Finance and Performance Committee

17 April 2024

Finance and Performance Committee of the whole - Terms of Reference Ngā Ārahina Mahinga

Chair	Councillor MacDonald
Deputy Chair	Councillor Coker
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

Delegations

The Council delegates to the Finance and Performance Committee authority to oversee and make decisions on:

Capital Programme and operational expenditure

· Monitoring the delivery of the Council’s Capital Programme and associated operational expenditure, including inquiring into any material discrepancies from planned expenditure.

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

· Approving Capital Programme business and investment cases, and any associated operational expenditure, as agreed in the Council’s Long-Term Plan.

· Approving any capital or other carry forward requests and the use of operating surpluses as the case may be.

· Approving the procurement plans (where applicable), preferred supplier, and contracts for all capital expenditure where the value of the contract exceeds $15 Million (noting that the Committee may sub delegate authority for approval of the preferred supplier and /or contract to the Chief Executive provided the procurement plan strategy is followed).

· Approving the procurement plans (where applicable), preferred supplier, and contracts, for all operational expenditure where the value of the contract exceeds $10 Million (noting that the Committee may sub delegate authority for approval of the preferred supplier and/or contract to the Chief Executive provided the procurement plan strategy is followed).

Non-financial performance

· Reviewing the delivery of services under s17A.

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

· Exercising all of the Council's powers under section 17A of the Local Government Act 2002, relating to service delivery reviews and decisions not to undertake a review.

Council Controlled Organisations

· Monitoring the financial and non-financial performance of the Council and Council Controlled Organisations.

· Making governance decisions related to Council Controlled Organisations under sections 65 to 72 of the Local Government Act 2002.

· Exercising 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 –

o (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; and

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

Development Contributions

· Exercising all of the Council's powers in relation to development contributions, other than those delegated to the Chief Executive and Council officers as set out in the Council's Delegations Register.

Property

· Purchasing or disposing 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.

Loans and debt write-offs

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

· Approving amendments to loans, in accordance with the Council’s Long-Term Plan.

Insurance

· All 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 (Sub-delegated to the Insurance Subcommittee as per the Subcommittees Terms of Reference)

Annual Plan and Long Term Plan

· Provides oversight and monitors development of the Long Term Plan (LTP) and Annual Plan.

· Approves the appointment of the Chairperson and Deputy Chairperson of the External Advisory Group for the LTP 2021-31.

Submissions

· The Council delegates to the Committee authority:

· To consider and approve draft submissions on behalf of the Council on topics within its terms of reference. Where the timing of a consultation does not allow for consideration of a draft submission by the Council or relevant Committee, that the draft submission can be considered and approved on behalf of the Council.

Limitations

· The general delegations to this Committee exclude any specific decision-making powers that are delegated to a Community Board, another Committee of Council or Joint Committee. Delegations to staff are set out in the delegations register.

· The Council retains the authority to adopt policies, strategies and bylaws.

The following matters are prohibited from being subdelegated in accordance with LGA 2002 Schedule 7 Clause 32(1) :

· the power to make a rate; or

· the power to make a bylaw; or

· the power to borrow money, or purchase or dispose of assets, other than in accordance with the long-term plan; or

· the power to adopt a long-term plan, annual plan, or annual report; or

· the power to appoint a chief executive; or

· the power to adopt policies required to be adopted and consulted on under this Act in association with the long-term plan or developed for the purpose of the local governance statement; or

· the power to adopt a remuneration and employment policy.

Chairperson may refer urgent matters to the Council

As may be necessary from time to time, the Committee Chairperson is authorised to refer urgent matters to the Council for decision, where this Committee would ordinarily have considered the matter. In order to exercise this authority:

· The Committee Advisor must inform the Chairperson in writing the reasons why the referral is necessary

· The Chairperson must then respond to the Committee Advisor in writing with their decision.

· If the Chairperson agrees to refer the report to the Council, the Council may then assume decision making authority for that specific report.

Urgent matters referred from the Council

As may be necessary from time to time, the Mayor is authorised to refer urgent matters to this Committee for decision, where the Council would ordinarily have considered the matter, except for those matters listed in the limitations above.

In order to exercise this authority:

· The Council Secretary must inform the Mayor and Chief Executive in writing the reasons why the referral is necessary

· The Mayor and Chief Executive must then respond to the Council Secretary in writing with their decision.

If the Mayor and Chief Executive agrees to refer the report to the Committee, the Committee may then assume decision-making authority for that specific report.

Finance and Performance Committee

17 April 2024

Unconfirmed

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Finance and Performance Committee

Open Minutes

Date: Wednesday 27 March 2024

Time: 9.30 am

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

Present

Chairperson

Deputy Chairperson

Members

Councillor Sam MacDonald

Councillor Melanie Coker

Mayor Phil Mauger

Deputy Mayor Pauline Cotter

Councillor Kelly Barber

Councillor Celeste Donovan

Councillor Tyrone Fields

Councillor James Gough – via audio/visual link

Councillor Tyla Harrison-Hunt

Councillor Victoria Henstock

Councillor Yani Johanson

Councillor Aaron Keown

Councillor Jake McLellan

Councillor Andrei Moore

Councillor Mark Peters

Councillor Tim Scandrett

Councillor Sara Templeton

Principal Advisor

Bede Carran

General Manager - Resources / CFO

Tel: 941 8999

David Corlett

Democratic Services Advisor

941 5421

david.corlett@ccc.govt.nz

www.ccc.govt.nz

Part A Matters Requiring a Council Decision

Part B Reports for Information

Part C Decisions Under Delegation

Karakia Tīmatanga: Given by The Mayor, Deputy Mayor and all Councillors.

The agenda was dealt with in the following order.

1. Apologies Ngā Whakapāha

Part C

Committee Resolved FPCO/2024/00021

That the apologies received from Councillors Gough and MacDonald for an early departure be accepted.

Councillor MacDonald/Councillor McLellan Carried

2. Declarations of Interest Ngā Whakapuaki Aronga

Part B

Councillors Henstock and McLellan declared an interest in Item 11 - ChristchurchNZ Holdings Ltd – Quarter 2 performance report to 31 December 2023.

Councillors Barber and Scandrett declared an interest in Item 12 - Venues Ōtautahi – Half year report for the six months ended 31 December 2023.

Councillors Gough, MacDonald, and McLellan (Civic Building Ltd) and Councillor Fields (Rod Donald Banks Peninsula Trust Ltd) declared an interest in Item 13 - Council-controlled organisations - Half year reports for the six months ended 31 December 2023.

Deputy Mayor Cotter and Councillor Peters declared an interest in Public Excluded Item 17.

3. Confirmation of Previous Minutes Te Whakaāe o te hui o mua

Part C

Committee Resolved FPCO/2024/00022

That the minutes of the Finance and Performance Committee meeting held on Wednesday, 28 February 2024 be confirmed.

Councillor MacDonald/Councillor Scandrett Carried

4. Public Forum Te Huinga Whānui

Part B

There were no public forum presentations.

5. Deputations by Appointment Ngā Huinga Whakaritenga

Part B

There were no deputations by appointment.

6. Presentation of Petitions Ngā Pākikitanga

Part B

There was no presentation of petitions.

7. Council submission on Government Policy Statement on land transport 2024

Officer Recommendations Ngā Tūtohu

That the Finance and Performance Committee:

1. Approves lodging the draft submission (Attachment A) on the Government Policy Statement on land transport 2024 to Te Manatū Waka - Ministry of Transport.

2. Delegates authority to [insert named Councillors] to approve any further changes to the draft Council submission on the Draft Government Policy Statement on Land Transport 2024.

Committee Resolved FPCO/2024/00023

2. Delegates authority to the Mayor, Deputy Mayor and Councillor Templeton to approve any further changes to the draft Council submission on the Draft Government Policy Statement on Land Transport 2024.

Mayor/Deputy Mayor Carried

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

8. Key Organisational Performance Results - February 2024

Committee Resolved FPCO/2024/00024

Officer Recommendations accepted without change

Part C

That the Finance and Performance Committee:

1. Receive the information in the Key Organisational Performance Results – February 2024 report.

Mayor/Councillor Coker Carried

9. Financial Performance Report - February 2024

Committee Resolved FPCO/2024/00025

Officer Recommendations accepted without change

Part C

That the Finance and Performance Committee:

1. Receive the information in the Financial Performance Report for February 2024.

Councillor Fields/Councillor Harrison-Hunt Carried

Councillor Coker assumed the Chair during consideration of Item 10.

Councillor MacDonald left the meeting at 10.26am during consideration of Item 10 and did not return.

Councillor Barber left the meeting at 10.28am and returned at 10.32am during consideration of Item 10.

Councillor Gough left the meeting at 10.30am during consideration of Item 10 and did not return.

10. Capital Programme Performance Report February 2024

Committee Resolved FPCO/2024/00026

Officer Recommendations accepted without change

Part C

That the Finance and Performance Committee:

1. Receive the information in the Capital Programme Performance Report February 2024.

Mayor/Deputy Mayor Carried

The Mayor left the meeting at 10.49am and returned at 10.57am during consideration of Item 11.

The Mayor left the meeting at 11.01am and returned at 11.04am during consideration of Item 11.

Councillors Henstock and McLellan declared an interest in Item 11 – ChristchurchNZ Holdings Ltd – Quarter 2 performance report to 31 December 2023 and did not participate in the vote or debate.

11. ChristchurchNZ Holdings Ltd - Quarter 2 performance report to 31 December 2023

Committee Resolved FPCO/2024/00027

Officer Recommendations accepted without change

Part C

That the Finance and Performance Committee:

1. Receives ChristchurchNZ Holdings Ltd’s Quarter 2/Half Year Performance Report for the period ending 31 December 2023.

Deputy Mayor/Councillor Barber Carried

Attachments

a ChristchurchNZ Holdings Ltd - Presentation to Council

The meeting adjourned at 11.20am and reconvened at 11.40am. Councillor Henstock was not present at this time.

Councillors Barber and Scandrett declared an interest in Item 12 – Venues Ōtautahi – Half year report for the six months ended 31 December 2023 and did not participate in the vote or debate.

12. Venues Ōtautahi - Half year report for the six months ended 31 December 2023

Committee Resolved FPCO/2024/00028

Officer Recommendations accepted without change

Part C

That the Finance and Performance Committee:

1. Receives the information in the Venues Ōtautahi Half Year Report for 2023/24.

Mayor/Councillor Harrison-Hunt Carried

Councillor Henstock returned to the meeting at 11.46am during consideration of Item 13.

Councillor McLellan (Civic Building Ltd) and Councillor Fields (Rod Donald Banks Peninsula Trust Ltd) declared an interest in Item 13 - Council-controlled organisations - Half year reports for the six months ended 31 December 2023 and did not participate in the vote or debate on the organisation they had an interest.

13. Council-controlled organisations - Half year reports for the six months ended 31 December 2023

Committee Resolved FPCO/2024/00029

Officer Recommendations accepted without change

Part C

That the Finance and Performance Committee:

1. Receives the half year reports for the period 1 July-31 December 2023 for the following Council-controlled organisations:

· Civic Building Ltd;

· Local Government Funding Agency;

· Rod Donald Banks Peninsula Trust;

· Te Kaha Project Delivery Ltd; and

2. Receives the Rod Donald Banks Peninsula Trust’s modified Statement of Intent for 2023/24.

Mayor/Councillor Scandrett Carried

14. Resolution to Exclude the Public Te whakataunga kaupare hunga tūmatanui

Committee Resolved FPCO/2024/00030

Part C

That at 11.47am the resolution to exclude the public set out on pages 231 to 232 of the agenda be adopted.

Councillor Coker/Deputy Mayor Carried

The public were re-admitted to the meeting at 12.22pm.

Karakia Whakamutunga: Given by The Mayor, Deputy Mayor and all Councillors

Meeting concluded at 12.23pm.

CONFIRMED THIS 17^TH DAY OF APRIL 2024

Councillor Sam MacDonald

Chairperson

Finance and Performance Committee

17 April 2024

7. Key Organisational Performance Results - March 2024
Reference Te Tohutoro:	24/442860
Responsible Officer(s) Te Pou Matua:	Peter Ryan, Head of Corporate Planning & Performance
Accountable ELT Member Pouwhakarae:	Lynn McClelland, General Manager Corporate Services

1. Purpose and Origin of the Report Te Pūtake Pūrongo

1.1 To provide Council with an overview of key service, project, and budget performance in the delivery of the 2021-31 Long Term Plan (and Annual Plan 2023/24).

2. Officer Recommendations Ngā Tūtohu

That the Finance and Performance Committee:

1. Receive the information in the Key Organisational Performance Results - March 2024 Report.

3. Background/Context Te Horopaki

3.1 This is a long-standing report focused on a suite of the ‘vital few’ organisational performance targets. It is a key component of the Performance Framework.

4. Considerations Ngā Whai Whakaaro

4.1 The key organisational performance targets include:

· Service delivery (levels of service)

· Capital projects (both planning and delivery)

· Finance (opex and capex)

4.2 A screenshot of a document

Description automatically generated Organisational performance forecasts, as at March 2024, for year three of the LTP 2021-31 (financial year to June 2024).

4.3 Community level of service delivery is forecast at 83.1%, against ELT’s target of 85% - no change from February forecast.

4.4 Key project milestone delivery is forecast at 96%, showing significant improvement from February, now forecast to meet the ELT target of 85%.

4.5 Non-Key project delivery sees a small improvement with a forecast of 83% - remains just below ELTs target of 85%. For detailed project-specific information refer to the Capital Programme Performance Report.

4.6 Capital planning shows funding programme budgets allocated for FY2025 by 1^st March 2024 at 93%, achieving ELTs target. Budget drawdowns for FY2026 and 2027 by 1^st May 2024 remains unchanged at 84% (stable since December 2023). However there is time remaining for the FY2026 and 2027 drawdowns target to be met by 1 May.

4.7 Operational budget is forecasting a surplus of $8.9m (after carry-forwards). For detailed information refer to the Financial Performance Report.

4.8 Delivery of the overall approved capital programme budget remains forecast at -4.5% (on track against a target of between 0% and -10%), remaining consistent since January. More information is available in the Capital Programme Performance Report.

5. Service Delivery

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Description automatically generated ELT Goal: Deliver 85% Community Levels of Service to target.

5.1 Community levels of service (LOS) is forecast at 83.1% delivery against the performance target of 85%, no change from February forecast.

5.2 Service delivery forecasts range from 33.3% to 100% achievement across activities. In summary, key forecast LOS exceptions for the March period include:

5.2.1 Transport & Waste Management activities have thirteen exceptions related to road and footpath condition, resurfacing, including resident satisfaction, deaths or serious injury crashes, and transport mode-share.

5.2.2 Three Waters activities have nine exceptions related to water supply compliance, wastewater and water supply reliability, responsiveness to faults and call outs, including resident satisfaction, and water loss and average water consumption.

5.2.3 Building Consenting activity has three exceptions related to building consents and code of compliance certificates processing timeframes, and building inspections.

5.2.4 Planning & Consents activity has two exceptions related to processing resource management applications within statutory timeframes.

5.2.5 Regulatory Compliance and Licencing activity has three exceptions related to response to inappropriate noise levels, food control plan verification visits, and investigation of dangerous building reports.

5.2.6 Citizens and Community activities have four exceptions: Citizen & Customer Services (2); Parks (2), which mostly relate to the latest annual Resident Satisfaction Survey results.

5.2.7 Corporate Planning & Performance service has one exception related to the implementation of the Long-term Plan programme.

5.2.8 Communications & Engagement has one exception related to providing advice and support.

5.3 Forecast actuals, comments, and remedial actions from managers for these LOS exceptions are available in Attachment A.

5.4 The scatter diagram below is an overview of the performance of the top-ten activities (in terms of budget size).

· The vertical y-axis shows service delivery (LOS) performance.

· A diagram of a diagram

Description automatically generated with medium confidence The horizontal x-axis shows budget over/underspend.

Capital Projects - Delivery and Planning

ELT Goal: Deliver 85% Key capital projects to ‘delivery complete’ milestones.

ELT Goal: Deliver 85% non-Key capital projects to ‘delivery complete’ milestones.

5.5 Key project milestone delivery is forecast at 96% delivery, (23 out of 24 projects, previously 20 out of 24 projects), a significant improvement of 13% from February, and moving above ELT’s target of 85%.

5.6 A screenshot of a computer

Description automatically generated Non-Key project milestone delivery is forecast at 83% delivery (against the target of 85%), an improvement (3%) from February.

5.7 For further information and underlying project delivery detail, refer to the detailed Capital Programme Performance Report.

5.8 Below is a forward view of capital delivery performance (financial) for the first three years of the LTP 2021-31, with an overview of capital delivery in preceding years against plan. This view takes into account a revised year-end budget delivery figure for 2022/23, and the adopted capital programme from the Annual Plan 2023/24 (adopted by Council 27 June 2023) – noting there has been an increase in the overall FY24 capex budget since the August 2023 report which relates to late FY23 financial adjustments on Te Kaha, and a budget increase within the Parks programme.

5.9 The view below now also includes future years planned expenditure for 2024/25, 2025/26 and 2026/27, as per the adopted draft Long-term Plan 2024-34 capital programme.

5.10 The extended black line is the full planned delivery budget including spend for Te Kaha.

5.11 The extended blue line shows the full Council planned delivery budget (excluding spend for Te Kaha, and before any confirmed carry-forwards).

5.12 The extended blue line (Council planned delivery budget, excluding spend for Te Kaha) shows a considerable lift in Council planned delivery (15% to 36%):

· from a consistent $486m to $492m planned budget for the three years 2021-24,

· A graph of a number of goods

Description automatically generated with medium confidence to between $566m to $664m planned budget for the future three years (2024-27).

5.13 It is accepted these future planned delivery budgets for capital meet Council’s expectations as being both deliverable and affordable.

5.14 Looking at current forecast performance for 2023/24 (year three of the LTP 2021) the revised total programme budget set for CCC to deliver is $492m (blue line). To the end March 2024 the total forecast capital delivery has remained stable at $470m (green line), which equates to 95.5% forecast delivery.

5.15 This forecast delivery value is an increase from the previous year forecasts (2022/23) of between $390m to $405m (year-end actual $452m), includes both core and externally funded works, but excludes Te Kaha. (Please note that Parakiore was formerly excluded along with Te Kaha but has now been included in core capital calculations.)

5.16 Council delivery for 2022/23 and forecast delivery for 2023/24 show a distinctive lift from that seen the previous four years. This higher level of delivery (approx. $450m per annum) is informing the development of the draft LTP 2024-34. However, delivery currently programmed into the draft LTP for 2024/25 to 2026/27 shows a very significant increase over historical delivery patterns.

5.17 The ELT performance goal for capital delivery is based on all delivery CCC is accountable for (excluding Te Kaha), regardless of funding source.

5.18 Figures align with the Financial and Capital Programme Performance reports.

ELT Goal: Ensure capital planning for FY25 funding programme budgets allocated,
90% by 1 March 2024.

ELT Goal: Ensure capital planning for FY26 & FY27 funding programme budgets drawn down, 90% by 1 May 2024.

5.19 Capital planning targets are intended to monitor the draw-down and allocation of future capital funding programme budgets. This helps the business plan and prepare for future capital project delivery, to effectively implement the LTP and subsequent Annual Plans.

5.20 Capital planning performance shows a small improvement for March, with funding programme budgets allocated for FY2025 by 1^st March 2024 reported at 93%. This has met the ELTs performance priority target. Budget drawdowns for FY2026 and 2027 by 1^st May 2024 is reported at 84%, remaining consistent since December 2023, below ELTs target of 90% for now. It is not unusual for forecasts to be below target at this time of the cycle. Ongoing collaboration between PMO and service units is expected to see this ELT goal being met for May, as has been in the case in previous years.

6. Finance

6.1 The organisation reports a forecast operational surplus of $8.9m (after carry-forwards). For underpinning information refer to the Financial Performance Report.

6.2 Overall capital programme budget expenditure forecast is at -4.5% (rounded). This is remains stable since January and remains on track to meet ELTs target (between 0% to -10%). More detailed information is available in the Capital Programme Performance Report.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	LOS Exceptions Commentary	24/567013	23

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Authors

Amber Tait - Performance Analyst

Boyd Kedzlie - Senior Corporate Planning & Performance Analyst

Approved By

Peter Ryan - Head of Corporate Planning & Performance

Lynn McClelland - General Manager Corporate Services

Finance and Performance Committee

17 April 2024

8. Financial Performance Report - March 2024
Reference Te Tohutoro:	24/498424
Responsible Officer(s) Te Pou Matua:	Russell Holden, Head of Finance
Accountable ELT Member Pouwhakarae:	Bede Carran, General Manager Finance, Risk & Performance / Chief Financial Officer

1. Purpose and Origin of the Report Te Pūtake Pūrongo

1.1 The purpose of this report is for the Finance and Performance Committee to be updated on Council's financial performance to March 2024 including the current year forecast, and to receive current treasury, rates, general debt and insurance claim information.

1.2 This is a regular monthly report that goes to the Committee.

2. Officer Recommendations Ngā Tūtohu

That the Finance and Performance Committee:

1. Receive the information in the Financial Performance Report - March 2024 Report.

2. Note that staff will prepare a report to Council on the treatment and application of the subvention payment received.

3. Brief Summary

3.1 The year-to-date operational surplus of $11.0m is $24.7m greater than budgeted because of higher subvention receipts, reduced personnel costs due to staff vacancies, improved waste management revenues and decreased landfill costs, higher rates income, and improved recreation and sports revenues due to higher participation. A surplus of $8.9 million is forecast for year-end, after accounting for likely proposed carry forwards.

3.2 The total capital programme before signalled carry forwards is forecast to be under spent by $41.8 million. This comprises a forecast under spend of $22.0 million on the core/external funded programme and a forecast under spend of $19.7 million on Te Kaha.

3.3 All treasury risk positions are within policy limits.

4. Operating Forecast

4.1 The $8.9 million forecast year end surplus after carry-forwards is an improvement of $8.5 million from that reported last month. The material improvement is largely due to higher subvention receipts of $31.8 million provided by Council controlled organisations compared to $24.4 million budgeted. It is proposed that the application of the additional $7.4 million is reported to Council, with options included, for a decision to be made.

4.2 The current forecast surplus before carry-forwards is $14.7 million, driven by; rates income, pool revenues, savings in personnel costs, improved waste management operations, and higher subvention receipts, partially offset by reductions in staff capitalisation on capital projects, higher interest costs and additional three waters operational and maintenance costs.

4.3 The forecast is updated monthly and alters as new information and events come to light.

4.4 Expenditure carry-forward requests signalled at this point are:

4.4.1 Water Reform $3.6 million – The water reform project is anticipated to receive the full revenue entitlement under the works agreement by the end of the current financial year, those revenues are required to cover any water reform expenditure out to the end of FY-25, any unspent funds must be returned to the Government.

4.4.2 Port Hills red zone funding $0.8m – remaining unspent budget.

4.4.3 Closed Landfill Aftercare costs $0.75m –unspent waste management landfill aftercare budget.

4.4.4 EQ repair programme $0.7m –remaining EQ repair programme budgets for the Pages Road demolition, Yaldhurst Memorial Hall repair, Opawa Childrens Library and Upper Riccarton War Memorial Library.

5. Operational Expenditure and Revenue

5.1 This covers day to day spend on staffing, operations and maintenance, and revenues to fund the operational spend.

5.2 Operational revenue exceeds expenditure as it includes rates revenue for capital renewals and debt repayment. This ‘capital’ revenue is referred to below as ‘Funds not available for Opex’ and is removed to show the year to date and forecast operational surplus or deficit.

	Year to Date Results			Forecast Year End Results			After Carry Forwards
$m	Actual	Budget	Var	Forecast	Budget	Var	Carry Fwd	Var
Revenues	(747.5)	(731.9)	15.6	(1,011.4)	(994.1)	17.3	(0.2)	17.5
Expenditure	557.9	569.1	11.2	763.5	760.8	(2.7)	6.0	(8.7)
Funds not available for Opex	178.6	176.4	(2.1)	233.2	233.3	0.1	-	0.1
Operating (Surplus)/Deficit	(11.0)	13.6	24.7	(14.7)	-	14.7	5.8	8.9

5.3 Brief summaries of revenue and expenditure variances are highlighted below.

5.4 Revenues are $15.6 million ahead of budget year to date and are forecast to be $17.5 million higher at year end. Key drivers of actual and forecast variances to budget include:

Variance	YTD	Forecast (after c/f)
Subvention receipts from Council controlled organisations	7.4m	7.4m
Waste operations (primarily Burwood landfill & Ecocentral rebate)	4.2m	5.1m
Consenting revenues (reducing consents backlogs)	2.1m	2.0m
Recreation & Sports Centres increased participation	2.1m	1.6m
Rating base growth	1.0m	1.2m
Rates penalties	2.0m	1.2m
Rates valuation objections (prior year)	(0.3m)	(0.3m)
Transwaste dividends	(0.5m)	(0.6m)
Transport revenues (NZTA Opex Subsidy)	(1.9m)	-

5.5 Expenditure is $11.2 million lower than budget year to date but forecast to be $8.7 million over budget at year end. The reason for the forecast deterioration in the last quarter is that Council expenditure is not completely phased across all expenditure lines, and so when the budgets are prepared, the expenditure is spread evenly across the 12 months. Some operational expenditure such as Plan Change 14 (PC 14) and operational expenditure funded from Better Off Funding is more heavily weighted towards the end of the financial year. The year-to-date variance is primarily driven by lower personnel costs primarily driven by higher than expected staff vacancies.

Key drivers of actual and forecast variances to budget include:

Variance	YTD	Forecast (after c/f)
Staff Costs (Units carrying vacancies planned to be filled from start of the year)	7.3m	7.1m
Grant payments (delays in projects and budget phasing variances)	1.0m	0.7m
Timing of Parks operating & maintenance costs	1.1m	-
Timing of Community Support operating & maintenance costs	1.3m	-
Transport operating and maintenance Costs (timing of works being undertaken)	1.8m	-
Professional advice expenditure (all units)	2.5m	(1.4m)
Waste operating costs (lower recycling processing fees, lower residual waste disposal fees and lower organics processing costs)	1.5m	(1.4m)
Consenting units operating & professional expenditure acquiring additional resource to clear backlog.	(0.2m)	(2.8m)
Three Waters maintenance & operating costs (additional reactive maintenance)	(2.7m)	(2.6m)
Digital capitalisation budget allocation	(2.9m)	(3.4m)
Digital P/O receipting delays resulting in FY-23 costs in FY-24, & increases in software renewal costs greater than allowed in the budget.	(2.6m)	(3.0m)
Total	8.1m	(6.8m)

5.6 In the 23/24 Annual Plan process, a change in structure had an unintended consequence of additional Digital costs being incorrectly capitalised in the budget and therefore not rated for. This has been corrected in the LTP, however it does leave a funding gap in the current year.

5.7 Funds not available for opex items included in this category contributing to the variance are Housing and Dogs (both non-rates funded), Capital Endowment funded projects, and Capital grants (borrowed).

5.8 Details of net cost by Activity are shown in Attachment A.

6. Capital Expenditure and Revenue

6.1 This section covers the capital programme spend and funding relating to it.

	Year to Date Results			Forecast Year End Results			After Carry Forwards
$m	Actual	Budget	Var	Forecast	Budget	Var	Carry Fwd	Var
Core Programme	289.3	338.6	49.3	442.1	467.0	24.9	8.6	16.3
External Funded Programme	33.9	20.2	(13.7)	44.5	25.0	(19.5)	(18.3)	(1.2)
Less unidentified Carry Forwards	0.0	0.0	0.0	(16.7)	0.0	16.7	31.6	(14.9)
Core/External Funded Programme	323.2	358.8	35.6	470.0	492.0	22.0	21.8	0.2
Te Kaha	141.1	157.1	16.0	204.4	224.2	19.7	19.7	-
Total Capital Programme	464.4	515.9	51.5	674.4	716.2	41.8	41.6	0.2
Revenues and Funding	(235.3)	(212.4)	22.9	(301.8)	(312.9)	(11.1)	(15.1)	4.0
Borrowing required	229.1	303.6	74.5	372.6	403.3	30.7	26.5	4.2

Capital Expenditure

6.2 Gross capital expenditure of $464.4 million has been incurred against a year-to-date budget of $515.9 million.

6.3 Overall, total capital expenditure of $674.4 million is forecast (based on the PMO forecast of $470 million for CCC Capital-Core/External Funded) to be spent against the annual budget of $716.2 million. Of the $41.8 million variance, the majority is forecast to be carried forward at year end.

6.4 For further information on capital expenditure, please refer to the Capital Programme Performance Report contained in this agenda.

Capital Revenues and Funding

6.5 Capital revenues and funding are a net $22.9 million higher than budget year to date, due to having received higher development contribution revenues and higher MCR capital revenues.

6.6 Capital revenues and funding are forecast to be $11.1 million lower before carry-forwards comprising delays in NZTA capital subsidies, the revenue not recovered in the current financial year is expected to be received in FY-25. The lower revenue is partially offset by higher development contribution receipts.

7. Special Funds

7.1 The annual movements and balance of the Housing Account and Capital Endowment Fund are shown in Attachment A.

7.2 The balance of funds available for allocation from the Capital Endowment Fund at 31 March 2024 was $1,475,977.

8. Treasury

Policy Compliance

8.1 All Treasury risks are within Policy limits, with no breaches projected over the coming year:

Risk Area	Compliance	*Plain-language meaning*
Liquidity Risk	Yes	(cash availability)
Funding Risk	Yes	(spread of debt maturities)
Interest Rate Risk	Yes	(managing interest costs)
Counterparty Credit Risk	Yes	(not all eggs in one basket)

Borrowing & Advances to Related Parties

8.2 Council’s actual and forecast borrowing and Advances are shown below ($ million):

8.3 Advances are primarily to Christchurch City Holdings Ltd (currently $641.2 million).

8.4 Net Debt by Jun-24 is estimated to be $315.9 million higher than at Jun-23, driven by capital expenditure (particularly Te Kaha).

Funding & Interest Rates

8.5 Council’s projected funding requirements, per financial year, are shown below. These are split between existing debt maturities (green) and expected new borrowing requirements (grey).

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8.6 Council’s interest rate risk is managed to reduce the volatility of interest costs from year to year. Most existing Council debt has been fixed for at least the next three years, which will limit the impact of current higher interest rates on Council’s future borrowing costs.

Average for 2022/23 was 4.9%; pre-Covid, in 2018/19, it was 5.2%.

9. Rates Debt

9.1 Rates debt decreased $2.1 million this quarter, as shown in the table below.

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9.2 The graph below shows 90+ days rates debt as a percentage of the annual rates strike that year, with a three month moving average to smooth the quarterly cycle. This indicates that rate arrears are in hand.

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9.3 As at 31 March 2024, there are 55 individual properties with arrears greater than $20,000 (and where at least some of those arrears are older than 90 days). Total arrears on those properties is $2.2 million.

10. General Debt

10.1 The increase in March 2024 current debt is due to a Rau Paenga Limited (formerly Ōtākaro) invoice for subsidies revenue of $9,065,646, due on April 20^th.

(000s)	Jul-23	Aug-23	Sep-23	Oct-23	Nov-23	Dec-23	Jan-24	Feb-24	Mar-24
CURRENT	7,960.8	7,594.6	39,947.5	6,694.8	10,589.2	4,023.9	(1,184.7)	5,883.5	14,586.8
31 + DAYS	947.9	1,053.9	(5,022.2)	1,363.0	900.6	1,457.7	889.6	784.2	789.6
62 + DAYS	398.8	285.5	162.3	439.0	189.3	331.7	885.5	281.7	234.2
92 + DAYS	116.9	164.1	147.1	127.4	351.3	125.7	338.0	105.0	191.5
122 + DAYS	80.5	78.1	122.9	80.3	(3.3)	325.6	58.8	116.0	62.2
183 + DAYS	599.8	605.6	638.7	680.6	436.1	624.3	821.9	781.9	867.5
TOTAL	10,104.8	9,781.8	35,947.8	9,254.6	12,769.4	6,704.8	1,809.1	7,952.2	16,731.8

10.2 General debt of $60,595 has been written-off this quarter. Half of this amount relates to write-offs relating to damage to street poles.

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11. Insurance Claims

11.1 The table below outlines the number of events that have been notified by Council against its insurance policies as well as claims against Council from third parties for the Jan – March 2024 quarter.

	Policy	Claims / Notifications		Estimated Cost
	Policy	Above excess	Below excess	Estimated Cost
Claims by Council	Motor Vehicle	1	1	$6,000
	Material damage	1	0	$260,000
Claims against Council	PI / PL	0	0	$0

11.2 CWTP fire claim – detailed repair requirements and cost estimates have been completed. Updates on this claim are reported to the Insurance Subcommittee, in accordance with the Terms of Reference for this Subcommittee.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	March 2024 - Attachment A – Operational & Capital breakdown by Activities	24/541621	38

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Authors

Bruce Moher - Manager Corporate Reporting

Mitchell Shaw - Reporting Accountant

Steve Ballard - Group Treasurer

Karthik MG - Reporting Accountant

Martin Zelas - Team Leader Rates

Adrian Seagar - Manager Insurance & Asset Management

Approved By

Russell Holden - Head of Finance

Bede Carran - General Manager Finance, Risk & Performance / Chief Financial Officer

Finance and Performance Committee

17 April 2024

11. Christchurch City Holdings Ltd - Draft Statements of Intent 2024/25
Reference Te Tohutoro:	24/480847
Responsible Officer(s) Te Pou Matua:	Linda Gibb, Performance Advisor, Resources
Accountable ELT Member Pouwhakarae:	Bede Carran, General Manager Finance, Risk & Performance / Chief Financial Officer

1. Purpose and Origin of the Report Te Pūtake Pūrongo

1.1 The purpose of this report is to present Christchurch City Holdings Ltd’s (CCHL’s) draft Statement of Intent (SOI) for 2024/25, the draft SOIs of the CCHL subsidiary companies and to seek shareholder comments on the draft documents.

1.2 The report has been written following receiving the CCHL group’s draft SOIs on 1 March 2024 as required by clause 1(2), part 1 of schedule 8 of the Local Government Act 2002 (LGA).

1.3 This report provides advice on the CCHL draft SOI only. The subsidiary companies’ draft SOIs are attached for information but it is a matter for CCHL to review those documents and engage with the subsidiary boards on their content.

1.4 CCHL’s draft SOI is at Attachment A and the Council’s Letter of Expectations (LOE) to CCHL dated February 2024 is at Attachment B. For information, the subsidiary companies’ draft SOIs are at Attachment C.

2. Officer Recommendations Ngā Tūtohu

That the Finance and Performance Committee:

1. Receives Christchurch City Holdings Ltd - Draft Statements of Intent 2024/25;

2. Notes the Christchurch City Holdings Ltd subsidiary companies’ draft Statements of Intent for 2024/25;

3. Requests that Christchurch City Holdings Ltd’s Chief Executive and Council’s CFO develop a revised dividend profile which will provide dividends of $55 million for the 2024/25 year, $65 million for the 2025/26 year, $65 million for the 2026/27 year and also look to identify opportunities to declare special dividends;

4. Council and CCHL staff work to develop a sustainable dividend policy framework that is agreed to by both parties; and

5. Notes that the decisions in this report are of low significance concerning the Christchurch City Council’s Significance and Engagement Policy.

3. Executive Summary Te Whakarāpopoto Matua

3.1 CCHL has a statutory obligation to present to Council a draft SOI on which Council can provide comments for the CCHL board to consider when finalising the SOI. CCHL’s SOI complies with the legislation and largely reflects the Council’s Letter of Expectations (LOE) to it issued in February 2024.

3.2 This report provides staff’s comments on the SOI.

4. Background/Context Te Horopaki

Local Government Act 2002 requirements for SOIs

4.1 Council controlled organisations (CCO) must prepare a SOI. The key purpose of the SOI provisions in the LGA are to enable the Council, as shareholder of a CCO, to influence the strategic direction of the CCO.

4.2 Schedule 8, parts 2 and 4 of the LGA set out the content requirements for SOIs - the objectives of the group, the board’s approach to governance, nature and scope of activities to be undertaken and the major accounting policies.

4.3 Clauses 1 and 2 of schedule 8, part 1 of the LGA provide that the board of a CCO must deliver a draft SOI to its shareholders by 1 March each year and that shareholders may provide comments on the draft to the CCO board by 1 May. Clause 3 of schedule 8, part 1 provides that the CCO board must consider the comments and finalise the SOI by 30 June.

4.4 The SOI is a tool to facilitate a strong relationship between a council and its CCOs by ensuring there is alignment of expectations on matters of strategic importance, including the objectives and how they will be achieved. The governing body of a CCO is required to consider a council’s comments. When considering a council’s comments the board of a CCO is required to consider the duties of directors pursuant to section 131(1) of the Companies Act 1993 including to act in the best interests of the company.

4.5 The shareholder’s expectations created from its Letter of Expectations (LOE) for 2024/25 and Enduring Statement of Expectations (SOE) for the foreseeable future inform CCHL’s development of its draft SOI.

4.6 Combined the SOI, LOE and SOE are important in supporting a strong relationship between the Council and CCHL which is a fundamental element for both parties to maximise value for the benefit of the community.

Council staff comment

4.7 Financial forecasts are not yet confirmed as the CCHL group’s business planning process is not yet completed. Final forecasts will be included in the final SOI. Council staff would like CCHL to socialise the final forecasts prior to the SOI being finalised.

4.8 CCHL’s infrastructure companies are valued at in excess of $5 billion, of which borrowings fund circa 42% which incurs a before-tax net cost of $86 million to the group in the financial year ending 30 June 2023. As long-life investments (the majority in strategic assets and infrastructure) the risks and rewards are inter-generational. Decisions today on capital structure, dividends, debt and investment/re-investment will have an impact on future value. It is important that CCHL and the Council as its sole shareholder are clear about the current and future potential impacts of decisions on these value drivers.

4.9 The Council’s Climate Resilience advisors in the Strategic Policy and Performance group have reviewed CCHL’s draft SOIs. The team has membership on the CCHL Environmental Sustainability working group. Staff note the draft SOI provides for CCHL to set group emissions reductions targets and report publicly against them. Staff also note that in its LOE to CCHL, the Council requested a briefing from CCHL on its progress towards achieving its emissions reductions plans. This is expected to take place before the end of the current financial year.

4.10 CCHL is a mandated Climate Reporting Entity in accordance with the Financial Sector (Financial Disclosures and Other Matters) Amendment Act 2021 and it will report on climate-related risks and opportunities in its reporting for the financial year to 30 June 2024.

4.11 Staff from the Council and CCHL will shortly begin work to review the nature and scope of reporting, the metrics and non-financial performance target that are reported against and other related matters.

Workshop

4.12 A workshop was held on 9 April 2024 where CCHL presented to Council the strategic context upon which the Group’s draft SOIs were formulated and the key matters for each of the subsidiary companies. Key themes presented that underpin the Group’s draft SOIs include:

· future capital requirements for projected capital work, noting that the current level of debt (approx. $2.3 billion) funding the assets lowers the headroom and options for future capital works;

· constrained profitability due to current economic and geo-political conditions, among other things, (noting the Council’s request in its LOE to maximise dividends over the SOI period);

· the opportunity costs or trade-offs between increased dividends over the next five years and investment in the CCHL subsidiaries, such as reducing debt to improve the group’s financial flexibility to support further capital investment, meet market volatility and unexpected events;

· deferral of some capital works and focus on cost control to free up cash for debt repayment and dividends;

· net neutral for carbon emissions by 2030 is not achievable without significant investment in carbon credits which is not affordable for the group under current conditions;

· developing, in consultation with Council, a responsible investment framework;

· group approach to risk management and engaging with the Council’s Audit and Risk Management Committee on key risks; and

· improvements to be made in the reporting framework including a stronger focus on forward-looking conversations and revised performance targets.

Letter of Expectations

4.13 Many of the matters covered at the workshop were included in the Council’s LOE to CCHL for 2024/25. In addition, the following expectations have also been included in the draft SOI:

· to operate within its existing mandate and existing assets, while seeking to lift returns over time through stronger oversight of capital management and operational improvements;

· clearly demonstrate alignment with the Council’s new strategic framework;

· work with the Council to develop a framework for a holistic approach to reporting that draws together (to the extent possible) a joined-up clear picture of the performance and key issues facing CCHL and its subsidiaries and including benchmarking and revised performance targets;

· health and safety measures to include targets of zero serious harm incidents and near zero other incidents and to notify the Council at a public meeting of any incidents;

· maintaining high levels of engagement with mana whenua and other stakeholders in areas of mutual interest; and

· supporting improved performance through demonstrable commitment to diversity, equity and engagement.

Omissions

4.14 The following LOE expectations are not evident in the draft SOI, noting that it is a matter for the CCHL to determine the reasonableness of including the expectations in its final SOI:

· set a dividend policy that takes into account the Council’s current preference for income over capital growth over the SOI period and reflect the flexibility that CCHL needs to meet its debt covenants, and maintain value in the core infrastructure owned by the group; and

· investment objectives, which will be included in the responsible investment framework.

Financial forecasts

4.15 The following table sets out the financial expectations for the CCHL parent and each of the subsidiaries:

CCHL group	2024/25 $m			2025/26 $m			2026/27 $m	2026/27 v 2025/26 $m
CCHL group	Draft SOI	LY SOI	Change	Draft SOI	LY SOI	Change	Draft SOI	Change
NPAT (subsidiaries)	136	143	-7	159	161	-2	186	+27
Dividends to CCHL	92	90	+2	105	96	+9	116	+10
Capital expenditure	260	258	+2	316	327	-11	355	+38
Debt	1,803	1,814	-11	1,930	1,903	+27	2,091	+162
CCHL parent profit	101	108	-7	127	129	-2	154	+27
Dividends to CCC	38	57	-19	46	51	-5	54	+8

4.16 The reduction in group NPAT of $7 million in 2024/25 is largely attributable to Christchurch International Airport Ltd (lower capacity on domestic routes due to engine repairs and slower return to pre-COVID international passenger numbers), Lyttelton Port (supply chain disruptions relating to shipping through the middle east) and City Care (public sector budgets have become tighter leading to less work being commissioned).

4.17 NPAT expectations in year 3 (2026/27) are 17% higher ($27 million) than in the prior year. Largely, the increase reflects recovery as the economy starts to pick up again and current impediments are expected ease. Half of the increase relates to Orion, but are highly uncertain due to the regulatory Default Price-Quality Path being reset from 1 April 2025. This effectively sets a ceiling on electricity lines companies’ prices.

4.18 Despite the forecast reductions in NPAT in 2024/25 and 2025/26, the subsidiaries’ dividends to CCHL have increased by $4 million and $11 million respectively, due to deferred capital projects and prioritisation of dividends.

4.19 However, the SOI signals that CCHL’s dividends to the Council have reduced by $19 million in 2024/25 and $5 million in 2025/26 as it focuses on reducing debt as a priority to paying dividends. With gearing of above 40% CCHL is mindful of its headroom under debt covenants with lenders and has raised concerns about its financial flexibility.

4.20 The dividend projections from CCHL to the Council of $38 million in 2024/25, $46 million in 2025/26 and $54 million in 2026/27 are consistent with what is provided for in the draft LTP.

4.21 There is inevitably a tension between balancing dividend distributions to the Council and investing to maintain value or for growth in the group. However, in the current environment where the residents of Christchurch are facing relatively stiff increases in rates it is important that the trade-off is suitable to both the Council shareholder and the CCHL board.

4.22 Council staff recommend that CCHL’s Chief Executive and Council’s CFO develop a revised dividend profile which will provide dividends of $55 million for the 2024/25 year, $65 million for the 2025/26 year, $65 million for the 2026/27 year and look to identify opportunities to declare a special dividend, for example a revised dividend profile may look at deferring debt repayment or re-phasing capital expenditure. The advice should include the short-medium term implications and risks of the options.

4.23 The following related information session/workshops have taken place for the members of the meeting:

Date	Subject
9 April 2024	CCHL Draft Statements of Intent for 2024/25

Options Considered Ngā Kōwhiringa Whaiwhakaaro

4.24 The only practicable option available to Council is to review and provide comment on CCHL’s draft SOI so they can be considered as part of finalising the SOI. In the absence of shareholder comments, the CCHL board will finalise the SOI and it will form part of the suite of accountability tools for shareholders as it stands in draft form.

Analysis Criteria Ngā Paearu Wetekina

4.25 The table below sets out the key criteria the recommendations in this report are based on, with respect to CCHL’s draft SOI only:

meets the LGA requirements for SOI content - the objectives of the group, the board’s approach to governance, nature and scope of activities to be undertaken and the major accounting policies
strategic objectives align with the Council’s strategic framework and community outcomes, the LGA’s four well-beings, Christchurch Economic Ambition, City Narrative and Destination Management Plans
the Council’s LOE and Enduring SOE are appropriately reflected
reasonableness of any material changes in the financial forecasts compared with those in the prior year’s SOI
dividend forecasts are consistent with the draft LTP 2024-34
commitment to taking meaningful actions towards reducing greenhouse gas emissions and reporting publicly
Commitment to high levels of engagement with mana whenua in areas of mutual interest
Continual improvement in health and safety
Support improved performance through a commitment to diversity, equity and engagement

5. Financial Implications Ngā Hīraunga Rauemi

Capex/Opex Ngā Utu Whakahaere

5.1 The draft SOIs do not create any new expenditure or otherwise affect Council funding.

6. Considerations Ngā Whai Whakaaro

Risks and Mitigations Ngā Mōrearea me ngā Whakamātautau

6.1 SOIs are one of the key accountability tools between the Council as shareholder and the CCOs. They provide transparency to all stakeholders, including the community.

Legal Considerations Ngā Hīraunga ā-Ture

6.2 The statutory authority to undertake the decisions in the report stems from the LGA.

6.3 Other legal implications are the LGA’s SOI requirements in section 64 (purpose of SOI) and schedule 8, part 1 (timing, process and required content of SOI). The consistency of the CCOs’ draft SOIs with these requirements has been discussed in the body of this report.

6.4 Section 131(1) of the Companies Act 1993 requires that a director of a company, when exercising powers or performing duties, must act in good faith and in what the director believes to be the best interests of the company. Strategy and Policy Considerations Te Whai Kaupapa here

Strategy and Policy Considerations Te Whai Kaupapa here

6.5 The required decisions are not directly related to the Christchurch City Council’s Strategic Framework.

6.5.1 They are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy. The level of significance was determined by considering the extent to which the decisions might impact the community.

6.5.2 The decisions are consistent with the Council’s Plans and Policies, as they relate to good governance.

6.6 This report supports the Council's Long Term Plan (2021 - 2031) as the CCOs are part of the way in which the Council delivers its community outcomes.

Community Impacts and Views Ngā Mariu ā-Hāpori

6.7 There is no impact on the community from the draft SOI. The activities underpinning it have been addressed by earlier decisions.

Impact on Mana Whenua Ngā Whai Take Mana Whenua

6.8 The decisions do not involve a significant decision concerning ancestral land or a body of water or other elements of intrinsic value, therefore this decision does not specifically impact Mana Whenua, their culture, and traditions.

6.9 The decision does not involve a matter of interest to Mana Whenua and will not impact on our agreed partnership priorities with Ngā Papatipu Rūnanga.

6.10 SOIs are governance documents, and VŌ’s draft SOI makes commitments to engage with mana whenua in areas of mutual interest.

Climate Change Impact Considerations Ngā Whai Whakaaro mā te Āhuarangi

6.11 The decisions in this report are unlikely to contribute to adaptation to the impacts of climate change or emissions reductions. The SOIs are governance documents and do not of themselves create any incremental operational activity.

7. Next Steps Ngā Mahinga ā-muri

7.1 The CCHL board will consider comments (if any) made by the Council as shareholder following which they will finalise the SOI by 30 June and publish it on their website by 31 July.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	CCHL Draft Statement of Intent 2024/25	24/543506	92
b ⇩	CCHL - Letter of Expectations 2024/25	24/337485	107
c ⇩	CCHL subsidiary company SOIs 2024/25	24/543602	113

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Author	Linda Gibb - Performance Monitoring Advisor CCO
Approved By	Bede Carran - General Manager Finance, Risk & Performance / Chief Financial Officer

Finance and Performance Committee

17 April 2024

12. ChristchurchNZ Holdings Ltd - Draft Statement of Intent 2024/25
Reference Te Tohutoro:	24/480752
Responsible Officer(s) Te Pou Matua:	Linda Gibb, Performance Advisor, Resources
Accountable ELT Member Pouwhakarae:	Bede Carran, General Manager Finance, Risk & Performance / Chief Financial Officer

1. Purpose and Origin of the Report Te Pūtake Pūrongo

1.1. The purpose of this report is to present ChristchurchNZ Holdings Ltd’s (CNZHL’s) draft Statement of Intent (SOI) for 2024/25 and to seek shareholder comments on the draft document.

1.2. The report has been written following receiving CNZHL’s draft SOI on 1 March 2024 as required by clause 1(2), part 1 of schedule 8 of the Local Government Act 2002 (LGA).

1.3. CNZHL’s draft SOI is at Attachment A and the Council’s Letter of Expectations (LOE) for 2024/25 is at Attachment B.

2. Officer Recommendations Ngā Tūtohu

That the Finance and Performance Committee:

1. Receives ChristchurchNZ Holdings Ltd - Draft Statement of Intent 2024/25;

2. Comments on ChristchurchNZ Holdings Ltd’s draft Statement of Intent 2024/25 as follows:

· For Goal 1 (Accelerate and amplify productivity, growth and regenerative transition of businesses) - include reference being made to the evidence-based approach already taken by CNZHL in respect of its Support Objective under Goal 1;

· For Goal 3 (Elevate Ōtautahi Christchurch’s profile and reputation in national and global markets) - When promoting Ōtautahi Christchurch to its tourism partners ChristchurchNZ Holdings Ltd could note the leadership role it is taking in promoting regenerative and sustainable tourism;

3. Advises any further comments on ChristchurchNZ Holdings Ltd’s draft Statement of Intent 2024/25 to be referred to the ChristchurchNZ Holdings Ltd board; and

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

3. Executive Summary Te Whakarāpopoto Matua

3.1 The key purpose of the SOI provisions in the LGA are to enable the Council, as shareholder of a Council-controlled organisation (CCO) to influence its strategic direction.

3.2 CNZHL’s draft SOI was received on 29 February 2024 ahead of the LGA’s due date of 1 March 2024, and meets the Act’s content requirements and the Council’s Letter of Expectations (LOE) for 2024/25 and the Council’s Enduring Statement of Expectations (SOE).

3.3 The Council’s operating grants for CNZHL as recorded in the draft LTP are consistent with the draft SOI, other than one rounding discrepancy which will be corrected in the final SOI.

3.4 Clause 2, schedule 8 of part 1 of the LGA provides for a CCO board to consider comments on its draft SOI made by shareholders by 1 May, after which it must finalise the draft SOI by 30 June 2024. It must be published by 31 July 2024.

4. Background/Context Te Horopaki

Local Government Act 2002 requirements for SOIs

4.1 Schedule 8, parts 2 and 4 of the LGA set out the content requirements for SOIs - the objectives of the group, the board’s approach to governance, nature and scope of activities to be undertaken and the major accounting policies.

4.2 Clauses 1 and 2 of schedule 8, part 1 of the LGA provide that the board of a Council-controlled organisation (CCO) must deliver a draft SOI to its shareholders by 1 March each year and that shareholders may provide comments on the draft to the CCO board by 1 May. Clause 3 of schedule 8, part 1 provides that the CCO board must consider the comments and finalise the SOI by 30 June.

4.3 The SOI is a tool to facilitate a strong relationship between a council and its CCOs by ensuring there is alignment of expectations on matters of strategic importance, including the objectives and how they will be achieved. The governing body of a CCO is required to consider a council’s comments. When considering a council’s comments the board of a company CCO is required to consider the duties of directors pursuant to section 131(1) of the Companies Act 1993 including to act in the best interests of the company.

4.4 The shareholder’s LOE for 2024/25 and Enduring SOE informed CNZHL’s development of its draft SOI.

CNZHL’s activities

4.5 CNZHL’s primary focus is on delivering sustainable economic growth to Christchurch primarily through attracting visitors, businesses, investment and events to the city, undertaking urban development, supporting businesses to achieve goals of becoming and maintaining sustainability, adopting new technologies and innovations.

4.6 The majority of CNZHL’s funding is from the Council of approximately $15.9 million proposed in 2024/25, inflation-adjusted for the following two years, as shown in the table below. The funding is underpinned by levels of service (represented as contractual attributes for delivery) as well as the draft SOI providing performance targets that reflect the Council’s ownership of the CCO.

4.7 Third party income makes an important contribution to CNZHL’s outcomes, by leveraging the Council’s funding to magnify net benefits to the city. Following substantial injections of COVID-19 support from central government over the past couple of years, and with the economy contracting, CNZHL’s ability to attract this revenue is likely to be constrained over the SOI period. Nevertheless CNZHL has forecast increases that in part represent stretch/ambition.

Draft Long Term Plan 2024-34

4.8 All Council operating and capital grants to CNZHL are provided for in the draft SOI consistent with the draft LTP with a rounding discrepancy in 2025/26 that will be addressed for the final SOI, as follows:

	2024/25 $m	2025/26 $m	2026/27 $m
Council funding (inflation adjusted in 2025/26 and 2026/27)	15.9	16.3	16.7
Draft LTP 2024-34	15.9	16.4	16.7
3^rd party revenue	1.6	1.9	2.1
*Total revenue / expense*	*17.5*	*18.3*	*18.8*
Total Assets	3.6	3.6	3.6

4.9 In the event there are changes to these allocations in the final LTP, the SOI will be amended accordingly.

4.10 Note that impact on the balance sheet from amalgamating DCL into CNZHL has not been recorded based on lack of certainty as to when and whether it will proceed.

Options Considered Ngā Kōwhiringa Whaiwhakaaro

4.11 The only practicable option available to Council is to review and provide comment on CCHL’s draft SOI so they can be considered as part of finalising the SOI. In the absence of shareholder comments, the CCHL board will finalise the SOI and it will form part of the suite of accountability tools for shareholders as it stands in draft form.

Analysis Criteria Ngā Paearu Wetekina

4.12 The table below sets out the key criteria the recommendations in this report are based on:

meets the LGA requirements for SOI content - the objectives of the group, the board’s approach to governance, nature and scope of activities to be undertaken and the non-financial performance measures the performance of the group will be judged upon, the major accounting policies of the organisation and forecast financial statements.
strategic objectives align with the Council’s strategic framework and community outcomes, the LGA’s four well-beings, Christchurch Economic Ambition, City Narrative and Destination Management Plans
the Council’s LOE and Enduring SOE are appropriately reflected
changes in the financial forecasts compared with the prior year’s are reasonable
funding provisions in the draft LTP 2024-34 are accurately reflected
commitment to taking meaningful actions to be net carbon neutral for operations by 2030
maintain high levels of engagement with mana whenua in areas of mutual interest
health and safety

Letter of Expectations and Enduring Statement of Expectations

4.13 The following are the key expectations from the LOE and SOE over and above those shown in the above table, all of which are included as expectations in those documents:

· reduce performance targets/levels of service to fewer meaningful targets which are outcomes-focussed, in particular the Council is looking for measures that identify CNZHL’s achievement of, and contribution to economic benefits for the city;

· consider how to attract investment and businesses that are innovators and frontrunners in emissions reduction technologies and practice;

· sustainable and regenerative tourism aligned with the Destination Management Plan;

· work with all Christchurch city stakeholders to ensure events attracted complement each other, to maximise the economic, social, cultural and environmental net benefits for the city. CNZ and VŌ to make a high level of collaboration and co-operation to achieve strategic and legacy economic and social outcomes for Ōtautahi a priority in the lead up to Te Kaha’s opening;

· focus on delivery of Council or CNZHL-initiated urban development projects that exemplify the Council’s broader strategic direction and achieve outcomes from its surplus properties or from CNZHL’s property portfolio;

· engage with the Council’s city growth and property team to coordinate programmes, provide project updates, share information and learnings and ensure the effective use of resources; and

· partner with central government and other third parties.

Comparison of financial forecasts with last year’s SOI

4.14 The following table shows draft SOI forecasts compared with last year’s final SOI forecasts:

	2024/25 SOI target $m	2025/26 SOI target $m	2026/27 SOI target $m
CCC funding - draft SOI for 2024/25	15.9	16.3	16.7
3^rd party funding - draft SOI for 2024/25	1.6	1.9	2.1
Total revenue - draft SOI for 2024/25	17.5	18.2	18.8
Total revenue - final SOI for 2023/24	19.3	19.9	-
Difference	-1.8	-1.7	-

4.15 Against last year’s final SOI targets, total revenue has reduced mostly due to reduced targets for third party revenue target was at least 17.5% in 2024/25 and 20% in 2025/26. These have been reduced in this year’s draft SOI to 10% and 11% in each of those years respectively. The target for 2026/27 is at least 12%.

4.16 The reduction in the targets reflects both current economic conditions which have made third party grants harder to come by.

4.17 Staff acknowledge that, as it is for many entities, the operating environment for CNZHL is likely to be challenging, and that CNZHL also acknowledges the need to operate and deliver on agreed performance measures within the fiscal envelope provided by Council.

What CNZHL delivers

4.18 CNZHL has three goals, and under each there are a series of Objectives to be achieved and Interventions to support achievement the Objectives and Goals.

4.19 Staff note that the Committee, in providing comments can invite CNZHL to consider the items noted below.

4.20 Under Goal 1 include reference being made to an evidence-based approach to the Support Objective, the reasons being is that this is already being undertaken by CNZHL and it aligns with the Christchurch Economic Ambition which also references the importance of an evidence-based approach to and building ‘on the unique expertise, culture, and values of our community, including Te Ao Māori.’

4.21 CNZH delivers major and mega events on behalf of the city under the Council agreed Major Events Strategy and Framework. It is requested that CNZH works with Council to strengthen appropriate recognition of Council as the majority funder of major events.

4.22 In respect of principally the Goal 2 Objectives, there is, at Council’s request, a review to be undertaken to “Identify internal and external duplication in relation to the Council’s urban regeneration functions in time for the LTP 24-34 considerations”. Final decisions made by the Council will be reflected in CNZHL’s final SOI (including the revision of key performance metrics if necessary).

4.23 When promoting Ōtautahi Christchurch to its tourism partners CNZHL could note its leadership role in promoting regenerative and sustainable tourism, as it does in Goal 3. Promoting and supporting regenerative and sustainable tourism is also aligning the SOI closely with the Destination Management Plan where it is also prominent.

Non-financial performance targets

4.24 These comprise:

· Five measures of success of delivering against key strategic objectives – economic growth, job creation, visitor spend and value of investment into Christchurch;

· Seven key performance indicators for the organisation’s performance including reducing the carbon footprint, health and safety and a commitment to benchmarking; and

· Nine levels of service (reduced from 26-30 that have been reported against in past years).

4.25 CNZHL has sought to move to fewer measures that focus on its contribution to outcomes as much as possible. This focus is more meaningful than measuring the number of inputs delivered to achieve outcomes.

5. Financial Implications Ngā Hīraunga Rauemi

Capex/Opex Ngā Utu Whakahaere

5.1 The draft SOI does not give rise to costs and revenues beyond what is provided for in the draft LTP.

6. Considerations Ngā Whai Whakaaro

Risks and Mitigations Ngā Mōrearea me ngā Whakamātautau

6.1 SOIs are one of the key accountability tools between the Council as shareholder and its CCOs. They provide transparency to all stakeholders, including the community.

Legal Considerations Ngā Hīraunga ā-Ture

6.2 The statutory authority to undertake the decisions in the report stems from the LGA.

Strategy and Policy Considerations Te Whai Kaupapa here

6.5 The required decisions relate to the Christchurch City Council’s Strategic Framework in so far that the draft SOIs identify the alignment of the CCO’s strategic objectives and deliverables with the Council’s strategic framework (and community outcomes).

6.6 They are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy. The level of significance was determined by considering the extent to which the decisions might impact the community.

6.7 The decisions are consistent with the Council’s Plans and Policies, as they relate to good governance.

6.8 This report supports the Council's Long Term Plan (2021 - 2031) as the CCOs are part of the way in which the Council delivers its community outcomes.

Community Impacts and Views Ngā Mariu ā-Hāpori

6.9 There is no impact on the community from the draft SOI. The activities underpinning the SOI have been addressed by earlier decisions or are being addressed in the draft LTP 2024-34.

Impact on Mana Whenua Ngā Whai Take Mana Whenua

6.10 The decisions do not involve a significant decision concerning ancestral land or a body of water or other elements of intrinsic value, therefore this decision does not specifically impact Mana Whenua, their culture, and traditions.

6.11 The decision does not involve a matter of interest to Mana Whenua and will not impact on our agreed partnership priorities with Ngā Papatipu Rūnanga.

6.12 The SOI is a governance document only, and includes commitments to engage with mana whenua in areas of mutual interest.

Climate Change Impact Considerations Ngā Whai Whakaaro mā te Āhuarangi

6.13 The decisions in this report are unlikely to contribute to adaptation to the impacts of climate change or emissions reductions. SOIs are governance documents and do not of themselves create any incremental operational activity.

7. Next Steps Ngā Mahinga ā-muri

7.1 CNZHL will finalise its SOI taking into account the consideration of any shareholder comments on the draft document. It will report against the SOI in its quarterly reporting to the Council.

7.2 At the Finance and Performance Committee’s request recently, a workshop is being scheduled for CNZHL to present on significant economic development opportunities for Christchurch (including its investment and urban development pipeline).

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	ChristchurchNZ Holdings Ltd - draft Statement of Intent 2024/25	24/535063	254
b ⇩	ChristchurchNZ Holdings Ltd - Letter of Expectations 2024/25	24/337507	278

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Author	Linda Gibb - Performance Monitoring Advisor CCO
Approved By	Bede Carran - General Manager Finance, Risk & Performance / Chief Financial Officer

Finance and Performance Committee

17 April 2024

13. Venues Otautahi - Draft Statement of Intent 2024/25
Reference Te Tohutoro:	24/473247
Responsible Officer(s) Te Pou Matua:	Linda Gibb, Performance Advisor, Resources
Accountable ELT Member Pouwhakarae:	Bede Carran, General Manager Finance, Risk & Performance / Chief Financial Officer

1. Purpose and Origin of the Report Te Pūtake Pūrongo

1.1 The purpose of this report is to present Venues Ōtautahi’s (VŌ’s) draft Statement of Intent (SOI) for 2024/25 and to seek shareholder comments on the draft document.

1.2 The report has been written following receiving VŌ’s draft SOI on 1 March 2024 as required by clause 1(2), part 1 of schedule 8 of the Local Government Act 2002 (LGA).

1.3 VŌ’s draft SOI is at Attachment A, and the Council’s Letter of Expectations (LOE) for 2024/25 is at Attachment B.

2. Officer Recommendations Ngā Tūtohu

That the Finance and Performance Committee:

1. Receives Venues Otautahi - Draft Statement of Intent 2024/25;

2. Comments on Venues Ōtautahi’s draft Statement of Intent 2024/25 as follows:

a. the final Statement of Intent to include updated performance targets following a full review by Venues Ōtautahi in consultation with Council staff;

b. provide clarity in the final Statement of Intent 2024/25 on what it means to pursue the possibility of the global application of the Company’s local procurement model;

3. Requests that Venues Ōtautahi provides a workshop to the Council during calendar year 2024 as an update on its commercial strategy for Te Kaha, and including detail on its strategy and plans to increase its revenue and reduce reliance on Council funding generally;

4. Advises any additional comments on Venues Ōtautahi’s draft Statement of Intent 2024/25 to be referred to the Venues Ōtautahi board for consideration; and

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

3. Executive Summary Te Whakarāpopoto Matua

3.1 The key purpose of the SOI process is to provide the Council, as shareholder with an opportunity to influence the direction of the council-controlled organisation (CCO).

3.2 VŌ’s draft SOI was received on the statutory due date of 1 March 2024 and sufficiently meets the LGA requirements for content, the Council’s Letter of Expectations (LOE) for 2024/25 and the Council’s Enduring Statement of Expectations (SOE), issued in December 2023.

3.3 The Council’s operating and capital grants, and funding flows for Te Kaha are consistent with the draft Long Term Plan 2024-34 with one small exception – the capital allocations differ slightly between the two planning documents. VŌ has advised it will update the funding allocations in its final SOI.

3.4 Clause 2, schedule 8 of part 1 of the LGA provides for a CCO board to consider comments on its draft SOI made by shareholders by 1 May 2024, after which it must finalise the draft SOI by 30 June 2024. It must be published by 31 July 2024.

4. Background/Context Te Horopaki

Local Government Act 2002 requirements for SOIs

4.4 The shareholder’s expectations created from its Letter of Expectations (LOE) for 2024/25 and Enduring Statement of Expectations (SOE) informed VŌ’s development of its draft SOI.

Venues Ōtautahi’s activities

4.5 VŌ’s primary activities are the attraction, planning and delivery of events and management of assets at the following Council-owned venues – Christchurch Town Hall and Wolfbrook Arena and at venues under VŌ management – Air Force Museum of New Zealand, Hagley Oval and Apollo Projects Stadium.

4.6 VŌ operates commercially but relies on Council funding support (circa $3 million in each of the SOI years) to assist it to meet the significant fixed costs associated with asset ownership, including repairs and maintenance of venues, servicing of legacy debt (which will be fully repaid in 2027) and significant fixed overhead costs such as utilities and insurance).

4.7 Te Kaha is due to open in April 2026 with VŌ the operator. The Council will provide funding support to VŌ to operate and manage the facility as was anticipated by the project’s business case. Contemporaneously with Te Kaha opening, the Apollo Stadium in Addington will be withdrawn from VŌ’s portfolio of venues under management and its associated costs and revenues are removed from VŌ’s financial forecasts from April 2026.

Draft Long Term Plan 2024-34

4.8 All Council operating and capital grants to VŌ are provided for in the draft SOI in line with the draft LTP other than the capital grant which will need to be corrected in the final SOI.

	2024/25 $m	2025/26 $m	2026/27 $m
Operating grant	3.25	3.25	3.20
Operating grant (Te Kaha)	0	2.3	1.5
Capital grant (draft SOI)	4.7	3.9	4.3
Capital grant (draft LTP)	4.7	4.0	4.5

4.9 In the event there are changes to these allocations in the final LTP, the SOI will be amended accordingly.

Options Considered Ngā Kōwhiringa Whaiwhakaaro

4.10 The only practicable option available to Council is to review and provide comment on VŌ’s draft SOI so the comments can be considered as part of finalising the SOI. In the absence of shareholder comments, the VŌ board will finalise the SOI and it will form part of the suite of accountability tools for shareholders as it stands in draft form.

Analysis Criteria Ngā Paearu Wetekina

4.11 The table below sets out the key criteria the recommendations in this report are based on:

meets the LGA requirements for SOI content
strategic objectives align with the Council’s strategic framework and community outcomes
the Council’s LOE and Enduring SOE are appropriately reflected
reasonableness of any material changes in the financial forecasts
funding provisions in the draft LTP 2024-34 are accurately reflected
commitment to taking meaningful actions to be net carbon neutral for operations by 2030
maintain high levels of engagement with mana whenua in areas of mutual interest
health and safety

Letter of Expectations and Enduring Statement of Expectations

4.12 The following are the key expectations from the LOE and SOE over and above those shown in the above table, all of which have been reflected in the draft SOI to the extent reasonable:

· focus on attracting major ticketed events to the city and prioritising those that contribute the most significant direct and indirect economic impact to the region, and to look for other revenue streams taking into account risk and return;

· review performance targets to provide a meaningful assessment of VŌ’s progress in achieving its strategic objectives (e.g. stretch targets, economic benefits, utilisation rates of venues, value for money measures and efficiency measures) – this work will take place for inclusion in the final SOI;

· work with stakeholders to ensure events attracted complement each other and a high level of collaboration and co-operation with ChristchurchNZ (CNZ), as a priority in the lead up to Te Kaha’s opening;

· continue implementation of the Te Kaha commercial strategy including seeking opportunities to grow and diversify revenue streams;

· have long term asset management plans in place; and

· commit to a no surprises policy.

Comparison of financial forecasts with last year’s SOI

4.13 The following table presents the changes in financial forecasts between last year’s final SOI and this year’s draft SOI, and discusses material variances below.

2024/25

SOI target

Prior year SOI target

2025/26

SOI target

Prior year SOI target

2026/27

SOI target

EBITDA

(3.0)

(0.1)

(2.0)

(1.1)

0.6

Change

-2.9

-0.9

4.14 EBITDA has reduced by $2.9 million for 2024/25 compared with last year’s SOI forecast. This largely reflects the removal of a grant of $2.4 million that was in the previous year’s SOI forecast) for Te Kaha pre-opening costs as VŌ is temporarily funding these costs itself from its Balance Sheet. In addition, there is an increase in insurance premiums of around $0.7 million which has increased VŌ’s fixed costs.

4.15 For 2025/26 compared with the prior year’s SOI forecast, EBITDA has reduced by $0.9 million reflecting Te Kaha coming on stream for two months (from April 2026), Apollo Stadium dropping out and some switching of events from VŌ facilities to Te Kaha. This creates additional operating revenue of $2.5 million offset by higher costs of $3.5 million. The increased costs and revenues reflect VŌ’s gearing up for Te Kaha.

4.16 The newly added year, 2026/27 is the first full operating year for Te Kaha. Compared with 2025/26 draft SOI forecasts, the net deficit from operations has reduced by $3.5 million and the Council’s operating grant for Te Kaha by $0.9 million (from $2.3 million to $1.5 million). This reflects the forward bookings for Te Kaha in its first full year of operations.

Non-financial performance targets

4.17 The Council’s LOE to VŌ sought a review of performance targets to provide a meaningful assessment of VŌ’s progress in achieving its strategic objectives. Examples were included such as including stretch targets and focussing targets on economic benefits, utilisation rates of venues, value for money and efficiency measures.

4.18 Staff recommend that the Council provides a formal comment to the VŌ board that it would like the final SOI to include updated performance targets following a full review by VŌ in consultation with Council staff.

4.19 Staff think it would be helpful if VŌ could provide clarity on what it means to pursue the possibility of the global application of the Company’s local procurement model, as they do not believe this will be readily understood.

4.20 The capital budget is based on asset management plans for the venues excluding Te Kaha with this undertaken with an independent verifier.

4.21 The Council’s climate resilience team has commented favourably on the environmental sustainability content in the draft SOI, calling out the roadmap as being a great addition to the content. They consider that in time VŌ should look to set performance measures for annual reductions.

5. Financial Implications Ngā Hīraunga Rauemi

Capex/Opex Ngā Utu Whakahaere

5.1 The draft SOI of itself does not create either capital or operating costs over and above those included in the draft LTP 2024-34.

5.2 In January 2024 VŌ delivered a workshop to the Council in which a deep dive into the commercial imperatives for Te Kaha were discussed. Staff recommend that VŌ be asked to provide an update later this year including detail on its strategy and plans to increase its revenue and reduce reliance on Council funding generally.

6. Considerations Ngā Whai Whakaaro

Risks and Mitigations Ngā Mōrearea me ngā Whakamātautau

6.1 SOIs are one of the key accountability tools between the Council as shareholder and the CCOs. They provide transparency to all stakeholders, including the community.

Legal Considerations Ngā Hīraunga ā-Ture

6.2 The statutory authority to undertake the decisions in the report stems from the LGA.

6.5 The required decisions are not directly related to the Christchurch City Council’s Strategic Framework.

6.5.2 The decisions are consistent with the Council’s Plans and Policies, as they relate to good governance.

6.6 This report supports the Council's Long Term Plan (2021 - 2031) as the CCOs are part of the way in which the Council delivers its community outcomes.

Community Impacts and Views Ngā Mariu ā-Hāpori

6.7 There is no impact on the community from the draft SOI. The activities underpinning it have been addressed by earlier decisions.

Impact on Mana Whenua Ngā Whai Take Mana Whenua

6.9 The decision does not involve a matter of interest to Mana Whenua and will not impact on our agreed partnership priorities with Ngā Papatipu Rūnanga.

6.10 SOIs are governance documents, and VŌ’s draft SOI makes commitments to engage with mana whenua in areas of mutual interest.

Climate Change Impact Considerations Ngā Whai Whakaaro mā te Āhuarangi

7. Next Steps Ngā Mahinga ā-muri

7.1 The VO board will consider comments (if any) made by the Council as shareholder following which they will finalise the SOI by 30 June and publish it on their website by 31 July.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	Venues Ōtautahi - Draft Statement of Intent 2024/25	24/469385	289
b ⇩	Venues Ōtautahi - Letter of Expectations for 2024/25	24/337497	323

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Author	Linda Gibb - Performance Monitoring Advisor CCO
Approved By	Bede Carran - General Manager Finance, Risk & Performance / Chief Financial Officer

Finance and Performance Committee

17 April 2024

14. Council-controlled organisations - Draft Statements of Intent 2024/25
Reference Te Tohutoro:	24/485553
Responsible Officer(s) Te Pou Matua:	Linda Gibb, Performance Advisor, Resources
Accountable ELT Member Pouwhakarae:	Bede Carran, General Manager Finance, Risk & Performance / Chief Financial Officer

1. Purpose and Origin of the Report Te Pūtake Pūrongo

1.1 This report presents draft Statements of Intent (SOIs) for 2024/25 for Council-controlled organisations (CCOs) - Civic Building Ltd (CBL), Local Government Funding Agency (LGFA), Riccarton Bush Trust, Rod Donald Banks Peninsula Trust, and Te Kaha Project Delivery Ltd.

1.2 The draft SOIs were received on or before 1 March 2024 as required by clause 1, schedule 8 of part 1 of the Local Government Act 2002 (LGA).

2. Officer Recommendations Ngā Tūtohu

That the Finance and Performance Committee:

1. Receives the following Council-controlled organisations’ draft Statements of Intent (SOIs) for 2024/25:

a. Civic Building Ltd;

b. Local Government Funding Agency;

c. Riccarton Bush Trust;

d. Rod Donald Banks Peninsula Trust; and

e. Te Kaha Project Delivery Ltd.

2. Advises any comments on the draft Statements of Intent to be referred to the Council-controlled organisations’ boards; and

3. Notes that the decisions in this report are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy based on the expectation that they will have little if any impact on the community.

3. Executive Summary Te Whakarāpopoto Matua

3.1 The key purpose of the SOI process is to provide the Council, as shareholder with an opportunity to influence the direction of the CCO.

3.2 The draft SOIs for the Council’s small CCOs were received on time (before 1 March 2024) and sufficiently meet the LGA requirements for content and the Council’s Enduring Statement of Expectations (SOE), issued in December 2023. (Note that not all the expectations are relevant or material to the small CCOs (or in the case of the LGFA, the governance responsibilities have been delegated to a shareholder council) with relatively narrow scopes of business.

3.3 Most of the draft SOIs reflect inflationary pressure on costs. However, there are no impacts on Council funding over and above what has been recognised in the draft LTP 2024-34 (note the only CCOs that the Council provides grant funding to are the Riccarton Bush and Rod Donald Banks Peninsula Trusts).

3.4 Council Finance staff have engaged with the CCOs (other than LGFA) to seek improvements to the draft SOIs, and some of those conversations are continuing as signalled in this report.

3.5 Clause 2, schedule 8 of part 1 of the LGA provides for a CCO board to consider comments on its draft SOI made by shareholders by 1 May 2024, after which they must finalise the draft SOI by 30 June 2024. It must be published by 31 July 2024.

4. Background/Context Te Horopaki

Local Government Act 2002 requirements

4.1 The purpose of a SOI is recorded in section 64(2) as being to:

a) State publicly the activities and intentions of the CCO for the year, and the objectives to which those activities will contribute; and

b) Provide an opportunity for shareholders to influence the direction of the organisation; and

c) Provide a basis for the accountability of the directors for performance.

4.2 Clauses 1 and 2 of schedule 8, part 1 provide the shareholder of a CCO may provide comments on the draft SOIs [of its directly and indirectly owned CCOs] to the CCO board by 1 May and the CCO board must consider the comments and finalise the SOI by 30 June.

4.3 The draft SOIs comply with the content requirements of schedule 8, parts 2-4 which include the objectives of the group, the board’s approach to governance, nature and scope of activities to be undertaken, non-financial performance targets and other measures by which performance is judged in relation to the objectives and the major accounting policies.

Enduring Statement of Expectations

4.4 In December 2023 the Council issued an Enduring SOE to its fully-owned CCOs. The expectations were largely of a general nature, but the following are particularly relevant to SOIs and are reasonably provided for in the draft SOIs with one or two exceptions discussed further in this report:

· demonstrating linkages between the CCO’s and the Council’s Community Outcomes and Strategic Framework that underpins the draft Long Term Plan 2024-34;

· targeting carbon neutrality by 2030;

· making health and safety a top priority;

· setting meaningful, reliable and concise performance targets; and

· engagement with mana whenua in areas of mutual interest.

Summary of draft SOIs

Civic Building Ltd (Attachment A)

4.5 CBL is a 50/50 partner in a joint venture with Ngāi Tahu Property Ltd which owns and manages the Civic Building. The Council’s other financial interests relating to CBL are as a tenant of the building, and as the lender of the capital used for the JV’s purchase of the building.

4.6 CBL’s financial projections in its draft SOI for 2023/24 compared with last year’s final SOI are set out in the table below:

Net profit before tax	2024/25 $000	2025/26 $000	2026/27 $000
Current draft SOI	410	581	609
Last year’s final SOI	509	840	-
Change	-99	-259	-

4.7 The reduction in net profit before tax reflects reforecasting based on higher interest costs than was expected when last year’s SOI was prepared. Last year’s assumptions of reducing rates did not occur.

4.8 The projected reduction in total assets, shown in the table over the page reflects the repayment of debt of $3 million in each of 2024/25 and 2026/27.

Total assets	2024/25 $000	2025/26 $000	2026/27 $000
Current draft SOI	48,496	48,344	45,128
Last year’s final SOI	49,923	50,690	-
Change	-1,427	-2,346	-

Non-financial performance targets

4.9 The performance targets are largely the same as in the prior year, amended slightly to reflect implementation of recommendations from the accessibility audit in 2022, and to now focus on maintaining them.

4.10 The environmental performance target now focuses on plant or systems that assist in reducing consumption against the baseline established last year.

Local Government Funding Agency (Attachment B)

4.11 The Council has an 8.3% ownership stake in the LGFA. It is also a borrower and a guarantor of losses incurred by LGFA in the event of defaults by other council-borrowers. The strategic approach agreed by all shareholder-councils is for the LGFA’s focus to be on lowering lending margins for council borrowers rather than maximise dividends for equity holders.

4.12 The LGFA is governed by a Shareholders’ Council comprising representatives of its largest local authority shareholders plus the Crown. The Shareholders’ Council issues an annual Letter of Expectations (LOE) to the LGFA board and makes recommendations to shareholders on governance matters such as performance and board appointments. The Shareholders’ Council is responsible for commenting on the LGFA’s draft SOI.

4.13 The Shareholders’ Council has not provided a copy of its LOE to the LGFA. Neither has it provided advice on the content of the draft SOI.

4.14 The LGFA’s financial forecasts compared with those projected in last year’s SOI are shown in the tables below. The LGFA advises that there is lack of certainty about the outyear projections due to the uncertainty of timing and market rates of the circa $7 billion of bonds and loans expiring over the SOI forecast period.

Net profit	2024/25 $m	2025/26 $m	2026/27 $m
Current draft SOI	15.1	13.1	10.1
Last year’s final SOI	9.3	10.5	-
Change	+5.8	+2.6	-

Lending	2024/25 $m	2025/26 $m	2026/27 $m
Current draft SOI	22,086	24,456	26,053
Last year’s final SOI	20,030	21,505	-
Change	+2,056	+2,951	-

4.15 Against last year’s SOI forecasts, net profit has increased in 2024/25 by $5.8 million and in 2025/26 by $2.6 million offset in part by higher operating and issuance costs of $4 million in 2024/25 and $6.6 million in 2025/26. These changes reflect higher interest income from increased lending of $2 million in 2024/25 and almost $3 million in 2025/26 offset by higher costs of issuing bonds into offshore markets.

4.16 Dividends to shareholders are unchanged at $2 million per annum (of which the Council’s share is 166,000). The LGFA’s dividend policy reflects its priority to local government lenders - “to provide an annual rate of return to shareholders equal to LGFA fixed rate bond cost of funds plus 2% over the medium term”. Therefore, the benefits of the higher profit will be reflected in future lending rates.

4.17 Lending to local government has increased over last year’s SOI expectations largely due to the higher level of loans made in the current financial year which flows through future years. Note that at the half year ended 31 December 2023, the LGFA had loans on issue to the value of $18.8 million compared with its full year 2023/24 SOI forecast of $17.9 million.

4.18 Notwithstanding the increase in lending, the impact of lower interest rates and a higher level of liquid assets (proportionate to the value of total lending) results in a year on year forecast decrease in net profit.

Non-financial performance targets

4.19 The majority of targets are the same as in prior years. Several are updated to reflect the passage of time – such as the change in Government policy for water services, recognition that its green bonds and climate loans are now embedded into its suite of investment tools available to assist the local government sector in achieving their sustainability and climate change objectives and therefore no longer needs to be explicit and to develop its sustainability strategy to include the estimated financial impacts of climate change.

Riccarton Bush Trust (Attachment C)

4.20 Riccarton Bush Trust is a charitable trust, with a break-even profit objective. The Trust administers 7.8 hectares of native bush and Riccarton (historic) House. The Trust was incorporated under an Act of Parliament in 1914. The Riccarton Bush Amendment Act 2012 underpins the Council’s financing obligations to the Trust.

4.21 The key drivers of the Trust’s financial performance are income from the on-site café, the Saturday morning market, tours and the Council’s annual operating grant. Third party grants and donations can also make a significant contribution. The upkeep costs for the house and bush and staff salaries are the Trust’s highest costs.

4.22 The following table sets out the Trust’s forecast revenue and expenses over the SOI period compared with last year’s final SOI:

Operating surplus / (deficit)	2024/25 $000	2025/26 $000	2026/27 $000
Current draft SOI	(296)	(298)	(300)
Last year’s final SOI	(270)	(270)	-
Change	(26)	(28)	-

4.23 The increase in the operating deficit reflects increased costs of depreciation, remuneration (e.g. living wage) and inflationary pressure. The majority of these costs are offset by an increase in the Council’s operating grant. The uncompensated balance of $26,000 in 2024/25 and $28,000 in 2025/26 is increased depreciation.

Council funding	2024/25 $000	2025/26 $000	2026/27 $000
Opex grant (draft SOI)	495	510	529
Opex grant (last year)	417	425	-
Change	+78	+85	-

4.24 The Trust’s SOI capital forecasts, of $52,000 in 2024/25 and $27,000 in 2025/26 are the same as projected in last year’s SOI.

4.25 The Council’s operating and funding grants for the Trust as recorded in the draft SOI are consistent with the draft LTP 2024-34.

Non-financial performance targets

4.26 The Trust’s original timetable for the bush enhancement project has not been met, in part as the engagement with mana whenua is taking longer than expected to be concluded. The project has now been recast into two distinct stages with Stage 1 being the activities required to meet health and safety requirements which includes upgrading the tracks and supporting infrastructure, as well as developing areas for larger groups and providing interpretation to educate, engage and encourage participation.

4.27 Council staff are assisting the Trust to engage with Ngāi Tūāhuriri on Stage 2 of the project (to integrate Ngāi Tūāhuriri narratives, values and association with the Bush through design, art, entrance experience and interpretation).

4.28 The performance target for the Bush Enhancement project has been amended from last year’s “works completed by June 2024” to “Stage 1 - commence infrastructure renewal and replacement”. Performance targets are expected to focus on outcomes, in this case project completion rather than commencement, and potentially quality standards.

4.29 Staff are currently engaging with the Trust towards the final SOI being refined to:

· reflect how the Trust’s objectives align to the Council’s strategic framework and community outcomes set out in the draft LTP; and

· reframe the performance target for Stage 1 of the Bush Enhancement Project from “commencing stage 1…” to an outcome-related target.

Rod Donald Banks Peninsula Trust (Attachment D)

4.30 The Trust supports sustainable management, conservation and recreation on Banks Peninsula. The following table sets out the Trust’s SOI financial projections:

Surplus/(deficit)	2024/25 $000	2025/26 $000	2026/27 $000
Current draft SOI	(331)	(777)	561
Last year’s final SOI	(157)	(168)	-
Change	-174	-609

4.31 The changes in financial forecasts for the most part reflect higher expenditure on strategic grants and projects of $151,000 in 2024/25 and $586,000 in 2025/26. This is a result of lower levels of expenditure made in 2023/24 due to uncertainty about the projects that the Council’s capital grant could be applied to. This uncertainty was recently resolved and the Trust is reverting to forecasts based on its 2020 strategic plan.

4.32 The major driver of the improved surplus of $1.3 million in 2026/27 compared with 2025/26 is the Council’s capital grant of $1.35 million.

4.33 The Council’s operating grant of $100,000 per annum and capital grant of $1.35 million in 2026/27 are provided for in the 2024-34 draft LTP (no change from 2021-31 LTP) and are appropriately included in the draft SOI.

Non-financial performance targets

4.34 Non-financial performance targets remain as in the prior year. They are focussed on the Trust’s four pillars of access, biodiversity, knowledge and partnerships.

Te Kaha Project Delivery Ltd (Attachment E)

4.35 Te Kaha Project Delivery Ltd is the governance body tasked with commissioning the design and construction of Te Kaha. The responsibility and accountabilities for the final design and construction of Te Kaha are held with the Council’s Capital Delivery – Major Facilities Team which reports to the Council monthly.

4.36 The funding allocations are the governance costs only.

Revenue/Expenses

2024/25

$000

2025/26

$000

2026/27

$000

Current draft SOI

330

321

232

Last year’s final SOI

330

321

232

4.37 There are no changes between the draft SOI and last year’s SOI.

4.38 Note that the reduction in revenue/expenses of $100,000 in 2026/27 reflects the completion of the stadium in 2026 but there is retention of the Chair and four directors over the defects period ending in April 2027.

Non-financial performance targets

4.39 These have changed in a minor way reflecting the passage of various phases of the project. They continue to focus on project management, control and assurance, optimising capital and whole-of-life costs, effective management of critical hazards, sustainability performance planning and health and wellbeing.

4.40 New targets have been added for the Council’s health and safety team to undertake regular audits and report to the Te Kaha board. This is an extra measure added to the suite of targets for the effective management of critical safety hazards.

Options Considered Ngā Kōwhiringa Whaiwhakaaro

4.41 The only practicable option available to Council is to review and provide comment on CCHL’s draft SOI so they can be considered as part of finalising the SOI. In the absence of shareholder comments, the respective governing bodies will finalise their SOIs and they will form part of the suite of accountability tools for stakeholders as they stand in draft form.

5. Financial Implications Ngā Hīraunga Rauemi

Capex/Opex Ngā Utu Whakahaere

5.1 There is no impact on Council funding as a result of the draft SOI forecasts.

6. Considerations Ngā Whai Whakaaro

Risks and Mitigations Ngā Mōrearea me ngā Whakamātautau

6.1 SOIs are one of the key accountability tools between the Council as shareholder and the CCOs. They provide transparency to all stakeholders, including the community.

Legal Considerations Ngā Hīraunga ā-Ture

6.2 The statutory authority to undertake the decisions in the report stems from the LGA.

Strategy and Policy Considerations Te Whai Kaupapa here

6.4 The required decisions are not directly related to the Christchurch City Council’s Strategic Framework.

6.4.1 They are of low significance in relation to the Christchurch City Council’s Significance and Engagement Policy. The level of significance was determined by considering the extent to which the decisions might impact the community.

6.4.2 The decisions are consistent with the Council’s Plans and Policies, as they relate to good governance.

6.5 This report supports the Council's Long Term Plan (2021 - 2031) as the CCOs are part of the way in which the Council delivers its community outcomes.

Community Impacts and Views Ngā Mariu ā-Hāpori

6.6 There is no impact on the community from the draft SOIs. The activities underpinning the SOIs have been addressed by earlier decisions.

Impact on Mana Whenua Ngā Whai Take Mana Whenua

6.7 The decisions do not involve a significant decision concerning ancestral land or a body of water or other elements of intrinsic value, therefore this decision does not specifically impact Mana Whenua, their culture, and traditions.

6.8 The decision does not involve a matter of interest to Mana Whenua and will not impact on our agreed partnership priorities with Ngā Papatipu Rūnanga.

6.9 The SOIs are governance documents, and all make commitments to engage with mana whenua in areas of mutual interest.

Climate Change Impact Considerations Ngā Whai Whakaaro mā te Āhuarangi

6.10 The decisions in this report are unlikely to contribute to adaptation to the impacts of climate change or emissions reductions. The SOIs are governance documents and do not of themselves create any incremental operational activity.

7. Next Steps Ngā Mahinga ā-muri

7.1 The CCO boards will consider any comments made by the Council as shareholder following which they will finalise the SOIs by 30 June and publish them on their websites by 31 July.

Attachments Ngā Tāpirihanga

No.	Title	Reference	Page
a ⇩	Civic Building Ltd - Draft Statement of Intent 2024/25	24/463547	335
b ⇩	Local Government Funding Agency - Draft Statement of Intent 2024/25	24/463644	349
c ⇩	Riccarton Bush Trust - Draft Statement of Intent 2024/25	24/463694	362
d ⇩	Rod Donald Banks Peninsula Trust - Draft Statement of Intent 2024/25	24/463733	378
e ⇩	Te Kaha Project Delivery Ltd - Draft Statement of Intent 2024/25	24/463538	402

In addition to the attached documents, the following background information is available:

Document Name – Location / File Link

Not applicable

Signatories Ngā Kaiwaitohu

Author

Linda Gibb - Performance Monitoring Advisor CCO

Approved By

Russell Holden - Head of Finance

Bede Carran - General Manager Finance, Risk & Performance / Chief Financial Officer

9. Capital Programme Performance Report - March 2024
Reference Te Tohutoro:	24/440298
Responsible Officer(s) Te Pou Matua:	Richard Wesley, Acting Head of Programme Management Office
Accountable ELT Member Pouwhakarae:	Jane Parfitt, General Manager City Infrastructure

10. Te Kaha Project - Elected Members Update
Reference Te Tohutoro:	24/490682
Responsible Officer(s) Te Pou Matua:	David Kennedy, Chief Executive Te Kaha Project Delivery Limited
Accountable ELT Member Pouwhakarae:	Andrew Rutledge, Acting General Manager Citizens and Community

ITEM NO.	GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED	SECTION	SUBCLAUSE AND REASON UNDER THE ACT	PLAIN ENGLISH REASON	WHEN REPORTS CAN BE REVIEWED FOR POTENTIAL RELEASE
16.	Public Excluded Finance and Performance Committee Minutes - 27 March 2024			Refer to the previous public excluded reason in the agendas for these meetings.
17.	Visibility of Capital Project Budget Changes: March 2024	s7(2)(h)	Commercial Activities	THE REPORT CONtains information on specific projects being tendered in the open market and accordingly it may put Council in a disadvantaged position.	This report can be released to the public once all commercial negotiations and contracts have been concluded, and subject to the approval of the Head of Procurement and Contracts
18.	2024/2025 Insurance Renewal	s7(2)(b)(ii), s7(2)(h), s7(2)(i)	Prejudice Commercial Position, Commercial Activities, Conduct Negotiations	Insurance renewals are undertaken on a confidential basis to protect the Council's negotiating position with insurers.	30 September 2025 This report may be released after the end of the 2024/25 cover year, however, specific details around financials and terms must remain confidential.