Finance and Performance Committee

Agenda

 

 

Notice of Meeting:

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

 

Date:                                     Wednesday 31 January 2018

Time:                                    9.30am

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

Mr Mike Rondell (Non-Voting Member)

 

 

26 January 2018

 

 

 

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

31 January 2018

 

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 appointed 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

31 January 2018

 

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.       Public Forum.................................................................................................................... 5

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

B       6.       Presentation of Petitions................................................................................................ 5

STAFF REPORTS

C       7.       Corporate Finance Report for the period ending 31 December 2017...................... 11

A       8.       Financial Performance report for the six months to 31 December 2017.................. 21

C       9.       Resolution to Exclude the Public................................................................................. 41  

 

 


Finance and Performance Committee

31 January 2018

 

 

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, 6 December 2017 be confirmed (refer page 6).

4.   Public Forum

A period of up to 30 minutes may be available for people to speak for up to five minutes on any issue that is not the subject of a separate hearings process.

It is intended that the public forum session will be held at <Approximate Time>

OR

There will be no public forum at this meeting

5.   Deputations by Appointment

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

6.   Petitions

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


Finance and Performance Committee

31 January 2018

 

 

 

Finance and Performance Committee

Open Minutes

 

 

Date:                                     Wednesday 6 December 2017

Time:                                    9:02am

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

Councillor Mike Davidson

Councillor Anne Galloway

Councillor Jamie Gough

Councillor Yani Johanson

Councillor Deon Swiggs

 

 

5 December 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/2017/00071

That the apologies from Mayor Dalziel and Mike Rondell, apology for lateness from Deputy Mayor Turner and apology for early departure from Councillor Chen be accepted.

Councillor Galloway/Councillor Davidson                                                                                                          Carried

 

2.   Declarations of Interest

Part B

There were no declarations of interest recorded.

3.   Confirmation of Previous Minutes

Part C

Committee Resolved FPCM/2017/00072

Committee Decision

That the minutes of the Finance and Performance Committee meeting held on Wednesday, 1 November 2017 be confirmed.

Councillor Davidson/Councillor Galloway                                                                                                          Carried

 

4.   Public Forum

Part B

There were no public forum presentations.

5.   Deputations by Appointment

Part B

There were no deputations by appointment.

6.   Presentation of Petitions

Part B

There was no presentation of petitions.


 

 

20. Resolution to Include Supplementary Reports

 

Committee Resolved FPCM/2017/00073

That the reports be received and considered at the Finance and Performance Committee meeting on Wednesday, 6 December 2017.

Public Excluded Items

21.       Insurance Update

Councillor Gough/Councillor Chen                                                                                                                       Carried

 

7.   Regenerate Christchurch - Annual Report for year ending 30 June 2017 and Quarterly Performance Report for quarter ending 30 September 2017

 

Ivan Iafeta, Jason Rivett and Andre Lovatt of Regenerate Christchurch joined the table for this item.

Committee Decided FPCM/2017/00074

Part A

That the Finance and Performance Committee recommends that the Council:

1.         Notes Regenerate Christchurch’s Quarter 1 2017 (1 July – 30 September) performance; and

2.         Notes Regenerate Christchurch’s Annual Report for the year ended 30 June 2017.

Councillor Chen/Councillor Gough                                                                                                                       Carried

 

8.   Annual Reports for year ended 30 June 2017 for Council-controlled Organisations

 

Committee Decided FPCM/2017/00075

Part A

That the Finance and Performance Committee recommends that the Council:

1.         Notes the 2016/17 performance of its Council-controlled organisations - Vbase Ltd, Civic Building Ltd, Riccarton Bush Trust, Tuam Ltd, Christchurch Agency for Energy Trust, Rod Donald Banks Peninsula Trust, World Buskers Festival Trust, Transwaste Canterbury Ltd and Central Plains Water Trust.

Councillor Gough/Councillor Galloway                                                                                                               Carried

Councillors Davidson and Gough declared interests and did not participate in the discussion or decision regarding Civic Building Limited.

Councillor Chen declared an interest and did not participate in the discussion or decision regarding the Riccarton Bust Trust.

 

Deputy Mayor Turner joined the meeting at 9:31am.

9.   Performance Reporting for October 2017

 

Committee Decided FPCM/2017/00076

Part A

That the Finance and Performance Committee recommends that the Council:

1.         Receive the information in the attached appendices.

Councillor Davidson/Councillor Galloway                                                                                                          Carried

 

10. LTP 2018-28 Audit Engagement Letter

 

Committee Decided FPCM/2017/00077

Part A

That the Finance and Performance Committee recommends that the Council:

1.         Receive the information in the LTP 2018-28 Audit Engagement Letter.

2.         Authorises the Mayor to sign the Audit Engagement Letter on behalf of the Christchurch City Council.

Councillor Buck/Deputy Mayor                                                                                                                             Carried

Councillor Chen left the meeting at 9:40am.

11. The use of Targteted Rates to support non-Council community assets (such as the Akaroa Health Hub)

 

Committee Resolved FPCM/2017/00078

Part C

That the Finance and Performance Committee:

1.         Notes that the use of targeted rates to contribute to funding for localised services which are outside the council’s responsibility, such as the Akaroa Health Hub, requires two related but separate decisions:

a.         To provide a grant from the council to the relevant local provider; and

b.         To fund this grant through a targeted rate (either on the community as a whole or on just that part of the community identified as receiving primary benefit from the service).

2.         Notes that both of these decisions are legally permitted, provided the proper legal process is followed.  The required consideration and decision-making could be achieved through the normal Long Term Plan process, although specific consultation of affected Akaroa area ratepayers would be advisable.

3.         Requests staff to report to the Council on options for supporting the development of an Akaroa Health Hub, including a mechanism to partially fund the Akaroa Health Hub, comprising a grant to be fully funded by a targeted rate on properties in the Akaroa Subdivision of the Banks Peninsula Ward in the draft Long Term Plan, and consulting with affected communities alongside the Long Term Plan Consultation.

Deputy Mayor/Councillor Buck                                                                                                                             Carried

 

12. Development Christchurch Ltd - Progress Update Report for October/November 2017

 

Rob Hall, Joel Lieschke and Steve Clarke of Development Christchurch Limited joined the table for this item.

Committee Decided FPCM/2017/00080

Part A

That the Finance and Performance Committee recommends that the Council:

1.         Notes Development Christchurch Ltd’s progress update report for October/November 2017.

Councillor Galloway/Councillor Davidson                                                                                                          Carried

 

13  Resolution to Exclude the Public

 

Committee Resolved FPCM/2017/00081

Part C

That the following people remain after the public have been excluded for the respective items of the public excluded agenda as they have knowledge that is relevant to those items and will assist the Committee:

Rob Hall, Joel Lieschke and Steve Clarke of Development Christchurch Limited for item 15.

Leah Scales of Christchurch City Holdings Limited for items 15 and 16.

Joanna Norris and Robyn Andrews of ChristchurchNZ Limited for items 17 and 18.

Stephen Walsh and Justin Armagnacq of Marsh Limited for item 21.

AND

That at 10:17  the resolution to exclude the public set out on pages 135 to 137 of the agenda and pages 5 to 6 of the supplementary agenda be adopted.

Councillor Manji/Councillor Gough                                                                                                                        Carried

 

The public were re-admitted to the meeting at 12:22pm.   

Meeting concluded at 12:22pm.

 

CONFIRMED THIS 31ST DAY OF JANUARY 2018.

 

Councillor Raf Manji

Chairperson

 


Finance and Performance Committee

31 January 2018

 

 

7.        Corporate Finance Report for the period ending 31 December 2017

Reference:

17/1266218

Contact:

Mushe Shoko
Steve Ballard

Mushe.Shoko@ccc.govt.nz
Steve.Ballard@ccc.govt.nz

941 6313
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:

a.         Receives the information in the report

 

 

4.   Key Points

Treasury Risk versus Policy Limits

4.1       Net Debt for treasury risk management purposes is defined as the Council’s borrowing (including borrowing from subsidiaries and the Capital Endowment Fund, but excluding any finance leases), less financial investments such as cash and deposits.

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

4.3       At 31 December 2017, Net Debt was $1,013 million, an increase of $82 million in the financial year to date.  This increase has been funded through a mixture of new borrowing and reduced cash holdings, as shown in the table below.


 

Current Debt and Investments versus June 2017

* Borrowing from Vbase – Vbase’s remaining insurance settlement proceeds are invested on its behalf by the Council, to access higher deposit rates.  This item will decline over time.

* Borrowing from CEF – Special Funds are invested internally where possible (ie. lent to Council, with interest payments funded by general rates).  Council borrowing from the Capital Endowment Fund will increase over time, as CEF’s remaining external investments mature and are invested internally.

* Borrower Notes – As part of its debt arrangements with the Local Government Funding Agency, the Council must invest a small portion of its borrowing in LGFA Borrower Notes.  This item will increase over time, in line with the Council’s total borrowing.

4.4       Treasury risk positions are within policy limits, except for the on-going approved breach for interest rate hedging (refer section 5 below).

Trade Debtors

4.5       At 31 December 2017 trade debtors were $14.7 million, $8.3 million lower than the balance as at 30 September 2017 primarily due to:

·    $8.2 million decrease in General debtors from $18.1 million to $9.9 million (more detail on General debtors is given in paragraph 6.2 below);

·    $0.7m decrease in Resource Consent debtors from $2.6 million to $1.9 million; offset by

·    $0.6 million increase in Building Control debtors from $1.5 million to $2.1 million.

4.6       Trade debtors of $76,944 have been written-off in the 6 months to 31 December 2017, compared to $79,656 for the same period last financial year. Further detail is provided in paragraph 6.5 below.

 

 

5.   Treasury Report

5.1       The 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 the 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 $12.5 million of realisable CEF investments

5.3       Long-term Funding Risk

Policy Limit (existing maturities only) – Within Limit

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.

The Council’s 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 2017/18 Plan.

5.4       Interest Rate Re-pricing Risk (hedging)

Policy Limit – Breach

* Green line = projected Net Debt (excluding term deposits), based on the 2017/18 Annual 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 are above maximum Policy limits for the 2018 and 2019 financial years. 

5.4.2   This breach has arisen from delays in Council’s debt growth – current hedging of around $1.2 billion was established in 2013 and 2014 to match around 60% of anticipated June 2018 net debt; however, the combination of the large insurance settlement and delayed capital programme has caused actual debt growth to be slower.

5.4.3   In discussion with the 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 originally approved this approach at the 10 March 2016 meeting, with subsequent ratification on 25 May 2017.


 

5.5       Credit Risk

Policy Limit – Within Limit

* Exposure to Derivative Banks includes exposure arising from hedging contracts (if any).

 

6.   Trade Debtors Report

6.1       At 31 December 2017 trade debtors were $14.7 million, $8.3 million lower than the balance as at 30 September 2017. Material items of trade debtors at 31 December 2017 were:

·        General debtors $9.9 million (30 September 2017: $18.1 million)

·        Resource Consent debtors $1.9 million (30 September 2017: $2.6 million)

·        Building Control debtors $2.1 million (30 September 2017: $1.5 million)

 

6.2       Significant debtors in the General debtors balance at 31 December 2017 were:

·        Vbase Limited (Vbase)

·        Land Information New Zealand (LINZ)

 

These two debtors account for $6.1 million of the General debtors balance. The Vbase amount is not yet due for payment. The LINZ invoice was due for payment in December 2016 and is discussed in more detail in the Overdue Debtors Report in the public excluded agenda.


 

6.3       The graph below shows a 2 year historical trend of the trade debtors balance:

 

Overdue Trade Debtors

6.4       At 31 December 2017 overdue trade debtors, older than 92 days, were $4.2 million (30 September 2017: $4.2 million), and 28.57 per cent of total trade debtors (30 September 2017: 18.26 per cent). Refer to the Overdue Debtors Report in the public excluded agenda for more detail.

The graph below shows a 2 year historical trend of overdue trade debtor balances. The large increase in the overdue trade debtors since December 2016 is discussed in the Overdue Debtors Report in the public excluded agenda.

 


 

Trade Debtors Written off

6.5       Trade debtors of $76,944 have been written-off during the six months to 31 December 2017 compared to $79,656 in the same period in the last financial year. The detail is below:

6.6       The significant write-offs (over $2,000) relate to debtors for Building consent work ($12,744) which have either been a result of a staff error in invoicing ($4,468) or where customers have gone into Liquidation or filed for bankruptcy ($8,276). There has also been two significant write-offs for Street Pole damages totalling $22,187. In both incidents the offenders have not been available to pursue.  

6.7       The Library debtors written off comprise a large number of relatively small amounts where the debt collection agency has been unable to locate the debtor or the debtor has refused to pay.  Only amounts over $30 are referred to debt collection agencies for collection. Libraries currently have a lending limit of up to 30 books at a 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.

6.8       A summary report of trade debtors written off by month is provided as Attachment A.

 

7.   Overdue Rates Debtors (Not Part of Trade Debtors Above)

7.1       At 31 December 2017 there were 17,240 rate payers (30 June 2017: 24,322) with overdue rates totalling $19.2 million (30 June 2017: $18.8m). This is an average outstanding rates of $1,114 per overdue rate payer (30 June 2017: $773). There were 785 payment arrangements in place – these arrangements allow ratepayers to pay their current year’s rates and arrears over a twelve month period without incurring any additional late payment penalties.

In June 2017 rates were in arrears on thousands of low value red zone sections owned by the Crown. Hence the significantly larger number of properties with rates in arrears and lower average overdue rates in June 2017 compared to December 2017.

7.2       The process for the recovery of debts outstanding at 30 June of each rating year commences as soon as possible at the start of the following rating year. The Rates team identifies all balances in arrears greater than $200.00 which do not have a formal payment arrangement. These then go through a recovery process as set out in the Rating Act, depending on whether a property has a mortgage or not.

7.2.1   Initially letters are sent out to the rate payers advising that non-payment or failure to enter into a formal arrangement will result in the account being passed onto a Debt Collection Agency or Mortgagee for further recovery action.

7.2.2   From 1 November Mortgagees of mortgaged properties can be contacted through the issue of Formal Demand Notifications for the rates in arrears at 30 June. The Mortgagee will then contact their customer for payment in full or for an arrangement to be put into place.

7.2.3   For properties with no mortgage, legal proceedings may be required to recover the debt which could ultimately result in the sale of the rating unit.

 

Attachments

No.

Title

Page

a

Debtors Written Off Summary - 31 December 2017

19

 

 

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

Steve Ballard - Manager Funds and Financial Policy

Mushe Shoko - Manager External Reporting & Governance

Approved By

Diane Brandish - Head of Financial Management

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee

31 January 2018

 

PDF Creator


Finance and Performance Committee

31 January 2018

 

 

8.        Financial Performance report for the six months to 31 December 2017

Reference:

18/50908

Contact:

Diane Brandish

diane.Brandish@ccc.govt.nz

941 8454

 

 

1.   Purpose and Origin of Report

1.1       The purpose of this report is for the Finance and Performance Committee to be updated on the financial results for the first six months of the 2017/2018 financial year to 31 December 2017.

 

2.   Staff Recommendations

That the Finance and Performance Committee recommends that the Council:

1.         Receives the information in the report.

 

3.   Key Points

3.1       The Council’s operational financial results for the first six months are unfavourable with a year to date net deficit of $2.3 million and a forecast deficit of $4.3 million at year end. The possibility of a larger deficit was first identified in September and cost savings have already been found to offset costs and reduce the forecast to the $4.3 million shown below. General Managers are working with their teams to identify further savings.

3.2       Capital expenditure of $218.8 million was incurred during the first six months, $12.9 million less than budget. The current forecast is for 2017/18 delivery to be behind budget by $19 million. This is largely a timing issue meaning budgets will need to be carried forward to next year and funds borrowed later.

 

Financial Performance Summary

Year to Date Results

Forecast Year End Results

After Carry Forwards

$m

Actual

Plan

Var

Forecast

Plan

Var

Carry Fwd

Result

Operational

 

 

 

 

 

Expenditure

288.3

284.6

-3.7

570.1

561.6

-8.5

4.3

-12.8

Revenues

-339.9

-338.5

1.4

-702.6

-694.1

8.5

-

8.5

Funds not available for Opex

64.9

64.9

-

132.6

132.6

-

-

-

Operating Deficit / (Surplus)

13.3

11.0

-2.3

0.1

0.1

-

4.3

-4.3

 

 

 

 

 

 

 

Capital

 

 

 

 

 

 

Gross Programme Expenditure

218.8

275.6

56.8

583.1

642.8

59.7

52.8

6.9

Less planned Carry Forwards

-

-43.9

-43.9

-63.1

-103.8

-40.7

-40.7

-

Programme Expenditure

218.8

231.7

12.9

520.0

539.0

19.0

12.1

6.9

Revenues and Funding

-201.6

-205.8

-4.2

-445.1

-425.6

19.5

17.8

1.7

Borrowing required

17.2

25.9

8.7

74.9

113.4

38.5

29.9

8.6

 

3.3       Key commentary on operational and capital results to date and forecasts are given below.  A view of the Council’s financial results by activity is provided in Attachment A.


 

 

Operational

 

Year to Date Results

Forecast Year End Results

After Carry Forwards

$m

Actual

Plan

Var

Forecast

Plan

Var

C/F

Result

Personnel costs

94.5

95.7

1.2

198.3

196.7

-1.6

-

-1.6

Less recharged to capital

-20.3

-19.0

1.3

-39.9

-37.8

2.1

-

2.1

Grants and levies

27.9

29.2

1.3

44.4

44.7

0.3

-

0.3

Operating costs

85.0

80.6

-4.4

167.3

160.8

-6.5

3.5

-10.0

Maintenance costs

55.0

53.0

-2.0

107.1

107.2

0.1

0.8

-0.7

Debt servicing

46.2

45.1

-1.1

92.9

90.0

-2.9

-

-2.9

Expenditure

288.3

284.6

-3.7

570.1

561.6

-8.5

4.3

-12.8

 

 

 

 

 

Operating revenue

-68.1

-69.0

-0.9

-148.0

-147.2

0.8

-

0.8

Interest and dividends

-43.8

-43.5

0.3

-98.4

-94.5

3.9

-

3.9

Rates income

-228.0

-226.0

2.0

-456.2

-452.4

3.8

-

3.8

Revenue

-339.9

-338.5

1.4

-702.6

-694.1

8.5

-

8.5

 

 

 

 

 

Net Cost

-51.6

-53.9

-2.3

-132.5

-132.5

-

4.3

-4.3

Other Funding

 

 

 

 

Transfers from Special Funds

-12.0

-11.8

0.2

-23.3

-23.3

-

-

-

Borrowing for cap grants /EQ resp

-5.4

-5.6

-0.2

-9.0

-9.0

-

-

-

Less Rates reqd for capex / debt

82.3

82.3

-

164.9

164.9

-

-

-

Funds not available for Opex

64.9

64.9

-

132.6

132.6

-

-

-

 

 

 

 

 

 

 

 

 

Operating Deficit / (Surplus)

13.3

11.0

-2.3

0.1

0.1

-

4.3

-4.3

 

Operational Expenditure

3.4       Operational expenditure is $3.7 million above budget year to date. The significant variances contributing to the year to date result includes increased annual rates cost to be paid by Council itself for Council-owned utilities infrastructure as a result of the last general revaluation ($3.1 million), and higher spend within Waters ($3.1 million), due to emergency flood mitigation works and SCIRT defect liability costs. These are partially offset by the timing of Strategic Policy & Planning projects ($1.6 million); and lower software fees and licences ($1 million).

3.5       The expenditure forecast of $12.8 million over budget at year end after adjusting for carry forwards is mainly due to:

3.5.1      Increased rates payable, as mentioned above ($6.1 million). Staff have since found a number of cost reductions and the net effect is currently forecast to be $0.5 million at year end,

3.5.2      Increased debt servicing costs ($2.9 million), relating to earlier than planned start dates of debt relating to forward starting swaps. These additional funds were placed on deposit until needed and the costs are therefore offset by increased interest revenues,

3.5.3      Costs for the SCIRT defects liability programme ($2 million), these costs did not form part of the plan due to the later than planned completion of the SCIRT programme, and management arrangements for this final period. These costs are being reviewed as they’re incurred to confirm whether they can be treated as capital.

3.5.4      Increased maintenance costs within Waters ($1.2 million), driven by emergency flood mitigation works,

3.5.5      Higher insurance costs ($0.8 million), due to increased premiums reflecting market conditions and increased asset value.

3.5.6      The above are partially offset by Software fees and licences savings of $1 million, due to a delay in associated IT projects becoming operational.

Operational Revenue

3.6       Revenue is $1.4 million higher than budget year to date, largely driven by higher, than expected, rates growth. The favourable forecast variance of $8.5 million is due to higher interest and dividend revenues ($3.9 million), and the higher rates growth ($3.8 million).

3.7       Within the year to date result, operating revenues are $0.9 million behind budget due to lower revenues from Consenting and Compliance ($1 million) driven by lower volumes of building inspections and commercial building consents. By year end operating revenues are forecast to be $0.8 million ahead of budget, driven by the release of insurance revenues currently sitting on the balance sheet for properties that have been or will be sold on an as is where is basis.

3.8       Higher interest and dividends revenue year to date is due to higher interest revenues ($3.5 million) largely resulting from earlier borrowing than planned (see 3.5.3), partially offset by timing of a Transwaste dividend ($3.1 million). The forecast recognises the higher interest revenues as a permanent result.

3.9       The net cost of individual activities are shown in Attachment A.


 

Capital Programme

 

Year to Date Results

Forecast Year End Results

After Carry Forwards

$m

Actual

Plan

Var

Forecast

Plan

Var

C/F

Result

Three Waters

41.2

51.9

10.7

92.0

81.4

-10.6

-10.8

0.2

Roading and Transport

33.9

27.1

-6.8

97.2

92.4

-4.8

-5.2

0.4

Strategic Land

-0.4

-

0.4

6.9

23.6

16.7

8.0

8.7

IM&CT

8.6

10.8

2.2

20.4

18.5

-1.9

-1.9

-

Other

19.3

32.9

13.6

82.0

83.0

1.0

0.7

0.3

Works Programme

102.6

122.7

20.1

298.5

298.9

0.4

-9.2

9.6

 

 

 

 

 

Infrastructure - SCIRT

-

-

-

-

-

-

-

-

Infrastructure - Non SCIRT

48.6

54.4

5.8

124.1

134.7

10.6

13.1

-2.5

Transitional / Recovery Projects

3.0

5.2

2.2

8.6

26.3

17.7

17.9

-0.2

Facilities Rebuild

64.4

91.6

27.2

150.2

181.2

31.0

31.0

-

Rockfall and Improv Allowance

0.2

1.7

1.5

1.7

1.7

-

-

-

Rebuild Programme

116.2

152.9

36.7

284.6

343.9

59.3

62.0

-2.7

 

 

 

 

Gross Capital Projects

218.8

275.6

56.8

583.1

642.8

59.7

52.8

6.9

Unidentified Carry forwards

-

-43.9

-43.9

-63.1

-103.8

-40.7

-40.7

-

Capital Programme

218.8

231.7

12.9

520.0

539.0

19.0

12.1

6.9

 

 

 

 

 

Development Contributions

-13.7

-11.2

2.5

-23.4

-22.4

1.0

-

1.0

Less DC Rebates

0.6

7.6

7.0

1.9

15.3

13.4

13.4

-

NZTA Capital Subsidy

-17.6

-26.1

-8.5

-68.0

-58.4

9.6

6.7

2.9

Vbase recovery - Town Hall

-15.9

-13.7

2.2

-30.9

-30.9

-

-

-

Capital release / Special dividends

-70.0

-70.0

-

-140.0

-140.0

-

-

-

Misc Capital Revenues

-3.7

-2.9

0.8

-5.3

-5.8

-0.5

-

-0.5

Asset Sales

0.1

-0.3

-0.4

-1.8

-2.5

-0.7

-

-0.7

Capital Revenues

-120.2

-116.6

3.6

-267.5

-244.7

22.8

20.1

2.7

 

 

 

 

Rates for Renewals and Landfill

-58.4

-58.4

-

-117.0

-117.0

-

-

-

Special Funds

-23.0

-30.8

-7.8

-60.6

-63.9

-3.3

-2.3

-1.0

Other Available Funding

-81.4

-89.2

-7.8

-177.6

-180.9

-3.3

-2.3

-1.0

 

 

 

 

 

 

 

 

 

Borrowing Required

17.2

25.9

8.7

74.9

113.4

38.5

29.9

8.6

 

Capital Expenditure

3.10    Capital expenditure is below budget year to date and is forecast to be $19 million lower than budget by year end, mainly due to delays within the rebuild programme. Expenditure is $218.8 million for the first six months of the year (94 percent of year to date budget).  A further $301.2 million is currently forecast to be spent by year end which equates to 96 percent of budget.

3.11    The $6.9 million forecast under spend after net budget carry forwards is mainly due to the following:

3.11.1    Strategic Land – land acquisitions are forecast to be under budget for the year; partially offset by,

3.11.2    Infrastructure – Non SCIRT – the Flood Intervention project has seen further properties along the Heathcote River being eligible. A change request will be required to fund the purchase of some of these properties.

3.12    Group of Activity level variance commentary for the capital programme is shown in Attachment A.

3.13    Financial results of significant (>$250,000) capital programme projects are shown in Attachment B.

Capital Revenues

3.14    Capital revenues/recoveries are behind budget year to date, however a favourable variance is forecast for the year.

3.15    Development contributions are higher than budget year to date because new development has been higher than anticipated, the majority of these have not been eligible for the rebate scheme. 

3.16    The large variance to budget year to date for NZTA subsidies is due to the timing of infrastructure expenditure.

3.17    Special funds net drawdowns are $7.8 million lower than budget year to date, mainly due to higher developer contributions set aside to fund future growth works.

3.18    Required borrowing is currently $8.7 million less than budget and forecast to be $38.5 million lower by year end, as a result of higher capital revenues and a lower forecast capital spend. Budget of $29.9 million is signalled to be carried forward due to timing issues. This results in lower forecast permanent borrowing of $8.6 million.

Special Funds

3.19    The current and forecast movements and balance of the Housing Account, Capital Endowment Fund and Earthquake Mayoral Relief Fund are shown in Attachment C.

3.20    The balance of Capital Endowment Fund 2017/18 funds unallocated is currently forecast to be $455,129.

 

Attachments

No.

Title

Page

a

Dec 2017 - Attach A - Financial Performance

27

b

Dec 2017 - Appendix B - Significant Capital Projects

35

c

Dec 2017 - Attach C - Special Funds

40

 

 

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

Bruce Moher - Manager Planning & Reporting Team

Diane Brandish - Head of Financial Management

Ryan McLachlan - Reporting Accountant

John Pickles - Reporting Accountant

Approved By

Diane Brandish - Head of Financial Management

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee

31 January 2018

 

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Finance and Performance Committee

31 January 2018

 

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Finance and Performance Committee

31 January 2018

 

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Finance and Performance Committee

31 January 2018

 

 

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:


Finance and Performance Committee

31 January 2018

 

 

 

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 Finance and Performance Committee Minutes - 6 December 2017

 

 

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

 

11

Vbase Ltd - Letter of Expectations 2018/19

s7(2)(f)(ii)

Protection from Improper Pressure or Harassment

To allow the Council and Vbase Ltd the space to negotiate and discuss the expectations contained in the LOE and the implications that may arise without pressure from third parties.

After publication of Vbase's final SOI for 2018/19

12

Overdue Trade Debtors Over $20,000 at 31 December 2017

s7(2)(a)

Protection of Privacy of Natural Persons

Publication of the names of the debtors will make collection more difficult.

When legal proceedings are commenced.

13

Watchlist and Major Cycleways Report

s7(2)(b)(ii)

Prejudice Commercial Position

Release of the information may prejudice ongoing commerical negotiations

When specific projects are completed