Agenda of Finance and Performance Committee


FINANCE AND PERFORMANCE COMMITTEE
Membership:	10
Meeting Cycle:	Meets on a six weekly basis, as required or at the requisition of the Chair
Quorum:	Half of the members
Reports to:	Council

PURPOSE

To assist the Council execute its financial and performance monitoring obligations and associated risk, control and governance frameworks and processes.

Determine and monitor:

• Maintain an overview of work programmes carried out by the Council’s organisational activities (excluding strategy and policy development).

• Progress towards achievement of the Council’s objectives as set out in the LTP and Annual Plans.

• Revenue and expenditure targets of key City Development Projects.

• The effectiveness of the internal audit, risk management and internal control processes and programmes for the Council for each financial year.

• The integrity of reported performance information, both financial and non-financial information at the completion of Council’s Annual Report and external accountability reporting requirements.

• Oversight of external auditor engagement and outputs.

• Compliance with Council’s Treasury Risk Management Policy,

• Requests for rates remissions.

• Approval of overseas travel for both elected members and officers.

• Requests for loan guarantees from qualifying community organisations where the applications are within the approved guidelines and policy limits.

Consider and make recommendations to Council:

• The adoption of the budgetary parameters for the LTP and Annual Plans.

• The approval of The Statements of Intent for Council Controlled Organisations, and Council Controlled Trading Organisations, and monitoring progress against the Statements of Intent.

• The adoption of the Council’s Annual Report.

General:

• Any other matters delegated to the Committee by Council in accordance with approved policies and bylaws.

• Approval and forwarding of submissions on matters related to the Committee’s area of responsibility.

HUTT CITY COUNCIL

Finance and Performance Committee

Meeting to be held in the Council Chambers,

2nd Floor, 30 Laings Road, Lower Hutt on

Wednesday 27 September 2017 commencing at 5.30pm.

ORDER PAPER

Public Business

1. APOLOGIES

Deputy Mayor Bassett

2. PUBLIC COMMENT

Generally up to 30 minutes is set aside for public comment (three minutes per speaker on items appearing on the agenda). Speakers may be asked questions on the matters they raise.

3. CONFLICT OF INTEREST DECLARATIONS

4. Recommendations to Council – 10 October 2017

a) Report on Hutt City Community Facilities Trust for the Year Ended 30 June 2017 (17/1301)

Report No. FPC2017/4/232 by the Senior Management Accountant 9

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

b) Report on Seaview Marina Limited for the Year Ended 30 June 2017 (17/1300)

Report No. FPC2017/4/233 by the Senior Management Accountant 12

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

c) Report on UrbanPlus Limited for the Year Ended 30 June 2017 (17/1304)

Report No. FPC2017/4/234 by the Senior Management Accountant 16

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

d) Report on Special Consultative Procedure to Establish New Fees Under Resource Management Act (17/1362)

Report No. FPC2017/4/230 by the Team Leader Resource Consents 20

Chair’s Recommendation:

“That the recommendations contained in the report be endorsed.”

5. SALE AND SUPPLY OF ALCOHOL (FEES) REGULATIONS 2013 - REGULATION 19(1) - REPORTING BY TERRITORIAL AUTHORITIES (17/1383)

Memorandum dated 7 September 2017 by the Manager Environmental Inspections 27

Chair’s Recommendation:

“The the recommendation contained in the memorandum be endorsed.”

6. New Zealand Local Government Funding Agency 2017 Annual Report (17/1372)

Report No. FPC2017/4/221 by the Chief Financial Officer 30

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

7. 2017 Standard and Poor's Credit Rating (17/1373)

Report No. FPC2017/4/222 by the Chief Financial Officer 103

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

8. Finance Update (17/1419)

Report No. FPC2017/4/243 by the Budgeting and Reporting Manager 115

Chair’s Recommendation:

“That the recommendation contained in the report be endorsed.”

9. Information Item

Finance and Performance Work Programme 2017 (17/1218)

Report No. FPC2017/4/123 by the Committee Advisor 132

Chair’s Recommendation:

“That the report be noted.”

10. QUESTIONS

With reference to section 32 of Standing Orders, before putting a question a member shall endeavour to obtain the information. Questions shall be concise and in writing and handed to the Chair prior to the commencement of the meeting.

11. EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

“That the public be excluded from the following parts of the proceedings of this meeting, namely:

12. Strategic Property Update (17/1374)

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

(A)	(B)	(C)

General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.


Strategic Property Update.	The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities (s7(2)(h)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

This resolution is made in reliance on section 48(1) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or 7 of that Act which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as specified in Column (B) above.”

Annie Doornebosch

COMMITTEE ADVISOR SECRETARIAT SERVICES

8 27 September 2017

Finance and Performance Committee

25 August 2017

File: (17/1301)

Report no: FPC2017/4/232

Report on Hutt City Community Facilities Trust for the Year Ended 30 June 2017

Purpose of Report

1. To provide the Committee with the Annual Report for Hutt City Community Facilities Trust for the year ended 30 June 2017.

Recommendations

That the Committee recommends that Council receives the Annual Report for the Hutt City Community Facilities Trust (CFT) for the year ended 30 June 2017, attached as Appendix 1 to the report.

Background

2. It is a requirement of the Local Government Act 2002 that the Council Controlled Organisations deliver to the shareholders an annual report on the organisation’s operations. This report is presented to this Committee for information.

3. Ms Kirsten Patterson (Chairperson) and Mr Peter Healy (General Manager) will be at the meeting to present the Annual Report and answer any questions.

Discussion

4. The audited Annual Report is attached as Appendix 1 to the report. The Annual Report received an unmodified opinion from Audit New Zealand.

5. The 2016/17 year was CFT’s busiest year since its inception in 2012/13 with three buildings under construction - the Walter Mildenhall Bowling Centre, the Stokes Valley Community Hub and the Fraser Parks Sports and Community Hub. The Stokes Valley Community Hub progressed from foundations through to the main structure being erected. The Walter Mildenhall Bowling Centre proved challenging. While the main club rooms, external greens, petanque and tennis courts were handed over during the year, significant problems with the roof structure over the indoor green delayed this project by several months. The delay was disappointing, but by the end of the financial year Hawkins and their engineering team were well on the way to correcting the fault and re-erecting the roof. The most pleasing CFT construction milestone for the year was the letting of the construction project to Armstrong Downes to build the Fraser Park Sports and Community Hub. The close of the year saw the foundation laid after nearly 8 years of planning and fundraising.

6. During the year CFT continued to manage and maintain its existing assets, which performed ahead of expectations. The Walter Nash Centre continued to attract a very high number of users and hosted many notable events, including the extremely successful Hutt Valley Sports Awards. The artificial turfs at Fraser Park also performed well and continue to achieve very high occupancy rates.

7. CFT had a net surplus of $4.891M for the 12 months ending 30 June 2017, compared with a budgeted surplus of $14.350M.

8. Actual revenue was $9.714M under budget primarily due to construction delays. The Stokes Valley Community Hub and Walter Mildenhall Bowls Centre developments were planned to be completed in 2016/17. These two developments will now be completed in early 2017/18. The second stage of the Fraser Park Sports and Community Hub was also to have commenced much earlier in 2016/17 and have been largely complete by 30 June 2017, however construction did not start until June 2017. As a result of the construction delays, planned Council funding (recognised by CFT as revenue), was not fully required in 2016/17 and now will be called upon as the construction projects are progressed and completed in 2017/18.

9. Operating Expenditure (including depreciation) was $254,000 below budget.

10. Year on year comparisons are not appropriate due to the timing and completion of multiple development projects crossing over the current and previous financial years, and the nature of the funding model.

11. Further detail is contained in the Annual Report attached as Appendix 1 to the report.

Consultation

12. The Trustees of CFT approved the Annual Report on 18 September 2017.

Legal Considerations

13. There are no further legal considerations required.

Financial Considerations

14. The audit has concluded and Audit New Zealand issued an unmodified audit opinion. The final management letter has not yet been received.

15. The Annual Report was signed and the audit opinion was issued on 18 September 2017.

Other Considerations

16. 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 contributes to the current and future needs of the community by providing an affordable service to the community.

Appendices

No.	Title	Page
1 ⇨	Hutt City Community Facilities Trust 2017 Annual Report FINAL (unsigned) (Under Separate Cover)

Author: Sharon Page

Senior Management Accountant

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

11 27 September 2017

Finance and Performance Committee

25 August 2017

File: (17/1300)

Report no: FPC2017/4/233

Report on Seaview Marina Limited for the Year Ended 30 June 2017

Purpose of Report

1. To provide the Committee with the Annual Report for Seaview Marina Limited for the year ended 30 June 2017.

Recommendations

That the Committee recommends that Council receives the Annual Report for Seaview Marina Limited (SML) for the year ended 30 June 2017, attached as Appendix 1 to the report.

Background

3. Mr Brian Walshe (Chairman) and Mr Alan McLellan (Chief Executive) will be at the meeting to present the Annual Report and answer any questions.

Overview

4. The audited Annual Report is attached as Appendix 1 to the report. The Annual Report received an unmodified opinion from Audit New Zealand.

5. The surplus for the year is $403,749 compared to a budgeted surplus of $354,003. This represents a return on equity of 7.5% compared to a target return of 5%. The surplus for the year is a 28% increase on last year.

Service Performance

6. Overall boat storage revenue showed an increase over the previous year of 2.3% however was short on budget by 10.4%. The trailer boat storage income increased from last year by 5.8%, while marina berth storage increased only by 2.9% from the year before but was lower than budget by 11.7%. While occupancies averaged in the high 90% range for the year, the marina berth occupancies averaged only 83% for the year. Growth in marina berth uptake has been slow over the last couple of years.

7. No Client Survey was planned for 2016/2017 as it is run every two years. However, an exit survey of all licensees leaving the marina is carried out and this provided an excellent means of measuring our service. Nine out of ten of these licensees would recommend Seaview Marina to other boat owners.

8. The boat yard business had an outstanding year. The income improved by 24.4% from the previous year and it achieved 37.6% above budget. The demand for hardstand services is being driven by marine contractors who see the advantages of operating at SML.

9. The Marine Centre occupancy was below budget for the year by 3.4%, which was an improvement on last year’s figures by 6.9%. There were only two tenancies, Unit 9 and Unit 12, which remained empty for parts of the year. Three lease renewals were negotiated early in the year and the average increase in rentals was 15%.

10. Programmed maintenance was completed in accordance with the Asset Management Plan. The completion of the half-life upgrades of floating berths was completed by the end of the year. The Wellington Marine Centre Warrant of Fitness and electrical installation checks for power pedestal were completed, with only minor repairs.

11. The in-water capital development program for adding berths to the H Pier walkway was put on hold. The Board decided that until the low overall occupancy rate capital improved no further berth extension would be undertaken. A number of smaller capital items were purchased including a new sewerage pump out facility and additional strops for the travel lift. Another capital project was started at the end of the financial year, which was a joint venture café development with Compass Coffee. As well as this, a new diesel pump out facility was installed jointly funded by Farmlands Fuel Ltd and SML. This allows credit card purchases 24/7.

12. There were no health and safety issues reported during the year. Mr Tony Kelly was appointed the Marina Health and Safety Officer and has done a good job in continuing the update of SML’s processes. During the year a computer based contractor induction process was developed.

13. Further detail is contained in the Annual Report attached as Appendix 1 to the report.

Statement of Financial Position

14. While current assets are less than current liabilities, SML has the ability to meet all short term payments due to its regular cash inflow from berth rentals and operating a working capital account through Council.

15. Non-current assets, including property, plant and equipment, are lower than budgeted due to the decision taken in 2015/16 not to proceed with the commercial pier development as originally planned in 2016/17. Instead the focus in 2016/17 has been on continued improvements to the marina facilities.

16. The Company is well positioned as it embarks on its capital programme for 2017/18.

Statement of Cash Flows

17. Cash flows from operating activities of $849,643 were ahead of last financial year.

18. With the decision to not proceed with the commercial pier development, borrowings from Council did not increase and remained at $2,700,000. However, the current account balance owed to Council reduced by $310,877. This current account is now completely up to date and is cleared monthly in arrears.

Ratio of Shareholders Funds to Total Assets

19. A target ratio has not been set. The actual ratio increased from 62.5% in 2015/16 to 66% in 2016/17.

Commercial Value of the Shareholders Investment

20. The net asset value as at 30 June 2017 is $5.817M. This has increased by $403,749 since 30 June 2016.

Consultation

21. The SML board approved the Annual Report on 21 September 2017.

Legal Considerations

22. There are no further legal considerations required.

Financial Considerations

23. The audit has concluded and Audit New Zealand issued an unmodified audit opinion. The final management letter has not yet been received.

24. The Annual Report was signed and the audit opinion was issued on 21 September 2017.

Other Considerations

25. In making this recommendation, we have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. We believe that this recommendation falls within the purpose of the local government in that it contributes to the achievement of current and future needs of the community by providing a return on shareholder investment and retaining public access through the Seaview Marina. It does this in a way that is cost-effective because it operates an effective business model.

Appendices

No.	Title	Page
1 ⇨	Seaview Marina Limited 2017 Annual Report (unsigned) (Under Separate Cover)

Author: Sharon Page

Senior Management Accountant

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

15 27 September 2017

Finance and Performance Committee

25 August 2017

File: (17/1304)

Report no: FPC2017/4/234

Report on UrbanPlus Limited for the Year Ended 30 June 2017

Purpose of Report

1. To provide the Committee with the Annual Report for Urban Plus Limited for the year ended 30 June 2017.

Recommendations

That the Committee recommends that Council:

(i) notes the draft Annual Report for Urban Plus Limited (UPL) for the year ended 30 June 2017 attached as Appendix 1 to the report; and

(ii) recommends that Council receives the final Annual Report for Urban Plus Limited to 30 June 2017, subject to the audit being completed prior to the Finance and Performance Committee meeting to be held on 27 September 2017.

Background

2. It is a requirement of the Local Government Act 2002 that Council Controlled Trading Organisations deliver to the shareholders an Annual Report on the organisation’s operations. This report is presented to this Committee for information.

3. Mr Brian Walshe (Chairman) and Mr Daniel Moriarty (Acting Chief Executive) will be at the meeting to present the Annual Report and answer any questions.

Discussion

4. As the audit had not been concluded at the time of writing this report, the Annual Report attached as Appendix 1 to this report is a final draft.

5. Officers expect the audit to be completed before the Finance and Performance committee meeting that will receive this report. Officers will table the final Annual Report at the committee meeting and will advise of any changes made to the draft Annual Report. Officers do not believe the financial results contained in the draft Annual Report will change and that any changes are likely to be for disclosure requirements. An unmodified audit opinion is expected.

Financial Results Overview

Parent

6. UPL Parent achieved a surplus after depreciation but before tax of $427k, compared with a budgeted surplus of $305k and a surplus of $94k in the previous year. The improved result against budget in the current financial year is due to the sale of properties.

Group

7. The UPL Consolidated Group includes Fairfield Waters Limited (FWL) and Fairfield Limited Partnership (FLP) - a structure established for the Summit Road Nursery site now known as Fairfield Waters (FW).

8. UPL Group achieved a surplus after depreciation but before tax of $334k. The reasons for the Group surplus being lower than the Parent surplus, is the expensing of FW marketing costs associated with the pre-sale of units in the development, Council rates on the land being developed, and the elimination on consolidation of loan interest and management fees recognised in the UPL Parent result.

Service Performance

Parent

9. Property Service’s non-financial performance measures were all achieved, with the exception of resident satisfaction with public halls, which was marginally below target by 2%. Operational expenditure was well within budget.

10. Residential Housing achieved all its performance measures for the year, with the exception of the percentage of housing occupied by low income elderly (i.e. super-annuitants), which at 79% was below target by 6%. A large portion of the 21% of non-super-annuitant occupants, identify their primary source of income as either invalid or disability benefit.

11. Whilst property development did not achieve its non-financial performance measures for the year, it performed better than budget by $106k before the sale of 4-6 Langford Road (a commercial development property). The sale of 4-6 Langford Road improved the result by a further $100k.

Statement of Financial Position

12. Total assets are higher than planned due to higher cash balances from properties sold during the year (to fund new property developments), higher inventories (properties bought for development but now being on-sold), revaluation of the residential portfolio, and a related party loan with Fairfield Waters Limited (to fund the development in the same name).

13. Total liabilities are in line with budget.

Statement of Cash Flows

14. Net cash from operations are higher due to receipts from property sales and higher than planned interest revenue.

15. Net cash flow from investing operations is lower than planned largely due to developments being slower to start.

16. Net cash flow from financing is higher due to the related party loan.

17. No debt was repaid during 2016/17 with proceeds from property sales being held to fund current and planned development projects.

Ratio of Shareholders Funds to Total Assets

18. The target ratio is at least 50%. The actual ratio is 67% Parent and 66% Group, compared with 58% last year.

Commercial Value of the Shareholders Investment

19. The net asset value as at 30 June 2016 is $21.6m compared with $15.2m last year due. The majority of the increase is due to property revaluations.

Consultation

20. The UPL board will approve and sign the final Annual Report before it is delivered to the shareholder.

Financial Considerations

21. As noted in paragraph 4, the attached Annual Report is still a (substantial) draft.

22. As the audit has not concluded, the final audit management letter has not yet been received.

Other Considerations

23. 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 contributes to the current and future needs of the community by providing an affordable service to the community.

Appendices

No.	Title	Page
1 ⇨	Urban Plus Limited 2017 Annual Report [DRAFT] 21092017 (Under Separate Cover)

Author: Sharon Page

Senior Management Accountant

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

19 27 September 2017

Finance and Performance Committee

04 September 2017

File: (17/1362)

Report no: FPC2017/4/230

Report on Special Consultative Procedure to Establish New Fees Under Resource Management Act

Purpose of Report

1. To seek Council approval to carry out a special consultative procedure in relation to the setting of new fees for two new approval processes created through the Resource Legislation Amendment Act 2017.

Recommendations

That the Committee recommends that Council:

(i) approves the special consultative procedure attached as Appendix 1 to the report; and

(ii) appoints a Subcommittee to hear submissions on the proposed fees and make a recommendation to Council, for the following reasons:

(a) Council is required to process the new application types created by the Resource Legislation Amendment Act;

(b) Council can set fees to recover the costs of processing applications under the Resource Management Act, and this is consistent with its current approach to cost recover the actual time spent on resource consent applications and reduce the level of rates contribution to operating costs;

(c) the proposed fees reflect the intention of the Resource Legislation Amendment Act to provide quicker and more cost-effective consenting pathways for the public; and

(d) the special consultative procedure will follow the requirements set out in section 83 of the Local Government Act 2002.

Background

2. The Resource Legislation Amendment Act 2017 (RLAA) obtained Royal Assent on 18 April 2017. The RLAA includes amendments to the Resource Management Act 1991 (RMA). One of the aims of the Amendment Act was to provide for more streamlined resource consent processes.

3. RLAA introduced two new types of applications – 1) boundary deemed permitted activities, and 2) exemptions for temporary or marginal effects.

4. A boundary deemed permitted activity is where the relevant neighbour has provided written approval to the proposed building, addition or alteration. Council must exempt ‘boundary activities’ from needing a resource consent if the neighbour approval is provided.

5. A marginal or temporary activity is where Council decides that the effects of an activity that would normally require a resource consent are no different in character, intensity, or scale than if there was no rule breach, and also that the adverse effects on any person are less than minor. Council may exempt marginal or temporary activities from needing a resource consent.

6. These new application processes come into effect on 18 October 2017. As with other applications made to Council under the RMA, Council has the ability to set fees to recover the costs of processing applications. Normally resource management fees are consulted on as part of the Annual Plan process. However it was not possible to do this for these new applications due to the timing of the amendments receiving Royal Assent after the consultation on the 2017/2018 Annual Plan had been carried out. It is therefore proposed that the new fees are set by using the special consultative procedure set out in section 83 of the Local Government Act 2002.

Discussion

7. Council is required to process the new application types created by the RLAA changes. The processing of these applications is a private benefit for the person making the application. It is therefore appropriate that the fees cover the reasonable costs of processing the new applications.

Note: All figures referred to in this report include GST.

8. The current application deposit fee for a non-notified land use consent for residential additions and alterations is $930.00. This is based on an hourly rate of $155 and includes up to five hours of processing and one hour of monitoring. Any additional processing time, if required, is charged to the applicant at $155 per hour.

9. The new application processes have been introduced to provide a more streamlined and efficient way of providing permissions for particular activities. It is therefore considered that the new fees should also reflect the lesser amount of processing time required compared to the current resource consent process.

10. Based on the anticipated work required to process the new applications (which involves checking the applications for accuracy and completeness; making sure the proposal meets the new application tests; a site visit may be required in some cases; and preparing the decision notice), the following fees are considered appropriate:

· Boundary deemed permitted activities – a deposit fee of $465.00 which covers three hours of processing time.

· Marginal or temporary activity exemptions – a deposit fee of $465.00 which covers three hours of processing time.

11. It is proposed that the existing hourly rate of $155.00 specified in the current schedule of fees and charges is used if additional fees are to be charged.

12. As is the current practice for resource consent applications, where the full deposit fee is not required due the consent being processed in less than the anticipated time, then the applicant will be refunded the amount of fee that has not been used.

13. Horowhenua District Council has undertaken a special consultative procedure to set its new fees and will be charging on actual time basis for processing the new applications based on our hourly rate of $150.

14. Kapiti District Council officers are currently preparing a recommendation to the Council that in undertakes a special consultative procedure to set the following fees:

· Boundary activities – fixed fee of $300.00.

· Marginal or temporary activities – deposit of $150.00 with additional fees charged at the existing hourly rates.

15. Upper Hutt City Council has set the following fees for the new application processes:

· Boundary activities – fixed fee of $275.00 based on two hours processing time and half hour administration costs.

· Marginal or temporary activities - fixed fee of $275.00 based on two hours processing time and half hour administration costs.

16. Wellington City Council officers have advised that they are yet to determine the amount of the new fees that will be set, and whether these will be fixed or deposit fees.

17. The proposed fees to be set for Hutt City are considered to be generally in line with the other Council’s referred to above, and also reflect the intention of RLAA to provide quicker and more cost-effective consenting pathways for the public.

18. Charging a deposit fee rather than charging on actual time basis is consistent with the current Hutt City current resource consent fees schedule, and it gives more certainty to applicants around the likely costs associated with the processing of these new types of applications.

Options

19. The other option to the special consultative procedure is to wait until next year’s annual plan consultation to set the new fees. This would result in a period of several months where Council is required to process the new types of applications, but it would be unable to impose charges to recover the costs of doing so. This would mean a reduction in revenue and increased subsidy from the general ratepayer to the operating costs of the Resource Consents team. The special consultative procedure is therefore considered the appropriate option for Council to follow.

Consultation

20. The process for the special consultative procedure will follow the requirements set out in Section 83 of the Local Government Act. In summary, this requires Council to prepare and adopt a statement of proposal (attached as Appendix 1 to the report); allow for a minimum of one month for submissions on the statement of proposal; and to hold a hearing if any submitter wishes to be heard. If a hearing is required then this will require the appointment of a subcommittee with delegated authority to hear submissions and make recommendations to Council.

Legal Considerations

21. Consent authorities can fix administrative fees for the new types of deemed permitted activities under section 36(1)(ae) of the RMA.

22. Section 36(3) of the RMA states that charges may be fixed under this section only-

(a) In a manner set out in section 150 of the Local Government Act 2002; and

(b) After using the special consultative procedure set out in section 83 of the Local Government Act 2002; and

23. Section 36AAA of the RMA sets out criteria that a local authority must have regard to when fixing charges under section 36. The proposed fees are considered to be in accordance with the requirements of the RMA as the “sole purpose is to recover the reasonable costs incurred by the local authority in respect of the activity to which the charge relates.”

24. This proposal to set new fees is provided for under section 36 of the RMA, and it will follow the correct special consultative procedure set out in section 83 of the Local Government Act 2002.

Financial Considerations

25. This is a proposal to set new fees so no funding is required. The public consultation process will be carried out by existing staff and will be part of current operating costs.

26. The new fees will enable the Resource Consents team to cost recover the actual time spent on these applications and thus reduce the rates contribution component for the team’s operating costs.

27. The fees will be reviewed within a year, once there is sufficient data on actual time spent, to confirm if these fees are set at appropriate amounts.

Other Considerations

28. 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 local government in that it meets the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses. It does this in a way that is cost-effective because it appropriately presents and anticipates future circumstances in order to provide good-quality customer service and performance that are efficient and effective.

Appendices

No.	Title	Page
1 ⇩	Statement of proposal for special consultative procedure	26

Author: Tim Johnstone

Team Leader Resource Consents

Approved By: Helen Oram

Divisional Manager Environmental Consents

Attachment 1

Statement of proposal for special consultative procedure

STATEMENT OF PROPOSAL

Resource Management Act – Fees and Charges

Boundary activities and marginal or temporary non-compliances

Reason for the Proposal

Recent amendments to the Resource Management Act 1991 have created additional activities and processes which require associated charges. These include:

· Boundary ‘deemed permitted’ activities – Council must exempt ‘boundary activities’ from needing a resource consent if neighbour approval is provided.

· Marginal/temporary breaches – Council may exempt ‘marginal or temporary’ activities from needing resource consent.

These activities come into effect on 18 October 2017, and in order for Council to charge for their processing, fees need to be set. The fees are required to cover the reasonable costs of processing the applications.

The proposed fees are deposit fees. The existing hourly rates specified in the schedule of fees and charges are used if additional fees are to be charged ($155 per hour). All fees include GST.

· Boundary activities – a deposit fee of $465.00 which covers three hours of processing time.

· Marginal or temporary activities – a deposit fee of $465.00 which covers three hours of processing time.

Legislation

The fees are made in accordance with section 36 of the Resource Management Act 1991.

Submissions

Written submissions may be made until…date to be confirmed.

Those who make a written submission may also make an oral submission. Hearings will be scheduled following the closing of the submission period and will be held at the Council Chambers at Hutt City Council. Please indicate on your submission form if you wish to speak to your submission.

Further information

Further information, including a submission form, is available from the Council, or from the Council’s website www.huttcity.govt.nz, or you may request a copy to be emailed or posted to you by calling or emailing Tim Johnstone, Team Leader Resource Consents (04 570 6926 or tim.johnstone@huttcity.govt.nz).

MEMORANDUM 25 27 September 2017

Our Reference 17/1383

TO: Chair and Members

Finance and Performance Committee

FROM: Raaj Govinda

DATE: 07 September 2017

SUBJECT: SALE AND SUPPLY OF ALCOHOL (FEES) REGULATIONS 2013 - REGULATION 19(1) - REPORTING BY TERRITORIAL AUTHORITIES

Recommendation

That the Committee approves the publication of a ‘table of income versus expenditure’ on Council’s website showing the alcohol licensing income received from fees payable in relation to, and costs incurred in:

(a) the performance of the functions of Council’s District Licensing Committee under the Sale and Supply of Alcohol Act 2012 (the Act);

(b) the performance of the functions of Council’s Inspectors under the Act; and

Purpose of Memorandum

1. To advise the Committee on Council’s responsibilities to annually prepare and make publicly available a report showing income from fees payable in relation to, and costs incurred for, all activities related to Alcohol licensing and enforcement under the Sale and Supply of Alcohol (Fees) Regulations 2013 (Regulation 19 (1) – Reporting by Territorial Authorities).

Background

2. The Sale and Supply of Alcohol Act 2012 (the ‘Act’) came into force on 18 December 2012 and became effective in December 2013.

3. The Act’s focus is on alcohol harm reduction. It has resulted in Licensing Inspectors having to spend a considerable amount of their time on stronger enforcement and alcohol harm reduction initiatives. The team works in collaboration with the New Zealand Police and the Medical Officer of Health.

4. The Act requires Territorial Authorities to report annually as follows:

Regulation 19(1) Reporting by territorial authorities

· (1) Every territorial authority must, each year, prepare and make publicly available a report showing its income from fees payable in relation to, and its costs incurred in,—

· (a) the performance of the functions of its licensing committee under the Act; and

· (b) the performance of the functions of its inspectors under the Act; and

· (c) undertaking enforcement activities under the Act.

· (2) The first report required by this regulation must relate to the year commencing 1 July 2014.

5. The amounts received through fees and the expenses are detailed in the table below. All charges are stipulated in the Act and Council has not made any amendments to it. This is because it is not able to without setting a bylaw for this specific purpose.

6. The reasons for Council running a loss of $114,006.32 for the period of 1 July 2016 to 30 June 2017 are as follows:

a. reduced income due to the higher fee generating applications being on a three yearly renewal cycle. As a result, these applications were not due for the 2016/17 financial period;

b. work carried out by inspectors in undertaking enforcement is not recoverable; and

c. the actual cost to inspectors and the District Licensing Committee to process, report and decide on applications is not reflective of the fees received.

7. The percentage of cost Council recovered from fees for carrying out its functions under the Sale and Supply of Alcohol Act 2012 for the 2016/17 financial period is 63%.

TABLE OF INCOME VS EXPENDITURE (GST EXCLUSIVE)

Required under Regulation 19 (1) of the Sale and Supply of Alcohol (Fees) Regulations 2013

Financial Year: 1 July 2016 to 30 June 2017

Appendices

There are no appendices for this report.

Author: Raaj Govinda

Manager Environmental Inspections

Reviewed By: Geoff Stuart

Divisional Manager, Regulatory Services

Approved By: Helen Oram

Acting General Manager, Goverance and Regulatory

28 27 September 2017

Finance and Performance Committee

05 September 2017

File: (17/1372)

Report no: FPC2017/4/221

New Zealand Local Government Funding Agency 2017 Annual Report

Purpose of Report

1. Council is a shareholder in the Local Government Funding Agency (LGFA). The purpose of this report is to share with Councilors the performance of the LGFA in the financial year ending 30 June 2017.

Recommendations

That the Committee notes the Local Government Funding Agency 2017 Annual Report attached as Appendix 1 to the report.

Background

2. In May 2011 Council decided to become a shareholder in LGFA and purchased $100,000 of shares. Council along with all other shareholders was also required to subscribe to an equal value of uncalled shares.

3. The overall objective of LGFA is to provide the local government sector with access to funding on much better terms than would otherwise be available in the financial markets.

4. Borrowing Councils are required to subscribe for LGFA Borrower Notes (subordinated convertible non-voting bonds), at 1.6% of the face value of each borrowing from LGFA. LGFA requires the Borrower Notes as equity as their balance sheet grows and this avoids the need to continually go back to shareholders for additional capital. Borrower Notes pay interest on maturity of the notes at LGFA’s cost of funds.

Discussion

5. LGFA had let $7.78B to 53 participating Councils at 30 June 2017. This is an increase of $1.33B from the previous year.

6. For the financial year ending 30 June 2016, the LGFA made a net operating profit of $11.05M (2016: $9.55M), and declared a dividend of $1.39M (2016: $1.39M).

7. Council had borrowed $97M from the LGFA as at 30 June 2017. This is an increase of $18M from the previous year. Borrowings include those on behalf of Council Controlled Organisations.

8. Council had $1.552M of LGFA Borrower Notes as at 30 June 2017 (2016: $1.264M).

9. From April 2017, LGFA extended their longest terms of borrowing from ten years (2027 maturity) to 16 years (2033 maturity). Council has to date borrowed $15M of longer dated borrowing with $5M maturing in each of 2031, 2032 and 2033.

10. Loans are only taken out with LGFA if they represent the best value for money after considering the terms and conditions from other lenders in the market place.

11. Council borrowings with LGFA have been in accordance with approved limits contained in Council’s Treasury Risk Management Policy.

Financial Considerations

12. Council will receive a dividend of $5,560 (2016: $5,570) from its $100,000 investment. This exceeds the interest that Council would generate or the cost of borrowing.

13. The main financial advantage of being a shareholder in LGFA is access to better borrowing terms and conditions.

Other Considerations

14. 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 allows the Council to operate in a cost-effective manner.

Appendices

No.	Title	Page
1 ⇩	Local Government Funding Agency Annual Report 2017	33

Author: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

Attachment 1

Local Government Funding Agency Annual Report 2017

99 27 September 2017

Finance and Performance Committee

05 September 2017

File: (17/1373)

Report no: FPC2017/4/222

2017 Standard and Poor's Credit Rating

Purpose of Report

1. The purpose of this report is to inform the Committee that on 29 August 2017, Standard and Poor’s Global Ratings affirmed Council’s credit rating as AA long term with “stable” outlook, and A-1+ short term.

Recommendation

That the report be noted and received.

Background

2. Standard and Poor’s annually review Council’s credit rating. The most recent review was completed in August 2017.

3. Standard and Poor’s found that Council has:

a. experienced and very strong financial management;

b. strong budgetary flexibility;

c. strong liquidity; and

d. low contingent liabilities.

4. These factors combined with the extremely predictable and supportive institutional framework in which New Zealand local government operates, resulted in the long term credit rating for Hutt City Council being classified as “AA/Stable”.

5. Partially offsetting the above strengths are Hutt’s average economy and budgetary performance, and moderate debt burden.

6. Seven of the eight key rating factors are unchanged from the 2016 rating review. Of particular note is that Council’s financial management continues to be rated “very strong”. Due to an increasing trend of rolling over unspent capital expenditure budgets, Standard and Poor’s have lowered Council’s budgetary performance, from average to weak.

Key Rating Factor	2017	2016
Institutional framework	Extremely predictable and supportive	Extremely predictable and supportive
Economy	Average	Average
Financial management	Very strong	Very strong
Budgetary flexibility	Strong	Strong
Budgetary performance	Weak	Average
Liquidity	Strong	Strong
Debt burden	Moderate	Moderate
Contingent liabilities	Low	Low

7. Carryovers in recent years have been;

OPERATING	2012/13	2013/14	2014/15	2015/16	2016/17
CFT grants & Development Stimulus Budgets	$1.0m	$5.1m	$9.7m	$13.6m	$17.0m
Carryovers	$0.8m	$3.5m	$1.6m	$9.9m	$9.5m
Percentage	80%	69%	16%	73%	56%

CAPITAL	2012/13	2013/14	2014/15	2015/16	2016/17
Total Capital Budgets	$35.8m	$33.3m	$53.8m	$93.7m	$92.2m
Carryovers	$7.3m	$4.2m	$12.8m	$32.3m	$41.3m
Percentage	20%	13%	24%	34%	45%

8. The 2016/17 operating carry overs comprise;

a. $7.5m Fraser Park Sportsville Facility (CFT build)

b. $1.0m Stokes Valley Community Hub (CFT build)

c. $1.0m Development Stimulus Fund

9. A significant portion of the 2016/17 capital carry overs are for rejuvenation or shared path/cycle-way projects. The major carry overs were;

a. $16.2m Town Hall & Events Centre

b. $8.8m Shared Path / Cycle-way projects

c. $4.2m Civic Precinct & Riddiford Gardens stage III

d. $1.7m Avalon Park stage III

e. $1.7m Making Places

f. $1.3m Stokes Valley Community Hub (HCC fit out)

10. It is worth noting that the large majority of the carried over capital funding is expected to be spent within 12 months delivering these projects, albeit somewhat later than originally forecast.

11. The stable outlook “reflects Standard and Poor’s expectation that Councils financial management will continue supporting its sound financial position, while Council undertakes substantial capital works that result in after capital account deficits and a moderate and growing debt burden.

12. The rating received by Council is the same as the New Zealand sovereign rating so any upward movement of the rating is restricted by the sovereign rating.

13. The research update provided by Standard and Poor’s is attached as Appendix 1 to the report.

Appendices

No.	Title	Page
1 ⇩	Standard and Poor's Credit Rating Review 2017	106

Author: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

111 27 September 2017

Finance and Performance Committee

15 September 2017

File: (17/1419)

Report no: FPC2017/4/243

Finance Update

Purpose of Report

1. The purpose of this report is to present the Committee with Council’s year to date financial performance to 31 August 2017 and forecast year-end financial position.

Recommendations

That the Committee notes the financial performance results.

Background

2. An analysis of Council’s financial position at the end of August 2017 is attached as Appendix 1 to the report.

Discussion

3. It is still very early in the financial year so it is difficult to make any predictions about the yearend position for both operating and capital based on the year to date position.

4. Operating Position: (excluding Gain/Loss on Assets)

Year to Date: there is an operating favourable variance of $1.6M mainly due to Integrated Community Services, Parks, and Community Facilities operating costs being less than budget to date due to programmed work being behind schedule at this stage.

Year End: there is a forecast year end unfavourable variance of $1.7M mainly due to costs for Hutt City Community Facility Trust (CFT) grants for the Stokes Valley Community Hub being deferred from last year (there was a compensating favourable variance last yearend). There is also likely to be an over spend in employee costs due to the recent organisation re-structure. The main area is the extra resources in the consents area but this is offset by additional revenue. The financial impact of the restructure will be reported next month.

5. Gains/Losses On Revaluation of Financial Instruments and Property Revaluations:

Year to date interest rate swaps have increased in value by $1.8M.

We are due to complete a revaluation of our assets later this year. Year three of the current Long Term Plan included an expected increase in asset values of about $72M.

These are both non-cash items.

6. Capital Expenditure:

Year to Date: there is a favourable variance of $3.1M against a year to date budget of $9.2M. This variance is mainly due to the timing of projects.

Year End: there is a forecast favourable variance $0.8M. This relates mainly to forecast underspends in the HCC component of the Stokes Valley Community Hub project ($0.5M), and Huia Pool Roof Membrane replacement ($0.3M), with the later required to be carried over to 2018/19. Other projects at this stage are expected to be completed on time and within budget by year end.

7. Asset Sales:

Asset sales at this stage are forecast to be on budget at $9.6M for the year.

8. Net Debt:

Net Debt is currently forecast to be $160M at year end, slightly over budget by $1M.

Treasury Compliance

9. All limits within the Treasury Risk Management Policy have been fully complied with. The Treasury Compliance Report as at 31 August 2017 is attached as Appendix 2 to the report.

Consultation

10. There is no requirement to consult.

Legal Considerations

11. There are no legal implications.

Financial Considerations

12. The financial considerations are included in the report.

Other Considerations

13. 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 provides Councillors with the necessary information to effectively undertake their governance role.

Appendices

No.	Title	Page
1 ⇩	Financial Tables August 2017	118
2 ⇩	Treasury Compliance Report August 2017	130

Author: Philip Benseman

Budgeting and Reporting Manager

Reviewed By: Brent Kibblewhite

Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

128 27 September 2017

Finance and Performance Committee

28 August 2017

File: (17/1218)

Report no: FPC2017/4/123

Finance and Performance Work Programme 2017

Recommendation

That the report be noted and received.

Appendices

No.	Title	Page
1 ⇩	Finance and Performance Work Programme for 2017	134

Author: Annie Doornebosch

Committee Advisor

Reviewed By: Kate Glanville

Senior Committee Advisor

Approved By: Kathryn Stannard

Divisional Manager, Secretariat Services

Attachment 1

Finance and Performance Work Programme for 2017

Finance & Performance Committee Work Programme 2017

Cycle 4	Officer	For Council
18 October 2017
Hutt City Council’s Annual Report	J Askin	·
Live-Streaming Equipment in Council Chambers	L Allott	·

Cycle 5 - 29 November 2017	Officer	For Council
Long Term Plan 2018-2028 – process, timeline and budget assumptions	B Kibblewhite	·
Rates Postponement Scheme for Residential Ratepayers Aged 65 and over	B Kibblewhite	·
Living Wage Assessment Results	J Beck	·
Review of Revenue and Financing Policy	W Moore	·
Long Term Plan Consultation Approach	J Askin
Risk and Assurance Update and Strategic Risk Register	E Davids
Audit NZ Final Management Report	D Newth
Activity Report – Information Technology	L Allott
Finance Update	B Kibblewhite
Insurance Update	B Kibblewhite
Finance & Performance Work Programme	A Doornebosch

Pending

Rating Policy for sporting, recreational, cultural and community facilities –B Kibblewhite

Appointment of Director SML and UPL – 31 March 2018

Council Asset Revaluations – Cycle 1 or 2, 2018

CCO Lending – due for review 30 June 2018

Review of Agreement with GWRC to collect rates – on or before 30 June 2018

Appointment of Directors to CFT/SML – 10 July 2018

Activity Report – Organisation – Cycle 5, 2018

Appointment of Director to UPL – 30 September 2018

Fraser Park Sportsville Update – Including progress against FPS Business Case – M Reid – June 2019

Deputy Mayor D Bassett	Cr G Barratt
Cr J Briggs	Cr M Cousins
Cr S Edwards	Cr M Lulich

Cr L Sutton	Mayor W R Wallace (ex-officio)