Finance and Performance Committee of the Whole

Agenda

 

 

Notice of Meeting:

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

 

Date:                                     Thursday 7 February 2019

Time:                                    9.30am

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

 

 

Membership

Chairperson

Deputy Chairperson

Members

Councillor Raf Manji

Deputy Mayor Andrew Turner

Mayor Lianne Dalziel

Councillor Vicki Buck

Councillor Jimmy Chen

Councillor Phil Clearwater

Councillor Pauline Cotter

Councillor Mike Davidson

Councillor David East

Councillor Anne Galloway

Councillor Jamie Gough

Councillor Yani Johanson

Councillor Aaron Keown

Councillor Glenn Livingstone

Councillor Tim Scandrett

Councillor Deon Swiggs

Councillor Sara Templeton

 

 

1 February 2019

 

 

 

Principal Advisor

Carol Bellette

General Manager Finance

 

Samantha Kelly

Committee and Hearings Advisor

941 6227

samantha.kelly@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 of the Whole

07 February 2019

 

 

Finance and Performance Committee of the whole - Terms of Reference

 

Chair

Councillor Manji

Deputy Chair

Deputy Major Turner

Membership

The Mayor and all Councillors

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

 

Area of focus

The focus of the Finance and Performance Committee is the financial and non-financial performance of the Council, including the delivery of the Council’s Capital Programme, CCHL and its subsidiaries, and any other Council Controlled Organisations.

 

In making recommendations or exercising its delegations, the Committee must manage the matters referred to in section 101 of the Local Government Act 2002 which includes that the Council must manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community.

 

The Finance and Performance Committee considers and, if the matter is not within the Committee’s delegated authority, reports to Council on matters relating to:

·           The delivery of the Council’s Capital Programme

·           The Council’s operational and capital expenditure, including any material discrepancies from planned expenditure

·           Leading and overseeing the Council’s strategic relationship with the Crown, including specific strategic projects of shared interest and interface with the Crown, including the Cost Share Agreement and matters under the Greater Christchurch Regeneration Act 2016

·           The financial and non-financial performance of the Council and Council Controlled Organisations, and governance decisions related to Council Controlled Organisations

·           The Council’s financial and funding policies under section 102 of the Local Government Act 2002

·           Debt write-offs and status of Council debtors

·           Acquisition or disposal of property where required for the delivery of the Capital Programme

·           Council insurance policies and related matters and litigation

·           The development of the Annual Report for consideration by Council

·           Advising and supporting the Mayor to lead the development of the Long Term Plan and Annual Plan, including setting the overall parameters, strategic direction and priorities, and the development of a consultation document.

·           Reviewing the delivery of services under s17A

·           Submissions to external bodies relating to the area of focus of the Finance and Performance Committee

 

 


 

Delegations

 

The Council delegates to the Finance and Performance Committee authority to:

·           Monitor the delivery of the Council’s Capital Programme, including inquiring into any material discrepancies from planned expenditure

·           Monitor the financial and non-financial performance of the Council and Council Controlled Organisations, including carrying out all of the Council’s obligations under sections 65 to 72 of the Local Government Act 2002

·           Exercise the Council’s powers directly as the shareholder, or through CCHL, or in respect of an entity (within the meaning of section 6(1) of the Local Government Act 2002) in relation to –

-          (without limitation) the modification of constitutions and/or trust deeds, and other governance arrangements, granting shareholder approval of major transactions, appointing directors or trustees, and approving policies related to Council Controlled Organisations

-          in relation to the approval of Statements of Intent and their modification (if any)

·           Purchase or dispose of property where required for the delivery of the Capital Programme, in accordance with the Council’s Long Term Plan, and where those acquisitions or disposals have not been delegated to another decision-making body of the Council or staff.

·           Adopt funding and financial policies other than those that must be adopted as part of the Council’s Long-Term or Annual Plans

·           As may be necessary from time to time, approve amendments to the Capital Programme outside the Long Term Plan or Annual Plan processes

·           Approve preferred suppliers for capital projects where the value of the contract exceeds $15 Million

·           Approve preferred suppliers and contracts from both capital and operational budgets relating to the Council’s Information Technology systems where the value of the contract exceeds $15 Million of capital expenditure or $10 Million of operational expenditure.

·           Amend levels of service targets, unless the decision is precluded under section 97 of the Local Government Act 2002

·           Approve debt write-offs where those debt write-offs are not delegated to staff

·           Insurance matters, including considering legal advice from the Council’s legal and other advisers, approving further actions relating to the issues, and authorising the taking of formal actions.

·           Authorise submissions to external bodies relating to the area of focus of the Finance and Performance Committee

 

The Committee delegates to the following subcommittees or working groups the responsibility to consider and report back to the Committee:

·           Insurance Subcommittee

 

 


Finance and Performance Committee of the Whole

07 February 2019

 

Part A        Matters Requiring a Council Decision

Part B         Reports for Information

Part C         Decisions Under Delegation

 

 

TABLE OF CONTENTS

 

C       1.       Apologies.......................................................................................................................... 7

B       2.       Declarations of Interest................................................................................................... 7

C       3.       Confirmation of Previous Minutes................................................................................. 7

B       4.       Public Forum.................................................................................................................... 7

B       5.       Deputations by Appointment........................................................................................ 7

B       6.       Presentation of Petitions................................................................................................ 7

Finance and Performance Committee

C       7.       Finance and Performance Committee Minutes - 5 December 2018............................ 9

Chairs introduction

Staff Reports

Capital Program: major projects

B       8.       Christchurch Town Hall Project Monthly Update...................................................... 15

B       9.       Capital Delivery Major Facilities Elected Member Update........................................ 19

current performance

B       10.     Capital Programme Performance Report.................................................................... 31

B       11.     Financial Performance report for the six months to 31 December 2018.................. 47

B       12.     Performance Reporting for December 2018............................................................... 69

finance reports

B       13.     Corporate Finance Report for the period ending 31 December 2018...................... 83

project approvals

C       14.     Akaroa Community Health Centre Funding Request................................................. 95

C       15.     Wastewater Heat Recovery Linwood Pool................................................................ 113

A       16.     Central City activation, events and attraction package.......................................... 153

insurance matters

C       17.     Establishment of an Insurance Subcommittee......................................................... 161

B       18.     Insurance Summary..................................................................................................... 163

C       19.     Resolution to Exclude the Public............................................................................... 172  

 

 


Finance and Performance Committee of the Whole

07 February 2019

 

 

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

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 9.30am

 

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 of the Whole

07 February 2019

 

 

7.        Finance and Performance Committee Minutes - 5 December 2018

Reference:

19/68824

Presenter(s):

Samantha Kelly – Committee and Hearings Advisor

 

 

1.   Purpose of Report

The Finance and Performance Committee held a meeting on 5 December 2018 and is circulating the Minutes recorded to the Council for its information.

2.   Recommendation to Finance and Performance Committee of the Whole

That the Finance and Performance Committee of the Whole:

1.         Receives the Minutes from the Finance and Performance Committee meeting held 5 December 2018.

 

 

Attachments

No.

Title

Page

A

Minutes Finance and Performance Committee - 5 December 2018

10

 

 

Signatories

Author

Samantha Kelly - Committee and Hearings Advisor

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

8.        Christchurch Town Hall Project Monthly Update

Reference:

19/49234

Presenter(s):

John Rossetter - Project Director

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole to be updated as to the current status of the Town Hall Rebuild Project.

Origin of Report

1.2       This report was requested by the Council under resolution CNCL/2018/00312.

That the Council:

1.            Approves an increase of up to $15 million to the Town Hall Project budget.

2.            Notes that the exact cost of the Town Hall project will not be known until project completion and close out of the Financial Accounts.

3.            Agrees that the additional budget funding be allocated from within the existing capital programme and will not impact on rates.

4.            Requests a report to Finance and Performance Committee detailing the savings identified across the multi-year capital programme that will enable the additional funds to be reallocated to the project. Noting that no approval is given to delay or re-scope projects beyond the current delegations.

5.            Notes the Christchurch Town Hall completion programme, including a staged reopening and public opening day at the end of February.

6.            Notes the changes made to the Project’s governance and management.

7.            Requests that the project provides a monthly status report to Finance and Performance Committee.

2.   Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Receives the report.

3.   Context/Background

3.1       Under Council resolution dated 19 December 2018 the budget for the Town Hall Rebuild Project was increased by up to $15M to a total budget allowance of up to $167.2M. The staged completion of the project as described below was also noted by the Council:

·   Auditorium, Foyer, Function and Limes rooms - 20 February 2019

·   James Hay Theatre - 5 April 2019

·   CSO - CPU 7 May 2019 and project completion 15 August 2019

3.2       Under this resolution the Council also agreed that the additional funding would be allocated from within the existing capital programme and would not affect rates. The Council requested that a report be presented to the Finance and Performance Committee of the Whole detailing the savings identified across the multi-year capital programme that will enable the additional funding to be allocated to the project. The Council noted that no approval was given to delay or re-scope projects beyond the existing delegations.

4.   Project Status

Programme

4.1       The date for the stage one handover of the auditorium, function and Limes rooms remains unchanged as 20 February 2019.

4.2       The next submission of the construction programme is expected to be received 25 January 2019. By mutual agreement between the parties programmes will now be presented by the Contractor on an approximately fortnightly basis.

4.3       A review of the project programme has been completed by an independent consultant. The consultant’s report does not raise concerns beyond those that are already being addressed by the project team.

Progress

Construction

 

4.4       Works within the areas forming the first staged handover are approaching completion with final finishing works, the removal of protections and cleaning underway.

4.5       Consent for the taking and use of groundwater for the ground source heating and cooling system has now been granted by Ecan and the commissioning of the system is underway.

4.6       The refurbishment of the organ has been completed and the tuning of the instrument is underway.

4.7       Works within the James Hay Theatre, kitchen and Christchurch Symphony Orchestra rehearsal building (CSO), which form the subsequent stages of handover, continue to progress.

4.8       Externally works are now well progressed with the Kilmore Street frontage having largely been completed. To the south the paving of the terraces and the reinstatement of the fountain are approaching completion.

Establishment

4.9       The majority of the main procurement packages with respect to the fit-out works are now in contract and the equipment has begun to arrive in Christchurch.

4.10    On site the fitting-out of the kitchens is underway, the communications network is operational and Wi-Fi access points are being installed.

4.11    Handover preparation has commenced with the scheduling of weekly meetings involving the establishment work-stream leads and the Contractor.

4.12    Planning for the opening of the facility continues to develop with public open days scheduled to occur late February.

5.   Financial

5.1       The total estimated final project cost remains within the total budget allowance of $167.2M.

5.2       A review of the project financial report has been completed by an independent consultant. Whilst the consultant and the project team remain in discussions with respect to clarifications, the report presents a picture that is consistent with the view of the project team.

5.3       Staff are in the process of finalising a report to the Finance and Performance Committee of the Whole. This will outline potential savings across the capital programme to enable the additional funding to be allocated to the Town Hall Rebuild Project. The report is being prepared on the understanding that savings should be identified from capital adjustments arising from existing planned programme revisions, rather than through adjustments made to accommodate the increased Town Hall Rebuild Project budget.

 

 

Attachments

There are no attachments to 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

Harriet Scott - Project Coordinator

John Rossetter - Project Director

Approved By

Alistair Pearson - Manager Capital Delivery Major Facilities

Mary Richardson - General Manager Citizen and Community

  


Finance and Performance Committee of the Whole

07 February 2019

 

 

9.        Capital Delivery Major Facilities Elected Member Update

Reference:

19/43628

Presenter(s):

Alistair Pearson, Manager Capital Delivery Major Facilities

 

 

1.   Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole to accept the project updates herein attached.

2.   Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Receive the information in the attached Capital Delivery Major Facilities Project Updates report.

 

3.   Key Points

3.1       Please refer to the individual reports.

 

 

 

Attachments

No.

Title

Page

a

Capital Delivery Major Facilities Update January 2019

20

 

 

Signatories

Author

Rita Estrella - Senior Project Coordinator

Approved By

Alistair Pearson - Manager Capital Delivery Major Facilities

Mary Richardson - General Manager Citizen and Community

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

10.    Capital Programme Performance Report

Reference:

19/99501

Presenter(s):

David Adamson – General Manager City Services

 

 

1.   Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole to be informed of Capital Programme Delivery Performance.

2.   Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Receive the information in the Capital Programme Performance report.

2.         Request further information on specific projects or portfolios.

 

 

 

Attachments

No.

Title

Page

a

Capital Programme Performance Report

32

 

 

Signatories

Author

Ged Clink - Head of Programme Management Office

Approved By

Carolyn Gallagher - Programme Director – Strategic Support

David Adamson - General Manager City Services

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

11.    Financial Performance report for the six months to 31 December 2018

Reference:

19/43419

Presenter(s):

Diane Brandish - Head of Financial Management

 

 

1.    Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole to be updated on the financial results for the first six months of the 2018/2019 financial year to 31 December 2018.

2.    Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Receives the information in the report.

3.    Key Points

Operating Deficit                     Full year forecast[1]              $1.5mñ

                                                                      Budget                                                $0m

 

Key drivers:  Higher forecast costs within Waters ($2.4 million) due to increased reticulation network maintenance costs and chlorination. Roads and Footpaths maintenance costs are forecast $2 million higher, partly due to reduced glyphosate use resulting in more expensive hand weeding and steam use; partial offset due to higher NZTA operational subsidies ($2.2 million). Actions are underway to minimise any full year operating deficit.

Operating Revenue

Year to date $364.3mñ               Full year forecast1            $743.1mñ

Budget                   $359.1m                          Budget                                               $741.1m

 

Key drivers: Higher rating growth late in the 2017/18 year; higher interest revenues; additional NZTA operational subsidies.

(Ref. 4.1 and 4.2 for variances amounts and explanations)

 

Operating Expenditure

Year to date $296.6mò               Full year forecast1                      $602.4mñ

Budget                   $305.6m                          Budget                                             $599.5m

 

Key drivers - year to date – slower EQ rebuild programme costs; slower Lancaster Park demolition costs – both forecast to be carried forward.

Key drivers – full year forecast – pre-funding debt (offset by higher interest revenue); Waters expenditure; Roads and Footpaths maintenance. 

(Ref. 4.3 – 4.6 for variances amounts and explanations)

 

 

 

Capital Expenditure

Year to date $236.6m       Forecast delivery          $485m     Budget $518.5m

Budget                   $230.1m            Forecast carry forwards       $137m¹         21.4% of budget

                                                         Forecast over spend                 $5m  ñ     

                                                                           

Drivers: Currently forecast to be $5m over budget after carry forwards, however this will reduce when the Strategic Land purchase budget, currently proposed to be carried forward, is applied to the Town Hall project. 

(Ref. section 5)

¹$98.5 million of carry forwards were budgeted.

 

4.    Operational Details

 

Year to Date Results

Forecast Year End Results

After Carry Forwards

$m

Actual

Plan

Var

Forecast

Plan

Var

C/Fwd

Var

Operating revenue

(75.2)

(75.9)

(0.7)

(154.1)

(162.0)

(7.9)

(5.2)

(2.7)

Interest and dividends

(42.4)

(39.6)

2.8

(91.4)

(92.4)

(1.0)

-

(1.0)

Rates income

(246.7)

(243.6)

3.1

(492.4)

(486.7)

5.7

-

5.7

Revenue

(364.3)

(359.1)

5.2

(737.9)

(741.1)

(3.2)

(5.2)

2.0

 

 

 

 

 

Personnel costs

97.8

100.8

3.0

200.9

206.9

6.0

-

6.0

Less recharged to capital

(16.7)

(20.9)

(4.2)

(39.4)

(41.0)

(1.6)

-

(1.6)

Grants and levies

27.5

27.3

(0.2)

46.4

46.2

(0.2)

-

(0.2)

Operating costs

87.8

89.7

1.9

170.1

169.6

(0.5)

0.5

(1.0)

Maintenance costs

51.3

60.9

9.6

115.0

122.9

7.9

10.8

(2.9)

Debt servicing

48.9

47.8

(1.1)

98.1

94.9

(3.2)

-

(3.2)

Expenditure

296.6

305.6

9.0

591.1

599.5

8.4

11.3

(2.9)

 

 

 

 

 

Net Cost

(67.7)

(53.5)

14.2

(146.8)

(141.6)

5.2

6.1

(0.9)

Other Funding

 

 

 

Transfers from Special Funds

(5.9)

(9.3)

(3.4)

(16.6)

(18.2)

(1.6)

(1.0)

(0.6)

Borrowing for cap grants/EQ resp

(1.5)

(1.0)

0.5

(4.3)

(4.3)

-

-

-

Less Rates for capex renewals & debt repayment

82.0

81.8

(0.2)

164.1

164.1

-

-

-

Funds not available for Opex

74.6

71.5

(3.1)

143.2

141.6

(1.6)

(1.0)

(0.6)

 

 

 

Operating Deficit / (Surplus)

6.9

18.0

11.1

(3.6)

-

3.6

5.1

(1.5)

 

Revenue

4.1       Revenue is $5.2 million higher than budget year to date largely due to higher NZTA operational subsidies ($3 million), higher rates revenues ($3.1 million), and higher interest revenues ($2.4 million); partially offset by slower Lancaster Park demolition recoveries ($3 million).

4.2       The revenue forecast variances include;

4.2.1   Lower Operating revenue ($2.7 million - after adjusting for carry forwards) largely due to,

·     Lower Vbase recoveries ($3 million), offset by lower staffing costs incurred,

·     Drop in Building Services revenues ($2.3 million) – driven by lower building consenting revenues – largely offset by lower costs of $2.1 million.

·     Higher NZTA operational subsidies ($2.2 million), due to weighting of subsidised maintenance spend and new subsidies introduced including footpaths.

4.2.2   Lower interest and dividends revenues ($1 million) driven by,

·     CCHL dividend delayed to 2020 ($3.2 million), due to additional rating growth.

·     Notification that half the special Transwaste dividend has been retimed to 2022 ($1.9 million).

·     Higher interest revenues ($3.7 million), mainly due to investing a prefunded debt rollover that is due for repayment in March 2019 (partially offset by increased debt servicing costs).

4.2.3   Higher Rates income ($5.7 million) due to,

·     Higher rating growth late in the 2017/18 year.

Expenditure

4.3       Operational expenditure is $9 million below budget year to date, mainly due to:

·   Slower EQ rebuild programme costs ($3.3 million), forecast to be under spent $2 million by year end with a carry forward of funds required,

·   Slower than budgeted Lancaster Park demolition costs ($3 million) – offset by matched recoveries,

·   Lower Building Services costs ($1.2 million), and

·   Lower Housing maintenance spend, largely considered to be timing ($1.1 million).   

4.4       The $2.9 million forecast expenditure variance after adjusting for carry forwards is mainly due to:

·   Higher debt servicing costs ($3.2 million), largely due to pre-funding of debt due for repayment in March 2019. These additional funds are placed on deposit until needed and the costs are offset by increased interest revenues,

·   Higher Three Waters costs ($2.4 million), due to increased reticulation network maintenance costs and chlorination,

·   Increased Roads and Footpaths maintenance costs ($2 million), partly due to reduced glyphosate use resulting in more expensive hand weeding and steam use; partially offset by,

·   Lower Vbase staffing costs ($3 million) – offset by lower recoveries above,

·   Lower Building Services costs ($2.1 million) – offset by lower revenues above.

4.5       Personnel costs variance year to date is driven by past and current vacancies across Council. The forecast includes lower Vbase staffing costs of $3 million for the year ($0.2 million year to date).

4.6       Maintenance costs result year to date is mainly due to timing of the Lancaster Park demolition costs ($3 million); the timing of the EQ rebuild programme ($2.9 million); Housing maintenance ($1.1 million); and Parks maintenance timing ($0.7 million). The forecast variance after adjusting for carry forwards is driven by the increased Waters costs (above) ($2.4 million), and the Roads and Footpaths maintenance spend ($2 million).

4.7       Funds not available for opex are higher year to date largely due to a slower spend within the EQ Housing Repair Programme ($2.2 million), and the lower Housing maintenance ($1.1 million). There is a carry forward forecast for the housing repair programme of $1 million, and a favourable operational housing variance of $0.6 million as a result of the increased rent related subsidies. 

4.8       The net cost of individual activities is shown in Attachment A.

 


 

5.    Capital Programme

 

Year to Date Results

Forecast Year End Results

After Carry Forwards

$m

Actual

Plan

Var

Forecast

Plan

Var

C/Fwd

Var

Three Waters

45.3

53.0

7.7

113.7

111.2

(2.5)

(2.9)

0.4

Roading and Transport

32.3

34.9

2.6

88.0

104.5

16.5

16.4

0.1

Strategic Land

2.4

-

(2.4)

(0.9)

15.2

16.1

16.0

0.1

IM&CT

12.8

14.6

1.8

26.6

27.0

0.4

0.2

0.2

Other

62.1

70.4

8.3

120.6

138.2

17.6

17.5

0.1

Works Programme

154.9

172.9

18.0

348.0

396.1

48.1

47.2

0.9

 

 

 

 

 

Infrastructure

31.5

38.2

6.7

64.2

68.8

4.6

4.5

0.1

Transitional / Recovery Projects

3.8

5.0

1.2

13.2

26.9

13.7

13.7

-

Facilities Rebuild

46.0

50.2

4.2

117.9

124.1

6.2

12.2

(6.0)

Rockfall

0.4

1.1

0.7

1.1

1.1

-

-

-

Rebuild Programme

81.7

94.5

12.8

196.4

220.9

24.5

30.4

(5.9)

 

 

 

 

 

Gross Capital Spend

236.6

267.4

30.8

544.4

617.0

72.6

77.6

(5.0)

Unidentified Carry forwards

-

(37.3)

(37.3)

(59.4)

(98.5)

(39.1)

(39.1)

-

Capital Programme

236.6

230.1

(6.5)

485.0

518.5

33.5

38.5

(5.0)

 

 

 

 

 

Development Contributions

(14.5)

(11.1)

3.4

(26.4)

(22.2)

4.2

-

4.2

Less DC Rebates

1.3

2.9

1.6

4.4

5.8

1.4

1.4

-

NZTA Capital Subsidy

(14.8)

(27.6)

(12.8)

(55.6)

(55.6)

-

-

-

Vbase recovery - Town Hall

(19.2)

(24.8)

(5.6)

(32.4)

(32.4)

-

-

-

CCHL Capital release

(70.0)

(70.0)

-

(140.0)

(140.0)

-

-

-

Misc Capital Revenues

(4.0)

(7.3)

(3.3)

(11.6)

(11.5)

0.1

-

0.1

Asset Sales

(1.0)

(1.0)

-

(3.1)

(1.3)

1.8

-

1.8

Capital Revenues

(122.2)

(138.9)

(16.7)

(264.7)

(257.2)

7.5

1.4

6.1

 

 

 

 

 

Rates for Capex Renewals

(62.2)

(62.2)

-

(124.3)

(124.3)

-

-

-

Reserve Drawdowns

(59.4)

(65.2)

(5.8)

(128.5)

(131.5)

(3.0)

(2.3)

(0.7)

Other Available Funding

(121.6)

(127.4)

(5.8)

(252.8)

(255.8)

(3.0)

(2.3)

(0.7)

 

 

 

 

 

Borrowing Required

(7.2)

(36.2)

(29.0)

(32.5)

5.5

38.0

37.6

0.4

 

Capital Expenditure

5.1       Capital expenditure of $236.6 million has been incurred for the first six months of the year. A further $248.4 million is currently forecast to be spent by year end.

5.2       The $5 million forecast ahead of budget spend after carry forwards is largely due to budget being flagged to be carried forward, but planned to be applied to the forecast ahead of budget spend on the Town Hall.

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

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

Capital Revenues

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

5.6       Development contributions are higher than budget because new development has been higher than anticipated. Payments of development contribution rebates have been slower than planned. There are $9.1 million of rebates provisionally allocated pending compliance with the scheme criteria.

5.7       The large year to date variance for NZTA subsidies is considered to be timing related and is forecast to be on budget by year end.

5.8       The lower Vbase recovery is a result of a slower than budgeted spend on the Town Hall rebuild to date.

5.9       Miscellaneous capital revenues are lower year to date, due to timing of Nga Puna Wai capital grants ($3.2 million). Forecast to be received by year end.

5.10    Asset sales include planned sales of surplus land.

5.11    Reserve net drawdowns are $5.8 million lower than budget year to date, mainly due to higher developer contribution revenue set aside to fund future qualifying growth projects.

5.12    The budget indicated a $5.5 million borrowing requirement for the Capital Programme. Due to the lower forecast capital spend there is now no borrowing requirement for this financial year. However after taking into account higher carry forwards of $37.6 million, there is a borrowing requirement of $5.1 million ($0.4 million less than budget). 

 

Special Funds

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

5.14    The balance of 2018/19 funds available for allocation in the Capital Endowment Fund is currently forecast to be $624,744.

 

Attachments

No.

Title

Page

a

Financial Performance

54

b

Significant Capital Projects

61

c

Special Funds

67

 

 

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

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 of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 


 


 


 


 


 


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

12.    Performance Reporting for December 2018

Reference:

19/68733

Presenter(s):

Peter Ryan, Head of Performance Management

 

 

1.   Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole to note an update on LTP level of service performance for December 2018.

2.   Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Receive the information in the monthly Level of Service Exceptions report for December 2018.

 

3.   Key Points

3.1       Staff forecasts as at 31 December 2018 (Attachment A) indicate a LTP level of service achievement of 80.9%.

3.2       Individual LTP level of service exceptions are set out in Attachment B.

 

 

Attachments

No.

Title

Page

a

LTP Level of Service Forecast Delivery Graph December 2018

70

b

Level of Service Exceptions, Forecast Period Ending 31 December 2018

71

 

 

Signatories

Authors

Monika De Neef - Senior Business Analyst

Lerks Stedman - Performance Analyst - PL

Approved By

Peter Ryan - Head of Performance Management

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

13.    Corporate Finance Report for the period ending 31 December 2018

Reference:

19/16368

Presenter(s):

Diane Brandish – Head of Financial Management

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole 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 decisions in this report are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy.

2.1.1   The level of significance was determined by the impact of the decisions on the community.

 

3.   Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Receives the information in the report;

2.         Notes the status of the Treasury Policy Compliance; and

3.         Notes the status of the Rates and Non-Rates Debtor balances.

 

4.   Key Points

 

Treasury Risk versus Policy Limits

4.1       As at 31 December 2018, all treasury risk positions were within policy limits (except for the on-going approved breach for interest rate hedging – refer section below).

Snapshot

Risk Area

Liquidity

Funding

Interest Rate Re-pricing

Counterparty Credit

Policy Compliance

Within

Within

Breach

Within

 

4.2       Council’s borrowing, lending, and cash balances (including year-to-date changes) were:

 

4.3       Council’s overall cash out-flow over the year was therefore $79.1 million, funded by $233.0 million of new borrowing offset by a $154.0 million cash increase.

 

Non-Rates Debtors

4.4       As at 31 December 2018, non-rates debtors increased by $697k (4.8%) over the quarter, the majority of which was an invoice for interest on outstanding LINZ balances.

4.5       There were $37k of debts written off taking the year to date write offs to $105k.

Snapshot

 

Dec 18

$m

Sept 18

$m

Up/Down

All non-rates debtors

15.195

14.498

ñ

Debtors written off

0.037

0.068

ò

 

Rates Debtors

4.6       As at 31 December 2018, the Council had recorded a net credit on the rates account.  This occurs when the total received from ratepayers exceeds the amount invoiced (ignoring future instalment dates).

4.7       An explanation of how this arises is included in Attachment 1.

Snapshot

 

Dec 18

$m

Sept 18

$m

Up/Down

Dec 18

Number

Sept 18

Number

Up/Down

All rates debtors

19.937

19.682

ñ

43,004

44,643

ò

Credit balances

(20.264)

(25.809)

ñ

20,303

20,078

ò

Net rates debtors

(0.327)

(6.127)

ñ

 

 

 

 


 

 

5.   Treasury

Short-term liquidity risk

5.1       Short-term liquidity helps to ensure adequate access to liquid funds.

Policy Limit (ratio must exceed 110%) - Within Limit

Long term funding risk

5.2       Managing the maturity spread of existing borrowing within policy limits helps to ensure adequate spread of debt maturities and manage long term funding risk.

Policy Limit (existing maturities only) - Within Limit

5.3       In practice, funding risk includes the requirement to access new borrowing as well as to simply re-finance existing maturities – a more comprehensive risk profile is shown below:

Interest Rate Re-Pricing

5.4       Managing interest rate re-pricing within policy limits helps to ensure acceptable volatility in interest costs (hedging).

Policy Limit – Breach

Orange line = projected borrowing
* Red bars = amount of debt already at contractually fixed rates as at 30 June each year.
* Dotted lines = Policy Limits (maximum & minimum amount of fixed rate hedging permitted).

5.4.1   Hedging levels continue to be fractionally above maximum Policy limits for the 2019 and 2020 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   On 28 June 2018 Council Resolution CNCL/2018/00124

·   Noted that the Council remains within limits on three major prudential ratios and remains outside the limits on one major prudential ratio. 

·   Noted that the Council will return to within the limit for Interest Rate Re-Pricing over time expected to be within 24 months. 

·   Ratifies the approach taken to return to within the limit for interest Rate Re‑pricing as discussed in Section 5.3 of the report.

Credit Risk

5.5       Maintaining credit risk within policy limits manages Council’s exposure to loss from counterparties' failure to pay.

Policy Limit - Within Limit

·   Derivatives exposures are nil because their net values are negative (i.e. Council would pay the bank if terminated).

·   (No derivative Agreements exist with ASB or Rabobank)

·   I-Cap and Millennium are the only remaining external investments for the Capital Endowment Fund.

6.   General Debtors

 

Dec 18

$m

Sept 18

$m

Up/Down

Dec 18

%

Sept 18

%

Up/Down

All non-rates debtors

15.195

14.498

ñ

100.0

100.0

 

 

 

 

 

 

 

 

Greater than 90days

3.945

3.469

ñ

26.0

24.0

ñ

Greater than $5k

13.695

13.051

ñ

90.1

90.0

ñ

Greater than $1m

7.381

6.854

ñ

48.6

47.3

ñ

Debtors written off

0.037

0.068

ò

 

 

 

 

 

 

 

 

 

 

Debtor Category

 

 

 

 

 

 

General

10.270

9.639

ñ

67.59

66.49

ñ

Resource Consent

1.701

1.524

ñ

11.19

10.51

ñ

Building Consent

2.349

2.453

ò

15.46

16.92

ò

Health

0.163

0.177

ò

  1.08

  1.22

ò

Infringements

0.263

0.208

ñ

  1.73

  1.43

ñ

Others

0.449

0.497

ò

  2.95

  3.43

ò

 

 

Overdue Trade Debtors

6.1       The most significant overdue debtor in this report remains the LINZ account for $3.4 million.

6.2       Overdue trade debtors (greater than 90 days) is 26% of total trade debtors, including the LINZ debt.

Trade Debtors Written Off

6.3       Trade debtors of $37,000 for the quarter and $106,000 have been written-off in the six months to 31 December 2018 compared to $77,000 in the six months to 31 December 2017.

6.4       The detail is below:

6.5       The significant write-offs (over $2,000) relate to:

1)    Negotiated settlement of a debtor for Resource Consent work resulted in a reduction of $6,453.

2)    Street Pole Damage: There have been six significant write-offs for Street Pole damages totalling $29,728. The offenders were either not available to pursue or were deemed to lack the financial capacity now or in the future to make payments towards the debt.

3)    Customer in Liquidation: The write offs are in relation to Building Consents ($3,156), Street Pole Damage ($5,966) and Recreation and Sport ($ 3,543) where customers have gone in liquidation and unsecured debtors are unlikely to receive payment.

6.6       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.

6.7       A summary report of trade debtors written off in 2018/19 by month is provided as Attachment B.


 

 

7.   Rates Debtors

 

 

Dec 18

$m

Sept 18

$m

Up/Down

Dec 18

#

Sept 18

#

Up/Down

Net rates debtors

(0.327)

(6.127)

ñ

63,307

64,721

ò

 

 

 

 

 

 

 

All rates debtors

19,937

19.682

ñ

43,004

44,643

ò

Greater than $1k

14.472

14.543

ò

5,805

5,342

ñ

Greater than $5k

4.520

4.135

ñ

454

408

ñ

Greater than $100k

0.524

0.321

ñ

2

1

ñ

Credit balances

(20.264)

(25.809)

ò

20,303

20,078

ñ

 

7.1       The active reporting and monitoring of rates debtors is impacted by the instalment dates.  Rates are invoiced at the end of the month and receipts are received over the month end leading up to the penalty date.  See Charts 1 and 2 in Attachment 1.

7.2       The table below highlights all outstanding rates invoices in arrears.

7.3       This ignores credits recorded for other ratepayers who have paid in advance of the next instalment date.

31 December 2018

($m)

General Rates Invoiced YTD (to  Dec 2018)

Pre-2018/19 Arrears

Outstanding Current Year

%age Outstanding Current Year vs Invoiced YTD

2018/19

373.831

5.013

14.924

4.0%

 

7.4       Note that the rates invoiced to December 2018 represents 50% of the total rates invoiced for the year.

7.5       In the table below, the arrears reflect the rates outstanding from previous reporting periods.

Quarter Ended

($m)

Value of Arrears

Number of Ratepayers in Arrears

Number of Ratepayers with a Payment Plan

December 2018

5.013

2,838

1,467

September 2018

18.521

16,998

n/a

 

7.6       Work continues to reduce the pre-2018/19 rates arrears balances.

7.7       In the quarter to 31 December 2018, $168,528 was collected under various arrangements for debts pre 2017/18.

7.8       The table below shows the ageing of the $5.013 million ($18.521 million September 2018) pre-2018/19 arrears:

Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

Arrears

10,684

13,200

24,587

42,159

105,353

96,053

141,787

221,428

4,358,278

∆ in Qtr

-120

-1,182

-370

-4,851

-3,775

-4,180

-12,915

-141,135

-13,339,063

 

 

 

 

 

 

 

 

 

 

Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

Number

12

16

19

24

25

31

43

139

2,838

∆ in Qtr

-

-1

-1

-2

-3

-5

-13

-251

-14,159

 

7.9       Arrears are actively managed to the extent possible. Options include payment plans and direct debit arrangements. Rates postponement is offered where appropriate.

 

 

 

Attachments

No.

Title

Page

a

Rates Arrears Information December 2018

91

b

Debtors Written Off Summary 31 December 2018

94

 

 

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

Andrew Jefferies - Manager Funds & Financial Policy

Auke van der Weij - Financial Accountant - Control

Approved By

Len Van Hout - Manager External Reporting & Governance

Diane Brandish - Head of Financial Management

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

Report from Banks Peninsula Community Board  – 17 December 2018

 

14.    Akaroa Community Health Centre Funding Request

Reference:

18/1363036

Presenter(s):

Gavin Thomas, Principal Advisor Economic Policy

 

 

 

1.   Staff Recommendations

 

That Te Pātaka o Rākaihautū/Banks Peninsula Community Board recommends to Council that it either:

1.         Agrees in principle to the request from the Akaroa Community Health Trust to provide it with One-off Council Grant funding up to a maximum of $1,300,000. The Grant to be used to fund the Trust’s outstanding funding commitment to the Canterbury District Health Board for the Akaroa Community Health Centre.

Or:

Declines the Akaroa Community Health Trust request for One-off Council Grant funding up to a maximum of $1,300,000.

Or:

Defers consideration of the request for funding until the end of 2019 to enable the Akaroa Community Health Trust to have a clearer view of its eventual funding requirements. 

That Te Pātaka o Rākaihautū/Banks Peninsula Community Board recommends to Council that if it agrees in principle to provide the Akaroa Community Health Trust with One-off Council Grant funding (Option 1 above), that:

2.         The Council proposes that the Grant be paid for from a Grants Targeted Rate on properties in the Akaroa and Bays area, on the basis that the Rate is:

a.         Applied to all rateable units in the Akaroa subdivision of the Banks Peninsula ward;

b.         Calculated on a proportional basis according to the capital value of each Rating Unit;

c.         Applied for a maximum of ten years from 1 July 2019  – 30 June 2028/29;

d.         Limited in total revenue raised to a maximum of $1,300,000 adjusted for interest revenue and interest costs arising from the difference in timing between when the Targeted Rate revenue is received and when the One-off Council Grant is paid;

e.         Calculated based on the interest rate earned by ratepayers on Targeted Rate amounts paid to Council before the Grant is paid in 2022/23 being 3.0 per cent (being an estimate of what the Council would earn by investing those funds on term deposit);

f.          Calculated based on the interest rate paid by ratepayers on Targeted Rate revenue received after the Grant is paid in 2022/23 to be 4.5 per cent (being an estimate of what the Council would pay on borrowing over this period);

g.         Reduced if the Trust receives further funding from other sources – the Grants Targeted Rate will be the funder of last resort.

3.         The Council uses a decision making process that includes appropriate community consultation that:

a.         proposes the Council’s preferred option as well as any other options the Council considers practicable; 

b.         meets the requirements of section 82 of the Local Government Act 2002;

c.         is focused on the communities directly affected by the proposal but be open to all Christchurch residents;

4.         The Council agrees that a Hearings Panel be convened at the completion of the consultation period to receive and hear submissions on the proposal, deliberate on those submissions, and to report back recommendations to the Council.

 

2.  Banks Peninsula Community Board Recommendation to Finance and Performance Committee of the Whole

 

Part A

That the Finance and Performance Committee of the Whole:

1.         Agrees in principle, subject to community consultation, to the request from the Akaroa Community Health Trust to provide it with One-off Council Grant funding up to a maximum of $1,300,000.  The Grant to be used to fund the Trust’s outstanding funding commitment to the Canterbury District Health Board for the Akaroa Community Health Centre, subject to the Council using a decision making process that includes appropriate community consultation as follows:

a.      proposes the Council’s preferred option as well as any other options the Council considers practicable, including:

         i. the community is asked if they support a targeted rate;

         ii. options of a four year and ten year rating period;

   iii. the community is asked what level of support should be required for the        targeted rate to be implemented;         

b.      the Community Board formally approves the Consultation Document;

c.      meets the requirements of section 82 of the Local Government Act 2002;

d.     is focused on the communities directly affected by the proposal but be open to all Christchurch residents;

2.         Agrees that a Hearings Panel be convened and hearings held, including in Akaroa, at the completion of the consultation period to receive and hear submissions on the proposal, deliberate on those submissions, and to report back recommendations to the Council.

3.         The grant be reduced if the Trust receives further funding from other sources – the Grants Targeted Rate will be the funder of last resort.

 

Secretarial Note: At its meeting on 24 January 2019 the Council resolved the following in respect of this report:

1.         Resolves that a report on the Akaroa Community Health Centre Funding Request and the Banks Peninsula Community Board recommendations be referred to the 7 February 2019 meeting of the Finance and Performance Committee of the Whole; and

2.         Delegates to the Finance and Performance Committee of the Whole decision-making authority in respect of the report.

 

 

Attachments

No.

Report Title

Page

1

Akaroa Community Health Centre Funding Request

98

 

No.

Title

Page

a

Letter to Banks Peninsula Community Board

111

 

 


Finance and Performance Committee of the Whole

07 February 2019

 

 

Akaroa Community Health Centre Funding Request

Reference:

18/1047516

Presenter(s):

Gavin Thomas - Principal Advisor Economic Policy

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Te Pātaka o Rākaihautū/Banks Peninsula Community Board to consider options and make recommendations to the Council on how it should respond to a request from the Akaroa Community Health Trust for One-off Council Grant funding to help the Trust meet its agreed financial contribution to the Canterbury District Health Board towards the cost of constructing the new Akaroa Community Health Centre.

1.2       There are two separate but interrelated matters that must be considered.

·    Should the Council provide funding to the Trust or not?

·    If yes, then what is the most appropriate way of providing that funding and apportioning the costs?

Origin of Report

1.3       The Akaroa Community Health Trust made a submission to Council’s draft Long Term Plan 2018-28 supporting a Council proposal to enable a targeted rate to be set to fund community facilities and asking the Council to use a targeted rate to help fund the community contribution to the building of the Akaroa Community Health Centre.

1.4       The Akaroa Community Health Trust then wrote to the Banks Peninsula Community Board in September 2018 formally requesting the Council establish the targeted rate (Attachment A).

1.5       This report is provided to fulfil Te Pātaka o Rākaihautū/Banks Peninsula Community Board resolution 23419 - that the Banks Peninsula Community Board:

1.1.1     Receive the information in the correspondence report dated 24 September 2018

1.1.2Refer the correspondence to staff who are preparing a report to the Council on this issue.

2.   Significance

2.1       The recommendation in this report has been assessed as being of medium significance in relation to the Christchurch City Council’s Significance and Engagement Policy.

2.2       The level of significance was determined by considering the costs and benefits of the recommended option if funding is provided.  Although it affects a relatively small proportion of the District – Akaroa and Bays - those residents would be affected to a moderate extent by an increase in the rates required from affected properties. The benefits that accrue from the Health Centre would have a high level of significance but don’t appear to be affected by decisions sought through this report. 

 

3.   Staff Recommendations 

That Te Pātaka o Rākaihautū/Banks Peninsula Community Board recommends to Council that it either:

1.         Agrees in principle to the request from the Akaroa Community Health Trust to provide it with One-off Council Grant funding up to a maximum of $1,300,000. The Grant to be used to fund the Trust’s outstanding funding commitment to the Canterbury District Health Board for the Akaroa Community Health Centre.

Or:

Declines the Akaroa Community Health Trust request for One-off Council Grant funding up to a maximum of $1,300,000.

Or:

Defers consideration of the request for funding until the end of 2019 to enable the Akaroa Community Health Trust to have a clearer view of its eventual funding requirements. 

That Te Pātaka o Rākaihautū/Banks Peninsula Community Board recommends to Council that if it agrees in principle to provide the Akaroa Community Health Trust with One-off Council Grant funding (Option 1 above), that:

2.         The Council proposes that the Grant be paid for from a Grants Targeted Rate on properties in the Akaroa and Bays area, on the basis that the Rate is:

a.         Applied to all rateable units in the Akaroa subdivision of the Banks Peninsula ward;

b.         Calculated on a proportional basis according to the capital value of each Rating Unit;

c.         Applied for a maximum of ten years from 1 July 2019  – 30 June 2028/29;

d.         Limited in total revenue raised to a maximum of $1,300,000 adjusted for interest revenue and interest costs arising from the difference in timing between when the Targeted Rate revenue is received and when the One-off Council Grant is paid;

e.         Calculated based on the interest rate earned by ratepayers on Targeted Rate amounts paid to Council before the Grant is paid in 2022/23 being 3.0 per cent (being an estimate of what the Council would earn by investing those funds on term deposit);

f.          Calculated based on the interest rate paid by ratepayers on Targeted Rate revenue received after the Grant is paid in 2022/23 to be 4.5 per cent (being an estimate of what the Council would pay on borrowing over this period);

g.         Reduced if the Trust receives further funding from other sources – the Grants Targeted Rate will be the funder of last resort.

3.         The Council uses a decision making process that includes appropriate community consultation that:

a.         proposes the Council’s preferred option as well as any other options the Council considers practicable; 

b.         meets the requirements of section 82 of the Local Government Act 2002;

c.         is focused on the communities directly affected by the proposal but be open to all Christchurch residents;

4.         The Council agrees that a Hearings Panel be convened at the completion of the consultation period to receive and hear submissions on the proposal, deliberate on those submissions, and to report back recommendations to the Council.

 

4.   Key Points

4.1       Akaroa Hospital was damaged beyond economic repair in the 2010/11 earthquakes and was subsequently demolished.  The Canterbury District Health Board (Canterbury DHB) has worked with the local community and primary health providers to develop a new Model of Care. As part of this model General Practice, aged care, palliative care, in-patient services and associated services will co-locate in a new building on the old hospital site.

4.2       The Akaroa Community Health Trust was formed as a representative community partner in the provision of a new Health Centre for Akaroa. The Trust has an agreement with the Canterbury DHB to provide $2.5 million in community funding towards the capital cost of the new Health Centre. Construction cost of the facility is budgeted by the Canterbury DHB to be $5,932,000.

4.3       The Trust has raised community funding of $1.27 million (as at October 2018) and is continuing its fundraising efforts. It currently receives around $8,000 per month from community fundraising and has applications for funding lodged with major national funds.

4.4       The Trust has asked the Council to raise $1.3 million from the Akaroa and Bays communities through a Grants Targeted Rate over a four year period. The revenue from the targeted rate would be used to fund One-off Council Grants to the Trust. This would enable the Trust to meet its capital funding commitment of $2.5 million.

4.5       In considering the Trust’s request the Council has two separate but interrelated issues to consider:

·    Agree or not to provide One-off Council Grant funding to the Trust;

·    If the Council agrees to provide One-off Council Grant funding, it then must decide how this should be paid for.

4.6       Practicable options considered for funding the Grant are:

·    Option 1 – set a Grants Targeted Rate on properties in the Akaroa and Bays area over a longer period - up to 10 years. The rate could be set on either a fixed charge (all rateable units pay the same amount) or proportionate charge (set as a proportion of capital value for each rateable unit) basis.

The recommended option is to set a Grants Targeted Rate on properties in the Akaroa and Bays area on a proportionate basis (based on property value) over a 10 year period.

Given the monetary effect of this charge on ratepayers in the Akaroa and Bays area, there is a very substantial equity benefit associated with using a proportionate basis rather than a fixed dollar charge per rateable unit.

·    Option 2 – Set a Grants Targeted Rate on the Akaroa and Bays area for four years (2019/20 – 2022/23). The rate could be set on either a fixed charge (all rateable units pay the same) or proportionate charge (set as a proportion of capital value) basis.

·    Option 3 – Set a Grants Targeted Rate on all rateable units in the District for four years (2019/20 – 2022/23) on a fixed charge basis.

Preferred Option Summary - Advantages and Disadvantages (Option 1)

4.7       The advantages of Option 1 include:

·    The Grants Targeted Rate is paid for by the community that will receive the majority of benefit from the Health Centre.

·    This is the more affordable option for affected ratepayers if the Council decides to make the One-off Council Grant and to fund this from a Grants Targeted Rate on properties in the Akaroa and Bays area. The difference in annual rate requirement is significant when comparing a four year term to a 10 year term.

·    Capital assets provide benefits over many years. Intergenerational equity suggests it is appropriate to match the period over which ratepayers fund the capital assets with the period over which benefits flow to the ratepayers. The ten year period achieves this better than a four year period.

·    A longer term increases flexibility in terms of adjusting the rate requirement if the Trust raises more money than expected.

·    Akaroa and Bays communities have the opportunity to collectively contribute to a key facility, promoting the concept of community ownership.

·    Using a proportional value basis for the rate provides significant equity benefits, making the rate more affordable for owners of lower value properties.

·    A Grants Targeted Rate is an efficient method of collecting funding from property owners.

4.8       The disadvantages of Option 1 include:

·    The Council would need to borrow to fund the Grant. This will add interest to the Targeted Rate requirement.

·    The Grants Targeted Rate would remain in place for a longer period of time, which may not suit some ratepayers and would mean the Council incurs administration costs for a longer period.

·    If the Council agrees to make a Grant to be funded by a Targeted Rate there will be no incentive for the Trust to continue fundraising from other sources, or for the Canterbury DHB to consider any other possible funding arrangements that are less financially onerous on such a small community.

·    In this case, regardless of how a targeted rate is structured, it would remain a significant funding requirement to come from a very small number of ratepayers.

·    The Council would assume political risk through the levying of a targeted rate. This risk is complicated by the fact that neither the Council nor the community will have ownership of the asset to be funded.

 

 

5.   Context/Background

Akaroa Community Health Centre

5.1       Akaroa Hospital was damaged beyond economic repair in the 2010/11 earthquakes and was subsequently demolished.  The Canterbury DHB decided not to redevelop hospital-level services, but has worked with the Akaroa and Bays community (including the Pompallier House Trust) and primary health providers to develop a new Model of Care. As part of this model General Practice, aged care, palliative care, in-patient services and associated services will co-locate in a new building on the old hospital site.

5.2       The Health Centre building will be owned by the Canterbury DHB and leased to Akaroa Health Limited, a Charitable Company established by the Akaroa Community Health Trust to run the Health Centre, deliver health services and lease space to others delivering services.

5.3       The Canterbury DHB is satisfied that:

·    The proposed Health Centre is supported by health providers who will work from it.

·    The intended services can be provided without an on-going need for community fund-raising to meet operating costs.

5.4       Construction of the facility is underway and is due for completion in June 2019. 

Community funding agreement

5.5       The Akaroa Community Health Trust was formed as a community partner in the provision of a new Health Centre for Akaroa. The Trust has an agreement with the Canterbury DHB to provide $2.5 million in community funding towards the capital cost of the Centre within four years of the facility being completed. Total construction cost of the facility has been budgeted by the Canterbury DHB at $5,932,000.

5.6       The Trust’s funding commitment has enabled aged care facilities (including 12 beds) and services to be included in the Health Centre. The Canterbury DHB has advised these would not have been included without community funding.

5.7       The Trust has raised $1.27 million (as at October 2018). It has made applications to national funds which are yet to make decisions and could receive funding from these sources. It has indicated it will continue fundraising at least until mid-2019.

Funding request

5.8       The Trust wrote to the Banks Peninsula Community Board in September 2018 requesting the Board recommend to the Council that it establish a targeted rate to provide funding for the community contribution for the Akaroa Community Health Centre.

5.9       The Trust’s request is for $1.3 million to be funded from a targeted rate on properties in the Akaroa and Bays communities to be set for four years.

5.10    The Canterbury DHB has sought community funding for health facilities in other parts of Canterbury. Kaikoura District Council set a targeted rate to provide community funding for construction of its new health facility and the Ashburton community contributed to the capital cost of a new health facility on the Ashburton Hospital campus through funding from a community trust.

Council’s policy position

5.11    The Council’s Revenue and Financing Policy enables the Council to provide One-off Council Grant funding for community facilities it does not own and for the cost of that funding to be recovered through a Grants Targeted Rate. 

5.12    The Policy states (in summary):

From time to time Council may determine that it is desirable to make a one-off grant which is either outside the scope of existing grants schemes or too large to be accommodated by existing grants budgets. In such circumstance, and subject to public consultation, such grant may be funded by a specific and temporary Grants Targeted Rate.

A Grants Targeted Rate:

·    May be applied either universally or to a specifically identified group of ratepayers, depending on Council’s assessment of how the benefits of the grant are distributed.

·    Will usually be set as a fixed dollar charge per SUIP, because this provides the most readily calculable revenue stream – Capital Value or other rating basis will only be used if this is considered to generate very significant equity benefits.

·    Will exist for only the number of years stated in the original public consultation, and will not be absorbed into any other rate once that period ends.

5.13    This policy provision came into effect through the Long Term Plan 2018-28 and was used to establish the Special Heritage (Cathedral) Targeted Rate to support restoration of Christ Church Cathedral.

5.14    The use of a Grants Targeted Rate to fund community facilities the Council doesn’t own was consulted on as part of the Council’s draft Long Term Plan 2018-28. The Akaroa Community Health Centre was used as an example of how a Targeted Rate could be used for this purpose. The Council received 90 submissions on this proposal with 31 in support, 38 opposing and 21 suggesting alternative approaches.

5.15    The Revenue and Financing Policy is part of the Council’s Long Term Plan and is available on the Council website https://ccc.govt.nz/assets/Documents/The-Council/Plans-Strategies-Policies-Bylaws/Plans/Long-Term-Plan/2018-2028/Vols/LTP-201828-Vol3-02Revenuefinancingandratingpolicies.pdf

5.16    The Policy doesn’t provide guidance on what types of community projects or organisations will be funded and has no criteria against which an application can be assessed. Consequently any decision by the Council on a request for funding of this type is not constrained by an existing policy.

5.17    This report doesn’t provide a recommendation on whether the funding request should be agreed to or not but does provide options and a recommendation on how a Grant could be funded.

Information and timing

5.18    In considering the Trust’s request for funding the Council could defer for a period of time to enable a clearer picture of the Trust’s eventual funding requirements to emerge, and enable discussion with the Canterbury DHB regarding their ultimate funding requirements.

5.19    The community funding is required to be provided to the Canterbury DHB within four years of the completion of construction of the Centre. This provides time to ensure all possible funding sources are fully explored.

5.20    The Akaroa Community Health Trust has declined to consider engagement with the Canterbury DHB regarding the possibility of reviewing the community funding requirement and restated its preference for the funding request and any subsequent funding implications to be considered by the Council as soon as possible. It wants a decision made to enable a rate to be applied from 1 July 2019.

5.21    While the Trust’s approach may mean complete information is not available to inform the early decision-making process, there are some valid reasons for the Council to consider the request as soon as practicable. These include:

·    The Trust would have certainty regarding its ultimate fundraising requirements.

·    The Akaroa and Bays community would have certainty regarding the ongoing call on its fundraising effort and generosity. There may be a perception in the community that the project has dominated community fundraising for several years. Over that period other fundraising has had to compete. There is also likely to be a degree of fundraising fatigue among the Trust’s fundraising committee, the wider Trust and the community.

·    The community may be more amenable to an additional rate (for a specific period of time) in the immediate period after the Centre opens. If a rate is set from the 2019/20 year it will coincide with the completion and opening of the Health Centre.

5.22    Deferring a proposal may simply delay the inevitable. Undertaking community consultation on a proposal will provide the Council with evidence of the level of community support for the approach proposed by the Trust.

5.23    The Trust has socialised the concept of a Grants Targeted Rate widely with its community and believes it has strong support. It wants a decision made to enable a rate to be applied from 1 July 2019.

6.   Option 1 – set a Grants Targeted Rate on properties in the Akaroa and Bays area over 10 years (recommended option).

Option Description

6.1       The Council would provide One-off Council Grant funding to the Akaroa Community Health Trust over four years and fund this from a Grants Targeted Rate over a 10 year period.

6.2       This would require the Council to loan fund the amount outstanding after year 4. Interest would be added to the Grants Targeted Rate from year 5 of the Rate period. This Option has been modelled on seven year and 10 year terms but could be adjusted to any duration.

6.3       The Council would pay for the Grant by setting a Grants Targeted Rate on all separately used or inhabited portions of property in the Akaroa subdivision of the Banks Peninsula ward. This area aligns with Canterbury DHB advice on Banks Peninsula health service patterns, the area of interest for the Akaroa Community Health Trust (in its Trust Deed) and aligns with Council Rating Valuation Rolls. The Rate would apply to the following valuation rolls:

23961              Akaroa township

23940              Akaroa surrounds – Takamatua to south coast

23930              Duvauchelle

23920              French Farm/ Wainui

23910              Le Bons Bay

23900              Okains Bay/ Little Akaloa

23890              Pigeon Bay

6.4       The map below shows the recommended catchment area for the Grants Targeted Rate.

 

6.5       There are two methods by which the rate could be applied:

·    A fixed charge with each rateable unit charged the same amount.

·    A proportionate charge with each rateable unit charged based on capital value

6.6       Each method has pros and cons. These are summarised in the table below:

Fixed charge

Proportionate charge

Pros

Cons

Pros

Cons

· Easy to administer

· Doesn’t change due to valuation changes

· Transparent – each ratepayer knows what they must pay

· Regressive tax

· May be onerous for some property owners (most likely those with lower value property

· Inconsistent with the Council’s general preference for proportionate rating

· Progressive tax so provides equity benefits

· More affordable for owners of lower value properties

· Consistent with the Council’s preferred approach to rating

· Not as easy to administer

· Less transparent – each ratepayer pays a different amount

· Amount per ratepayer can change following property revaluation

 

 

6.7       Modelling for this option is based on an estimate of there being 2,722 rateable units in the proposed Targeted rate catchment and that interest of 4.5 per cent applying throughout the term. Estimated rate charges by term duration and rating methodology are provided in the table below.

Rating method

4 year term

Additional rate per annum (ex GST)

7 year term

Additional rate per annum (ex GST)

10 year term

Additional rate per annum (ex GST)

Fixed charge

$114.16

$68.89

$51.13

Proportionate charge

CV $350,000

CV $500,000

CV $600,000

CV $1,000,000

 

$71.47

$102.10

$122.52

$204.21

 

$43.13

$61.62

$73.94

$123.23

 

$32.01

$45.73

$54.87

$91.45

 

Significance

6.8       The significance of this option is assessed as medium, which is consistent with section 2 of this report.

6.9       The assessment recognises the significance is higher for residents and ratepayers directly affected (in the Akaroa and Bays areas) than for others. With a 10 year Targeted Rate term and a lower annual cost the significance is assessed as being less than for Option 2.

6.10    Engagement requirements for this level of significance are to inform or consult with the affected community. Given establishing a new rate is likely to attract a high degree of community interest, a community consultation process that gives effect to section 82 of the Local Government Act 2002 would be used, including the opportunity to present submissions to a hearings panel.

Impact on Mana Whenua

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

Community Views and Preferences

6.12    The Trust has engaged with the community over a number of years on a preferred health facility and services for the area. This has informed decisions regarding the Health Centre facility and the services to be delivered.

6.13    The Canterbury DHB has consulted with the Akaroa and Bays community in developing a new “Model of Care”. The services to be delivered through the Health Centre are part of the new Model of Care which was released in 2017.

6.14    Residents and ratepayers in the Akaroa and Bays area are directly affected by this option. Their views about using a Grants Targeted Rate to help fund the Health Centre are not yet known.

6.15    The Council received 34 submissions from Akaroa residents on its draft Long Term Plan 2018-28, with 12 submitters including feedback on the proposal to enable One-off Council Grants to be funded from a Grants Targeted Rate. Of those submissions nine were in favour of using a targeted rate to help fund the Akaroa Community Health Centre and three were against.

Alignment with Council Plans and Policies

6.16    This option is consistent with the Council’s Revenue and Financing Policy which provides for the Council to make One-off Council Grants to fund community facilities not owned by the Council and to set a Grants Targeted Rate to pay for the Grant.

Financial Implications

6.17    Cost of Implementation – There would be costs associated with undertaking community consultation, the advice and decision-making processes and setting up a Grants Targeted Rate.

6.18    Maintenance / Ongoing Costs – Once a rate is in place there would be minimal ongoing costs.

6.19    Funding source – These costs would be met from existing operating budgets.

Legal Implications

6.20    Section 16 of the Local Government (Rating) Act 2002 (LGRA) provides for the setting of a targeted rate.

6.21    Section 23 of the LGRA details requirements for setting a rate, which include that the rate must be in accordance with relevant provisions of the Council’s long term plan and funding impact statement for that financial year.

6.22    The Council’s Revenue and Financing Policy (in the Long Term Plan 2018-28) provides for a Grants Targeted Rate. A funding impact statement will be adopted as part of the Annual Plan 2019/20 which would need to include information regarding the Targeted Rate.

6.23    The Council’s Legal Services Unit has reviewed this report and believes the legal requirements are appropriately met.

Risks and Mitigations  

6.24    Transfer of funding risk from the Canterbury DHB and the Trust to the Council and the community. Given the agreement is between the Trust and the Canterbury DHB this may not seem appropriate to some.

Residual risk rating: The residual rating of the risk after the below treatment(s) is implemented will be low/medium.

Planned treatment(s) includes the setting of a Grants Targeted Rate to help fund the community share for the Centre.

6.25    There is political risk for the Council in charging the Targeted Rate. This can be mitigated to some extent through clear and effective messaging as part of the consultation.

Residual risk rating: The residual rating of the risk after the below treatment(s) is implemented will be low to medium.

Planned treatment(s) includes appropriate community consultation regarding any proposal to set a Grants Targeted Rate.

6.26    Loan funding brings a risk that interest rates may rise over the repayment period. To mitigate this risk (for the community) it is recommended that the Council fixes the interest rate at 4.5 per cent for the full term.

Implementation

6.27    Implementation dependencies;

·    Rates team applying the Targeted Rate as part of the rates strike each year.

6.28    Implementation timeframe – Rate would be included in the funding impact statement and the income and expenditure in the appropriate activity budget in the Annual Plan 2019/20.

Option Summary - Advantages and Disadvantages

6.29    The advantages of this option include:

·    The Targeted Rate is paid for by the community that receives the most benefit from the Health Centre.

·    This is the more affordable option for affected ratepayers if a Grants Targeted Rate on properties in the Akaroa and Bays area is set. The annual rate requirement for a 10 year term is significantly less than for a four year term.

·    Intergenerational equity – capital investments provide benefits over many years, and are more appropriately funded through borrowing (which is repaid over multiple years).

·    A longer term provides opportunities to adjust the rate if the Trust raises further funding.

·    The Akaroa and Bays communities collectively contribute to a key facility, promoting the concept of community ownership.

·    A Grants Targeted Rate is an efficient method of collecting funds.

6.30    The disadvantages of this option include:

·    The Council would borrow to fund the Grant. This adds interest costs to the Targeted Rate requirement.

·    The Grants Targeted Rate would be in place for a longer period, which may not suit some ratepayers and would mean the Council incurs administration costs for a longer period.

·    The incentive for the Trust to continue fundraising or for the Canterbury DHB to consider other possible funding arrangements are reduced.

·    Regardless of how a targeted rate is structured, it would remain a significant funding requirement from a small number of ratepayers.

·    The Council would assume political risk through levying a targeted rate. This is compounded by neither the Council nor the community having ownership of the asset to be funded.

7.   Option 2 - Set a Grants Targeted Rate on properties in the Akaroa and Bays area for four years (2019/20 – 2022/23).

Option Description

7.1       The Council would provide One-off Council Grant funding to the Akaroa Community Health Trust over a four year period and fund this from a Grants Targeted Rate over the same period.

7.2       The Grants Targeted Rate would apply as for Option 1, specifically;

·    Rate applies to all separately used or inhabited portions of rateable units in the area.

·    Either a fixed charge method (all rateable units pay the same amount) or a proportionate method of rating (based on the capital value of the rateable unit) could be used.

7.3       Modelling for this option uses the same assumptions as for Option 1.

·    2,722 rateable units.

·    Ratepayers receive 3% interest on rates payments made prior to 2022/23 (when the Council would make the Grant).

Significance

7.4       The significance of this option is assessed as medium, which is consistent with section 2 of this report. The assessment recognises significance is higher for residents and ratepayers directly affected (in the Akaroa and Bays areas) than for people in the wider Christchurch District (outside the area that would pay the Targeted Rate).

7.5       The significance is higher than for Option 1 as the annual Targeted Rate requirement for each property is greater.

Impact on Mana Whenua

7.6       As for Option 1.

Community Views and Preferences

7.7       As for Option 1.

Alignment with Council Plans and Policies

7.8       As for Option 1.

Financial Implications

7.9       Cost of Implementation – as for Option 1 but the costs will extend over a shorter period.

7.10    Maintenance / Ongoing Costs – as for Option 1 but the costs will extend over a shorter period.

7.11    Funding source – as for Option 1.

Risks and Mitigations  

7.12    Funding risk moves from the Canterbury DHB and the Trust to the Council and the community. Given the agreement is between the Trust and the Canterbury DHB this may not seem appropriate to some.

Residual risk rating: The residual rating of the risk after the below treatment(s) is implemented will be low/medium.

Planned treatment(s) includes the setting of a Grants Targeted Rate to help fund the community share for the Centre.

7.13    Political risk for the Council in charging the Targeted Rate. This risk can be mitigated to some extent through clear and effective messaging as part of the consultation.

Residual risk rating: The residual rating of the risk after the below treatment(s) is implemented will be low to medium.

7.14    Planned treatment(s) includes appropriate community consultation regarding any proposal to set a Grants Targeted Rate.

Implementation

7.15    As for Option 1 but over a shorter time period.

Option Summary - Advantages and Disadvantages

7.16    The advantages of Option 2 include:

·    The Grants Targeted Rate is paid by the community that receives the majority of benefit.

·    The One-off Council Grant is provided to the Trust after four years of applying the targeted rate, providing the community with interest revenue that reduces the rate requirement.

·    The Akaroa and Bays communities contribute to a key facility that will serve the community for many years, promoting the concept of community ownership.

·    The Akaroa and Bays communities collectively contribute to a key facility, promoting the concept of community ownership.

·    A Grants Targeted Rate is an efficient method of collecting funds

7.17    The disadvantages of Option 2 include:

·    Affordability - if a fixed charge is used then each rateable unit will pay an additional $114 + GST in rates per year for four years. For lower value properties this could increase rates 5 per cent in year one in addition to the Council’s forecast rates increase of 5.5 per cent meaning some properties would face more than a 10 per cent rate rise in the first year.

·    The incentive for the Trust to continue fundraising or for the Canterbury DHB to consider other possible funding arrangements is reduced.

·    The Council would assume political risk through levying a targeted rate. This is compounded by neither the Council nor the community having ownership of the asset to be funded.

·    Intergenerational equity – capital investments provide benefits over many years, and are more appropriately funded through borrowing (which is repaid over multiple years).

·    A shorter term reduces opportunities to adjust the rate if the Trust raises further funding.

 

8.   Option 3 - Set a Grants Targeted Rate on all rateable units in the District for four years (2019/20 – 2022/23) on a fixed charge basis

Option Description

8.1       The Council would provide One-off Council Grant funding to the Akaroa Community Health Trust as for Option 1 and pay for this by setting a fixed charge Grants Targeted Rate on all separately used or inhabited portions of rateable units in the Christchurch District over a four year period.

8.2       Modelling of the rate requirement based on the Council’s Long Term Plan 2018-28 estimate of there being 172,112 rateable units results in a Grants Targeted Rate of $1.76 per rateable unit, per annum for four years.

Significance

8.3       Significance is assessed as low due to the very low charge per property.

Community Views and Preferences

8.4       With a low level of significance the Council could consult only as part of the Annual Plan.

Alignment with Council Plans and Policies

8.5       This option is consistent with the Council’s Revenue and Financing Policy.

Financial Implications

8.6       Cost of Implementation – as for Option 1.

8.7       Maintenance / Ongoing Costs – as for Option 1.

8.8       Funding source – as for Option 1.

Risks and Mitigations  

8.9       This option risks creating an expectation that district-wide funding should be used for other facilities that provide benefit to a particular community or part community that therefore may be more appropriately funded by central government or the benefitting community.

Implementation

8.10    As for Option 1.

Option Summary - Advantages and Disadvantages

8.11    The advantages of this option include:

·    Very low Targeted Rate per rateable unit.

·    Including the proposal in the consultation for the draft Annual Plan only could be appropriate. 

8.12    The disadvantages of this option include:

·    The costs are not borne by the community that incurred the debt or that receives the majority of the benefits.

 

 

Attachments

No.

Title

Page

a 

Letter to Banks Peninsula Community Board

 

 

 

Confirmation of Statutory Compliance

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

(a) This report contains:

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

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

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

 

Signatories

Author

Gavin Thomas - Principal Advisor Economic Policy

Approved By

Emma Davis - Acting Head of Strategic Policy

Diane Brandish - Head of Financial Management

Carol Bellette - General Manager Finance and Commercial (CFO)

 


Finance and Performance Committee of the Whole

07 February 2019

 

PDF Creator


Finance and Performance Committee of the Whole

07 February 2019

 

 

15.    Wastewater Heat Recovery Linwood Pool

Reference:

19/65117

Presenter(s):

Nigel Cox, Head Recreation, Sport, and Events

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is to request the Finance and Performance Committee of the Whole to make a decision on Capex funding of a wastewater heat recovery system at Linwood Pool.

Origin of Report

1.2       This report is staff generated after receiving a feasibility study and cost estimates for a wastewater heat recovery system at Linwood Pool.

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 considering the impact on the environment, the community and costs of utilising a Wastewater heat recovery system instead of an air source heating system.  

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

 

3.   Staff Recommendations 

That the Finance and Performance Committee of the Whole:

1.         Approve the increase of the Linwood Pool budget from $21,641,750 to $22,719,750 (an increase of $1,078,000) to enable the integration of a wastewater heat recovery system within the Linwood Pool facility.

2.         Approve the funding of the waste water heat recovery system for the Linwood Pool up to $1,078,000 through reprioritisation of ‘Recreation and Sport Buildings & Plant R&R Programme’ FY21.

3.         Request that staff also seek third party funding for the wastewater heat recovery system for the Linwood pool.

4.         Note that this initiative directly aligns with Council’s Strategic Priority of Climate Change Leadership.

 

4.   Key Points

4.1       This report supports the Council's Long Term Plan (2018 - 2028):

4.1.1   Activity: Facilities, Property & Planning

·     Level of Service: 13.4.29.0 We provide advice and projects that reduce the energy used in Council facilities - 1.7% reduction year on year energy use (Based on Sustainable energy strategy 2008 Option 4)

4.2       The following feasible options have been considered:

·     Option 1 – Wastewater heat recovery system funded through reprioritisation of ‘Recreation and Sport Buildings & Plant R&R Programme’ FY21 (preferred option).

·     Option 2 - Wastewater heat recovery system requests additional funding through the Annual Plan process.

·     Option 3 - Reduce scope elements of the Linwood Pool project to include wastewater heat recovery system within the current project budget.

·     Option 4 – Continue with the project utilising air source heating.

4.3       Option Summary - Advantages and Disadvantages (Preferred Option)

4.3.1   The advantages of this option include:

·    The electricity required to heat the pools is reduced by an estimated 33%, saving of 290,000kWh per annum and associated carbon saving of 37 tonnes per annum.

·    The operational costs of the Linwood Pool are reduced by an estimated $41,500 per annum.

·    Reprioritisation within the existing CAPEX programme does not require new funding through the Annual Plan process.

·    Allows the concept design to continue without delay to the programme.

 

4.3.2   The disadvantages of this option include:

·     The potential negative public perception of an increased Linwood Pool project budget.

·     The deferral of planned building renewals in FY21 will delay part of the RSU renewal programme.

·     It may be perceived that there is excess funding within the Recreation and Sport Buildings & Plant R&R Programme in FY21.

 

 

5.   Context/Background

Project Overview

5.1       Funding of $21,641,750 for the development of a Linwood Pool is included in the 2018-2028 Long Term Plan.

5.2       On the 16 May 2018 the Linwood-Central-Heathcote Community Board resolved (LCHB/2018/00065) that approved 141 Smith Street as the site for the Linwood Pool and that staff proceed with procurement and development of a concept design.

5.3       The location of 141 Smith Street is in close proximity to pressure sewer 11B running through the adjacent site Linwood Park. When considering heating options for the pool a feasibility study on Wastewater Heat Recovery was commissioned (Attachment B).

5.4       Air source heating is an efficient heating option and is what had been used at the recently completed Taiora:QEII Recreation and Sport Centre. Wastewater heat recovery allows the heat pumps to operate with a higher energy efficiency and associated lower electrical consumption loads.  

5.5       Community engagement on the pre-concept design was completed in December 2018 and information gathered will be utilised to develop the concept design.

Wastewater Heat Recovery Overview

5.6       Globally there are thought to be over 1,000 installations using wastewater as a thermal source, including at least 5 installations in Australia. These existing installations also include at least 5 aquatic centres. So, whilst it is a new concept in New Zealand, it is not a new concept globally.

5.7       There is a 24-hour average of 12,000kW of wastewater thermal energy available immediately adjacent to the Linwood pool site which is easily sufficient to supply the estimated winter heating needs of approximately 800kW for the Linwood Pool facility, as well any future library building.

5.8       The wastewater flowing through the pressure sewer main adjacent to the site is consistently warm all year around, with an average annual temperature of about 18oC. This makes wastewater an excellent source of heating thermal energy and will allow heat pumps to operate with high energy efficiency and associated low electrical consumption costs.

5.9       Isolation of the pressure sewer main (Pressure Sewer 11B) can be done easily using existing valves located in pump station PS11. The dry weather wastewater flows from PS11 can be accommodated along the parallel pressure sewer line (Pressure Sewer 11A) meaning that take-off and return connections needed for the Linwood pool can be easily made into the network without disruptions to the wastewater network operation.

5.10    Adopting wastewater as a thermal energy source will allow the Linwood Pool to offer electricity savings over conventional air source heat pumps through increased heat pump efficiency.

5.11    Recovering heat from wastewater will capture and recycle a significant amount of thermal energy which would otherwise be discarded. This will make both the Linwood Facility and Christchurch City more energy efficient and more sustainable.

5.12    The detailed cost estimates, energy, financial and carbon savings are outlined in Attachment A. 

Third Party Funding 

5.13    There are opportunities for third party funding to contribute towards the wastewater heat recovery system. However indications are that these will not cover the full amount.

 

 


 

6.   Option 1 – Wastewater heat recovery system funded through reprioritisation of ‘Recreation and Sport Buildings & Plant R&R Programme’ FY21 (preferred)

Option Description

6.1       Reprioritising $1,078,000 of Capex from within ‘Recreation and Sport Buildings & Plant R&R Programme’ CPMS ID 9030 in FY21 to the Linwood pool allows the wastewater heat recovery system to be included as part of the Linwood Pool project.  

Significance

6.2       The level of significance of this option is low which is consistent with section 2 of this report.

6.3       Engagement requirements for this level of significance are consistent with section 2.

Impact on Mana Whenua

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

Community Views and Preferences

6.5       Community feedback has not been sort for this option.

6.6       Based on the operational nature of the decision it is considered that people are unlikely to be affected.

Alignment with Council Plans and Policies

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

Financial Implications

6.8       Revision of the Linwood Pool budget from $21,641,750 to $22,719,750 (an increase of $1,078,000).

6.9       Maintenance / Ongoing Costs – Operational costs reduced by $41,500 per annum (leading to a negligible rates saving).

6.10    Funding source – $1,078,000 from ‘Recreation and Sport Buildings & Plant R&R Programme’ CPMS ID 9030 in FY21.

Legal Implications

6.11    There is not a legal context, issue or implication relevant to this decision.

6.12    This report has not been reviewed and approved by the Legal Services Unit.

Risks and Mitigations

6.13    There is a risk associated with this decision that some individuals or groups within the community may not support the reallocation of renewal funding.

6.13.1 Residual risk rating: The residual rating of the risk after the below treatment is low.

6.13.2 Planned treatment is to ensure that deferred replacement and renewal items are effectively programmed into future years.

Implementation

6.14    Implementation dependencies - A decision needs to be made in early February 2019 to continue with the concept design of the Linwood Pool and avoid any redesign costs or significant delay to the programme.

6.15    Implementation timeframe – The wastewater heat recovery system would be included in the Linwood pool project and completed at the same time.

Option Summary - Advantages and Disadvantages

6.16    The advantages of this option include:

·   The electricity required to heat the pools is reduced by an estimated 33%, saving 290,000kWh per annum and associated carbon saving of 37 tonnes per annum.

·   The operational costs are reduced by an estimated $41,500 per annum.

·   Reprioritisation within the existing CAPEX programme does not require new funding through the Annual Plan process.

·   Allows the concept design to continue without delay to the programme.

6.17    The disadvantages of this option include:

·   The potential negative public perception of an increased Linwood Pool project budget.

·   The deferral of planned building renewals in FY21 will delay part of the RSU renewal programme.

·   It may be perceived that there is excess funding within the Recreation and Sport Buildings & Plant R&R Programme in FY21.


 

7.   Option 2 – Wastewater heat recovery system requests additional funding through the Annual Plan process.

Option Description

7.1       Additional funding for the wastewater heat recovery system is requested through the Annual Plan process.

Significance

7.2       The level of significance of this option is low which is consistent with section 2 of this report.

7.3       Engagement requirements for this level of significance are consistent with section 2.

Impact on Mana Whenua

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

Community Views and Preferences

7.5       Community feedback has not been sort for this option.

7.6       Based on the operational nature of the decision it is considered that people are unlikely to be affected.

Alignment with Council Plans and Policies

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

Financial Implications

7.8       Revision of the Linwood Pool budget from $21,641,750 to $22,719,750 (an increase of $1,078,000).

7.9       Maintenance / Ongoing Costs – Operational costs reduced by $41,500 per annum (leading to a negligible rates saving).

7.10    Funding source – $1,078,000 to be included as part of the Annual Plan process. This additional funding, partially offset by minor operating cost savings, will increase rates by c.0.01% in FY22.

Legal Implications

7.11    There is not a legal context, issue or implication relevant to this decision.

7.12    This report has not been reviewed and approved by the Legal Services Unit.

Risks and Mitigations

7.13    There is a risk associated with this decision that some individuals or groups within the community may not support and increase in project funding through the annual plan.

7.13.1 Residual risk rating: The residual rating of the risk after the below treatment is low.

7.13.2 Planned treatment is to effectively communicate through annual plan consultation.

Implementation

7.14    Implementation dependencies - A decision needs to be made in early February 2019 to continue with the concept design of the Linwood Pool and avoid any redesign costs or significant delay to the programme.

7.15    Implementation timeframe – The wastewater heat recovery system would be included in the Linwood pool project and completed at the same time.

Option Summary - Advantages and Disadvantages

7.16    The advantages of this option include:

·   The electricity required to heat the pools is reduced by an estimated 33%, saving 290,000kWh per annum and associated carbon saving of 37 tonnes per annum.

·   The operational costs are reduced by an estimated $41,500 per annum.

7.17    The disadvantages of this option include:

·   The potential negative public perception of an increased Linwood Pool project budget.

·   The potential negative public perception of a minor rates increase.

·   The decision on the inclusion of the wastewater heat recovery system would be after the completion of concept design so would incur redesign fees and/or significant delay to the programme.


 

8.   Option 3 - Reduce scope elements of the Linwood Pool project to include wastewater heat recovery system within the current project budget.

Option Description

8.1       The scope of the project is reduced to allow the inclusion of the wastewater heat recovery system within the current project budget.

Significance

8.2       The level of significance of this option is low which is consistent with section 2 of this report.

8.3       Engagement requirements for this level of significance are consistent with section 2.

Impact on Mana Whenua

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

Community Views and Preferences

8.5       The local community are specifically affected by this option due to their interest in the Linwood Pool project and desire to ensure that the new facility meets the needs of the local community. Through proceeding with Option 3, proposed spaces for the community will be compromised.  

8.6       Community views on the Linwood Pool project were gained through public consultation on site selection for the proposed facility.

8.7       Following development of initial sketches a community open day was held in December 2018 where feedback was sort on the proposed spaces to be included within this facility.

Alignment with Council Plans and Policies

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

Financial Implications

8.9       Cost of Implementation – Managed within existing project budget of $21,641,750.

8.10    Maintenance / Ongoing Costs - Operational costs reduced by $41,500 per annum (leading to a negligible rates saving)

8.11    Funding source – not applicable

Legal Implications

8.12    There is not a legal context, issue or implication relevant to this decision.

8.13    This report has not been reviewed and approved by the Legal Services Unit.

Risks and Mitigations

8.14    There is a risk associated with this decision that some individuals or groups within the community do not support the removal of scope. 

8.14.1 Residual risk rating: The residual rating of the risk after the below treatment is high.

8.14.2 Planned treatment is undertake community engagement prior to a concept being presented for approval.

Implementation

8.15    Implementation dependencies – An additional round of community engagement would be required before presenting the concept for approval.

8.16    Implementation timeframe – The wastewater heat recovery system would be included in the Linwood pool project and completed at the same time.

Option Summary - Advantages and Disadvantages

8.17    The advantages of this option include:

·   The electricity required to heat the pools is reduced by an estimated 33%, saving 290,000kWh per annum and associated carbon saving of 37 tonnes per annum.

·   The operational costs are reduced by an estimated $41,500 per annum.

8.18    The disadvantages of this option include:

·   Proposed spaces for the community would be compromised or removed completely.

·   An additional community engagement prior to the concept being presented for approval will incur significant delay to the programme.


 

9.   Option 4 - Continue with the project utilising air source heating.

Option Description

9.1       Continue with the project utilising air source heating.

Significance

9.2       The level of significance of this option is low which is consistent with section 2 of this report.

9.3       Engagement requirements for this level of significance are consistent with section 2.

Impact on Mana Whenua

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

Community Views and Preferences

9.5       Community feedback has not been sort for this option.

9.6       Based on the operational nature of the decision it is considered that people are unlikely to be affected.

Alignment with Council Plans and Policies

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

Financial Implications

9.8       Cost of Implementation – not applicable.

9.9       Maintenance / Ongoing Costs – not applicable.

9.10    Funding source – not applicable.

Legal Implications

9.11    There is not a legal context, issue or implication relevant to this decision.

9.12    This report has not been reviewed and approved by the Legal Services Unit.

Risks and Mitigations

9.13    There is a risk associated with this decision that some individuals or groups within the community do not support the decision not to include wastewater heat recovery system. 

9.13.1 Residual risk rating: The residual rating of the risk after the below treatment is low.

9.13.2 Planned treatment is to effectively communicate the decision making process and rational for the decision.

Implementation

9.14    Implementation dependencies - A decision needs to be made in early February 2019 to continue with the concept design of the Linwood Pool and avoid any redesign costs.

9.15    Implementation timeframe – not applicable.

Option Summary - Advantages and Disadvantages

9.16    The advantages of this option include:

·   There are no changes required to the programme timeline or funding of the project.

9.17    The disadvantages of this option include:

·   The potential negative public perception of a missed opportunity to improve resource efficiency and reduce carbon emissions.

 

 

Attachments

No.

Title

Page

a

Linwood Pool Wastewater Heat Recovery Summary 2019-01-28

124

b

Linwood Woolston Pool Wastewater Heat Recovery Feasibility Study 2018-11-07

126

 

 

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

Nigel Cox - Acting Head of Recreation & Sports

Lizzie Farthing - Recreation & Sports Planner

Approved By

Michael Down - Finance Business Partner

Mary Richardson - General Manager Citizen and Community

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

16.    Central City activation, events and attraction package

Reference:

19/11069

Presenter(s):

Carolyn Ingles - Head of Urban Regeneration, Design and Heritage

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is to outline a proposed approach to attracting more visitors to the central city and to recommend funding allocation in the draft 2019/2020 Annual Plan.

Origin of Report

1.2       This report is provided to fulfil Council resolution CNCL/2018/00300:

 ‘Request that staff in conjunction with ChristchurchNZ investigate options for attracting more visitors to the central city, including a central city winter package, and report to the Council in February 2019.’

1.3       The resolution followed discussion within a December 2018 report on establishing a central city activation fund of $250,000 to promote central city opportunities.  The suggestion was that the funding support an FTE and development and delivery of additional events and activation in the central city particularly over the winter months.  While such a role has commenced on an termporary basis, this report outlines a proposed ongoing activation, events and attraction package.

1.4       This report also responds to the Central City Action Plan ‘Light up the City’ actions: https://www.ccc.govt.nz/assets/Documents/Culture-Community/Central-City/Central-City-Action-Plan-booklet-WEB.pdf.

2.   Significance

2.1       The decisions to be made by the Council as a result of this report are of relatively low significance in relation to the Christchurch City Council’s Significance and Engagement Policy.

2.1.1   If the staff recommendations are adopted, the funds required to establish the winter package will be included in the draft 2019/2020 Annual Plan and consulted on as part of that process.  The substantive decision on whether or not to approve the funding will be considered and made before the Council adopts the Plan in June 2019.

 

3.   Staff Recommendations

That the Committee of the Whole:

1.         Agree in principle to the establishment of a winter package to support the Central City.

2.         Recommend to the Council that $280,000 funding to support the proposed winter package is added to the 2019/2020 draft Annual Plan, noting that the final decision to include funding will be considered before adoption of the draft and final 2019/2020 Annual Plan.

3.         Recommend that the Council delegates to the Head of Urban Design, Regeneration and Heritage and the Head of Recreation, Sports and Events – in conjunction with ChristchruchNZ - the decision to jointly approve the details of the winter package, noting that this will contain elements of:

a.         Extending the existing events programme and establishing an activation programme;

b.         Delivering a strategic marketing campaign, complemented by a local campaign; and

c.         Coordinating with retailers and hospitality to leverage visitation.

4.         Recommend that the Council note that the reporting and monitoring of the winter package will occur via reporting on the Central City Action Plan.

 

4.   Key Points

4.1       On 19 December 2018 Council considered a report relating to incentives to support the central city.  The Council sought advice from staff regarding a package to support visitation.  In particular, reference was made to establishing a central city activation fund of $250,000, with the purpose of using events and activation to promote retail, hospitality, residential and significant amenity and leisure opportunities in the Central City, particularly during the winter months of 2019 and 2020.

4.2       Increasing activity is a key focus of the Central City Action Plan, which notes that while the Central City is re-emerging as a focal point for people and activity, support will still be needed over the next 1-2 years in particular during winter.  The plan sets out several short-term actions to enable activation and support the evening economy.

4.3       We have reliable empirical evidence that activation events increase footfall and attendance in the CDB (via our pedestrian count data), which in turn leads to increased retail and hospitality spending (via ChristchurchNZ Marketview data sets), which in turn supports a sustainable economy and provides a vibrant experience for visitors and residents. 

4.4       The public sector can play a part in increasing visitation to the Central City, however to optimise visitation into spend, the retail and hospitality sector will need to engage with the programme.  For example, evening events during winter, without corresponding changes to opening hours, will have minimal benefit for retail businesses.  Likewise, we want to compliment and support the existing hospitality offering, not directly compete by over-providing temporary food trucks for example.     

4.5       The package set out in this report coordinates with and builds on what is already programmed and provides for additional support, ongoing funding for the currently established but temporary Central City Activator, funding to coordinate and curate activations, and a strategic and local marketing campaign.

4.6       The Council resolution requests an options report. There are limited options to increase visitation – advice from ChristchurchNZ and Christchurch City Council (CCC) officers indicates that a mix of events, activations, marketing and communications is required.  The proposal in this report was developed as a result of a workshop with ChristchurchNZ and CCC staff.  It is a joint proposal to Council.

4.7       There is no silver bullet to overcoming the perceptions and engagement of residents and visitors with the central city.  The package, while having the key elements set out in section 5.11, will need to be developed in ways that are innovative and agile.

4.8       The Council’s willingness to consider such a package is consistent with the leadership and commitment to the Central City and reinforces the direction, and support set out in the Central City Action Plan.

 

5.   Context/Background

Central City Action Plan

5.1       The Council approved the Central City Action Plan in November 2018. The action plan is intended to cover the 2018-2021 period – until the next Long Term Plan period commences.  It has five key action areas: Leadership, Amenity and Activation, Growth, People and Getting it done.  Included in the plan are actions related to central city activation and events. 

5.2       In December 2018, the Council requested a report on options for attracting visitors to the central city, including a winter package.  

5.3       This report sets out the recommended key elements of a Central City package.  There will be a degree of trialling and testing what works and what enables the best leverage with the Central City retail and hospitality sector.  Key components are identified below although the detail will be developed following funding approval.  

 

What is happening now

5.4       A trial project has already been established for a 6-month period using funding which is available in the 2018/19 financial year only.  This trial funds an ‘Activator’ within the Council Events Team, along with a very modest operational budget funding to support activations.  For the trial period the activator will work with ChristchurchNZ, the Central City Business Association, HospitalityNZ, the private sector and across the Council to create small scale activations and events.  The Activator role commenced on 4 February and will conclude on 30 June.

5.5       The trial project also enables the activations and events for the early part of the Winter 2019 to be set in place.  While the work for the initial months of FY20 can undergo some degree of planning, until Council approves the final 2019/2020 Annual Plan, that work cannot be confirmed.

5.6       There is a significant amount of activity already scheduled for Winter 2019 including a revamped Arts Festival, more comprehensive Kids Fest, opening of the Town Hall and Farmers Market.  The current events and festivals programme, at 31 January 2019, is set out in Attachment A. 

5.7       ChristchurchNZ have a winter/spring domestic campaign planned which will launch in May.

 

Winter Package proposal

5.8       The public sector can increase footfall into the central city, but conversion of footfall into retail and hospitality spend is in large part dependent on the degree to which retailers engage with and leverage the additional footfall.  We know from our events and pedestrian count monitoring that events and activations bring additional footfall.

5.9       Winter 2019 is likely to be a particular point of vulnerability for the central city, with the offering still being developed and the need to shift resident’s perceptions of the central city and their shopping behaviour, and perception of Christchurch amongst potential domestic visitors.  While winter 2020 may also be a vulnerable time, the proposal set out in this report is for the winter package to be front-loaded to winter 2019.

5.10    The timing of the establishment of this initiative means that for Winter 2019 the initiative would largely leverage off what is currently programmed, although innovative and bespoke opportunities would continue to be explored.  The proposal is to increase the frequency and variety of activity in the central city and additional marketing to spread the message to both domestic visitors and local residents that the Central City provides a unique and exciting leisure opportunity.  A recent article in the New Zealand Herald noted that Christchurch is ‘a place to stop, stay and soak up the vibe of a city on the rise, in every sense’.

5.11    While this is excellent positive attention now, it is important that this vibrancy continues.  The proposed package will effectively be a ‘Wintertimes’ programme and has three components:

5.11.1       Extending the existing events programme and activity within the Central City. Although there is a significant amount of activity already scheduled for Winter 2019, the programme needs to be extended to fill any gaps and augment events with street programmes and vacant space activations.  The overall quantum of this portion of the package is likely to be approximately $150,000. This would be achieved in two ways:

·     Curating smaller scale activity between the larger events, to ensure a consistent central city ‘buzz’.  This requires the ongoing employment of the trial Central City Activator to end June 2020.  It also requires a larger operational budget to support delivery. 

·     Adding to the existing Events calendars being managed by CCC.  Given the lead in time required for events, this is more likely to be possible for Winter 2020.  ChristchurchNZ and CCC staff are investigating the feasibility of an additional event(s) for the coming winter.

5.11.2       Delivering a strategic marketing campaign and supporting that campaign with aligned local messaging and associated collateral. The strategic marketing campaign would be the responsibility of ChristchurchNZ.  Council would be responsible for supporting the strategic campaign with a programme aimed at local residents – much like ChristchurchNZ developed the Explore campaign and Council developed Explore:Town.  This requires additional funding for ChristchurchNZ of $100,000 to their 2019/2020 budget and $30,000 within Council budgets for local messaging.

5.11.3       Working with retailers and hospitality to leverage the activation and marketing.  This is aligned with the Central City Activation role and will be developed in liaison with the Central City Business Association and HospitalityNZ Canterbury Branch.  It would be supported from within the dollar allocation indicated above.

5.12    As noted above, the detail of the programme will be developed in collaboration with the ChristchurchNZ and the private sector, with final approval delegated to the appropriate Heads Of units and budget allocations to ChristchurchNZ. 

Best for City

5.13    As part of implementing the Central City Action Plan, a best for city decision-making framework has been developed and is now being trialled.  The intention is that ideas that emerge to support the central city are evaluated using the framework and the results are provided as advice to the relevant decision-makers.

5.14    For the Winter Package proposal, the evaluation is set out in Table 1 below:

Table 1: Central City Proposed Winter Package evaluation

Extent to which the proposal:

( ü )

Comment: details, risk, mitigation possible / needed, trade-offs

 

Low

Med

High

Has strategic alignment:

 

 

 

 

Aligns with the Central City Action Plan (CCAP)

 

 

ü

Is an action in the CCAP

Aligns with strategic outcomes

 

                      

ü

Central City Action Plan is driven from a Council strategic priority.

 

 

 

 

 

Delivers/unlocks clear benefits:

 

          

 

 

Supports public / end user confidence in the central city as a place

 

 

ü

Reinforces Council’s commitment to the Central City and sends a strong message to the community and private sector of Council’s intention

Supports / stimulates investor confidence

 

ü

 

See comment above.

Closes existing viability/delivery gaps

 

 

ü

There is no current dedicated funding for activation. Wintertime has been identified as a point of vulnerability and this proposal addressed that.

Provides value for money / cost effective / doesn’t foreclose other or different positive outcomes

 

ü

 

The proposal includes delegations which will provide flexibility.

Has synergies with current prioritised projects/work

 

 

ü

Proposal builds on existing programme and fills in gaps.  Also requires leverage with the private sector.  See section 5.11.

 

 

 

 

 

Demonstrates delivery feasibility:

 

 

 

 

Can be delivered in a timeframe that will make a difference

 

ü

 

The existing trial period will enable some planning for Winter 2019 to occur.

Can be delivered within existing resources

ü

 

 

Requires additional funding

Complies with legislative/policy/regulatory requirements, with a low complexity of intervention

 

ü

 

 

 

6.      Financial Implications

6.1          The $280,000 funding is proposed to be allocated as follows:

·    $100,000 - strategic marketing campaign (ChristchurchNZ)

·    $30,000 – local marketing (CCC)

·    $80,000 – funding for activations and small scale events (CCC)

·    $70,000 – 1 FTE for 1 year (CCC, but working alongside ChristchurchNZ, CCBA, HospitalityNZ and other private sector interests).

 

Based on current calculations, the additional funding would add 0.06% to the rates increase proposed for 2019/2020.

 

6.2          The December 2018 report identified possible funding required of $250,000.  The difference between the figure quoted in that report and this is that there is an identified gap in funding to support local messaging targeted at residents, as set out in section 5.11.2.  An additional $30,000 has been included to support that component of the package.

 

6.3          While the funding proposal set out in this report will support the initial months of Winter 2020, there may be a need to include additional funding in the 2020/2021 Annual Plan.  It is intended that monitoring of the package will occur during 2019 and via the Central City Action Plan reporting, to ascertain if funding should be recommended for inclusion in 2020/2021.

7.      Legal implications

7.1          There are no legal implications arising from this report.

 

 

Attachments

No.

Title

Page

a

Central City Events Calendar

159

 

 

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

Carolyn Ingles - Head of Urban Regeneration, Design and Heritage

Approved By

Gill Robertson - Finance Business Partner

Nigel Cox - Acting Head of Recreation & Sports

Carolyn Ingles - Head of Urban Regeneration, Design and Heritage

Brendan Anstiss - General Manager Strategy and Transformation

  


Finance and Performance Committee of the Whole

07 February 2019

 

PDF Creator


 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

17.    Establishment of an Insurance Subcommittee

Reference:

19/64382

Presenter(s):

Carol Bellette – General Manager Finance and Performance

 

 

1.   Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole to establish an Insurance Subcommittee and adopt the Terms of Reference (Refer Attachment A).

2.   Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Establish an Insurance Subcommittee.

2.         Adopts the Terms of Reference for the Insurance Subcommittee (Attachment A of this report).

 

3.   Key Points

3.1       At its meeting on 6 December 2018 the Council resolved to discharge the Insurance Committee and noted that the Finance and Performance Committee of the Whole would establish an Insurance Subcommittee.

3.2       Under clause 32(3) of Schedule 7 of the Local Government Act 2002 the Finance and Performance Committee of the Whole has the ability to sub delegate any of its responsibilities, duties or powers to a subcommittee.

3.3       The proposed Terms of Reference for the Insurance Subcommittee are attached to this report as Attachment A. It is proposed that the chair, membership, responsibilities, powers and duties of the subcommittee remain the same as the previously disestablished Insurance Committee.

 

Attachments

No.

Title

Page

a

Insurance Subcommittee - Draft Terms of Reference

162

 

 

Signatories

Authors

Samantha Kelly - Committee and Hearings Advisor

Chris Gilbert - Special Counsel Commercial

Approved By

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

18.    Insurance Summary

Reference:

19/83065

Presenter(s):

Diane Brandish – Head of Financial Management

 

 

1.   Purpose and Origin of Report

Purpose of Report

1.1       The purpose of this report is for the Finance and Performance Committee of the Whole to be updated on the current position of the Council’s insurance programme.

Origin of Report

1.2       This report is being provided following a request from the Chair of the Finance and Performance Committee of the Whole.

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 the fact this is an update report.

2.1.2   As this is an update report, no community engagement and consultation is required.

 

3.   Staff Recommendations

That the Finance and Performance Committee of the Whole:

1.         Receive the information in this report.

 

4.   Key Points

4.1       Council has a comprehensive insurance portfolio in place for property and liability cover which is reviewed on a regular basis. This cover is explained below and details of existing policies are included in Attachment A to this report. All policies are renewed on 30 June.

4.2       Council officers through Marsh, Council’s brokers, continually assess the insurance market to ensure that Council has the best possible insurance cover. Over the past few years we have steadily increased the amount of information provided to insurers to allow them to understand our asset portfolio and associated risk better.

4.3       This work has meant that despite hardening market conditions Council has been able to retain terms and conditions that are more advantageous than might be available otherwise.

4.4       We investigate alternative sources of cover, for example parametric cover which has been considered twice, once in 2012 and again in August 2016. In both cases the staff recommendation was that we not proceed with this.

4.5       As part of the 30 June 2019 renewal process, Council staff are currently undertaking a risk modelling exercise to determine likely losses from various earthquake events for above ground insured assets. This will allow us to understand whether Council is purchasing an appropriate level of cover, and to target our insurance placements to ensure value for money.

4.6       This risk modelling exercise presents a good way to begin addressing questions around resilience analytics and risk finance for both above and below ground infrastructure. If it is embraced within a broader context around resilience analytics it will not just support the 2019 insurance renewal it will also augment risk literacy for the 2021 LTP process at the Council and provide a firm foundation for further analytics. 

 

5.   Context/Background

Above Ground Assets

5.1       Council currently has full replacement (including earthquake) cover in place over 1,392 above and below ground buildings collectively valued at $2,510 million. A further 10 above ground buildings valued at $110 million have cover for fire and other perils, excluding earthquake, in place. These buildings are covered for fire only as they are under 34 percent NBS and have unrepaired earthquake damage. The remaining 641 buildings which have a total value of $188 million but individual values of less than $2 million, remain self-insured.

5.2       As the graph below shows 89.8% of Council’s above ground asset value has cover for all perils, 0.3% is covered for non-natural disaster perils, and 9.9% is self-covered by Council.

 

5.3       The increased value of assets, reduced available capacity and hardening of pricing in the insurance market means that capacity is not available to the full value of $2,510 million. It has been necessary to place some cover on a “first loss” basis. This means that each asset will still be covered for its replacement value but the maximum that insurers will pay for the cover period is limited to the available capacity.

5.4       Assets are added to the relevant policy as repairs or rebuilds are completed or properties are purchased. Processes are in place where the project manager or property consultant provides the insurance team with details of the asset and value so that they can arrange for cover to be placed as required.

5.5       Council's properties are revalued on an annual basis to determine the likely reinstatement cost for each building. The last valuation was carried out by Quotable Value in June 2018 and the update for June 2019 is currently underway, being carried out by Bayleys Valuations Limited (Bayleys).

5.6       Bayleys were appointed in late 2018 following a Request for Proposal process. The valuation team has had a long relationship providing insurance and asset valuations for Council and other similar sized organisations.

5.7       Buildings such as libraries, pools, and heritage buildings are valued by a quantity surveyor to take into account the specialised nature of these assets. The requirement for a quantity surveyor to carry out these valuations was a key learning from the 2010/2011 earthquakes.

5.8       Before any revaluation begins the insured asset schedule is checked against Council's real estate records to ensure that all assets are included and that any assets disposed of are not valued and insured.

 

Below Ground Assets

5.9       Under the National Civil Defence Emergency Management Plan, the Crown will provide 60% of the cost of reinstating damaged horizontal infrastructure assets. This funding is only available if Council is able to show that it can meet a 40% share of these costs. Council currently relies on the strength of its balance sheet and the cover outlined below to meet this obligation.

5.10    Council’s underground infrastructure is partially covered by a panel of insurers led by Vero Insurance New Zealand Limited. This policy provides full replacement cover for the three waters underground infrastructure of the city. It excludes the Christchurch Waste Water Treatment Plant and the Three Waters pump stations as these are covered under Council’s above ground policies referred to above.

5.11    The current value of the infrastructure assets included under this policy is $7.2 billion, with $480 million of insurance cover available. The graph below shows that Crown funding and insurance cover available covers up to 66% of asset value, with 33% being self-covered by Council.

 

5.12    Parametric cover for these assets has been considered twice, once in 2012 and again in August 2016. This type of cover is rarely more economical than a traditional insurance product and is most attractive when the desired cover cannot be provided by traditional insurance methods.

5.13    The problem with a parametric cover is in precisely defining the area most likely to be affected and the level of ground acceleration that would trigger the claim. The Council could suffer significant damage as a result of another series of quakes but not be eligible for compensation as a result of wrongly defining the trigger points. In light of this staff have not pursued this option further.

 

Liability Cover

5.14    Council has a total of $50 million cover for Professional Indemnity (PI) available. This is comprised of a primary layer of $20 million with Berkshire Hathaway Specialty Insurance (BHSI), an excess layer of $25 million with QBE Insurance (Australia) Limited, and a $5m excess layer with Allianz Global Corporate and Specialty (Allianz). This policy has an unlimited retroactive date and includes cover for claims arising from Council performing its Building Act functions.

5.15    The Council’s Public Liability (PL) cover has also been placed with BHSI. This policy is in a single layer of $50 million for the cover year.

5.16    Although Council has moved cover away from Riskpool, it still has a relationship with them regarding the settlement of outstanding professional indemnity (PI) claims. Staff have calculated the value of these claims as approximately $1.5 million although many will be settled for less than the policy excess.

5.17    The majority of PI claims arise in Council’s Consenting and Compliance group. This group has a dedicated team who deal with these claims proactively alongside Council’s legal services unit, and many are settled at below the excess level.

 

Contract Works

5.18    Council now provides principal supplied contract works cover, which has the following advantages:

·    Greater control over policy terms and conditions.

·    Lower cost due to the Council's purchasing power and no contractors margin being added to the premium.

·    Only one insurer is involved in the event of a claim as the cover is placed with the same insurer who covers the building.

5.19    A number of contract works cover facilities have been put in place for minor works where the contract value is $5 million or less and the construction period is twelve months or less. These policies cover the following types of projects:

·    Earthquake repairs and new buildings for community facilities, heritage buildings, and social housing.

·    Non-earthquake related repair or rebuild projects for all buildings.

·    Infrastructure projects - civil structures.

5.20    Projects that are outside these parameters have cover placed on an individual project basis and policies are tailored to the specific needs.

 

Other policies

5.21    In addition to the above cover the Council has a number of other policies which are detailed in Attachment A to this report:

·    Fine arts

·    Motor vehicle

·    Marine hull

·    Corporate Travel

·    Personal Accident

·    Crime (Fidelity)

 

Resilience and Risk Finance

5.22    There is a lot of analytical work to be done in order to deliver on a ‘Resilient Christchurch’ vision. Risk financing – whether using insurance or alternative capital – is no panacea. Equally, a resilience strategy which does not work hand-in-glove with the Council’s insurance programme is flawed.  Given that the Council already purchases a significant amount of insurance cover, there are numerous potential questions. These include the following:

·    What is the Council’s risk appetite? Is it objectively informed, strategically aligned and quantitatively expressed? Is it coherently articulated, well understood and universally operationalised? 

·    How well does the Council’s insurance programme deliver against the Council’s strategic objectives? Is the Council buying the right cover, too much cover or too little? Are the right assets insured to the right limits against the right perils? Given the Council’s risk appetite, is the cover providing value? Might synergies flow from combining the programme with the risk management of excluded assets, such as the port, the airport, and Orion?

·    How capital efficient is the insurance programme relative to other potential sources of capital – such as debt, operating budget, alternative risk capital, Crown-sponsored aid? Might other solutions – such as a captive, a catastrophe bond, a resilience bond or contingent credit – be more capital efficient? If so, which ones and how ought they be combined? 

·    What is the interplay between Council’s insurance programme and its long-term capital programme? Are capital investments being informed by the price and availability of risk capital? Conversely, are the benefits of capital investments being realised in the risk finance programme? How do the answers to these questions vary over the life of the capital plan, the city’s debt finance and infrastructure? 

5.23    These questions are important – and not just with the current insurance policies in mind; they are fundamental to Council’s resilience. 

 

Attachments

No.

Title

Page

a

Insurance Policy Details

169

 

 

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

Adrian Seagar - Senior Insurance Specialist

Diane Brandish - Head of Financial Management

Mike Gillooly - Chief Resilience Officer

Approved By

Diane Brandish - Head of Financial Management

Carol Bellette - General Manager Finance and Commercial (CFO)

  


Finance and Performance Committee of the Whole

07 February 2019

 

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Finance and Performance Committee of the Whole

07 February 2019

 

 

19.  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 of the Whole

07 February 2019

 

 

 

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

20

Public Excluded Finance and Performance Committee Minutes - 5 December 2018

 

 

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

 

21

Overdue Trade Debtors (Greater than $ 20,000 and 90 days) 31 December 2018

s7(2)(a)

Protection of Privacy of Natural Persons

Publication of the name of the debtors will collection make more difficult

When legal proceedings have commenced

22

Liability Insurance Update

s7(2)(b)(ii), s7(2)(i)

Prejudice Commercial Position, Conduct Negotiations

Discussions with insurers must proceed on a confidential basis due to the commercial sensitivities involved.

When the Chief Executive determines there are no longer grounds under the Act for withholding the report

23

Capital Programme Watchlist and Major Cycleways Watchlist

s7(2)(b)(ii)

Prejudice Commercial Position

Release of the information may prejudice ongoing commerical negotiations

Information on individual projects may be released from public excluded when the project is complete and the Chief Executive has determined there is no longer any reason to withhold the information under the Act.

 

 



[1] After carry forwards