         Receive this report for information.

 

Committee Resolved SFCM/2016/00059

Part B

The Strategy and Finance Committee resolved to:

1.         Receive this report for information.

Councillor Gough/Councillor Chen                                                                                                                       Carried

 

 

9.   Statements of Intent 2017-19 - Christchurch City Holdings Limited and Subsidiaries and Canterbury Development Corporation Holdings Ltd and Subsidiaries

 

Committee Recommendation SFCM/2016/00060

(Staff recommendation accepted without change.)

Part A

         That Council:

1.      Accepts the 2017-2019 Statement of Intent for Christchurch City Holdings Ltd; and

2.      Notes the 2017-2019 Statements of Intent for Christchurch City Holdings Ltd’s subsidiaries:

·    Orion New Zealand Ltd

·    Christchurch International Airport Ltd

·    Lyttelton Port Company Ltd

·    Enable Services Ltd

·    City Care Ltd

·    Red Bus Ltd

·    EcoCentral Ltd

·    Development Christchurch Ltd

3.    Accepts the 2017-2019 Statement of Intent for Canterbury Development Corporation Holdings Ltd (including Canterbury Development Corporation Ltd); and

         4.   Notes the 2017-2019 Statement of Intent for Canterbury Development Corporation Ltd’s   subsidiary CRIS Ltd.

Councillor Chen/Mayor                                                                                                                                            Carried

 

10. Performance report for the year to 30 June 2016

 

Committee Comment

The Committee noted the results of the social housing residents’ survey and asked that staff provide a split between repaired and unrepaired tenant survey results.

 

Committee Decided SFCM/2016/00061

Part A

That the Council:

2.1       Receive this report.

2.2       Approve net operational carry forward requests from 2015/16 of $20.5 million, together with associated funding sources (as detailed in Attachment E), to enable completion of projects in 2016/17 and beyond.

2.3       Approve (as detailed in Attachment F) capital works and rebuild carry forwards requests of $187.8 million, noting this replaces an unspecified $165 million already included in the amended Long Term Plan, together with development contribution rebates and other capital recoveries of $77 million to enable completion of capital / rebuild projects in 2016/17 or later as indicated.

Councillor Gough/Councillor Turner                                                                                                                    Carried

 


 

 

11. Corporate Finance Report for the Period Ending 30 June 2016

 

Committee Decided SFCM/2016/00062

Part A

(Staff recommendation accepted without change.)

That the Council

1.         Receives this report.

Councillor Turner/Councillor Clearwater                                                                                                           Carried

 

 

12. Development Christchurch Limited Update

 

Committee Decided SFCM/2016/00063

(Staff recommendation accepted without change.)

Part A

That the Council:

1.         Receive the report.

Councillor Chen/Councillor Gough                                                                                                                       Carried

 

13  Resolution to Exclude the Public

 

Committee Resolved SFCM/2016/00064

Part C

The Committee resolved:

1.            That at 2.37pm the resolution to exclude the public set out on pages 292 to 294 of the agenda be adopted; and

 

2.            That Rob Hall, James Stewart and Steve Clarke from Development Christchurch Limited and Paul Munroe from Christchurch City Holdings Limited  remain after the public have been excluded for Item 15 and Tom Hooper of Christchurch Development Corporation, remain after the public have been excluded for Item 17 of the public excluded agenda as they have knowledge that is relevant to those items and will assist the Council.

 

Councillor Manji/Mayor                                                                                                                                              Carried

 

 

The public were re-admitted to the meeting at 4.01pm.

 

   

Meeting concluded at 4.01pm.

 

CONFIRMED THIS 15TH DAY OF SEPTEMBER 2016

 

Councillor Raf Manji

Chairperson

   


Strategy and Finance Committee

15 September 2016

 

 

6.        Development Contributions Policy 2015 - Proposed Amendments (2016)

Reference:

16/901739

Contact:

Gavin Thomas

gavin.thomas@ccc.govt.nz

941 8834

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Strategy and Finance Committee to recommend to the Council that the Development Contributions Policy 2015 be amended as proposed.

Origin of Report

1.2       The Council approved the proposed amendments to the Development Contributions Policy 2015 for the purpose of community consultation at its 28 July 2016 meeting. This report deals with the outcomes of that consultation and submission process and makes final recommendations to the Council on amendments to the Development Contributions Policy 2015.

2.   Significance

2.1       The decisions in this report are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy.

2.1.1   The level of significance was determined by an assessment of the sections of the community likely to be affected by the decisions and the impact of decisions on those sections of the community.  The level of significance is considered to be low due to the minimal changes being made to the policy and the overall development contribution charge reducing for most developments.

2.1.2   The community engagement and consultation approach used and outlined in this report reflects the assessment.

 

3.   Staff Recommendations

That the Strategy and Finance Committee recommend that the Council:

1.         Approve the amendments to the Development Contributions Policy 2015 (Attachment 1)

2.         Agree that the amendments be effective from 1 July 2016.

 

 

4.   Key Points

4.1       This report supports the Council's Long Term Plan (2015 - 2025):

4.1.1   Activity: Strategic Planning and  Policy

·     Level of Service: 17.0.1 (non-LTP) Advice is provided to Council on high priority policy and planning issues that affect the City

4.2       The following feasible options have been considered:

·     Option 1 – Amend the Development Contributions Policy 2015 (preferred option)

·     Option 2 – Do nothing

4.3       Option Summary - Advantages and Disadvantages (Preferred Option)

4.3.1   The advantages of this option include:

·     The schedule of assets that provide for growth (Table 3.2) and schedule of development contribution charges (Table 2.2) in the Development Contributions Policy accurately reflect the Council’s revised capital expenditure programme.

·     The interest and inflation cost adjustors used in the development contributions charges calculations are consistent with those used for the Annual Plan 2016/17 and the amended Long Term Plan 2015-25.

·     The updated development contributions charges per activity and per catchment are almost all less than the charges in the Development Contributions Policy 2015. Backdating the application of the new charges to apply from 1 July 2016 ensures that developers are not disadvantaged.

·     Other minor changes to the wording of the policy (other than capital programme details and development contribution charges) improve the clarity of the policy.

4.3.2   The disadvantages of this option include:

·     Administrative costs / time for Council staff to amend the charges.

 

5.   Context/Background

About Development Contributions

5.1       Development contributions enable the Council to require developers to pay a fair share of the costs the Council incurs to provide infrastructure for new development. The cost of development contributions is directly related to the cost to Council of providing that infrastructure.

5.2       Development contributions are a significant revenue stream for the Council. Revenue from development contributions may only be used to pay for the growth component of assets identified in the development contributions policy – it is not general revenue.

5.3       The Council reviewed its development contributions policy in 2015 and adopted the current policy in June 2015.

Legislative requirements

5.4       Local authorities are required under section 102(2)(e) of the Local Government Act 2002 (LGA) to adopt a policy on development contributions or financial contributions.

5.5       Section 102(4)(a) of the LGA requires the council to consult on a draft policy in a manner that gives effect to the requirements of section 82 of the LGA. Section 102(4)(b) requires the same consultation approach when amending an existing policy.

5.6       Section 201A (1)(a) of the LGA requires a development contributions policy to include a schedule that lists each new asset, additional asset, asset of increased capacity, or programme of works for which the development contributions are intended to be used or have been used. This information is used to calculate development contribution charges.

5.7       When consulting on proposed changes to a plan, policy or other document, Section 82A (2)(d) of the LGA requires that details of the proposed changes are made publically available.  This enables the consultation to be limited to the proposed changes only rather than the complete policy.

Development Contributions Policy – amendment rationale

5.8       The Council’s Annual Plan 2016/17 and amended Long Term Plan 2015-25 included changes to the Council’s capital expenditure programme and to the forecast interest and inflation rates applied over the period to 2025.  Staff advice to the Council was that these changes should be reflected in the development contributions policy to ensure consistency and appropriate levying of development contributions charges.

5.9       The amended information to be included in the development contributions policy is mostly limited to updating the schedule of growth-related capital expenditure and the schedule of charges.  There are also some minor amendments to the wording of the policy to ensure references remain relevant and to improve clarity of the policy. 

5.10    Amending the schedule of assets included in the development contributions policy and the resulting development contribution charges is recommended on the following basis.

1.    The Council’s review of its 10 year capital expenditure programme has changed the timing of delivery of some assets and programmes that provide growth capacity.  In general this will result in capital expenditure being incurred later than originally planned, reducing the cost of capital incurred by the Council. This flows on to a reduction in development contribution charges. 

2.    As part of the capital programme review, the Northern Arterial roading programme has been added. This will increase the road network development contribution charge in the greenfields catchment.  The Council has also made changes to the active transport and public transport capital expenditure programmes which result in small increases in development contribution charges for both activities.

3.    Interest and inflation rates used in the Long Term Plan 2015 have been updated in the Annual Plan 2016 and Long Term Plan amendment to reflect revised forecasts, with overall lower inflation and interest rates expected over the life of the Long Term Plan. Development contribution calculations have been amended to use the revised rates, reducing the cost of capital and therefore reducing costs incurred by the Council. This flows on to a reduction in development contribution charges.

5.11    The effect on development contribution charges from applying the updated information detailed above is shown in table 1.

5.12    The effect on development contributions for non-residential developments is more difficult to quantify as some non-residential development contribution assessments are undertaken as a special assessment tailored to the type of business, its footprint and location.  It is expected that almost all non-residential development contribution charges will reduce as a result of applying the proposed amended charges.

5.13    Officers also recommend that the Council backdates the effective date for the amended policy to 1 July 2016 – the day the reviewed capital expenditure programme and financial assumptions took effect.  This means an assessment of development contributions undertaken after 1 July will be reviewed to take into account the changes.  This approach will maintain alignment between the Long Term Plan 2015-25 and the Development Contributions Policy.

Further policy review

5.14    A full review of the Development Contributions Policy is planned to be undertaken the 2016-17 year. This will include a review of the wording of the Policy, the possible introduction of sub-district catchments for more activities, a review of Household Unit Equivalent (HUE) assessment methodology and an update of the capital expenditure programme and development contribution charges if required.

 

6.   Option 1 – Amend the Development Contributions Policy 2015 (preferred)

Option Description

6.1       Amend the Development Contributions Policy 2015 as detailed in Attachment 1.

Significance

6.2       The level of significance of this option is low and is consistent with section 2 of this report.  Engagement requirements for this level of significance are to be consistent with the requirements of sections 82 and 82A of the LGA. The engagement undertaken has met with these requirements.

Impact on Mana Whenua

6.3       This option does not involve a significant decision in relation to ancestral land or a body of water or other elements of intrinsic value, therefore this decision does not specifically impact Ngāi Tahu, their culture and traditions.

Community Views and Preferences

6.4       The development community are specifically affected by this option due to their being required to pay development contributions where appropriate.  The development community was advised of the proposed amendments to the development contributions policy through e-newsletter notification.

6.5       Three submissions were received to the proposed amendments. The submissions, staff responses and recommendations to the Council are included as attachment 2 to this report.

6.6       No submissions were received against the proposed amendments being approved. One submission is strongly in support of the proposed amendments and two submissions address wider issues associated with development contributions that are not part of the proposed amendments. These issues can be considered as part of the full policy review to be undertaken in the 2016-17 year.

6.7       A letter has been sent to all submitters advising the outcome of the consultation, including details of the Committee meeting and how they can request speaking rights.  Also included in this letter was a link to the feedback summary with project team responses.

Alignment with Council Plans and Policies

6.8       This option is consistent with Council’s Plans and Policies.

Financial Implications

6.9       Cost of Implementation – minor costs associated with making changes to development contribution calculation software and reassessing development contributions assessments undertaken from 1 July 2016 to 22 September.

6.10    Maintenance / Ongoing Costs – Nil.

6.11    Funding source – Existing budgets.

Legal Implications

6.12    The Legal Services Unit of the Council has reviewed the proposed amendments and confirms, in their view, the appropriate legal standards are met.

Risks and Mitigations

6.13    There are no risks identified for the Council in amending the Policy as recommended.  Staff will ensure there are processes in place to support the changes being backdated to 1 July 2016, if the backdating of the amendments is agreed by the Council.

Implementation

6.14    Implementation dependencies – there are supporting processes to be updated following adoption of the recommended amendments. This includes changes to documents and to assessment and calculation software. These changes will be prepared for to ensure a seamless transition.

6.15    Implementation timeframe – if the policy is amended by the Council at its meeting of 22 September 2016 all necessary changes in datasets and charges will be made the following day. Assessments undertaken between 1 July 2016 and the date of adoption will be revised based on the new charges and developers sent advice of the changes to development contributions charges specific to their development. 

Option Summary - Advantages and Disadvantages

6.16    The advantages of this option include:

·   The Development Contributions Policy includes a schedule of assets and a schedule of development contributions charges that accurately reflect the revised Long Term Plan 2015-25 capital expenditure programme.

·   The interest and inflation cost adjustors used to calculate the development contributions charges are consistent with those used for the Annual Plan 2016/17 and the amended Long Term Plan 2015-25.

·   Developers will not be disadvantaged.  Most of the proposed development contributions charges per activity and per catchment are less than the charges in the Development Contributions Policy 2015.  While the development contribution charges for road network (Greenfields catchment only), active transport and public transport increase, the overall charge per HUE will be less.

·   Other minor changes to the wording of the policy (other than capital programme details and development contribution charges) will improve the clarity of the policy.

·   Any risk associated with having a development contributions policy that is not fully consistent with the Long Term Plan is eliminated.

6.17    The disadvantages of this option include:

·   Administrative costs/ time for Council staff to apply the amended charges.

7.   Option 2 – Do nothing

Option Description

7.1       Do not amend the development contributions policy schedule of assets for growth or the development contributions charges.

Significance

7.2       The level of significance of this option is low consistent with section 2 of this report.  Engagement requirements for this level of significance are not applicable.

Impact on Mana Whenua

7.3       This option does not involve a significant decision in relation to ancestral land or a body of water or other elements of intrinsic value, therefore this decision does not specifically impact Ngāi Tahu, their culture and traditions.

Community Views and Preferences

7.4       Property developers would be affected by this option due to development contributions being required from developers to fund a fair share of the cost of providing infrastructure for growth.  Their views are varied regarding the wider policy but they are consistently seeking the amount charged for development contributions to be lower, so they are unlikely to prefer an option that does not immediately reduce the charges.

7.5       Three submissions were received on the proposal. No submissions were received that support not making the amendments proposed.

Alignment with Council Plans and Policies

7.6       This option is inconsistent with Council’s Plans and Policies

7.6.1   Inconsistency – the Development Contributions Policy would not be consistent with the Annual Plan 2016/17 or the amended Long Term Plan 2015-25.

7.6.2   Reason for inconsistency - the costs associated with providing growth-related assets has reduced in the Annual Plan and Long Term Plan due to the capital expenditure programme review and the use of revised inflation and interest rates over the life of the Long Term Plan. 

7.6.3   Amendment necessary - amend the Development Contributions Policy to be consistent with the Annual Plan and amended Long Term Plan.

Financial Implications

7.7       Cost of Implementation – Nil.

7.8       Maintenance / Ongoing Costs - there will be a reduction in actual development contribution revenue received though it is impossible to accurately quantify this on an annual basis.

7.9       Funding source – Existing budgets.

Legal Implications

7.10    The Development Contributions Policy is a requirement of the Local Government Act 2002 and that legislation includes requirements regarding what information the policy must include and how the development contribution charges are calculated.  The view of the Council’s Legal Services team is that this option presents risks in terms of the Council fulfilling its legal requirements.

Risks and Mitigations

7.11    The legal service unit has advised there is a risk of the Development Contributions Policy being challenged if the schedule of growth assets and development contributions charges are inconsistent with the Council’s revised capital expenditure programme.  The risk arises from new obligations in the Local Government Act 2002 which suggest the Council should keep development contribution charges updated, despite the provision remaining in the Act that a policy is only required to be reviewed every 3 years. 

Implementation

7.12    Implementation dependencies  - not applicable.

7.13    Implementation timeframe – not applicable.

Option Summary - Advantages and Disadvantages

7.14    The advantages of this option include:

·   No immediate cost incurred.

7.15    The disadvantages of this option include:

·   There is a risk of development contribution assessments being challenged. If a challenge was successful this could result in economic and reputation risks to the Council.

 

Attachments

No.

Title

Page

a

Amendments (2016) - Development Contributions Policy 2015

20

b

DCP Feedback with staff comments

42

c

Stormwater Final

46

 

 

Confirmation of Statutory Compliance

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i)  sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

 

Signatories

Author

Gavin Thomas - Senior Policy Analyst

Approved By

Helen Beaumont - Head of Strategic Policy

Emma Davis - Acting General Manager Strategy and Transformation

  


Strategy and Finance Committee

15 September 2016

 

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15 September 2016

 

 

7.        Final 2017-19 Statements of Intent for Council Controlled Organisations

Reference:

16/932620

Contact:

Patricia Christie

patricia.christie@ccc.govt.nz

941-8113

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Strategy and Finance Committee to recommend that the Council accepts the final 2017-19 Statements of Intent (SOI) for the following Council Controlled Organisations (CCOs):

·    Rod Donald Banks Peninsula Trust

·    Riccarton Bush Trust

·    World Buskers Festival Trust

·    Tuam Ltd

·    Civic Building Ltd

·    Christchurch Agency for Energy Trust

·    Vbase Ltd

·    New Zealand Local Government Funding Agency.

Origin of Report

1.2       This report is staff generated in order to accept the final SOIs of the above named CCOs that were submitted to the Council by 30 June 2016 in accordance with the Local Government Act 2002. 

2.   Significance

2.1       The decision(s) in this report are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy.

2.1.1   The level of significance was determined by consideration of the impact of this decision on the community.

2.1.2   The community engagement and consultation outlined in this report reflect the assessment.

 

3.   Staff Recommendations

That the Strategy and Finance Committee recommends that the Council:

1.         Accepts the Statements of Intent for the Council Controlled Organisations that are owned directly by the Council.

 

 

 

4.   Key Points

4.1       At its meeting on 28 April 2016 the Council reviewed and commented on draft SOIs for the CCOs.  It referred a number of comments on the draft SOIs to the CCOs for consideration and inclusion in their final SOIs if appropriate (Council resolution CNCL/2016/00216 refers).

4.2       Set out below is a brief description of each CCO’s final SOI, and material changes to it since the draft. 

Rod Donald Banks Peninsula Trust (RDBPT)

4.3       The RDBPT has six key projects underway towards its conservation, environmental and biodiversity aspirations including developing the existing walkway along the summit ridgeline of Banks Peninsula, managing the Rod Donald hut along the Summit Walkway, facilitating regeneration of native forest in Grehan Valley above Akaroa and in Le Bons Bay, supporting a project to develop a walkway around the Lyttelton Harbour basin and mapping to capture all existing walks on Banks Peninsula.  

4.4       The RDBPT’s aspirations for 2016/17 are to where possible, secure long term access on Akaroa walking tracks and critical loop links that are not on public or reserve land, support community-led projects, develop a health and safety plan to comply with the Health and Safety at Work Act 2015, and strategic planning for the five year period from 1 July 2017.

4.5       Key financial statistics are:

 

Final SOI

$ million

Draft SOI

$ million

Opening bank balance 1 July 2016

2.820

2.710

Grants and capital expenditure on projects - $346,250 per annum

(1.040)

(1.040)

Other net (expenditure)/income (interest less operating costs and project costs committed to partners)1

0.050

0.013

Projected closing bank balance 30 June 2019

1.720

1.683

1this sum includes funding paid to Orton Bradley Park of $50,000 over the period, Trust operating expenditure offset by revenue in 2016/17 from the sale of land to Josef Langer Trust for native forest regeneration at Le Bons Bay.

4.6       Key changes to the final SOI from the draft are as follows:

4.6.1   A reduced set of performance targets have been included in the final SOI to ensure focus is on the most important of areas of performance.  This was stimulated by the Council’s comment on the RDBPT’s draft that it “should consider further reviews of its operational performance targets to ensure that it is only including its most key/significant targets in its Statement of Intent to avoid the need for excessive reporting”.

4.6.2   The RDBPT has revised its financial performance targets to reflect its recent agreement with Orton Bradley Park to provide further grant funding of $25,000 per annum in 2016/17 and 2017/18.  It has also revised its projected opening balance of the trust account with the firming up of 2015/16 financial results that flow on through the SOI timeframe. 

   Riccarton Bush Trust (RBT)

4.7       RBT’s key activities in the 2016/17 year include maintaining the land and property, evaluating performance of catering and augmented reality applications, developing operational policies, in particular health and safety to ensure compliance with the new Health and Safety at Work Act 2015, environmental initiatives such as managing feral pigeons and rats in the bush, community-related developments and activities, investigating options for improving visitor experiences such as interpretation facilities for house and grounds and upgrading and developing bush walk to become a self-guiding interpreted trail and combined landscape development/concept plan for the Riccarton House grounds and cottage garden including a tree succession plan.

4.8       As required by the Riccarton Bush Amendment Act 2012, RBT is funded by the Council annually based on an agreed budget.  RBT is projecting its costs to be around $480,000 per annum for the next three years which in large part will be funded by the Council ($314,000 in 2016/17).  Funding is also generated from the café and restaurant activities licensed by RBT.

4.9       There is one change only to the final SOI from the draft received by the Council in March.  The Council commented to RBT that it “should consider adding a health and safety target for the number of accidents and near misses of staff, contractors and visitors”.

4.10    Council staff note that this performance target has been added (refer to section 8.0 (b)(7) ‘Performance Targets’ of the SOI) as follows:

Develop Health & Safety Policy to meet the requirements of the Health and Safety at Work Act 2015.

·     Fully implement Health & Safety Policy and review on a quarterly basis.

·     Monitor and review the Health and Safety Measure for all Trust activities, of:

Serious Harm incidents = 0

Accident = 1

Near Misses = 3

 

World Buskers Festival Trust (WBFT)

4.11    The WBFT’s priority is to return the 2017 Festival to the streets of Christchurch with a centralised hub around the Arts Centre.  Satellite sites will be located in high foot traffic areas around the central city. 

4.12    Aside from the $195,000 per annum grant provided by the Council, the WBFT raises funding from other sources including door charges for evening events, stimulated by its free daytime shows, and sponsorship.

4.13    While its focus is on street performance, the WBFT is also looking to develop street theatre beyond the traditional buskers’ programme.  It will also continue to offer opportunities for the wider Canterbury community to experience the festival.  Roadshows beyond Canterbury boundaries (outside the Festival timetable) may be undertaken if they can be self-funded.

4.14    Key financial statistics for the WBFT are:

·    the Festival has a projected budget of $1.4 million per annum over the SOI three year period;

·    it expects to break-even or generate a small surplus each year; and

·    poor weather conditions over several days during the 2016 Festival has almost fully depleted its retained earnings (accumulated small surpluses from previous festivals) leaving it with little flexibility to manage any downturn in revenue from the 2017 Festival.

4.15    The WBFT’s final SOI is unchanged from its draft.  However, the WBFT has acknowledged to Council staff it has noted the Council’s comment of “concern regarding the World Buskers Festival operating outside Christchurch City boundaries with regard to cost recovery” made on its draft SOI.

 


 

Tuam Ltd

4.16    Tuam Ltd owned and managed the former Civic building and car park in Tuam Street prior to divestment following the earthquakes.  The company’s earthquake insurance claims have now been settled and paid.

4.17    The key issues for Tuam Ltd, and shareholders over the course of the SOI period, 2017-19, are as follows:

·    payment to the Council of a dividend of its surplus cash of $46 million in 2016/17 (this was paid on 29 July); and

·    determining options for Tuam Ltd’s future taking into account the tax burden of around $400,000 on earthquake depreciation rollover relief which will need to be paid in 2019 if the relief cannot be utilised.

4.18    The only change from the draft and final SOIs reflect the delay in paying the dividend from June 2016 to 29 July 2016.

Civic Building Ltd (CBL)

4.19    CBL is owned in full by the Council and is a 50 percent partner with Ngai Tahu in a joint venture that owns and manages the Civic Building in Hereford Street.

4.20    The operations of CBL are expected to make small losses for the years ending June 2017 and 2018.  In the year ending June 2019 (and thereafter) CBL projects to make profits.  The key performance target for CBL is to manage the Civic building on a commercial and prudent basis.

4.21    There are no changes to the final SOI from the draft.

Christchurch Agency for Energy Trust (CAfE)

4.22    CAfE’s purpose is to raise awareness and promote energy efficiency initiatives and the use of renewable energy in Christchurch. It administers the Christchurch Energy Grant Scheme for buildings in the central city for the implementation of renewable energy initiatives, a district energy scheme and energy efficiency measures that go well beyond the building code minimum.

4.23    The Council commented on CAfE’s draft SOI that it “should consider reviewing its estimates when each of the grants are expected to be paid out based on progress to date”.

4.24    CAfE has responded to the Council’s comment and reviewed and revised the timing and amount of grant payments to be made accordingly.  This has led to a reforecast of the timing of its distribution of grant funding from two years to three years (ending by June 2019). 

4.25    At June 2018, CAfE will have fully allocated its grant funding, and paid it out in full by June 2019, amounting to $2,190,000.

Vbase Ltd

4.26    Following submission of its draft SOI, Vbase undertook a more comprehensive review of its budget and identified savings that it believe could be captured with reasonable certainty.  The Board considers there might be further improvements to its financial position over the course of the SOI period.

4.27    The following table presents the changes in projected financial performance for Vbase over the SOI period:


 

Movement +/(-) between draft and final SOIs

 

2017

$000

2018

$000

2019

$000

Revenue

(2,003)

(2,033)

(4,247)

 

 

 

 

Expenses

2,168

2,356

4,398

EBITDA

165

323

151

Town Hall revised impairment provision

1,640

-

-

Reassessed depreciation charge following review of assumptions

1,344

1,184

(66)

Other costs (incl Interest and earthquake repair costs)

(747)

165

165

Tax

(12,034)

625

(340)

 

 

 

 

Debt (borrowings from Council)

 

(1,000)

(3,000)

 

 

2017

$000

2018

$000

2019

$000

NPAT projections

(48,460)

(17,894)

(3,051)

NPAT changes between draft and final SOIs

(9,387)

2,297

(90)

 

4.28    The key observations from the tables above are as follows:

·    worse than expected 2016/17 profitability after tax, as a result of confirmation of the deferred tax position of the Town Hall impairment provision after the draft SOI was presented;

·    a reduced loss in 2017/18 (from $1.972 million in the draft SOI to $1.650 million in the final) as a result of a combination of cost savings across the business and an increase in revenue targets;

·    a lower reduction of EBITDA (net operating balance) in 2018/19 largely as a result of the Air Force Museum venue agreement expiring in that year;

·    a lower level of borrowing in 2018 and 2019 based on updated cash forecasts.

4.29    Following its review of the draft SOI, the Council commented that Vbase should consider a number of issues.  These are shown in the table below, and the Vbase response, by way of its action in the final SOI, is provided.

Council comment

Vbase final SOI

Reviewing its operational targets proposed for both venues in Hagley Park to ensure that they are more in line with the spirit of these operational constraints.

The number of events have been reduced by between 100 and 125 per year (event days include meetings and functions) to ensure compliance with resource consent conditions.

Given the financial sustainability objective and continuing operating losses that it investigate options to improve its long term profitability.

The budget now includes a reduction in the EBITDA loss forecast in 2016/17 of $165,000.  Vbase will continue to pursue opportunities to improve its profitability.

Adding a health and safety operational target for the number of accidents and near misses of staff, contractors and visitors to all venues in this document.

Included, as shown below.

Amending the statements regarding Lancaster Park to reflect no decision has been made on its future.

The SOI content advises “…there is still much uncertainty around the future stadium infrastructure for Christchurch, including whether this will be a repair of Lancaster Park or a new venue.”.

That Vbase adopts a policy around environmental performance together with KPIs.

Included, as shown below.

Invite the Vbase board and management to an informal briefing of the Council.

To be actioned following the completion of further analysis of Vbase’s assets.

 

New non-financial performance measures

4.30    Vbase has included the following new performance measures in its SOI, to address the comments on health and safety and environmental performance noted in the table below.

4.30.1 At 30 June 2016 Vbase’s health and safety incident levels for staff, contractors and visitors / guests was lower than the 2016/2017 target.

Looking forward

4.31    Vbase continues to have a significant challenge in returning to profitable operations at least over the SOI’s three year period.


 

Local Government Funding Agency

4.32    The Council has an 8.3 percent stake in the Local Government Funding Agency (LGFA), equal to the stakes of eight local and regional councils, including Auckland, Hamilton, Tauranga, Wellington and others.  The Government owns 20 percent of the LGFA.

4.33    The LGFA aims to provide at least 50 percent of aggregate long-term debt funding to its participating local authorities.  It operates on a commercial basis, although it has traded off the distribution of profits for providing loans at lower interest rates.  In each of the years covered by the SOI, the LGFA is forecasting dividend distribution of $1.5 million to shareholders, of which the Council’s share will be $124,500 in each year.

4.34    The Council did not provide any comments on the LGFA’s draft SOI.  A Shareholders’ Council that is made up of five-ten appointees of the shareholders has the responsibility of monitoring the performance of the LGFA.

4.35    The LGFA has made changes to its draft SOI which are now recorded in its final document.  Financial Management projections have been restated reflecting more clarity of the 2015/16 year’s operating outcomes.  The forecast dividend in each of the three years has not changed.  The LGFA’s objectives now includes one that reflects its intent to ensure compliance with the Health and Safety at Work Act 2015.

 

 

5.   Context/Background

5.1       The Local Government Act 2002 provides that a CCO board must consider any comments on the draft SOI that are made to it within two months of 1 March by the shareholders; and deliver the completed SOI to the shareholders on or before 30 June each year.

5.2       The final SOIs for the CCOs that are included in this report were received on or before 30 June 2016. 

 

 

Attachments

No.

Title

Page

a

2017-19 Final Statement of Intent:  Rod Donald Banks Peninsula Trust

55

b

2017-19 Final Statement of Intent:  Riccarton Bush Trust

80

c

2017-19 Final Statement of Intent:  World Buskers Festival Trust

87

d

2017-19 Final Statement of Intent:  Tuam Ltd

99

e

2017-19 Final Statement of Intent: Civic Building Ltd

111

f

2017-19 Final Statement of Intent:  Christchurch Agency for Energy

124

g

2017-19 Final Statement of Intent:  Vbase Ltd

132

h

2017-19 Final Statement of Intent:  New Zealand Local Government Funding Agency

153

 

 

Confirmation of Statutory Compliance

Compliance with Statutory Decision-making Requirements (ss 76 - 81 Local Government Act 2002).

(a) This report contains:

(i)  sufficient information about all reasonably practicable options identified and assessed in terms of their advantages and disadvantages; and

(ii) adequate consideration of the views and preferences of affected and interested persons bearing in mind any proposed or previous community engagement.

(b) The information reflects the level of significance of the matters covered by the report, as determined in accordance with the Council's significance and engagement policy.

 

Signatories

Author

Linda Gibb - Performance Advisor

Approved By

Diane Brandish - Head of Financial Management

Peter Gudsell - General Manager Finance and Commercial

  


Strategy and Finance Committee

15 September 2016

 

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15 September 2016

 

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15 September 2016

 

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15 September 2016

 

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Strategy and Finance Committee

15 September 2016

 

 

8.        Chairperson's Report: Capital Endowment Fund Working Group

Reference:

16/1006637

Contact:

Paul Lonsdale

Paul.Lonsdale@ccc.govt.nz

941 8999

 

 

1.   Purpose and Background of Report

Purpose of report

1.1       The purpose of this report is for the Capital Endowment Fund Working Group to request that the Strategy and Finance Committee recommend that the Council resolve to maintain the current status of the Capital Endowment Fund.

Background of report

1.2       The Capital Endowment Fund Working Group was established by a Council resolution at the Council meeting held on Thursday 24 September 2015. A meeting of the Working Group was held on 26 August 2016.

 

2.   Working Group Recommendations

That the Strategy and Finance Committee recommend that the Council:

1.         Maintain the current status of the Capital Endowment Fund, including the current practice of the Fund lending internally to the Council.

2.         Request advice from Christchurch City Holdings Limited on potential options for investing the Capital Endowment Fund in assets held by Christchurch City Holdings Limited, to be reviewed by the appropriate Council Committee before the end of this calendar year.

3.         Confirm the need for a report on the policy for distribution of funds from the Capital Endowment Fund.

 

 

3.   Key Points

3.1       The working group met on Friday 26 August 2016. The members present were: Councillor Lonsdale (Chairperson), Councillors Buck, Manji, Scandrett and Turner, Peter Gudsell and Garry Moore. An apology was received from Roger Bridge.

3.2       In order to maintain the distinction between Management and Governance, Peter Gudsell did not participate in determining the Working Group’s final recommendations.

3.3       The discussion at the meeting focused on two key points, being options for investing the Capital Endowment Fund (the Fund), and the appropriate model for allocating proceeds from the Fund.

3.4       The Working Group expressed interest in directly investing the Fund in local monopoly assets. However, it was acknowledged that care would be required in doing this because such action is likely to impact on the Council’s net debt to revenue ratio, and in turn its ratings. Further advice would also be required from Christchurch City Holdings Limited (CCHL) before making any decision to invest in assets such as Orion or the Christchurch International Airport.

3.5       In light of this, the Working Group recommended that the Council request advice from CCHL on potential options for investing in assets held by CCHL. The Working Group also recommended maintaining the current status of the Fund as a separate accounting entity, and that the current practice of the Fund lending internally to the Council should be continued (at least until the advice from Christchurch City Holdings Limited has been received and considered).

3.6       The full notes of the meeting are attached as Attachment A. The memorandum from Council staff which informed the Working Group’s discussion is attached as Attachment B.

 

Attachments

No.

Title

Page

a

Meeting Notes

169

b

Memo to the Capital Endowment Fund Working Group: Broader Options for the Capital Endowment Fund

172

 

 

Signatories

Author

Paul Lonsdale - Councillor

Approved By

Paul Lonsdale - Councillor

  


Strategy and Finance Committee

15 September 2016

 

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Strategy and Finance Committee

15 September 2016

 

 

9.    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:


Strategy and Finance Committee

15 September 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

10

Public Excluded Strategy and Finance Committee Minutes - 18 August 2016

 

 

Refer to the previous public excluded reason in the agendas for these meetings.