Finance and Performance Committee

Agenda

 

 

Notice of Meeting:

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

 

Date:                                     Wednesday 2 August 2017

Time:                                    9am

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

 

 

Membership

Chairperson

Deputy Chairperson

Members

Councillor Raf Manji

Deputy Mayor Andrew Turner

Councillor Vicki Buck

Councillor Jimmy Chen

Mayor Lianne Dalziel

Councillor Mike Davidson

Councillor Anne Galloway

Councillor Jamie Gough

Councillor Yani Johanson

Councillor Deon Swiggs

 

 

28 July 2017

 

 

 

Principal Advisor

Carol Bellette

General Manager Finance and Commercial

 

Aidan Kimberley

Committee and Hearings Advisor

941 6566

aidan.kimberley@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:
https://www.ccc.govt.nz/the-council/meetings-agendas-and-minutes/

 


Finance and Performance Committee

02 August 2017

 

Terms of Reference Finance and Performance Committee

 

Chair

Councillor Manji

Membership

Deputy Mayor Turner (Deputy Chair), Mayor Dalziel, Councillor Buck, Councillor Chen, Councillor Davidson, Councillor Galloway, Councillor Gough, Councillor Johanson, Councillor Swiggs and a non-voting independent member to be appointed by an Appointments Panel established by the Council.

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

Monthly

Reports To

Council

 

Responsibilities

The focus of the Finance & Performance Committee is the financial and non-financial performance of the Council and its subsidiaries.

 

The Finance & Performance Committee:

·         Seeks to enhance the Council’s accountability with the community in relation to the Council’s financial and non-financial performance

·         Promotes active citizenship, community participation and community partnerships, including participatory budgeting

·         Works in partnerships with key agencies, groups and organisations

The Finance & Performance Committee considers and reports to Council on issues and activites relating to:

·         The preparation and adoption of the draft and final Annual Plan and Long Term Plan (based on the strategic direction of the Strategic Capability Committee)

·         Performance  against the  Long Term Plan (LTP) and  Annual Plan (AP), including financial performance and non-financial performance including:

-          medium to long term asset management

-          treasury investment and borrowings

-          organisational performance and capability

·         Insurance matters including to:

-          consider legal advice from the Council’s legal and other advisers,

-          approve further actions relating to the issues,

-          make recommendations to Council concerning formal actions.

·         Performance of a number of subsidiaries including Council Controlled Organisations (CCO). 

·         Recommendations   from   Council’s   Subcommittees,   Community Boards, the public, stakeholders and providers in relation to finance and performance.

·         Overseeing the development to the Annual Report for consideration by the Council

·         Development of the financial policy of the Council

·         Development of a Genuine Progress Indicator

Process for appointing Independent Members to the Finance and Performance Committee

 

The following principles will guide the appointment process for Independent Members of the Finance and Performance Committee:

 

1.              Council Officers, in consultation with Elected Members, will compile a longlist of candidates and provide this list to the General Manager Finance and Commercial for consideration.

 

2.              If appropriate, the Chair of the Finance and Performance Committee and the General Manager Finance and Commercial may endorse the nominations.

 

3.              Candidates will be contacted at the appropriate time to confirm their willingness to serve as an independent committee member and, if confirmation is received, appropriate background checks as determined by the General Manager Finance and Commercial will be conducted. Candidates will also be informed of Council policies.

 

4.              The Chair and Deputy Chair of the Finance and Performance Committee, and the General Manager Finance and Commercial, will review the candidates to develop a shortlist by assessing the following:

 

a.              Professional credentials and relevant experience.

b.             Their understanding of relevant legislation.

c.              Experience overseeing or assessing the performance of organisations.

d.             Potential conflicts of interest.

e.             Affiliations or connections with the Council and its related entities.

f.               Reference and background check reports.

 

5.              The shortlist of candidates will be presented to an Appointments Panel. The Panel will select from that shortlist the independent member to be appointed to the Committee. The resolution to appoint the independent member should specify the dates on which the appointment commences and concludes. 

 

6.              The Chair of the Panel will inform the Council in writing of the Panel’s decision.

 


Finance and Performance Committee

02 August 2017

 

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

C       6.       Impact on Business from Council Works..................................................................... 11

A       7.       Memorandum of Understanding - the Council, ChristchurchNZ, and Christchurch City Holdings.......................................................................................................................... 17

C       8.       Final 2017/18 Statements of Intent............................................................................. 23

C       9.       Corporate Finance Report for the period ending 30 June 2017................................ 33

C       10.     Development Christchurch Ltd - Progress Report June/July 2017 ........................... 43

C       11.     Resolution to Exclude the Public................................................................................. 47  

 

 


Finance and Performance Committee

02 August 2017

 

 

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 and 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 Finance and Performance Committee meeting held on Wednesday, 5 July 2017 be confirmed (refer page 6).

4.   Deputations by Appointment

There were no deputations by appointment at the time the agenda was prepared. 

5.   Presentation of Petitions

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


Finance and Performance Committee

02 August 2017

 

 

 

Finance and Performance Committee

Open Minutes

 

 

Date:                                     Wednesday 5 July 2017

Time:                                    9:01am

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

 

 

Present

Chairperson

Deputy Chairperson

Members

Councillor Raf Manji

Deputy Mayor Andrew Turner

Councillor Vicki Buck

Councillor Jimmy Chen

Mayor Lianne Dalziel

Councillor Mike Davidson

Councillor Anne Galloway

Councillor Jamie Gough

Councillor Yani Johanson

Councillor Deon Swiggs

 

 

4 July 2017

 

 

 

Principal Advisor

Carol Bellette

General Manager Finance and Commercial

 

Aidan Kimberley

Committee and Hearings Advisor

941 6566

aidan.kimberley@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 FPCM/2017/00035

That the apology for early departure from Councillor Gough be accepted.

Deputy Mayor/Councillor Manji                                                                                                                           Carried

 

2.   Declarations of Interest

Part B

There were no declarations of interest recorded.

3.   Confirmation of Previous Minutes

Part C

Committee Resolved FPCM/2017/00036

Committee Decision

That the open and public excluded minutes of the Finance and Performance Committee meeting held on Wednesday, 31 May 2017 be confirmed.

Councillor Swiggs/Councillor Chen                                                                                                                       Carried

 

4.   Deputations by Appointment

Part B

There were no deputations by appointment.

5.   Presentation of Petitions

Part B

There was no presentation of petitions.

 


 

Councillor Gough left the meeting at 09:30 am.

6.   Asset Management Unit Status Report

 

Committee Resolved FPCM/2017/00037

Part C

That the Finance and Performance Committee:

1.         Receives the information contained in this report and the May 2017 Portfolio Dashboard Report

2.         Requests that future Asset Management reports:

a.         Include data on asset condition and asset values.

b.         Be reported to the Committee quarterly.

Councillor Manji/Mayor                                                                                                                                           Carried

 

 

7.   Review of the Rates Postponement Scheme

 

Committee Comment

The Finance and Performance Committee considered the report on the review of the rates postponement scheme.

An additional proposal was tabled at the meeting by Councillor Manji. The key differences from the staff recommendations were to allow for universal access to the rates postponement scheme for superannuitants in owner-occupied homes, and access for other owner-occupiers who can demonstrate significant financial hardship. An alteration was also made to clarify that the Policy should be reviewed before each future Long Term Plan.

The Committee recommended that the Council accept this revised option.

 

Committee Decided FPCM/2017/00038

Part A

That the Finance and Performance Committee Recommends that the Council:

1.         Requests staff to amend the current Rates Postponement Policy for consultation in the 2018 Long Term Plan, so that:

a.         There is universal access (no asset or income test) for all superannuitants in owner-occupied homes, and access for other owner-occupiers who can demonstrate significant financial hardship.

b.         100% of rates may be postponed, provided that the total postponed value shall not exceed 20% of the most recent Rating Valuation.

c.         An annual interest and administration charge will recover the Council’s costs.

d.         Application must include evidence of adequate financial and legal advice (like a bank loan application), to minimise the risk of future recovery being successfully challenged.

e.         Understanding of compound interest and the impact on home equity must be re-confirmed each year (staff will include a standard renewal form with first instalment rates invoices, as is currently done for the Rebate scheme).

f.          The policy is reviewed prior to each future Long Term Plan.

Councillor Manji/Councillor Davidson                                                                                                                 Carried

Councillor Swiggs requested that his vote against the resolution be recorded.

 

   

Meeting concluded at 10:20am.

 

CONFIRMED THIS 2ND DAY OF AUGUST 2017

 

Councillor Raf Manji

Chairperson

   


Finance and Performance Committee

02 August 2017

 

 

6.        Impact on Business from Council Works

Reference:

17/805048

Contact:

Chris Gregory

Chris.gregory@ccc.govt.nz

941 8324

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee to be updated on the options for addressing the impact of Council infrastructure projects on private businesses, and to make a recommendation to the Council.

Origin of Report

1.2       This report is being provided to fulfil the following Council resolution from its meeting of 20 June 2017: 

“Request staff to report back on existing processes in relation to work in the public domain and on options for how businesses unreasonably adversely impacted by Council works could be addressed.”

2.   Significance

2.1       The decision in this report is 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 Significance and Engagement Policy.

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

 

3.   Staff Recommendations

That the Finance and Performance Committee recommends that the Council:

1.         Receive the information in the report.

2.         Note that financial compensation for businesses or other ratepayers affected by the Council’s infrastructure works (whether through the rates system or a Grant) is not considered feasible,

3.         Require that the managers of all Council infrastructure projects liaise with any businesses, property owners and tenants that front Council infrastructure projects to either enable access for pedestrians and vehicles onto the property or agree practical alternative measures to be implemented.

 

4.   Key Points

4.1       The Council already has a number of processes to control and manage construction activities in the road corridor. These include activities by other agencies such as electricity, telecommunications and private developers.

4.2       Staff and contractors work closely with affected parties to mitigate the impacts of Council projects on those businesses, property owners and tenants. However, this is frequently a balance between community expectation and achieving efficiency in the delivery of the capital programme.

4.3       Virtually all Council projects provide some form of mitigation whether it is temporary access, temporary routes or traffic management.

4.4       On a few occasions mitigations, such as dedicated parking, are provided on a case by case basis where the impact cannot be directly mitigated.

4.5       Rates relief for affected property-owners is not considered feasible.  Specific objective criteria would be required to define the extent of disruption sufficient to qualify for relief, the amount of rates remission to be provided, and the length of time for which this should be applied.  Current rates staff and system resources are inadequate to administer such a remission to the standard required by rates legislation.

4.6       Financial compensation by establishing a new type of Grant would be more feasible in that resources already exist to manage this sort of activity.  However, there would remain a significant practical difficulty in defining who should qualify and how much should be provided, particularly as there are commonly a number of other factors to be considered beyond the direct impact of the Council works.

 

5.   Context/Background

Background

5.1       At its meeting to consider the 2017/18 Annual Plan the Council resolved the following:

“Request staff to report back on existing processes in relation to work in the public domain and on options for how businesses unreasonably adversely impacted by Council works could be addressed.”

The report below outlines the existing formal processes, current project procedures and compensation options.

Council processes for activities in the road reserve

5.2       The Council has three processes that control and manage the road corridor (which is defined as fence to fence, not just the roadway itself). Temporary Traffic Management Plans, Corridor Access Requests and Temporary Use of Legal Road permits are the three methods by which the Council manages activities in the road corridor to reduce impacts on road users, neighbours and roading assets.

5.3       The Christchurch Traffic Operations Centre (CTOC) manages the Temporary Traffic Management process that requires all works in the road to have an approved Temporary Traffic Management Plan. In considering the plan CTOC take cognisance of other proposed works, road safety and traffic flow efficiency. The proposed plan is also considered against the national code for temporary traffic management as an industry benchmark.

5.4       Transport Operations staff manage the Corridor Access Request process that requires approval before any agency or developer can excavate in the road corridor. This process is intended to protect Council assets such as footpaths and roadways. By knowing who is digging and where, staff can ensure that remediation is up to standard and that any defects, complaints or queries are directed to the correct agency.

5.5       Transport Operations staff manage the Temporary Use of Legal Road Reserve process that requires approval before any agency or developer can use the road corridor for their own activities. The type of activities covered by these permits include hoardings, skips, storage areas, scaffolding etc. This process is intended to ensure that issues such as public safety, pedestrian routes and wider community/business impacts are considered before the permit is issued.

5.6       All three of these processes are intrinsically interlinked and are closely co-ordinated between staff in the relevant teams.

 


 

Current process for Council projects

5.7       Where any Council infrastructure project is likely to impact on an adjacent business or residential property then the Contractor and the Council Project Manager work with the affected parties to ensure vehicle and pedestrian access is maintained to that business/property. Often this is by defining a safe pedestrian route and/or by providing a temporary crossing for vehicles.

5.8       On a very few occasions it is impossible to preserve full access due to the nature of the work. For example;

·     open utility trenches in the footpath that prevent pedestrian access to specific premises

·     open trenches that are too wide to bridge with conventional steel plates to provide temporary vehicle crossings.

5.9       In some projects the works require the temporary removal of car parking outside of the business in order to undertake the work proposed such as pipe laying or road construction. These car parks are not provided for specific businesses but are for general public use. Usually alternative parking is available nearby further along the road or on adjacent streets.

5.10    In a few cases the removal of car parking has been extensive with no viable on-street parking nearby and temporary parking has been provided. This situation is assessed on a case by case basis and on occasions special parking provisions are provided to maintain amenity such as on the current works on Hills Road.

5.11    Staff and contractors try to work collaboratively with all parties affected by the works to achieve reasonable solutions, however, on some occasions the extent of the work or its duration mean that not all impacts can be mitigated to the satisfaction of all and staff have to balance community impact against affordability and traffic efficiency. This has often been case in recent times purely due to the extent of the rebuild programme.

Compensation

5.12    Financial compensation through the rates system would require the Council to:

·   Define a specific type and minimum level of disruption required in order for a property to qualify for a remission, based on objective and measurable criteria (not staff judgement).

·   Ensure that the qualification criteria could be applied to all properties in a way that is equitable (e.g. so that a similar level of relief is provided to properties in similar circumstances).

·   Determine what level of rates relief is appropriate, including a formula if the amount is to be proportional to the level of disruption and/or the value of the property.

·   Estimate the likely cost of such a remission, and be satisfied that it is fair and equitable for this cost to be borne by other ratepayers.

·   Ensure that rates staff and systems are sufficient to process applications promptly, provide on-going monitoring, and end the remission promptly once the temporary disruption has ceased.

5.13    As a practical matter, this final requirement cannot be met with existing rates staff and systems.  More broadly, it should be recognised that the rates system is governed by specific legislation and is designed to impose a relatively stable level of taxation across the District – it is not intended to provide short-term relief for temporary circumstances.  Recent experience with the Council’s temporary earthquake-related remissions demonstrated that it is very difficult to administer such remissions robustly, even when the list of affected properties and the length of time they are affected is significantly more stable than would be likely under a “roadworks remission”.

5.14    Financial relief could potentially be provided through the Grants system – a form of “hardship fund” that businesses, tenants, or other affected ratepayers could apply to for consideration of financial support.  A new grant would need to be established and funded as existing grants do not cover the situation being considered, but this approach would have the advantage of fewer legal constraints than rates and existing staff and system resources that are designed to provide similar services.

5.15    However, there would remain a fundamental problem of definition – how could we objectively define a minimum level of disruption, how could we be satisfied that an applicant really has experienced the extent of financial or other disruption that they are claiming, and how much compensation should be offered in each case?

5.16    Moreover, although the linkage between the presence of Council works and ratepayers’ financial or personal disruption is superficially obvious, it becomes more nebulous when used as the basis for financial compensation – for example:

·   If a business has declining sales revenue, how much of this may be attributed to Council works and how much to other factors (such as changes in market trends, local demographics, traffic flows, and competition)?

·   For residential ratepayers, how can personal disruption be translated into financial compensation (particularly if most Council activity occurs during working hours)?

·   For all properties, how can the impact of Council-specific works be separated from the often overlapping impact of works from other service providers (such as telecommunications companies) or developers (particularly in the CBD, where rebuilding often encroaches on street space and disrupts neighbouring properties)?

5.17    The level of analysis and judgement required to consider these issues thoroughly is likely to be unacceptable, in terms of both the amount of time required to do it and the lack of consistency and transparency in the end result. 

5.18    Although a far more straightforward and efficient approach could be adopted, this would achieve little more than simply giving a standard amount of money to anyone with roadworks within a certain distance of their property.  The extent of disconnect between need and support under such an approach is considered unacceptable.

 

Attachments

There are no attachments for this report.

 

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

Authors

Chris Gregory - Head of Transport

Steve Ballard - Manager Funds and Financial Policy

Approved By

David Adamson - General Manager City Services

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee

02 August 2017

 

 

7.        Memorandum of Understanding - the Council, ChristchurchNZ, and Christchurch City Holdings

Reference:

17/762551

Contact:

Ian Thomson

ian.thomson@ccc.govt.nz

941 8999

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       To enable the Finance and Performance Committee to receive and consider the attached draft Memorandum of Understanding before making a recommendation to the Council.

Origin of Report

1.2       ChristchurchNZ Ltd has been established as a single entity to represent the Council’s interests in tourism, mega and major events, international education, and economic development in Christchurch and Canterbury; 

1.3       The Council expects the Finance and Performance Committee to provide oversight of the entity (Letter of Expectations of 28 September 2016);

1.4       A draft Memorandum of Understanding has been prepared to record arrangements for the monitoring and support  of the entity;

1.5       This is attached as Attachment A, for the Committee’s consideration.

2.   Significance

2.1       The decision to be made by the Council is of low significance, in relation to the Council’s Significance and Engagement Policy.  No community engagement or consultation is proposed.

 

3.   Staff Recommendations

That the Finance and Performance Committee:

1.         Approves the draft Memorandum of Understanding between the Council, ChristchurchNZ Holdings Ltd, ChristchurchNZ Ltd, and Christchurch City Holdings Ltd, as set out in Attachment A;

2.         If necessary, requests the General Manager Financial and Commercial to make any non-material changes to the document that may be required by the Committee;

3.         Recommends that the Council approves the draft Memorandum of Understanding as set out in Attachment A, and delegates to the Chief Executive authority to sign the Memorandum of Understanding on the Council’s behalf;

 

 

4.   Key Points

4.1       The draft Memorandum of Understanding records the monitoring and support to be provided by the Council and Christchurch City Holdings Ltd to ChristchurchNZ Ltd.

 

5.   Context/Background

5.1       In 2013 the Council entered into a Memorandum of Understanding with Canterbury Development Corporation Ltd and Christchurch City Holdings Ltd.  The purpose was to record the monitoring and reporting functions to be put in place following the restructuring of Canterbury Development Corporation Ltd;

5.2       Since then Canterbury Development Corporation has been amalgamated with Christchurch and Canterbury Marketing Ltd to form ChristchurchNZ Ltd;

5.3       ChristchurchNZ Ltd is wholly owned by ChristchurchNZ Holdings Ltd (previously Transition Holdings Ltd and before that Canterbury Development Corporation Holdings Ltd);

5.4       One of the Council’s priorities for the establishment of the new entity was for ChristchurchNZ Holdings Ltd to work with the Council and Christchurch City Holdings Ltd on a review of the earlier Memorandum of Understanding;

5.5       This has been progressed, and the result is the draft document attached. It provides that:

·   Christchurch City Holdings Ltd will meet at least quarterly with ChristchurchNZ Ltd, to be briefed on matters such as ChristchurchNZ Ltd’s strategic direction and current areas of focus.  They will also share relevant information about economic activity in the Canterbury region;

·   The Council’s Finance and Performance Committee will provide the oversight of ChristchurchNZ Ltd referred to in the Council’s Letter of Expectations dated 28 September 2016;

·   The Committee will be responsible for receiving and reviewing the annual Statements of Intent prepared by ChristchurchNZ Holdings Ltd and ChristchurchNZ Ltd, and the monitoring and reporting functions set out in the Local Government Act 2002;

·   The Committee will also monitor ChristchurchNZ Ltd’s performance against the service levels agreed to with the Council and recorded in the Long Term Plan;

·   Christchurch City Holdings Ltd will be responsible for recommending appointments to the boards of ChristchurchNZ Holdings Ltd and ChristchurchNZ Ltd;

5.6       The draft Memorandum of Understanding has been approved by the other parties.

 

 

Attachments

No.

Title

Page

a

Draft Memorandum of Understanding

20

 

 

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

Ian  Thomson - Senior Legal Advisor, Governance

Approved By

Rob Goldsbury - Head of Legal Services

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee

02 August 2017

 

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Finance and Performance Committee

02 August 2017

 

 

8.        Final 2017/18 Statements of Intent

Reference:

17/696505

Contact:

Linda Gibb

Linda.gibb@ccc.govt.nz

941.6762

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       This report notes the changes made to the 2017/18 Statements of Intent (SOI) for Christchurch City Holdings Ltd (CCHL) and its subsidiaries and for the Council’s trading organisations and charitable trusts following their consideration of the Council’s comments on the draft documents in April 2017. 

Origin of Report

1.2       This report is staff generated as a result of final SOIs being received by the Council on or before 30 June 2017.

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 applying the Council’s Significance and Engagement Policy, taking into consideration (amongst other things) the possible costs/risks to the Council, ratepayers and the wider community of carrying out the decision, whether the impact of the decision can be easily reversed and the number of people affected and/or with an interest in the matter.

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

 

3.   Staff Recommendations

That the Finance and Performance Committee recommend that the Council:

1.         Notes that the final Statements of Intent for 2017/18 have been received from the following groups of Council-controlled organisations:

a.         Christchurch City Holdings Ltd and its subsidiaries – Christchurch International Airport Ltd, Orion New Zealand Ltd, Lyttelton Port Company Ltd, Enable Services Ltd, City Care Ltd, EcoCentral Ltd, Red Bus Ltd and Development Christchurch Ltd;

b.         Council-owned organisations and charitable trusts – Vbase Ltd, Civic Building Ltd, ChristchurchNZ Ltd (formerly Transition Holdings Ltd) and Local Government New Zealand, Riccarton Bush Trust, Christchurch Agency for Energy Trust and Rod Donald Banks Peninsula Trust;

2.         Notes that the final Statements of Intent for 2017/18 address the Council’s comments on the draft documents made at its meeting on 13 April 2017 (Council resolutions CNCL/2017/00109 and CNCL/2017/00110 refer);

3.         Notes that the Statements of Intent meet the minimum statutory requirements for information to be provided as set out in clauses 9 and 10 of Schedule 8 of the Local Government Act 2002;

4.         Notes that the Statements of Intent will be made public by each of the Council-controlled organisations on or before 31 July 2017.

 

4.   Key Points

4.1       Clause 3 of Schedule 8 of the Local Government Act 2002 (LGA) sets out the process for Council-controlled organisations (CCO) to finalise their SOIs.  It provides for CCO boards to consider the comments made by shareholders on the draft documents and to then provide the final SOI to shareholders on or before 30 June each year. 

4.2       The final SOIs for the following CCOs were received by shareholders by 30 June 2017, all of which address the comments made by the Council on the draft documents at its meeting on 13 April 2017, and set out in paragraph 4.8:

·    CCHL and its subsidiaries – Christchurch International Airport Ltd, Orion New Zealand Ltd, Lyttelton Port Company Ltd, Enable Services Ltd, City Care Ltd, EcoCentral Ltd, Red Bus Ltd and Development Christchurch Ltd (CNCL/2017/00109 refers);

·    Council-owned CCTOs and charitable trusts - Vbase Ltd, Civic Building Ltd, ChristchurchNZ Holdings Ltd (formerly Transition Holdings Ltd), New Zealand Local Government Funding Agency Ltd, Riccarton Bush Trust, Christchurch Agency for Energy Trust and Rod Donald Banks Peninsula Trust (CNCL/2017/00110 refers); and

·    Development Christchurch Ltd – a revised draft SOI was considered by the Council at its meeting on 8 June (CNCL/2017/00179 refers).

4.3       CCHL, as shareholder made comments on its subsidiaries’ draft SOIs, all of which have been addressed in their final documents.  The material changes CCHL sought were to Lyttleton Port Company’s (LPC) SOI.  The changes mostly reflected the cruise berth decisions made by the Council at its meeting on 23 March (CNCL/2017/00072 refers) which was after LPC’s draft SOI was submitted.  LPC’s revised SOI also notes its contribution to the Council’s Antarctic Strategy. 

4.4       All changes made to CCHL’s and its subsidiaries’ SOIs are noted in CCHL’s report to Council at Attachment A to this report.

4.5       The final SOIs meet the statutory requirements for content set out in clauses 9 and 10 of Schedule 8 of the LGA. 

4.6       The LGA does not provide shareholders with an opportunity to further comment on the content of the documents, or to agree or approve them.  This is because SOIs are ‘owned’ by a CCO’s board and content is for the board to decide, as long as the statutory requirements of the LGA are met.  Shareholders are able to require a CCO to amend its SOI for certain matters, mostly relating to the narrative of its strategic intentions, scope of operations, capability, functions and performance targets. 

4.7       In accordance with clause 7 of Schedule 8 of the LGA, the final SOIs will be made public on or before 31 July (one month following submission).  They are expected to be available on the CCOs’ websites, or on the Council’s website.  Council staff can provide the physical documents on request. 


 

4.8       The following table sets out the comments made by the Council on the CCOs’ draft SOIs, and the response of those entities following consideration of the Council’s comments. 

CCTO/Trust

Issues raised by the Council, as shareholder

How addressed

CCHL

Consider reducing the number of performance targets to those that provide greater transparency about the quality and quantity of its activities and responsiveness to shareholders.

Reduced. 

 

CCHL

Including a reference to its public responsibilities when setting remuneration.

Included.

CCHL

Amending information flows to reflect that it now provides regular reports to Council and periodic workshops/briefings together with regular management discussions.

Included.

All CCTOs in the CCHL group

Having both financial and non-financial performance measures for each of the three years that the SOI covers.

CCHL’s subsidiaries were encouraged to provide non-financial targets that embrace innovative practices this year (i.e. running an electric bus trial, establishing an innovation hub).  Council staff agree with CCHL that it is reasonable that these targets are annual and reassessed each year so they are more concise, achievable and relevant for future years. 

Financial measures are always provided for the three-year period.

Orion NZ Ltd

Including an obligation to mitigate environmental management risks.

Included.

Development Christchurch Ltd

Reflecting recent Council decisions regarding its land strategy.

Addressed.

Development Christchurch Ltd

Including a narrative of the company’s purpose and objectives.

Included.

Development Christchurch Ltd

Adding performance targets that are relevant to the governance nature of the SOI.

Included.


 

Development Christchurch Ltd

Amending the SOI to reflect that further discussion is required with the Council regarding the extent to which responsibility for projects already provided for in the Council’s LTP may be transferred to DCL and the compensation provided for those projects. 

Amended.

Development Christchurch Ltd

Removing the words “where appropriate” after “engage in sustainable environmental practices”, and include awareness of coastal hazard reports.

Addressed.

Vbase Ltd

Noting that it will investigate options to improve its long-term profitability.

Change to draft SOI: “Options for the future business structure are being discussed with Council”. 

Vbase Ltd

If feasible, align the health and safety targets with experience to date and benchmarks.

Addressed.

Vbase Ltd

Whether the section entitled “Contribution to Rebuild” is required given the time that has elapsed since the earthquakes.

Removed.

Vbase Ltd

Removing the request for an operational subsidy for the Town Hall, as the SOI is not the vehicle in which to make such a request.

Removed.

ChristchurchNZ Holdings Ltd (incorporating Christchurch Development Corporation and Canterbury and Christchurch Tourism and ChristchurchNZ Ltd)

Adding that its half-year financial statements will be provided by the end of February each year and will be prepared in accordance with generally accepted accounting practice.

Specifically noted as a reporting requirement.

Riccarton Bush Trust

Including information on its expenditure against the capital grant approved by Council in its half-year and full year reporting.

Specifically noted as a reporting requirement.

 


 

Transwaste

Transwaste Canterbury Ltd (Transwaste) is a commercial joint venture that is charged with managing the Canterbury region’s waste through its ownership of the Kate Valley Landfill and the Burwood Resource Recovery Park.  It is owned 50 percent by Canterbury Waste Services Ltd, a wholly-owned subsidiary of Waste Management NZ Ltd and 50 percent by Canterbury district councils (Selwyn, Waimakariri, Ashburton and Hurunui) and Christchurch City Council.  Christchurch City Council is the majority shareholder of the councils’ 50 percent share, with 77.8 percent (38.9 percent of the company overall).

The joint venture arrangement reflects the key objectives of collaboration between the local authorities to achieve durable outcomes and to work with the wider community goals of long-term waste minimisation.  It is governed by the Canterbury Regional Landfill Joint Committee comprising councillors of all shareholding councils.  It is at this Committee that accountability, reporting, monitoring and other governance decisions are made.  The Council is not provided with a line of sight to the decisions being taken, and outcomes being generated other than informally from the Councillors appointed to the joint committee. 

Staff propose to take this matter up with the joint committee to align its reporting with the Council’s governance policy.

 

 

 

 

Attachments

No.

Title

Page

a

CCHL Report to Council on the changes made to its group's Statements of Intent

28

 

 

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

Authors

Linda Gibb - Performance Monitoring Advisor

Patricia Christie - Manager External Reporting and Governance

Approved By

Diane Brandish - Head of Financial Management

  


Finance and Performance Committee

02 August 2017

 

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Finance and Performance Committee

02 August 2017

 

 

9.        Corporate Finance Report for the period ending 30 June 2017

Reference:

17/767217

Contact:

Patricia Christie
Steve Ballard

Patricia.christie@ccc.govt.nz
steve.ballard@ccc.govt.nz

941 8113
941 8447

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee to receive quarterly information relating to the Council's treasury and debtors risks.

Origin of Report

1.2       This report is staff generated.

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 the impact of the decisions on the community.

 

3.   Staff Recommendations

That the Finance and Performance Committee recommends that the Council:

1.         Receives the information in the report

2.         Notes the on-going but temporary Treasury Policy breach for interest rate re-pricing (hedging), last ratified at the Council meeting of 25 May 2017.

 

 

4.   Key Points

Treasury Risk versus Policy Limits

4.1       Net Debt for treasury risk management purposes is defined as Council’s borrowing (including borrowing from subsidiaries and the Capital Endowment Fund, but excluding any finance leases), less amounts on-lent to CCHL, “borrower note” investments in LGFA (explained under the table below), and cash holdings.

4.2       Movements in this Net Debt figure represent Council’s net operating and capital spending flows over the period.

4.3       At 30 June 2017, Net Debt was $931 million, an increase of $217 million over the financial year.  Key movements since 30 June 2016 have been:

a)         $92 million reduction in cash investments, of which:

·     $9 million was used to meet Council’s operating and capital investment cash-flows; and

·     $83 million was used to repay internal loans from Vbase (Vbase had lent its post-earthquake insurance settlement to Council, in order to obtain more favourable term deposit rates - $33 million of such internal loans remain as at 30 June 2017).

b)        $304 million increase in borrowing from the Local Government Funding Agency.  This amount was applied as follows:

·     $143 million to fully pre-fund Council’s large debt maturity in December, in accordance with the advice of our external treasury advisor, PWC;

·     $65 million borrowed in advance of requirements to match existing hedging instruments (rather than incur the cost of re-structuring them);

·     $91 million was on-lent to Christchurch City Holdings Limited (CCHL sources the bulk of its new borrowing from Council, in order to access the favourable borrowing rates available from the Local Government Funding Agency); and

·     $5 million was invested in LGFA Borrower Notes.

4.4       These changes are shown in the table below:

Current Debt and Investments versus June 2016

* Borrowing from Capital Endowment Fund (CEF) – ratepayer-funded interest is paid by Council to CEF, rather than CEF investing in low-returning external investments.  $31 million is still in external investments.

* Local Government Funding Agency (LGFA) Borrower Notes – Each time Council borrows from LGFA it must invest a small proportion into a matching LGFA Note to maintain LGFA’s required capital adequacy.

 

4.5       Treasury risk positions are within policy limits, except for interest rate re-pricing.  This temporary breach was approved at the 10 March 2016 Council meeting (details below).

Debtors

4.6       At 30 June 2017, the debtors' balance stood at $15.8 million, $1.3 million higher than reported in March 2017. The increase is primarily due to General Debtors increasing from $8.7 million to $11.4 million. This is partially offset by a decrease in Resource Consent debtors from $3.3 million to $2.3 million.

4.7       Debts of $139,016 has been written-off during the 2017 financial year compared to $511,303 for the 2016 financial year.  The significant decrease is due to the write off of $367,329 owed by companies that were placed into liquidation or receivership in the 2016 financial year.  Further detail is provided in paragraph 6.4 below.

 

5.   Treasury Report

5.1       Council manages four types of treasury risk relating to its Net Debt:

Treasury Risk

Management Objective

Short-Term Liquidity Risk

To ensure that on-going cash payments can be met in an orderly manner.

Long-Term Funding Risk

To ensure that debt maturities (and anticipated new borrowing) are spread so as to minimise re-financing risk in future years.

Interest Rate Re-pricing Risk

To ensure that interest rates are fixed for varying terms, to minimise the impact of market rate volatility on budgeted interest costs over the Long-Term Planning period.

Counterparty Credit Risk

To minimise the risk of loss due to a counterparty’s inability or unwillingness to make payments to Council as they fall due.

 

Policy Snapshot

Risk Area

Policy Compliance

Liquidity

Within

Funding

Within

Interest Rate Re-pricing

Breach

Counterparty Credit

Within

 

5.2       Short-term Liquidity Risk

Policy Limit (LGFA Liquidity Ratio must >110%) – Within Limit

* Ratio is calculated as the sum of all three, divided by external debt
* Investments include Borrower Notes plus $29.5 million of realisable external CEF investments

 

5.3       Long-term Funding Risk

Policy Limit (existing maturities only) – Within Limit

 

5.3.1   In practice, management considers funding risk in terms of both the re-financing of existing maturities and the need to incur new debt to meet negative operating flows, as shown in the chart below.


 

Council Funding Risk (existing maturities plus expected new borrowing)

* Blue = Maturity of CCC debt

* Red = Maturity of debt on-lent to CCHL

* Green = expected new borrowing based on the published Draft 2017/18 Plan.

 

5.4       Interest Rate Re-pricing Risk

Policy Limit – Breach

* Green line = projected Net Debt (excluding term deposits), based on the Draft 2017/18 Plan

* Red bars = amount of debt at contractually fixed rates as at each 30 June

* Dotted lines = Policy Limits (minimum & maximum amount of fixed rate hedging permitted)

 

 

5.4.1   Hedging levels remain above maximum Policy limits for all financial years to 2019/20. 

5.4.2   This breach has been created by delays in Council’s debt growth – hedging of up to $1.2 billion from June 2018 originally represented around 60% of anticipated net debt; however, the combination of large insurance settlement and delayed capital programme has caused actual debt growth to be slower.

5.4.3   In discussion with Council’s external treasury advisor (PricewaterhouseCoopers), management remains of the view that the cost of adjusting the hedging profile is not justified, and that the best course of action is still to retain the existing hedging profile and allow it to come back within Policy limits over time as actual debt levels increase.

5.4.4   Councillors last ratified this approach at the 25 May 2017 meeting.

 

5.5       Credit Risk

Policy Limit – Within Limit

* Derivative exposures are calculated as the current market value plus a buffer to reflect potential future value movements.  If the total exposure for any bank is negative (i.e. Council would pay the bank upon termination), then a zero exposure is recorded.


 

6.   Debtors Report

6.1       At 30 June 2017, the debtors' balance stood at $15.8 million, $1.3 million higher than reported in March 2017.

6.1.1   The increase is primarily due to General Debtors increasing from $8.7 million to $11.4 million. This is partially offset by a decrease in Resource Consent debtors from $3.3 million to $2.3 million.

6.2       The significant debtors within the General Debtors balance of $11.4 million include; Vbase Limited, Land Information New Zealand and the Ministry of Health. These three debtors account for approximately $7.4 million of the balance.

 

Overdue Debtors

6.3       Overdue debtors, (older than 92 days), have increased by $0.8 million to $3.4 million (21.31 per cent of total debt compared to 18.06 per cent reported in March 2017). This is covered in more detail in the Overdue Debtors Report in the public excluded agenda.

Debts Written off

6.4       Debts of $139,016 have been written-off during the 2017 financial year compared to $511,303 compared to last financial year. The detail is below:

6.5       Regulatory debts written off during the year include $11,500 of resource consent fees approved by Council on 14 July 2016. Sundry debtors written off include $14,309 of service fees approved by Council on 8 September and an infrastructure damage claim of $9,893 approved for write off in June 2017.

6.6       The significant decrease in debt written off compared to 2016 relates to the $366,624 owed by companies that were placed into liquidation or receivership in 2016.  These debts were written off following Council approval with the majority being provided for at 30 June 2015.  A summary report is provided in Attachment A.

6.7       The library debt written off comprises a large number of relatively small amounts where the debt collection agency has been unable to locate the debtor or the debtor refuses to pay.  Only amounts over $30 are referred to debt collection agencies for collection. Libraries currently have a lending limit of up to a maximum of 30 books at any point in time. This limit is primarily utilised by youth members to develop and support literacy. This limit does not affect the use and enjoyment of other customers.

 

 

 

 

Attachments

No.

Title

Page

a

Debt Written Off - Summary - 30 June 2017

41

 

 

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

Authors

Andrea Webb - Financial Accountant

Patricia Christie - Manager External Reporting and Governance

Steve Ballard - Manager Funds and Financial Policy

Approved By

Diane Brandish - Acting General Manager Finance and Commercial

  


Finance and Performance Committee

02 August 2017

 

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Finance and Performance Committee

02 August 2017

 

 

10.    Development Christchurch Ltd - Progress Report June/July 2017

Reference:

17/773812

Contact:

Rob Hall

Rob.Hall@dcl.org.nz

 

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee to note the activities that Development Christchurch Ltd (DCL) has undertaken in June and July 2017.

1.2       The information in this report is an update on the activities and projects which DCL is currently undertaking.  Reporting of DCL’s performance against its Statement of Intent targets is provided quarterly, alongside that of other council-controlled organisations.

Origin of Report

1.3       This report was prepared and submitted by the Chief Executive of DCL. 

 

2.   Staff Recommendations

That the Finance and Performance Committee recommends that the Council:

1.         Notes the information contained in Development Christchurch Ltd’s Progress Report for June and July 2017.

 

 

3.   Key Points

3.1       The report from DCL is at Attachment A.  It contains an update on the following projects:

3.1.1      New Brighton

3.1.2      Peterborough Quarter

3.1.3      Christchurch Adventure Park

3.1.4      Commercial advisory services to the Council.

 

 

 

 

Attachments

No.

Title

Page

a

Development Christchurch Ltd Report - Public

45

 

 

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

Authors

Linda Gibb - Performance Monitoring Advisor

Patricia Christie - Manager External Reporting and Governance

Approved By

Diane Brandish - Head of Financial Management

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee

02 August 2017

 

PDF Creator


 

PDF Creator

 

 


Finance and Performance Committee

02 August 2017

 

 

11.  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:


Finance and Performance Committee

02 August 2017

 

 

 

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

12

Development Christchurch Ltd - Progress Report for June/July 2017

s7(2)(b)(ii)

Prejudice Commercial Position

To allow DCL to protect its commercial position in negotiations for contracts on particular projects.

when contracts are completed

13

Capital Programme Watchlist and Major Cycleways Reports

s7(2)(b)(ii)

Prejudice Commercial Position

The reports contains confidential and sensitive commercial information pertinent to the capital project delivery

Following completion of major projects

14

Overdue Debtors over $20,000 at 30 June 2017

s7(2)(a)

Protection of Privacy of Natural Persons

Overdue debtors should remain confidential to assist in the collection of these debts.

When legal proceedings are commenced

15

Civic Financial Services - Special General Meeting for shareholders' to vote on the possible sale of Civic Assurance House

s7(2)(b)(ii)

Prejudice Commercial Position

The report contains details of a potential market transaction that could prejudice the seller's ability to maximise the sale price.

After the property sale has been completed