65 01 March 2017
Finance and Performance Committee
25 January 2017
File: (17/60)
Report no: FPC2017/1/66
Review of Draft Statement of Intent 2017/2018 for the Hutt City Community Facilities Trust
Purpose of Report
1. The purpose of the report is to provide a review of the draft Statement of Intent (SOI) for the Hutt City Community Facilities Trust as delivered to Council for Council’s consideration.
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Recommendations That the Committee recommends that Council: (i) notes that the Board of the Hutt City Community Facilities Trust (CFT) has submitted a draft Statement of Intent (SOI), attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002; (ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis; (iii) reviews the draft SOI and considers any modifications that should be made; (iv) receives the draft SOI; and (v) provides comment for the Board of the Trust to consider in finalising its SOI (including any modifications suggested by the Committee arising under paragraph (iii) above). |
Background
2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft SOI on or before 1 March of each year.
Discussion
3. The Board of Hutt City Community Facilities Trust (CFT) has submitted a draft SOI to Council. This is attached in Appendix 1 to the report.
4. The board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9, Schedule 8 of the LGA). The compliance of the company within the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2017/2018 –SOI are detailed below:
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Required Content |
Draft SOI Content |
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(a) the objectives of the Trust |
The objectives of the CFT are stated. |
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(b) a statement of the board’s approach to governance of the group |
A statement is included. |
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(c) the nature and scope of the activities undertaken by the group |
The nature and scope of activities are outlined. |
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(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms |
The terms are defined. No shareholder funds are distributed to CFT. |
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(e) the accounting policies of the group |
Accounting policies are outlined. |
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(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives |
Performance targets are included. |
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(g) an estimate of the amount or proportion of accumulated profits and capital reserves that is intended to be distributed to the shareholders |
Information provided. There is no intention to pay a dividend to the shareholder. |
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(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report |
The kind of information to be provided is outlined. The Trust will provide annual and six-monthly reports. |
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(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation |
Information included. Express approval from Council is required. |
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(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation) |
No compensation anticipated. |
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(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed |
A statement as to the net value of shareholders investment is provided. |
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(l) any other matters that are agreed by the shareholders and the board |
No other matters included. |
5. This draft SOI has reduced the scope of the “Activities” undertaken by CFT to a very specific list of projects, following the trend from the previous year.
6. The structure of the Performance Targets is also focused on the specific projects the CFT is currently undertaking.
Consultation
7. There are no consultation considerations.
Legal Considerations
8. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the LGA. Also Council may suggest changes which the Board must consider in finalising its SOI.
9. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation should be met by Council officers in respect of the CFT SOI.
10. Note that despite anything in the Trust’s constitution, Council may, by resolution, require the Board to modify the SOI and the Board must comply (section 5, Schedule 8), provided that Council first consults the Board.
Financial Considerations
11. The net shareholder’s investment in CFT is estimated to be valued at $27.314m as at 30 June 2017 (compared with $19.327m at 30 June 2016).
Other Considerations
12. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it meets the current and future needs of the community through contributing the community outcomes.
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1View |
Hutt City Community Facilities Trust Draft Statement of Intent 2017-2018 - marked up version (Under Separate Cover) |
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Author: Sharon Page
Senior Management Accountant
Reviewed By: Bradley Cato
Solicitor
Reviewed By: Brent Kibblewhite
Chief Financial Officer
Approved By: Joycelyn Raffills
General Manager, Governance and Regulatory