Agenda of 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

8 29 November 2017

Finance and Performance Committee

10 October 2017

File: (17/1552)

Report no: FPC2017/5/297

Long Term Plan 2018-2028

Purpose of Report

1. The purpose of this report is to update Council on progress with the development of the Long Term Plan 2018-2028, and seek guidance on the high level consultation process to be undertaken.

Recommendations

That the Committee recommends that Council:

(i) approves the high level budget assumptions outlined in the report;

(ii) notes the key budget risk areas;

(iii) provides any further direction required in respect of the 2018-19 budget;

(iv) notes the process and timeframe for the development of the Long Term Plan 2018-2028; and

(v) provides any further direction in respect of the consultation to be undertaken on the Long Term Plan.

Background

2. Under the Local Government Act 2002 (“the Act”) Council is required to prepare and adopt a Long Term Plan (LTP) every three years and an Annual Plan for each financial year. The LTP outlines what Council will do over the next ten years, how much it will cost and how it will be funded. Schedule 10 of the Act outlines the information required in a LTP.

3. Our last LTP was adopted in 2015 for the period 2015-2025, with Annual Plans being adopted in 2016-17 and 2017-18. While Annual Plans should reflect the work programme contained in the LTP for the relevant year with only minor adjustments highlighted, past Council Annual Plans have included significant changes. In addition to new funding, the 2017-18 Annual Plan also included a new financial strategy that was consulted on and adopted.

4. Council is due to develop and adopt a LTP for 2018-2028 and Annual Plan for 2018-19. This information will be prepared in the one document, with year one of the LTP covering the Annual Plan for 2018-19.

Discussion

Key budget areas of risk

5. There are number of potential risks that will not be provided for in the LTP budgets due to uncertainty. These include:

• Overspend on current projects and increased costs on future planned projects.

• Delays in projects, through design hold ups, scope of work, consultant availability, and contractor availability.

• Non realisation of some user charges revenues due to changing demands. The following table shows some user charges revenue in recent years;

• Unforeseen new areas of expenditure potentially identified through the consultation process.

• Climate change and unforeseen events such as storms or other natural disasters resulting in direct costs and impact on future insurance premiums.

• A reduction in the average annual 1% growth that has been provided for in our rating data base, noting actual growth has been 0.8% (excluding Queensgate earthquake impact), in the last two years.

• Changes in Government policy affecting subsidies and grants for existing programmes or capital works, changes in priorities, new initiatives or changes to local government requirements.

• Inflationary Pressures outside of the allowances outlined below.

• Increases in interest rates.

Forecasting assumptions

6. There are a number of assumptions that will be built into our budgets mostly around the provision we make for the increases in our revenue, including rates, and our costs, in year one and the out-years. These have a significant impact on our debt profile over the period of the plan. While we review the CPI information that is provided by Statistics New Zealand we are now using the Local Government Cost Index (LGCI) provided by Business Economic Research Ltd (BERL) for our inflation adjustments.

Inflation/Cost Adjusters:

7. The annual CPI (produced by Statistic NZ) to 30 June 2017 was 1.7%.

8. BERL’s calculation of LGCI to 30 June 2017 was 1.5% and is forecast to be 1.8% to 30 June 2018 and to 2.0% to 30 June 2019.

9. Human Resources have advised the current ‘average position in range’ across Council following the 2017 remuneration review is 96.8% of the mid-point (100%). In 2016 it was 97.9% and in 2015 it was 98.2%. The 2% budget increases of recent years have not been able to keep up with the market and we have been steadily losing ground. Surveys undertaken by Councils remuneration advisors, Strategic Pay, forecast for 2017-2018 an expected overall median increase of 2% for all employee categories. Human Resources have advised that in order to remain competitive in the market we will need to budget a 3% increase for the next remuneration round to ensure the average position in range improves. With the transition to the new remuneration framework which is designed to move people up in the range quicker than previously, the 3% budget recommendation will support the framework in moving towards this and will also ensure we meet our Remuneration Policy commitments.

10. The following are the cost adjusters used in the current 2017-2018 Annual Plan and the proposed adjusters for the 2018-2028 LTP.

Proposed Assumptions:

11. A significant review of our Financial Strategy was carried out and adopted in the 2017-2018 Annual Plan which resulted in changes to a number of our budget assumptions.

12. Debt – debt limits are now set as a percentage of revenue with diminishing percentages in future years that give flexibility and scope to future Councils to introduce new projects. These limits are being used by officers in preparing draft budgets.

13. Rates - the rates increase for 2018-2019 is to be within the financial strategy limits. It was agreed that we would use historical cost increases for our rates increases so for 2018-2019 this will be the LGCI for the 12 months ending 30 June 2017 which is 1.5%, plus a 1% allowance for growth. Year two (2018-2019) of the 2017-2018 Annual Plan had a 1.4% increase, plus a 1% allowance for growth.

14. Operating budgets - the overall budgets for 2018-2019 will be based on the 2018-2019 year forecasts in the 2017-2018 Annual Plan. Budget Managers have been advised there are to be no increases in operating budgets unless these arise through contractual obligations or increases from external suppliers. Where possible measures will be taken to mitigate such increases through savings elsewhere or increases in revenue. Budget Managers have been asked for proposals that absorb general inflationary pressures and provide additional saving opportunities to help meet Council’s overall financial targets.

15. Capital expenditure – these budgets will be based on projects within the current 2017-2018 Annual Plan plus any adjustments approved by Council during the LTP process within the maximum debt levels as laid out in the Financial Strategy.

16. Employee cost – these budgets will be based on the new organisation structure.

17. Variances - significant variances between the 2018-2019 year of the Long Term Plan and year two of the 2017-2018 Annual Plan will need to be justified.

18. Natural disasters and insurance – the Council has comprehensive insurance policies which are designed to provide substantial, but not total, cover from the financial impact of natural disasters.

19. Revaluation of property, plant and equipment – a revaluation of property, plant and equipment is carried out every three years. The latest revaluation is currently underway and the results will be applied from 1 July 2018. Until the detailed results are known, the estimated gains on asset revaluation per the 2015-2025 LTP are assumed.

20. Asset sales – approximately $5m of asset sales have been assumed over the life of the new LTP. This does not include any deferrals from the current 2017-2018 Annual Plan.

21. NZ Transport Agency (NZTA)– budgeted NZTA subsidy levels are based on the assumption that the current funding patterns and subsidy percentages will not change during the term of the LTP.

22. Weathertight homes – a balance sheet provision already exists to fund the expected maximum settlement of known weathertight home claims. We are not aware of any new claims and it has been assumed that any legal costs associated with existing claims will be met from this provision.

23. Service levels - no significant changes are planned.

Content and structure of the LTP

24. The LTP will be structured around Council’s four key strategy areas: Leisure and Wellbeing, Growth and Development, Environmental Sustainability and Infrastructure. These will be aligned to the community outcomes and contributions of Council activities. Together with the Council’s Integrated Vision for Hutt City and the Financial Strategy (adopted as part of the 2017-18 Annual Plan), these documents outline the future Council has planned for the city over the next 20 to 30 years.

25. The high level story behind the LTP will be a continuation of the rejuvenation/growing our city theme agreed in 2014, given its continued Councillor and community support. This is subject to any changes in priorities that emerge from the Councillors’ retreat on 29 January 2018.

26. A number of other documents that form part of the LTP process have been, or will be presented to Council for adoption over the next few months after being presented to the appropriate committee. These include:

· Financial Strategy – already adopted in June 2017

· Draft Revenue and Financing Policy – December 2017

· Significant and Engagement Policy – December 2017

· Development Contributions Policy – December 2017

· Review of the Infrastructure Strategy – December 2017.

Consultation

27. Following an amendment to the Act in 2014, Council is required to prepare a consultation document (CD) that will provide an effective basis for public participation. This is in contrast to past years where a draft LTP was produced for public consultation.

28. The CD is the only lawful basis for mandatory consultation with the community on the matters Council proposes to include in the LTP. It is intended to be concise, simple and easily understood. The CD must cover key issues and choices facing the local authority, and the consequences of those choices including their impact on rates, debt and levels of service. Summaries of the Financial and Infrastructure Strategies are to be included, along with any significant changes proposed to rating or funding systems, and the impacts of the local authority’s proposal across the various categories of rating unit.

29. The detailed underlying information relied on by the CD must be adopted and audited before the CD can be adopted.

30. Below is a proposed timetable for developing the 2018-2028 LTP and CD

Activity	Date
Council adopt key assumptions and risks for 2018/19 budgets and consultation approach for LTP following Finance and Performance Committee recommendation on 29 November.	12 December 2017
Mayor/Councillors’ retreat	29 January 2018
Briefing for Council and community boards/committees on budgets and projects	1 February 2018
Community Plan Committee agree underlying information and content of CD	20 February 2018
Community Plan Committee/Council meet to approve text for CD	15 March 2018
Public consultation	27 March – 27 April 2018
Hearing of submissions	16-17 May 2018
Community Plan Committee/Council agree final changes to LTP	6 June 2018
Council meet to adopt LTP and set the rates	28 June 2018
LTP printed and published	By 27 July 2018

31. This year there is a focus on consultation and engagement with groups typically under-represented in civic decision-making process. This includes youth, Maori, other ethnic minorities and the disability community. To ensure communication activities are targeted for these groups a cross-organisation project team has been established for the LTP. Membership includes representation from the Youth Council, Accessibility and Disability Panel and Community Services.

32. Consultation and engagement will include distribution of the CD, supporting consultation material targeted towards the focus groups (e.g. a video made by youth for youth, social media posts), local advertising, consultation with Maori and other ethnic minorities, attendance at Community Board and Panel meetings during the consultation process.

33. As with previous years a number of additional consultation and engagement methods will also be used, including:

· Radio advertising

· Articles in Council publications

· Email newsletters to subscribers interested in receiving Council news

· An independent survey of residents

· Ability to load submissions electronically

· Use of other e-democracy tools such as Facebook where appropriate

· Meetings with special interest groups

· Attendance at public events.

34. We also encourage Councillors to recommend what consultation approach is most appropriate for their wards and to give further direction. Supporting consultation collateral can be provided to Councillors wishing to do their own engagement activities.

Legal Considerations

35. The requirements of the Act will be followed in respect of the LTP 2018-2028.

Financial Considerations

36. All work required as part of the LTP will be undertaken within current budgets.

Other Considerations

37. 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 conducting annual consultation provides the opportunity for members of the public to comment on the manner in which Council proposes to meet the current and future needs of the community. It does this in a way that is cost-effective, publishing information on the Council website and providing a high level overview of Council’s proposals for the future of the city to each residence and business.

Appendices

There are no appendices for this report.

Author: Josie Askin

Corporate Planner

Author: Philip Benseman

Budgeting and Reporting Manager

Reviewed By: Wendy Moore

Divisional Manager, Strategy and Planning

Reviewed By: Brent Kibblewhite

GM Corporate Services and Chief Financial Officer

Approved By: Kim Kelly

General Manager, City Transformation

16 29 November 2017

Finance and Performance Committee

06 November 2017

File: (17/1700)

Report no: FPC2017/5/300

Revenue and Financing Policy Review for 2018-2028 Long Term Plan

Purpose of Report

1. The purpose of this report is to gain the Committee’s approval of the amended Revenue and Financing Policy as part of the Long Term Plan 2018-2028 process.

Recommendations

That the Committee recommends that Council:

(i) approves the proposed amendments to the Revenue and Financing Policy for consultation as part of the Long Term Plan 2018-2028 including:

a. Environmental Health –this will be separated from Environmental Consents but only for assessment of public/other (including private) benefit. It will not be a separate activity; and

b. District Plan – the hearing fee will be changed to ensure Council recovers its costs as currently this is not the case; and

(ii) notes further analysis is required on the continuation or changes to the current 10 year differential transition.

For the reasons outlined in the report below.

Background

2. Council is required to review its Revenue and Financing Policy every three years. The policy was last reviewed in 2015. This policy provides the underlying rationale for fees and charges and is one of the main drivers of relative rates levels between the residential and business sectors.

Discussion

3. The Revenue and Financing Policy outlines the Council’s approach to funding each of its activities. Funding sources include:

a. Fees / User Charges

b. General Rates (Business, Residential, etc)

c. Targeted Rates

d. Other – subsidies, grants, etc

4. The amount attributed to each funding source for each activity is generally expressed as a percentage or as high, medium and low.

High	80-100%
Medium/high	60-79%
Medium	40-59%
Medium/low	20-39%
Low	0-19%

5. At a workshop on 19 October 2017, officers briefed Councillors on the results of an internal review of the Revenue and Financing Policy and advised that the current Revenue and Financing Policy was compliant with legislative requirements and required only minor changes. The review looked at all of Council’s activities.

6. Officers propose retaining the current Revenue and Financing Policy with the following minor changes:

a. Environmental Health – this will be separated from Environmental Consents but only for assessment of public/other (including private) benefit. It will not be a separate activity; and

b. District Plan – the hearing fee will be changed to ensure Council recovers its costs as currently this is not the case.

Differential Transition

7. The public good element is funded through General Rates. The rate per dollar of Capital Value varies between the different rating categories – known as the differential. The differential exists to recognise that different sectors of the community derive different levels of benefit from the different activities undertaken by Council.

8. In 2012/13 the Council commenced on a 10 year transition shifting more of the rates burden from Business to Residential (page 94 of 2017-2018 Annual Plan).

9. The recent property revaluation has resulted in a significant shift of the rates burden from commercial to residential. In 2017/18 Council agreed to freeze the differential transition for one year and extend the transition period by a year, to reduce the rates impact on residential rate payers caused by the significant increase in residential property values during the three yearly revaluation in October 2016.

10. Council could consider whether the differential transition should be altered to reflect impacts from revaluation changes. If Council decides to alter the differential transition, it needs to consider whether the property revaluations have achieved the intended objective of shifting the overall rates burden from business to residential.

11. The following graph suggests the residential target identified in 2011/12 of 60.4% has been achieved.

12. Further analysis is required including calculating the comparable 2018/19 residential and business percentage targets, before Officers can make a recommendation on changing or ceasing the current 10 year differential plan. A recommendation will be provided to this committee at its next meeting in February 2018.

13. The Society of Local Government Managers (SOLGM) provides guidance on the Local Government (Rating) Act 2002 including guidance on making decisions regarding differential rating categories [Rating Knowhow: A guide to the Local Government (Rating) Act 2002, November 2013].

14. SOLGM advises that where Councils elect to set a rate differentially, the categories and the objectives for the differentiation (that is to say, how the rates in the dollar will vary for each category), must be clearly explained in council’s funding impact statement (either as a total amount of revenue sought from each category or some statement of the relationship between the rates on different categories – see page 181 Long Term Plan 2015-2025).

15. SOLGM further advises that the power to use differential rates is not something that should be used arbitrarily or to excess. SOLGM generally advises local authorities to consider differentials on a general rate in circumstances where there are differences in:

a. levels of service – if one group receives a higher level of service, or a higher share of benefits, then it should be charged more (this is one of the main reasons that section 101(3) of the Local Government Act 2002 requires a consideration of benefit)

b. willingness to pay – if one group is willing to pay more than another group, your council might determine that that group should pay a higher proportion

c. cost – if the cost of providing a service to one group is higher than for others, they should pay more.

Consultation

16. Council is no longer required to use the Special Consultative procedure to consult on changes to the Revenue and Financing Policy however it is required to give effect to section 82 of the Local Government Act 2002.

17. Council is able to make, in its discretion, judgements about:

a. how to comply with engagement requirements

b. the extent to which different options are to be identified and assessed

c. the degree to which benefits and costs are to be quantified

d. the extent and detail of the information to be considered and

e. the extent and nature of any written record to be kept of the manner in which it has complied with those sections.

18. All Divisional Managers were consulted during the review of activities for the Revenue and Financing Policy.

19. Consultation will be required if Council at the February 2018 committee meeting decides to change or cease the current 10 year differential transition plan.

Legal Considerations

20. Council has taken into consideration all legal requirements related to the development and approval of Revenue and Financing Policies.

Financial Considerations

21. The Revenue and Financing Policy process involves a two-step process. Step one is a theoretical allocation of costs based on a set of economic principles. Step two is the consideration of the overall impact of funding allocations from step one on the community.

22. Step one considers who benefits from or causes council’s expenditure and who should pay. Private benefits point towards user charges. Public benefits point towards funding through a taxation tool such as general rates. This means of funding is recommended where the benefits are widespread and individual groups or users cannot be identified or charged.

23. A decision will need to be made on the differential transition at the February 2018 committee meeting.

Other Considerations

24. 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 ensures that Council activities are funded through the correct funding source. It does this in a way that is cost-effective because it takes into consideration the level of public and private good received from each activity.

Appendices

There are no appendices for this report.

Author: Wendy Moore

Divisional Manager, Strategy and Planning

Approved By: Brent Kibblewhite

GM Corporate Services and Chief Financial Officer

21 29 November 2017

Finance and Performance Committee

06 November 2017

File: (17/1244)

Report no: FPC2017/4/226

Equipment in Council Chambers

Purpose of Report

1. The purpose of this report is to outline how improvements could be made to the live-streaming equipment and technology in the Council Chambers.

Recommendations

That the Committee recommends that Council:

(i) notes that Council has been live-streaming meetings held in the Council Chambers during 2017;

(ii) notes the statistics provided in Appendix 1 attached to the report on the viewing of meetings;

(iii) notes the options to upgrade the live-streaming equipment outlined in the report;

(iv) notes that $25,000 was allocated in 2017/18 to upgrade the live-streaming equipment in the Council Chambers; and

(v) agrees with the proposed allocation of this funding to cover integration of the live-stream with the current control system, one replacement camera, four additional microphones and a battery charger.

For the reason that this is the most cost effective method of improving the quality of the live-stream for viewers of these meetings.

Background

2. The initial focus in setting up the new Council Chambers was on the provision of audio visual equipment to assist with the running of meetings.

3. In August 2014 the Local Government Act 2002 was amended to make provision for participation in local authority meetings by means of audio link or audiovisual link where permitted by Standing Orders.

4. After the Council Chambers were reinstated in the Administration Building following earthquake-strengthening, Council amended its Standing Orders in December 2016 to provide for members to attend meetings by means of an electronic link. Provisions regarding the webcasting and recording of meetings were added at the same time. These were drawn from the Local Government New Zealand Standing Orders template and reflect emerging practice in the sector around the accessibility of meetings and transparency of the decision making process.

5. Live-streaming of Hutt City Council meetings commenced with test streaming of the 22 November and 14 December 2016 Council meetings. Streaming of meetings continued in 2017 and, at the Community Plan Committee meeting held on 8 June 2017, officers were asked to investigate improved live-streaming equipment and technology for the Council Chambers. A budget allocation of $25,000 was made for 2017/18.

Discussion

6. There are three components to the equipment provided in the Council Chambers - audio visual fit-out, Skype and live-streaming. This report addresses only the live-streaming component, and those aspects of the audio-visual fit-out and Skype provision that impact on the live-stream.

7. A portable camera was installed at the rear of the Chambers in 2016 for the live-streaming of meetings. This was installed on a trial basis as a temporary solution.

8. A number of issues have been identified with the live-streaming, including the following:

a. Security of the camera and power supply, and the preference for two cameras to allow a front view of all participants. This can be addressed by mounting secure, purpose built cameras in addition to the existing Skype camera.

b. The manual process of switching the live-stream on and off. This can be addressed through re-programming to allow the live-stream to easily be started and stopped on the control panel by an officer present at the meeting. This would also overcome the current issue whereby the live-stream commences prior to the start of the meeting and captures conversations held in the public gallery.

c. The viewing range of the current live-stream camera. This means that Skype access, available in the Council Chambers on the screen closest to the Retiring Room, is outside the camera’s viewing range and anyone attending the meeting via Skype would not be visible but would be audible on the live-stream. This also means that any material displayed on the screens during the course of a meeting is not visible on the live-stream. This can be addressed through re-programming to allow “screen in screen” so that camera, screen content or both camera and content can be displayed on the live-stream at the press of a button on the control panel.

d. The physical process of members switching microphones on and off to ensure that the audio feeds to the live-stream. This is best resolved through diligence on the part of elected members, and the Chair calling on individual members to speak. An alternative would be to convert the existing microphones to voice activation mode, although this would also mean that all comments made by members would be audible. Our suppliers advise that voice activation has been trialed at multiple councils but has not been successful, mainly due to members speaking at once and sensitivity to other noises around the table, all of which affects the quality of the audio feed.

e. The possibility of two cameras operating in tandem with the microphones and automatically switching to the correct side of the room. Our suppliers advise that automation is technically possible albeit very difficult, and would require members to always sit on the same side of the table for all meetings attended.

f. The option of having a person/desk to control the microphones including volume control and muting, cameras, loading of presentations and display of content. This is considered to be the best option if two cameras are employed.

g. The possibility of running a fulltime split screen to show two camera feeds side by side and eliminate the need for a control desk/person. This option is technically possible and would result in a busy screen layout that may be confusing for some viewers.

h. The absence of microphones on the officer side tables and where members of the public sit to make their Public Comment. This can be addressed by providing microphones in these locations. It would also be prudent to provide one additional microphone that can be used as a spare in the event of a microphone malfunction.

i. The requirement to charge up the microphones prior to meetings, which can be problematic if daytime and evening meetings are scheduled on the same date. The provision of additional microphones will require additional charging capability.

j. Increasing the size of the screens on each side of the Chambers. This can best be achieved by replacing the existing screens with eight 60 inch screens. This would increase the image size from 94 inch diagonal to 120 inches. The existing screens could be used elsewhere within Council. The option of adding to the existing bank of screens was also considered but discarded due to the weight of the screens and the nature of the fixing behind each video wall.

k. Ability for councillors to display information on the big screens from their computers, and for information displayed on the screens to be accessed by councillors on their computers. This is already possible through a connection to the same network and using the remote viewer on Air Media at chambers.huttcity.info.

9. Other issues raised include:

a. The need for an improvement in the sound levels experienced by members of the public in the public gallery. An officer has demonstrated to elected members how the sound system works and how to change the volume controls if necessary.

b. The need for instructions for use of microphones at the Public Comment table. An officer has prepared instructions for the Public Comment microphone.

c. Linking from the live-stream page to the agenda papers. A link to the Council Meeting Papers page has been added to the Council Meetings Live page.

d. Posting on the Council’s Facebook page the link to the live-stream and details of that day’s meeting. An officer will keep the Facebook page updated with this information.

e. Investigation of whether Skype for Business could be used for Council meetings so that people can be invited to attend a meeting via Skype through clicking on a link, and ability for this to be a fully interactive session if required. People dialing in would hear the discussion through a mix of the microphones. Skype for Business provides greater functionality than Skype, and options for implementing Skype for Business during 2018 are currently being considered. To fully enable Skype for Business, it would be necessary to purchase additional Skype cameras.

f. Options to provide for electronic voting with the results displayed on the screen. Information has been requested from our suppliers but is not yet available.

10. The availability of live-streaming of meetings is publicised through Council’s Facebook page and on the Council website.

11. Statistics on the use of live-streaming to date are attached as Appendix 1 to the report. These show the number of views of the live-stream and the recording of the meeting. `Unique views’ is the number of individuals who view a meeting from their unique IP address, while `total views’ is the total number of views from people who may access the same meeting multiple times during the course of the meeting. The following unique views were recorded for the live-streaming carried out to date:

Meeting	Date	Unique Views	Average Watch Time
Policy and Regulatory Committee	27 February 2017	87	0:27:05
Council	14 Mar 2017	99	0:12:23
District Plan Committee	26 April 2017	12	0:13:37
Policy and Regulatory Committee	1 May 2017	11	0:14:19
City Development Committee	2 May 2017	76	0:24:00
Finance and Performance Committee	3 May 2017	25	0:57:08
Community Services Committee	4 May 2017	46	0:23:31
Community Plan Committee – Pt 1	16 May 2017	41	0:29:57
Community Plan Committee – Pt 2	16 May 2017	58	0:21:39
Community Plan Committee – Pt 1	17 May 2017	59	0:09:48
Community Plan Committee – Pt 2	17 May 2017	46	0:25:33
Council – Pt 1	23 May 2017	64	0:04:04
Council – Pt 2	23 May 2017	62	0:15:17
Community Plan Committee	8 June 2017	73	0:39:58
Council	12 June 2017	20	0:11:14
Council	29 June 2017	17	0:04:31
District Plan Committee	26 July 2017	17	0:24:00
Policy and Regulatory Committee	31 July 2017	19	0:23:38
City Development Committee	1 August 2017	19	0:28:13
Finance and Performance Committee	2 August 2017	14	0:29:16
Community Services Committee	3 August 2017	11	0:37:52
Council	15 August 2017	68	0:27:24
District Plan Committee	20 September 2017	22	0:31:37
Policy and Regulatory Committee	25 September 2017	6	0:24:52
City Development Committee	26 September 2017	10	0:14:47
Finance and Performance Committee – Pt 1	27 September 2017	9	0:04:05
Finance and Performance Committee – Pt 2	27 September 2017	11	0:10:51
Council	10 October 2017	76	0:23:28
Finance and Performance Committee	18 October 2017	16	0:13:59

Options

12. Officers have investigated a permanent live-stream solution for the Council Chambers to address the issues outlined in sections 8 and 9 above.

13. The issues outlined in sections 8a, b, c, h and i can be addressed through integrating the live-stream with the current control system, purchasing and mounting a single camera at the rear of the Chambers, and purchasing four additional microphones and a charger. This option would fit within the budget already allocated by Council. The total implementation cost, including installation and reprogramming the control system, would be $24,580 + GST.

14. Options 8e, f and g address the preference for two cameras, to allow a front view of all participants. Options e and g are not recommended following discussion with our supplier. Option f is considered to be the best solution where two cameras are in operation, but is not currently recommended as it falls outside the budget allocation. The cost of adding two controllable cameras and programming the switching and control system is estimated at $17,000, with four additional microphones and a charger adding approximately $10,800 (both figures exclusive of GST). Given that the majority of meetings are held outside of normal working hours, the cost of providing a control desk is estimated at $8,000pa if a staff member was employed to cover these duties. This is based on 60 meetings totaling 120 hours, of which 80 hours would be outside normal working hours. Our supplier has also been asked if they could offer this service, but they don’t generally operate after 5.30pm and are currently assessing whether this could be covered with their staff.

15. The option also exists to increase the size of the screens as outlined in section 8j of the report. Replacing the existing screens would require a budget allocation of approximately $82,000 (exclusive of GST), and allowance would also need to be made to have Naylor Love adapt the timber paneling to suit the wider video wall including possible extra fixing.

16. Section 9f alludes to the options available to provide for electronic voting. The options and estimated budget figures are not yet to hand.

17. In addition, and with reference to section 8d of the report, the option exists to convert the microphones to be sound activated, at no additional cost. This would overcome the issue of members speaking without switching their microphone on, or switching their microphone off during the live-stream to allow for private conversations between members, both of which occurrences would be frustrating for viewers. This is not recommended following advice from our supplier, and is a decision for members to make, taking into account the purpose of providing the live-stream, and the lack of success experienced by other councils that have trialed voice activated microphones.

18. The information above is summarised in the table below.

Improvements recommended by officers within the current budget allocation of $25,000.	Improvements recommended by officers outside the current budget allocation	Improvements not recommended by officers
Integration of the live-stream with the current control system, including reprogramming to allow the display of either the camera or screen content or both camera and screen content using “picture in picture”	Implementation of Skype for Business during 2018	Voice activation of microphones
		Two cameras mounted on the side walls of the Chambers
		Automation of two cameras so that cameras will zoom in on the person who is currently speaking using a microphone.
Single camera mounted at the rear of the Chambers		Control desk to monitor microphones and cameras
Four additional microphones		Fulltime split screen showing two camera feeds
Battery charger for additional microphones		Increasing the size of the screens
Ability for councilors to display information on the large screen from their tablets		Options to provide for electronic voting

Consultation

19. No external consultation has been undertaken on this matter, nor has any feedback been requested or received from members of the public about the live-streaming of meetings. During the live-stream the Chat feature is able to be used to update viewers should there be any equipment issues, and feedback from the few occasions this has been used has been positive.

20. Opportunities exist to further promote the availability of live-streaming via all Council websites, the Order Paper for each meeting and through social media optimisation to draw in new and unique visitors through sites including Facebook, Twitter and YouTube. Recorded meetings are available on the main Council website.

Legal Considerations

21. The Local Government Act 2002 provides for members of a local authority and members of the public to participate in meetings by means of audio link or audiovisual link where permitted by Standing Orders. Standing Orders also make provision for the webcasting and recording of meetings.

Financial Considerations

22. Financial considerations are outlined in sections 13 to 17 above.

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 local government in that it provides for members of the public to easily access formal meetings of Council and its Committees from their own device. It does this in a way that is cost-effective because it minimises the expenditure required to improve the live-streaming equipment in the Council Chambers based on the level of take-up of this technology at present.

Appendices

No.	Title	Page
1 ⇩	Live Streaming Usage Data February to October 2017	30

Author: Joyanne Stevens

Business Analyst

Approved By: Lyndon Allott

Chief Information Officer

33 29 November 2017

Finance and Performance Committee

29 August 2017

File: (17/1332)

Report no: FPC2017/5/7

Activity Report - Information Services

Purpose of Report

1. The purpose of this report is to outline the results of a review of the Information Services components of the Support Services activity.

Recommendation

That the Committee:

(i) notes the information contained in this report;

(ii) notes that this review also meets the intent of section 17A of the Local Government Act 2002; and

(iii) agrees that a full section 17A review should not be undertaken at present for the reasons outlined in the report.

Background

2. Activity Reports provide regular information about Council activities, so that activities can be analysed and their future direction considered. They also address the requirements of section 17A of the Local Government Act 2002 (LGA) that regular reviews be undertaken of the cost-effectiveness of current arrangements for meeting the needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions.

High-level description of Activity

3. The Information Services Division includes the following:

· Information Technology (IT) – operational support, infrastructure design and management.

· Corporate Records – maintenance of corporate records and information, electronic document management, digitisation and archives, and mail and print services.

· Business Analysis – business requirements, communication and management of programmes of work for ongoing improvement initiatives.

· Applications Support – business software applications support, maintenance and project related work on business systems.

· Land Information Services (LIS) – maintenance and development of a range of geographical and spatial information to provide decision making services to a wide range of users. LIS includes provision of information to customers relating to engineering records and survey plans, maintenance and record keeping of this information.

Reason for the review

4. This review is required because three years have passed since this Activity was last reviewed.

Rationale for service provision

5. The Strategic Leadership Team (SLT) at Council is focused on rejuvenation and creation of an exciting new Hutt City. SLT has three priorities for delivering Council’s Integrated Vision for the City, the Council’s key strategies and the Long Term Plan (LTP):

· Providing the best local government services

· Developing new world-class community facilities

· Stimulating economic and social development

6. Information Services’ role in providing the best local government services (BLGS) includes:

· Creating centralised customer services

· Introducing and using technology to make it easier for customers and residents to do business, engage, and communicate with us

· Continuous improvement of our key customer-facing processes

· Continuing our focus on working with others to look for service improvements and efficiencies

· Digitising archival records to allow online access

· Capturing and migrating records into our electronic document management system to improve management and access

· Providing further property information online

· Customising mobile applications for spatial data capture, editing and viewing

7. Information Services’ role in developing new world-class community facilities includes:

· Implementation of new technologies and support for existing technologies across community facilities.

· Procurement that takes into account sustainability factors

· Promoting provision of a modern archives repository

· Developing and maintaining relationships with other organisations in the region

· Completed the implementation of the online District Plan.

· Automation of B4UDig map production

· Urban and rural aerial photography refly including digital elevation model, contours and updated vector data

· Development of 3D GIS capabilities

· Events Centre technology infrastructure and business systems/software

· Koraunui Stokes Valley Community Hub technology infrastructure

8. Information Services’ role in stimulating economic and social development includes:

· Providing relevant systems to ensure the organisation has the capability to fulfil this priority

· Further development and testing of disaster recovery facilities

· Expansion of officer access to information via mobile devices to additional business areas

· Full review of requests for service and asset management system

· Incorporating more digitisation into business practice

· Progressing work on regulatory systems

· Implemented HR system recruitment tools online

· Supporting community groups to identify and manage their archival material

· Core system maintenance, Server replacement, PC replacement.

· Completed the review and enhancement of Water Services asset data, and capture of private water services

· Investigate and implement Smart City solutions

· Ongoing implementation of IS training plan

9. An Information Services Strategic Plan (ISSP) is the source and authority for all operational and capital decisions relating to information delivery within Council. Business cases are required for all significant projects that relate to information delivery, and these must demonstrate that their basis lies in the ISSP.

10. The ISSP is prepared on a three year rolling basis to ensure that it continues to meet the changing demands of the business, fits with the Council’s vision and keeps pace with the rapid changes in technology and best practice.

11. An updated IS Strategic Plan and roadmap is being drafted to guide the future direction of this important area of operations. An outline of the Strategic Plan is attached as Appendix 1 to the report. The roadmap includes components dealing with the culture of technology use, leadership and collaboration to deliver services, access to digital services, use of technology, innovation and the need for investment to enable all of these other things to progress. The key outcomes of the Strategic Plan are that:

· Innovative solutions will be delivered through technology

· Adoption of technology is accelerated

· Information and data is exploited as a valuable asset

· Simple, easy to access solutions will provide a single view of the customer

12. In addition Council has Information and Communications Technology (ICT) policies that govern the use of the IT systems, such as the ICT user policy with associated specific policies for security and confidentiality of information. Policies are in place for web, email and mobile device usage. All council staff are required to sign and abide by these policies before being given access to network resources.

13. Through the activities outlined above, Information Services Division supports the social, cultural, environmental and economic wellbeing of the city, and assists the organisation to progress all the community outcomes for the city:

· A safe community

· A strong and diverse economy

· An accessible and connected city

· Healthy people

· A healthy natural environment

· Actively engaged in community activities

· Strong and inclusive communities

· A healthy and attractive built environment

· A well-governed city

Present arrangements for governance, funding and service delivery

14. Information Services activities are governed and funded by Council with services delivered by Council officers. IT components of this activity have previously been contracted out, but were brought in-house in 2009.

15. Contracts are in place with a number of external organisations to provide a range of services including software licensing and consultancy, technical and hardware supply, infrastructure support, telecommunications and related services, website development and support, copier and printing equipment, digitisation, support for the electronic document management system, and other specialised services.

16. External partners include the Association of Local Government Information Management (ALGIM) and providers in the Wellington region.

Current and future risks likely to have a significant impact on this activity

17. Speed of change in technology and the ability adapt to change. We do not aim to be the first but it is critical that we have the capability to take advantage of technology that enables a better service to our customers.

18. The stability and reliability of suppliers so that we can access resources when needed.

19. Access to data communications limits the ability to access network services.

20. The strategy of partnering with suppliers, using out of the box solutions, keeping up to date with technology and only developing software when absolutely necessary reduces the level of risk.

Current performance against KPIs compared to historical and peer benchmarks

21. Until 2014 an annual IS customer satisfaction survey, based on the national ALGIM survey, was run to gather feedback on the performance and service delivered by the Division. The 2013 and 2014 surveys both resulted in 96% staff satisfaction with the overall level of IT services and systems used, as outlined below.

*Number of Respondents: 112.

22. An Internal Services survey was conducted across all business support activities by the Business Improvement Team in October 2015. The results for IS outlined below show continued high levels of staff satisfaction with the services offered, with 93.5% satisfied or very satisfied with the overall customer experience.

*Graph excludes respondents that selected not applicable.

23. Running another internal customer satisfaction survey will be considered within the next 6 months.

24. The Council’s final NRB Communitrak Survey was run in 2016. This included questions about use of online payment or information services available on the Council website. Fifty-five percent of residents said they had used any of the online payment or information services available on the website (50% in 2015). Of these people, 59% had accessed Council or community information (52% in 2015), 53% had used the website to pay rates, 27% had paid a parking fine, 19% had renewed their dog registration, and 8% had ordered a LIM.

Total operating and capital cost of the service over the last 3 years and next 10 years

25. The following table outlines the actual net operating and capital costs of the Information Services activity for the past three financial years and that forecasted for the next 10 years as shown in the LTP. The increase in operating costs over the next 10 years contains an annual estimated increase in the CPI, as shown on page 152 of the LTP.

26. The operational costs for the activity can be broken down into six main budget areas as shown in the following table of 2016/17 expenditure.

16/17 Actual	Operating Expenditure $000	Revenue $000	Depreciation $000	Net Operating Expenditure $000
Corporate Information	885		30	915
IS Applications	1,136		102	1,238
Land Info & Engineering Records	1,166	15	36	1,187
Archives	415		4	419
Management & Projects	620	40	899	1,479
IT Infrastructure	1,295		84	1,379
TOTALS	5,517	55	1,155	6,617

Adjustments that could be made to user charges and service levels to increase or decrease these by 5%, and comparison of any significant fees or charges against peers

27. Options for service delivery cuts if 5% less funding was provided for this activity are:

· Reduce maintenance and support contracts through less project work and not taking advantage of system upgrades.

· Reduce level of service to customers (Internal and External) though reduction in staff numbers.

· Reduce digitisation of information.

28. Options for increased service delivery if 5% more funding was provided for this activity include:

· Employ additional helpdesk resource so we are able to establish a full Service Desk function providing a better service to internal customers by reducing call resolution times to acceptable timeframes.

· Increase innovation through testing and evaluating new technology and solutions, including Smart City initiatives.

· Accelerate the introduction of new apps and web services for the public to enhance their interaction with council and our services.

· Accelerate the adoption of technology within Council including the introduction of more mobile and cloud services.

· Complete more heritage displays and events promoting the excellent archives we have at Hutt City.

29. IS costs are allocated to all Council Divisions receiving these services. The allocated costs are calculated based on a detailed breakdown of the number of desktop or laptop computers in use and the software that is licensed for the particular areas. These allocated charges cover the costs of computer hardware, network infrastructure, operating systems and business software licensing and vendor support fees. The charges reflect the actual services that are received by each Division. We do not have access to this type of information relative to other councils.

Current highlights or issues of significance to Council

30. The draft Information Services Strategic Plan is currently being developed and an outline of the document is attached as Appendix 1 to the report. This plan will require significant ongoing investment to enable Council to:

· Meet modern best practice service standards

· Continue to support the delivery of increased and enhanced online services

· Integrate business systems to ensure seamless and efficient availability of information

· Support the changes in work patterns that are a feature of modern life

· Support sustainability principles and practices

· Enable recovery of key systems in a disaster. Current estimated recovery times of key systems are in Appendix 2 attached to the report.

31. Work is already underway to build the foundations that will enable delivery of the strategy. Projects that are currently underway include:

· Introduction of additional security monitoring on the network

· Disaster recovery resilience though implementing a new replicated server architecture

· Planning for the introduction of cloud solutions for our core business systems (Finance, Property and Rating)

32. Council has been a sector leader in its use of technology and associated process changes to improve services delivered to both external and internal customers. This approach was formalised with the Smarter Cities project in 2010, the Customer Experience Refresh Programme in 2012 and the Best Local Government Services programme in 2015. A list of the improvements made since 2010 as part of these programmes is attached as Appendix 3 to the report.

Reasonably practical options for the governance, funding and delivery of this activity

33. Officers consider that it is impractical and not cost effective to undertake a full section 17A analysis of options for the governance, funding and delivery of Information Services at this time. See Appendix 4 attached to the report for an assessment of alternative governance, funding and service delivery options. Continuing the current model is considered to be the most cost effective and efficient option. However, officers continue to work closely with local authorities within the region to explore opportunities for efficiencies and shared services. This is considered to be best handled on a case by case basis as opportunities arise.

Appendices

No.	Title	Page
1 ⇩	Outline of Information Services Strategic Plan	44
2 ⇩	Key Systems Recovery Times	45
3 ⇩	Improvement Projects Completed Since 2010	46
4 ⇩	Alternative Governance, Funding and Service Delivery Options	54

Author: Joyanne Stevens

Business Analyst

Reviewed By: Lyndon Allott

Chief Information Officer

Approved By: Tony Stallinger

Chief Executive

Attachment 3

Improvement Projects Completed Since 2010

improvement projects completed since 2010

INTRODUCTION

Council officers have been steadily progressing business improvement projects for many years now. In 2003 Council received a NZ Business Excellence Progress Award, and in 2004 Council received a NZ Business Excellence Commendation (Bronze) Award. In 2006 Council was presented with an Achievement (Silver) Award by the NZ Business Excellence Foundation. In 2008 Council enjoyed success at the Vero Excellence in Business Support Awards (Local Government category). And in 2011 Council received a Baldrige Gold Award from the NZ Business Excellence Foundation.

In the wake of these successes, Council formalised its approach to business improvement through a series of improvement programmes.

SMARTER CITIES

The Smarter Cities project commenced in 2010 with e-commerce, e-democracy and e-community initiatives identified as priorities. The project focused on delivering existing services using smart technology as part of the Council website. Projects commenced under Smarter Cities between 2010 and 2012 include the following.

Smarter Cities Initiatives	Status ( Completed to the extent envisaged at the time / Currently in progress )
Paying infringements online	Parking infringements – completed 2010 All other infringements – completed 2011
E-Democracy, focusing on open access to information, online service delivery and civic engagement	Completed
Mobility to allow field officers to access council information and conduct business away from the council building	Trade Waste – implemented 2011 but more work required 2017 Environmental Health – progress made 2017 Building Consents – completed 2015
Cemeteries information online	Completed
Request For Service tracking	Completed
Sending and receiving plans	Completed
Building Warrants of Fitness	Completed
Property searches electronically	Building consents – completed Resource consents – in progress
Resource consents online	Completed
Bookings online	Booking request forms provided online
Liquor licensing online	Information but not applications
Payments online	Most now available
Building consents online	Completed
New registrations and renewals	New dog registrations completed Renewals of dog registrations, health and trade waste completed

CUSTOMER EXPERIENCE REFRESH PROGRAMME (CERP)

Council embarked on its Customer Experience Refresh Programme in 2012. The Programme included a Customer Process Redesign component that mapped current, improved and ideal states for the major process groupings undertaken at Council - Applications/Registrations, Bookings, Information, Infringements and Requests for Service. The mapped processes were tested and validated, resulting in presentation to SLT of a recommended implementation plan in 2013.

MAGIC WAND EXERCISES

As part of the Customer Process Redesign, workshop participants for each major process grouping were asked to complete a Magic Wand Exercise whereby they identified the following components of the existing processes that they would change with the wave of a magic wand if it was in their power to do so. These suggestions were considered as part of developing improved and ideal states for each process.

Magic Wand Exercise Suggestions

Status ( Completed to the extent envisaged at the time / Currently in progress )

Applications:

· easier online applications

· all applications able to be made online

· electronic applications able to be lodged/ tracked/ monitored/updated/finalised

· ability to receive large amounts of information online

· online tracking of applications accessible by customers

· electronic workflows for document circulation

· easier payments

· ability to pay the fee before an invoice is generated

· protocol for locations and names of documents

· standardised, user friendly, application forms available in one place online

· email templates to supplement existing letter templates

· paperless system

· FAQs categorised

· CI integration, integration of GIS and TRIM

· improvements in CI

· online updates

· ensuring everyone uses the most up to date form

· deactivate CI emails advising of updated events

· Many completed

· Not all applications available online

· Building consents -

· Completed

· Building consents

· Completed

· Building consents

· Completed

· Building consents -

· Completed

· In progress

· Completed -

· Completed

· Building consents

· Completed

Bookings:

· standardised booking request forms

· consistent exceptional customer service across Council

· Completed

· In progress

Information:

· one system to serve all customers with information

· property data online, all building information and plans available on Council website, property enquiry system as part of customer service tool

· decisions and application plans in old files marked to make them easier to find for customers

· FAQ webpage with clear information/process/links to the correct form/links to email the correct team

· paperless systems

· online interaction with customers

· OIR process too bureaucratic for simple requests

· clear OIR process

· cross Council information request form

· prompt processing of information requests

· all customer contacts promptly acknowledged and an action timeframe provided

· ability to answer more questions at first point of contact

· Completed

· Most available, resource consents in progress

· Building information available online

· Completed --

· In progress

· Chat under investigation

· Completed

· Completed, Library calls redirected to Contact Centre

Infringements:

· transparent and easy to access infringements database across all of Council

· improved reports/letters/notices/reminders

· ability to scan licence plates to check status on national database

· traceability of fine payments particularly from Courts

· Ministry of Justice updates on progress

· reporting on fines revenue by Finance

· encouragement to infringers to pay promptly

· all forms of payment provided for

· Completed -

· Completed

· In progress -

· In progress for parking fines

· Completed

Payments:

· web payments permitted up to the last date due (not the day before falls due), payment accepted at NZ Post up until the last date

· one stop payment web page for all payments, ability to pay all infringements at once, one system that allows for all payment types

· fines payment tab on front page of website

· payments allocated to correct accounts with customers using correct references

· part payment and time payment options available

· easier processing of payments electronically from the bank statement

· IntelliLeisure and Finance One integration

· ability to refund hall bonds to credit cards

· generic debt collection process for all of Council, debt collection by one team in Council

· Completed - -

· In progress - -

· Completed

· In progress -

· In progress

· Completed

· In progress

Requests for Service:

· more methods of submitting RFSs

· acknowledgement of RFSs to the customer

· ability to analyse faults/complaints/defects

· better online reporting

· standard data entry, consistent input process

· accuracy of information

· one system links all departments

· system identification of same site issues to prevent duplications

· all RFSs logged

· one media used to distribute inquiries/jobs

· updated action officer lists

· improved Confirm, tracking Confirm

· after hours information input

· full use of the system by everyone

· requests sent to the correct department

· action officers take responsibility and ownership

· progressive updates of notes

· email alert when jobs close to overdue

· close off performance managed and monitored

· Completed

· Completed -

· Post Implementation Review

· Completed

· Post Implementation Review

· Completed

· Post Implementation Review

· Completed

· Post Implementation Review

CERP IMPLEMENTATION PLAN

SLT approved an implementation plan in September 2013. This included the following short (to June 2014), medium (to June 2015) and long term (after June 2015) solutions to address areas where quick wins were readily achievable as well as targeting areas with high volume or high value transactions.

CERP Implementation Plan Solutions

Status ( Completed to the extent envisaged at the time /

Currently in progress )

Applications:

· web form for Responsible Dog Owner application

· improved use of TRIM for Animal Services

· increased use of Accellion for transferring large files

· improved website notes to assist customers

· web forms/ guiding notes for applicants

· online tracking of applications with eProperty

· investigation of eProperty pre-lodgement module

· Completed

· Completed -

· Completed

· Building consents

· Completed and decided not to proceed at present

Bookings:

· web form/email for booking requests

· investigation of a public calendar for inspection bookings

· cashiers all using IntelliLeisure

· Completed

· Investigation completed but inspection bookings transferred to Contact Centre instead -

· Completed

Information:

· redesign of existing website

· as seamless as possible a flow between systems

· DIEM broker implemented, more property information online (TRIM/Webdrawer/DIEM)

· TRIM workflow for Official Information Requests

· Completed

· Completed -

· Completed

Infringements:

· infringements payments online through eProperty

· enhanced use of TRIM for infringements

· Investigated and decided not to proceed

· Completed

Payments:

· investigation of more online payments

· basic self-service internet kiosks to allow access to HCC website and online services

· eProperty/ePayments (for all Property and Rating charges)

· Completed

· In progress -

· Available for most (all environmental consents, animals, phone infringement payments)

Requests for Service:

· improved Report a Problem

· optimised website for mobile devices

· web form to query RFS progress

· improved notification emails from Confirm

· improved addresses/RFS location

· automatic customer updates

· Confirm improvements

· mobility allowing updates in the field

· investigation of online map view of RFS’s

· map view for logging RFS’s

· Completed

· Customer can access updates

· Superseded by Internal Report A Problem

· Completed

BEST LOCAL GOVERNMENT SERVICES (BLGS)

In 2015 SLT made some changes to the CERP Programme and renamed it Best Local Government Services. BLGS was identified as one of the three key priorities for SLT. The Programme incorporated improvement projects being carried out across Council, with a view to standardising the approach to process improvements and establishing an organisational view of the improvements being made and the benefits that accrued. Projects were grouped by general topic and prioritised in discussion with the BLGS Governance Group. A huge number of BLGS projects have been undertaken since 2015 with the following projects completed.

BLGS Projects

Status ( Completed to the extent envisaged at the time /

Currently in progress )

Applications/Registrations:

· Text reminders for dog renewals

· New dog applications and payments online

· Fillable forms for building and resource consent applications

· Electronic processing of building and resource consent applications improvements

· Building consent fees calculator online

· eSubmit eTrack trial

· GoShift electronic building consent application forms

· Completed 2015

· Completed 2015 -

· Completed 2016

Information:

· Rates certificate requests online

· District Plan online for staff use

· District Plan online to the public

· District Plan Browse implemented

· New LIM tool

· District Plan Inquiry implemented

· Completed 2015

· Completed 2016

Finance:

· Online payments for building and resource consents, pool inspections, building Warrants of Fitness

· Contact Centre able to use ePayments for any Property and Rating payment over the phone

· Enterprise budgeting implemented

· Account to account payment implemented for LIMs

· Online payments and requests for building information

· Text reminders for rates

· Enterprise budgeting forecasting

· Completed 2015 - -

· Completed 2015 -

· Completed 2015

· Completed 2016

· Completed 2016 -

· Completed 2016

· Completed 2017

Requests for Service:

· Internal Report-A-Problem (IRAP) implemented

· Completed 2016

Customer Service:

· Snaphire implemented

· Additional functionality for public PC’s at front counter

· Completed 2016

· Completed 2017

Strategic Projects:

· IT and process changes to get teams working more electronically

· Health and safety online system

· Completed 2016 -

· Completed 2017

BLGS priorities as at August 2017 are:

BLGS Projects

Status ( Completed to the extent envisaged at the time /

Currently in progress )

Applications/Registrations:

· Building consents directly into Property and Rating

· Online progress tracking of building consents

· Online progress tracking of resource consents, LIMs, other applications, potentially health licences

· Environmental Health mobility

· In progress

· Completed

· In progress -

· In progress

Bookings:

· IntelliLeisure improvements and decision – possible enabler project for online bookings

· Leisure Active, swim, gym and facilities management requirements gathering – enabler project for online bookings

· Non-IntelliLeisure bookings online

· Building inspection bookings online

· In progress -

· In progress - -

· In progress

Information:

· Property documents online – planning information

· ePlan (District Plan) post project learnings

· In progress

Finance:

· Automatic payments review

· Electronic purchase orders

· New system requirements

· Managing Council’s aged debt

· Ongoing debt recovery process

· Electronic invoicing – improving the internal Request for Invoice process and improving use of IntelliLeisure invoices

· Internet banking payee revamp

· Part payments – instalments for infringements

· In progress

· In progress - -

· In progress

Requests for Service:

· RAP/IRAP post implementation review and process improvements

· In progress

Customer Service:

· Visitor sign in system Laings Road

· Small business coordinator trial

· Completed

· In progress

Strategic Projects:

· Parking review project – creating a Parking Policy, process improvements, technology review and business case, implementing any changes, implementing Pay My Park app

· TechOne’s CI Anywhere analysis and roadmap planning

· In progress - - -

· In progress

Attachment 4

Alternative Governance, Funding and Service Delivery Options

Analysis of the cost effectiveness of the following options for the governance, funding and delivery of the Information Services activity

LGA section 17A (4) requires consideration of the following options.

Option	Advantages	Disadvantages	Effectiveness	Cost
GOVERNANCE AND FUNDING BY HCC	· retains control in areas that play an important role in the achievement of strategic objectives and delivery of community outcomes · promotes the achievement of important non-commercial objectives · provides opportunities for community input through consultation · retains direct accountability to the community · direct responsibility for managing risk	· timeliness of decision-making by governance body	· the Council’s objectives for providing the service are met through governance and funding by HCC · internal customer surveys indicate high levels of customer satisfaction	· transparency of costs through the Long Term Plan and Annual Plan processes

Option

Advantages

Disadvantages

Effectiveness

Cost

GOVERNANCE AND FUNDING BY HCC

· retains control in areas that play an important role in the achievement of strategic objectives and delivery of community outcomes

· promotes the achievement of important non-commercial objectives

· provides opportunities for community input through consultation

· retains direct accountability to the community

· direct responsibility for managing risk

· timeliness of decision-making by governance body

· the Council’s objectives for providing the service are met through governance and funding by HCC

· internal customer surveys indicate high levels of customer satisfaction

· transparency of costs through the Long Term Plan and Annual Plan processes

GOVERNANCE AND FUNDING BY A JOINT COMMITTEE OR OTHER SHARED GOVERNANCE ARRANGEMENT	· provides for cooperation in areas that play an important role in the achievement of strategic objectives and delivery of community outcomes	· timeliness of decision-making by governance body · shared control · different strategic objectives and therefore different views of what is important · less connection to community outcomes	· the Council’s objectives for providing the service are not met as effectively through governance and funding by a joint committee or other shared governance arrangement	· transparency of costs through the Long Term Plan and Annual Plan processes
DELIVERY BY HCC	· retains control in areas that play an important role in the achievement of strategic objectives and delivery of community outcomes · promotes the achievement of important non-commercial objectives · provides opportunities for community input through consultation · retains direct accountability to the community · direct responsibility for managing risk	· timeliness of decision-making by governance body · expenditure level required to provide specialised equipment and services	· the Council’s objectives for providing the service are met through delivery by HCC · internal customer surveys indicate high levels of customer satisfaction · there is no evidence that a change in service delivery might provide improved service	· transparency of costs through the Long Term Plan and Annual Plan processes
DELIVERY BY A WHOLLY OR PARTIALLY OWNED CCO OF WHICH HCC IS A SHAREHOLDER	· improved commercial focus · ring-fencing financial risk · accountability for financial performance and the cost of operations · tax-effectiveness · independence · agility and less bureaucracy · ability to attract high quality board members and staff · economies of scale where several local authorities are involved · capacity to manage complex specialist or technical issues where several local authorities are involved	· lack of direct accountability to the community · tensions between pursuing profit and delivering community outcomes · additional ongoing costs · reduced ability of Council to manage risk · risk of ratepayers having to fund operational shortfalls · blurred responsibilities between Council and the CCO over the effective use of ratepayer funding	· the Council’s objectives for providing the service are not as effectively met through delivery by a wholly or partially owned CCO of HCC · there is no evidence that a change in service delivery might provide improved service	· there may be cost efficiencies but will also be additional overhead costs associated with establishing and overseeing a CCO · there may be taxation issues on establishment if assets are to be transferred to the CCO
DELIVERY BY ANOTHER LOCAL AUTHORITY	· ability to utilise specialist skills and/or equipment	· may lead to fragmentation and a lack of coordination, especially with other council activities · may reduce opportunities to improve effectiveness	· the Council’s objectives for providing the service are not as effectively met through delivery by another local authority · there is no evidence that a change in service delivery might provide improved service	· ability to enter contracts for the delivery of services
DELIVERY BY CONTRACTING OUT	· includes the ability for external agencies to seek funding from other sources · retains flexibility to choose between suppliers · separates Council from operational and financial risk · provides for use of specialist operators/ equipment at competitive rates where there are a number of providers	· may lead to fragmentation and a lack of coordination, especially with other council activities · may reduce opportunities to improve effectiveness · management of multiple contracts has cost and resource implications resulting from the need to manage several relationships, procurement processes and monitor performance across multiple contracts · lack of connection with ratepayers	· the Council’s objectives for providing the service are not as effectively met through contracting out · there is no evidence that contracting out might provide improved service · prior to 2009 Council’s IT services were contracted out for more than a decade but were brought in-house to improve service delivery and cost effectiveness	· where there are a large number of potential providers a competitive tender process should secure the best value
CONCLUSION AS TO WHICH IS THE MOST COST EFFECTIVE OPTION	The broad range of specialist services provided by Information Services is used extensively by both internal and external customers. Council has experience of outsourcing the IT component but ultimately it was considered more effective and efficient to manage these responsibilities in-house. Consideration has also previously been given to consolidating all ICT services in Wellington, the Hutt Valley and Poririua under a single infrastructure platform, including a single business software solution. Council opted not to progress with that initiative based on uncertain benefits and doubts about cost savings. Council continues to participate in the Wellington Regional ICT Steering Group. Continuing the current model is considered to be the most cost effective and efficient option for Hutt City Council.

59 29 November 2017

Finance and Performance Committee

25 October 2017

File: (17/1633)

Report no: FPC2017/5/299

Risk and Assurance Update and Strategic Risk Register

Purpose of Report

1. The purpose of this report is to update the Committee on risk and assurance actions and activities to maintain and improve Council’s internal control framework and to present the Strategic Risk Profile.

Recommendations

That the Committee:

(i) notes the information in this report; and

(ii) notes the Strategic Risk Profile 2017 as approved by the Strategic Leadership Team, attached as Appendix 1 to the report.

Background

2. The Risk and Assurance Manager provides an update twice a year on the actions and activities to maintain and improve Council’s assurance and risk management framework. The Risk and Assurance Update was last presented to the Finance and Performance Committee meeting on 2 August 2017.

Discussion

Strategic Risk Profile

3. Attached as Appendix 1 to the report is the annual Strategic Risk Profile for 2017 for Council, as approved by the Strategic Leadership Team (SLT) and Risk Management Working Group.

4. Strategic risks are those that affect the achievement of Council’s strategies, strategic objectives, key goals and strategic execution.

5. This profile considers each key strategy and provides a high level snapshot of strategic risk context, plans and treatment actions.

6. The risk status update provides an indication of a decrease, no change or increase in the risk ranking, which is derived from a combination of consequence and likelihood assessments for the risk based on the risk ranking matrix.

7. Responsibilities and supporting processes of the risk management framework are reinforced regularly. Managers periodically review risk in their respective division, identifying emerging themes, and provide assurance on risk treatment actions in place and any issues. Processes are in place for escalation outside of the regular reporting channels. Divisional Managers will next report on risk in January 2018.

8. The Strategic Risk Profile was last presented to the Finance and Performance Committee on 1 March 2017.

Risk Rating changes to previous Risk Profile

9. Urban Growth Strategy (UGS) risk rating has increased (worsened) to reflect current challenges and delays with implementing certain key UGS projects. Public views are being sought on housing intensification that may allow medium density development in existing residential areas to advance UGS targets. There is some uncertainly regarding the potential establishment of Urban Development Authorities through Housing Legislation and the impact on Council plans and powers.

10. Organisation strategic risk rating has increased while the updated organisational structure embeds and gains traction through its alignment to strategies. Health and safety plans continue to progress areas that require attention and improvement.

11. The Natural Hazards strategy rating has increased following the 14 November 2016 Kaikoura earthquakes. Actions are underway to address our susceptibility to, resilience and preparedness for natural hazards.

Internal Audit

12. Fieldwork for the internal audit of Silverstream Landfill is underway. An update will be provided at the next Risk and Assurance update.

13. The annual update of the three year rolling internal audit plan (for 2017-2020 period) is in the process of being drafted.

14. Monitoring processes are in place to track and follow up findings from internal audits, to ensure corrective actions are cleared as the resolution date falls due.

15. Monthly reporting continues to assess compliance with legislative and regulatory requirements. For the 2017/2018 year to date there have been no significant breaches.

Risk Management Working Group

16. The Risk Management Working Group (RMWG) has met once since the 2 August 2017 update provided to the Finance and Performance Committee.

17. Arrangements for the external emergency power feed for the Administration Building at Laings Road is being confirmed and a work instruction will be documented once tested.

18. Documenting the updated approach to crisis management is underway and will be put forward to SLT for review and approval in the first quarter of 2018.

19. In October 2017 the service priorities for business continuity were reviewed and updated.

20. Coordinated Incident Management System training continues to take place approximately six weekly and is run by Wellington Regional Emergency Management Office staff.

21. All sites have emergency evacuation plans and regular drills.

Options

22. Not applicable.

Consultation

23. Not applicable.

Legal Considerations

24. Not applicable.

Financial Considerations

25. Not applicable.

Other Considerations

26. In making this recommendation, the Risk and Assurance Manager has considered the purpose of local government in section 10 of the Local Government Act 2002. The Risk and Assurance Manager believes that this recommendation falls within the purpose of the local government in that it provides the Finance and Performance Committee with information to support their governance role. It does this in a way that is cost-effective because it provides assurance on the effective and efficient management of risk within Council.

Appendices

No.	Title	Page
1 ⇩	Strategic Risk Profile 2017	63

Author: Enid Davids

Risk and Assurance Manager

Approved By: Brent Kibblewhite

GM Corporate Services and Chief Financial Officer

Attachment 1

Strategic Risk Profile 2017

1. Risk classification

The risk classification (Low, Medium, High or Extreme) is an expression of risk in terms of a combination of the impact/consequence of an event and the associated likelihood of occurrence to derive a rating for the risk based on the risk ranking matrix. Refer 1.4 for impact/consequence and 1.3 for risk likelihood guides (extracts from the risk management system).

1.1 Urban Growth Strategy
Leisure and Wellbeing
Organisation
Financial Strategy
Infrastructure
Environmental Strategy
Natural Hazards Risk Rating / Assessment Chart

Consequence	Likelihood
Consequence	Rare	Unlikely	Possible	Likely	Almost Certain
Insignificant	L	L	L	M	M
Minor	L	M	M	M	H
Moderate	L M	M	M	H	H
Major	M	M	H	H	E
Extreme	M H	H	H	E	E

E: extreme risk; immediate action required

H: high risk; senior management attention is needed

M: medium risk; management responsibility must be specified

L: low risk; manage by routine procedures

1.2 Risk status update

The risk status update illustrates the movement of risk from the previous period and is denoted by the following format:

Decrease

No change

Increase

1.3 Risk Likelihood Guide

Descriptor	Description
Almost Certain	The event could occur in most circumstances, e.g. 50% + chance of occurring in the next 12 months or five out of every 10 years.
Likely	The event will probably occur in most circumstances, e.g. 20% chance of occurring in the next 12 months or two out of every 10 years. Or the event has occurred.
Possible	The event should occur at some time, e.g. 15% chance of occurring in the next 12 months or 1.5 times out of every 10 years. The event might occur.
Unlikely	The event could occur at some time, e.g. 10% chance of occurring in the next 12 months or once out of every 10 years. Possible but uncommon.
Rare	The event may occur only in exceptional circumstances, e.g. up to 5% chance of occurring in the next 12 months or once in 20 years or could occur under combination of circumstances.

1.4 Strategic Risk – Impact / Consequence

Strategic risks are significant as to materially impact Council’s future success or failure. Strategies have interdependencies and contribute to one another, making it difficult to map strategic risk to a defined impact.
For the purposes of preparing this strategic risk profile, the potential impact of risk events on strategic value drivers has been defined as follows:

Factor	Extreme	Major	Moderate	Minor	Insignificant
Strategic risk	Council’s viability, reputation and services may be severely damaged should the risk eventuate	Council’s viability, reputation and services may be affected in a major way should the risk eventuate	Council viability, reputation and services will only be affected in a moderate way should the risk eventuate
Financial	Loss, $20M or greater	Loss $5M - $20M	Loss $250K - $5M	Loss $100K - $250K	Loss less than $100K
	Ongoing loss of $2M p.a.	Ongoing loss $500K-$2M p.a.	Ongoing loss $25K-$500K p.a.
Health and Safety	Fatality(s)	Immediate hospital transfer or multiple serious injuries	Injury, possible hospitalisation, days lost	Minor injury, first aid treatment required	No or minor injury, no first aid required
Human Resource		Inability to recruit into key skilled positions on an ongoing basis	Inability to recruit into key positions
Legal	Sued/fined $20M or greater	Sued/fined $5M - $20M	Sued/fined $250K - $5M	Council sued or fined for up to $250K	Council prosecuted for minor offence
	Legislative non-compliance involving the potential for imprisonment of Councillor or senior management. Judicial review of Council decision on matter relating to funding or rates (rates invalid)	Failure to follow correct statutory processes Legislative non-compliance involving the prosecution or significant criticism of Council by Judiciary	Failure to follow correct statutory processes	Minor breaches first of its kind, one-off issues. Complaints to the ombudsman or other statutory offices	Small non-systemic and/or technical breach
Environmental Impact/Aspects	Significantly irreversible effect on the local ecosystem Serious damage of national importance	Long term contamination Serious damage of regional importance Strong statutory response with legal action E.g. Loss of Biodiversity	Some significant effect on environment, may have residual effect May cause response from regulatory authorities	Minor in itself but combined effects may be significant Some public complaints possible E.g. spilling copious amount of diesel into stormwater	Unlikely to cause public complaint No damage or contamination E.g. minor chemical spill of DDE
Image	Negative national multi media coverage for 2+ weeks	Negative national multi media coverage for 1-2 weeks	Negative national multi media coverage for one week	Negative national media coverage
Service Delivery	Unable to deliver services across 2 or more divisions for 10+ days	Unable to deliver services across one division for 10+ days	Unable to deliver services across one division for up to a week	Unable to deliver services across one division for 1-2 days	Disrupted service for small number of customers for one day
	Infrastructure service/s out for city for 10+ days	Infrastructure service/s out for 2 suburbs for one week	Infrastructure service/s out for city for one day		Infrastructure service/s out for one suburb for one day
	Permanent loss of facility infrastructure, service	Public amenity closed for 1 month or more	Public amenity closed for 2 weeks or more	Public amenity closed for 1 week or more	Public amenity closed for less than 1 week
Community	Loss of life	People in several suburbs ill through failure of infrastructure, facility or service	People in 2-3 suburbs ill through failure of infrastructure, facility or service	People in one suburb ill through failure of infrastructure. facility or service

Attachment 1

Strategic Risk Profile 2017

Strategic risk profile 2017

The execution of all strategies impacts Council’s standing in the community, carries stakeholder, reputational and legal risk that will generally have a financial impact.

2. Urban Growth Strategy

2.1 CONTEXT: Future population projections indicate Hutt City has lower than regional average population growth and an aging population. Ambitious targets are set around new housing developments city-wide, which includes growing new dwellings by 6,000 (average 300 p.a.) and population growth to 110,000 by 2032 (recent Statistics NZ’s population projection to 2033 is 108,100). In 2016, population reached 103,400, up 1.4 per cent from 2015, the highest annual increase since 2001 (0.7 per cent). As at August 2017, Lower Hutt’s economy is showing signs of improvement across a range of indicators with residential building figures in the year to June reaching their highest levels since the late 1970s. Council investment in development strives for balance so not to place an unreasonable burden of rates increases or debt on residents. Incentives to stimulate building and business development focus on STEMM: science, technology, engineering, mathematics and manufacturing industries. The expected benefits from the new Events centre (to be open for business May/Jun-18) are $51M to $93M brought into the economy over a 20 year period and 74 direct and 104 total new jobs created in the fifth year. The potential establishment of Urban Development Authorities through Housing Legislation (submissions closed 19 May 2017) may fast track development projects to ensure cities are connected, have quality housing that is sustainable, affordable and in a wide range of options.

2.1.1 Strategic risk description

This strategy contributes to the city’s economy and growth and focuses on growth targets, demographics (particularly youth), new homes and businesses and how this supports economic development. If Council does not stimulate economic and social development this may impact the city’s ability to retain and grow businesses and population and/or the ability to attract new businesses and/or tourists to the city. This may impact on the city’s rate-payer base. Reaching growth targets relies on:

§ Economic development plans being realised (four-star hotel, Events Centre, River Link Promenade)

§ Achievement of District Plan Changes

§ Readiness of supporting infrastructure (water etc.)

§ Achievement of city population growth

§ Political leadership

2.1.2 Key Strategies / Plans

2.1.3 Risk Treatment, actionS

District Plan

Urban Growth Strategy 2012-2032

Economic Development Plan 2015-2020

CBD Making Places 2030

Hutt City Development Charges and Rates Remission Policy (emphasis on CBD, Wainuiomata Mall and Naenae shopping centre)

Rates Remission and Grants for Economic Development

Petone 2040

Events Strategy 2013-2023

Vision Seaview Gracefield 2030 – Transforming the Future

STEMM projects and programmes to promote related employment options and grow the economic wealth of these sectors and the ‘Technology Valley’ brand

Manage within Resource Management Act the sustainable management of physical and natural resources and environmental management. Balancing environmental impacts with economic activities.

Parking Policy review of parking in the city is underway

National Policy Statement on Urban Development Capacity plans to meet requirements

NB: Review of Housing Policy 2008 on hold, while the potential establishment of Urban Development Authorities is underway

From 1 October, the City Transformation Group organisation structure is aligned to this strategy, by combining all the key functions that focus on city planning and development to drive growth and rejuvenation while enhancing and protecting the wellbeing of residents and the environment.

Provide development stimulus incentives – development contributions and rates remission schemes to attract investment to the city.

Gain political and community buy-in for District Plan Changes to achieve growth targets.

Housing growth challenge – a change required in supply and type i.e. for an increasing ageing population, smaller households and affordable housing types for young families.

There is ongoing liaison with Wellington Water to ensure there is supporting infrastructure in (potential) development areas.

RiverLink Promenade project (with GWRC and NZTA) will enable connection between CBD and Hutt River and deliver flood protection, lifestyle and transport outcomes. This also involves a pedestrian and cycle bridge linking Melling Station to the CBD.

Urban Growth Strategy Projects:

§ Kelson ¡ Stokes Valley

§ Wainuiomata ¡ District Plan Changes

CBD development projects: ¡ Hotel construction underway

§ Events Centre ¡ 177 High Street

§ River Link and Promenade ¡ District Plan

§ Attracting commercial and residential activity to CBD

Proposed plan change 43 that could allow for a wider range of housing types and medium density housing in the city.

Proposed plan change 39 Transport, to review transport provisions and give effect to the Regional Policy Statement.

Neighbourhood Precinct Placemaker role and Suburban Shopping Centres Improvement fund to revitalise suburban shopping centres.

Ongoing monitoring of progress, outcomes and implementation of Urban Growth Strategy. There were 325 new homes constructed during the financial year 2016 / 2017.

3. Leisure and WellBeing Strategy

3.1 context: Hutt City has some of the highest levels of social deprivation in New Zealand, in particular Naenae, Taita, Pomare and Delaney, Epuni East and Waiwhetu North. Heightened nationwide construction activity may impact the availability of project resources, contractors, project/building costs and health and safety compliance. There is pressure within the funding sector impacting on Community Facilities Trust ability to achieve fund raising goals.

3.1.1 Strategic risk description

This strategy contributes to the city’s culture, physical and educational wellbeing and aims to positively impact residents’ quality of life, prospects, safety and connectivity. If this strategy is unsuccessfully executed, the above outcomes may not be achieved and will impact the delivery of the Vision for Hutt City.

Council’s suite of capital projects may see spending of up to $100 million over the next 10 years on projects and initiatives to rejuvenate the city and stimulate positive change in the community. The key uncertainties associated with the successful redevelopment into World-Class Community Facilities relies on:

§ Funding and fundraising

§ Best Practice Project Management

§ Meaningful Community Engagement

§ Managing any political uncertainties

3.1.2 Key Strategies / Plans

3.1.3 Risk Treatment / actionS

Leisure and Wellbeing Strategy 2012-2032

Renewal and revitalisation of facilities

Rejuvenation Hutt City

CBD Making Places 2030

Long Term Integrated Community Facilities Plan 2015-2045

Walk and Cycle The Hutt strategy 2014-2019

Go Outside and Play – a comprehensive plan for play in Hutt City

Smoke Free Outdoor Places Policy

Strengthen current social projects focussing on high deprivation communities with a focus on core strengths that make a difference (literacy, arts, recreation). Including:

§ YOUth Inspire Major’s task-force for Jobs

§ North East Kids Initiative and North East Pathways

§ TAKA: Te Awa Kairangi Access Trust and corporate relationships

§ Healthy Families

§ Computer Clubhouses

Accessibility and Inclusiveness Plan 2017 to 2027 and advisory panel

Sponsorship Guideline 2017 and processes

Community Funding Strategy, updated May 2017, focuses efforts on reducing inequality through co-funding initiatives provided by externally providers and improved representation through Community Panels and introduction of communicate projects (assets)

From 1 October, the City and Community Services Group organisational structure is aligned to this strategy (and infrastructure strategy) to deliver high quality community services, facilities and infrastructure using an integrated, community-focused approach.

The Community Hubs model clusters together civic, social and sporting facilities into integrated facilities to achieve better social and economic outcomes for communities’ social, educational, recreational and cultural activities.

Updated facilities provide a mechanism to stimulate community transformation. Large scale projects include Civic Precinct (Town Hall, Events Centre and Riddiford Gardens), Avalon Park (stage 3) and Fraser Park Sportsville (stage 2 (of 3) works in progress).

Completed projects include Huia Pool fitness suite, Learn to Swim and hydrotherapy pools (Jul-17), Purpose built Stokes Valley Community Hub (Oct-17) and Walter Mildenhall Regional Bowls Centre (Sep-17).

Upcoming initiatives include Naenae community hub and proposed Sportsvilles in Wainuiomata 2018-2020 and Petone 2023-2025.

Cycling project spend of $13M over 2015-18 from Council/NZTA/Urban Cycle Fund.

Wharf refurbishment plan to 2020 – refurbish shortened Petone Wharf, fully refurbish Rona Bay and Days Bay wharves and removal of Point Howard Wharf.

Large projects (e.g. events centre) have project steering groups that include Councillors to support project governance. Strategic Leadership Team has overarching programme view of prioritisation, staging, funding and resource allocation across strategic projects.

Effectively resourcing projects, particularly the availability of people and mix of skills, to successfully implement this strategy.

Sound analysis for decisions making and meaningful stakeholder communications.

Monitoring processes are being agreed to measure progress against strategic objectives for lifestyle, culture and heritage, physical and educational wellbeing to ensure outcomes are achieved in a cost effective manner. Community outcomes will be apparent in future years.

4. Infrastructure Strategy
4.1 context: Council aims to deliver reliable, quality infrastructure services for water treatment and supply, wastewater disposal, stormwater drainage, flood protection, roading and footpaths that meet the current and future needs of the city in the most cost effective way. The provision of assets and infrastructure assets are essential for the continued delivery of critical services and public and social good. Council is a (fifth equal) shareholder in Wellington Water Limited who jointly manages water treatment and supply, stormwater and wastewater service across the Wellington region for its shareholding councils. Ownership of underlying assets, policies and charges resides with Council. Since April 2017, chlorine is now added to reticulated water supplied from Waterloo Treatment Plant following positive E.Coli tests and an increased level of coliforms (test results from December 2016 onwards).
4.1.1 Strategic risk description The Infrastructure Strategy, supported by Asset Management Plans, provides for good-quality essential infrastructure networks to meet the current and future needs of communities in a cost-effective way for households and businesses. If this strategy is not successfully executed, infrastructure network outcomes may not be achieved. Key focus of Infrastructural Asset Management Plans revolves around essential infrastructure networks being reliable, resilient, fit for purpose, affordable and sustainable for the long term. Vulnerability exists if critical infrastructure, such as reservoirs and water network, bridges and roading network are damaged due to a major earthquake, climate change, accidents or other threats affecting the Hutt Valley
4.1.2 Key Strategies / Plans	4.1.3 Risk Treatment, actionS
Infrastructure Strategy 2015-2045 (under review and update) Infrastructure Asset Management and Maintenance Plans Local Government Act 2002, Resource Management Act 1991 and Land Transport Management Act 2003 Hutt Valley Floodplain Management Plan Public Health Risk Management Plan for water supply Asset Renewal Strategy and Asset Development Strategy	From 1 October, City and Community Services Group organisational structure is aligned to this strategy (and leisure and wellbeing) to deliver high quality community services, facilities and infrastructure using an integrated, community-focused approach. Infrastructure based projects in the Long Term Plan completed or on target for delivery as a method for implementing asset management plans. Strategic Project Team headed by Strategic Project Director will ensure selected capital projects are adequately resourced and processes aligned to deliver those key projects. Renewal, maintenance and upgraded assets to meet future service levels. RiverLink project with Greater Wellington Regional Council to upgrade the river defences from Kennedy Good Bridge to Ewen Bridge aims to protect our city from up to a one in 440 year flood event. Alignment of Wellington Waters three waters aspirations to meet Council urban growth strategy aspirations through modelling and liaison. Seismic strengthening for the one remaining bridge on seismic review programme will commence 2020/21. Planning process – District Plan and Annual Plan. Contract management, safety audits and testing programmes. Monitoring processes are being agreed to measure progress against infrastructure strategic objectives and outcomes being achieved in a cost effective manner. Wellington Water “Shaping Our Future” initiative to deliver value to Council.

5. Environmental Sustainability Strategy and Resilience
5.1.1 Strategic risk description Council strives to show leadership in environmental protection and community resilience; and ongoing adaption and enhancement, so to protect and enhance the environment, air and water quality. Council actions must align with this aim and ensure business practices and resourcing is provided accordingly (reputational risk). The Environmental Sustainability Strategy contributes to the city’s environmental protection, sustainability, natural disasters, safety and climate change. This strategy covers seven key focus areas: water, waste, transport, land use, biodiversity, energy and resilience. If this strategy is unsuccessfully executed, then outcomes to protect, maintain and enhance the quality of the environment now and for the reasonably foreseeable needs of future generations may not be achieved.
5.1.2 Key Strategies / Plans	5.1.3 Risk Treatment, actionS
ESS Environmental Sustainability Strategy 2017-2043 and Implementation Plan Wellington Region Waste Management and Minimisation Plan 2017-2023 Regional Waste Education Strategy Long Term and District Plan contains environmental projects, goals and measures All Local Authorities to take into account the need to maintain and enhance the quality of the environment (Local Government Act s14) Walkway and cycleway projects to address emissions and network optimisation National Environmental Standards for Sources of Human Drinking Water, Drinking Water Standards for NZ 2005 (revised 2008), MOH grading of water source and treatment plant	Environmental Impact and Aspects Register for ISO14001certification Ongoing monitoring of outcomes and implementation of ESS activities Local action plans and activities for waste minimisation programme such as input into development of Regional Solid Waste Bylaw and National Waste Data Framework, Resource Recovery Centre feasibility Recycling and refuse collection Water sources treatment standards for treatment and management of water Silverstream Class A Landfill meets standards outlined in the Centre for Advanced Engineering’s Landfill Guidelines Public open spaces network, reserves, parks, Urban Forest Plan Sustainability and Resilience Team structure reflects an elevated cross Council integrated approach to lead and advocate for environmental sustainability to deliver ESS goals Newly established Asset Manager Horticulture and Ecology Advisor will support actions to achieve biodiversity objectives in this strategy

5.2 RESILIENCE, NATURAL HAZARDS RISK AND EMERGENCY MANAGEMENT Context: There are four major fault lines within the Wellington region, making the Hutt Valley vulnerable to earthquakes. Hutt City sits on a natural flood plain and is high flood, tsunami and landslide risk due to its topography. Weather volatility, flood frequency and intensity in Hutt Valley is projected to increase. Sea level rise may impact low-lying Petone, Eastbourne and Seaview and disrupt transport systems.

5.2.1 Strategic risk description

Preparedness is vital to manage the city’s exposure and susceptibility to natural hazard events and emerging environmental trends in order to be resilient and able to plan for, respond to and thrive after an emergency event. Emergency planning interacts with ESS environmental goals, which include ‘resilience’ to address natural hazards, climate change and risk areas such as resource shortages and economic shocks, infrastructure strategy.

Lack of emergency preparedness may result in the inability of Council and our communities to respond to and/or recover from natural hazard/s.

5.2.2 Key Strategies / Plans

5.2.3 Risk Treatment, actionS

Wellington Regional Natural Hazard Management Strategy (NHMS) February 2017 coordinated through Wellington Regional Emergency Management Office (WREMO) with Greater Wellington Regional Council and other participating councils WCC, PCC, UHCC, and KCDC. Staff and resources are pooled to have a co-ordinated regional emergency response plan based on the emergency preparedness principles of 4R’s reduction, readiness, response and recovery. (WREMO currently undergoing a review).

Hutt River flood management planning

Water Wellington ‘Water Supply Resilience Project’ 2016-2019

Opus study of road network resilience

Infrastructure asset management plans, emergency response plans and contingency plans for infrastructure risk

National Infrastructure Plan 2011-2031 (via Treasury National Infrastructure Unit)

Investigation and design of a Cross Valley Link begun in 2016 and is closely related to NZTA’s agreed Petone to Grenada link road to enable alternative transport networks

Implementation of NHMS will set our communities on a pathway towards risk reduction.

Evacuation procedures, co-ordinated Emergency Operating Centre operable, Standard Operating Procedures and use of Coordinated Incident Management System (CIMS).

Cooperation with central government, emergency services, lifeline utilities, Wellington Regional Civil Defence and Emergency Management (CDEM) Group and getready.org.nz for preparedness and early warning system. Input to regional resilience planning and implement local initiatives.

CDEM capacity increased both internally and in communities. An outcome of the organisational review is to improve capacity and capability to support community resilience and emergency management. Divisional Manager Regulatory Services responsibilities now include coordinating Council’s emergency management, crisis management and business continuity planning activities.

Responsibilities are being clarified for emergency management capability/arrangements between HCC and WREMO.

Civil Defence Emergency Management Act 2002 s58 allows for reduced services during and after an event.

Emergency management mapping and use of GIS technology.

Development of Readiness in Welfare, Emergency Assistance Centres and Mass Temporary accommodation, community hubs re-established and Local welfare committee.

Council’s Resilience Framework has four key priority areas: disaster preparedness, addressing inequalities, climate change and sea level risk and economic vulnerabilities.

City-wide tsunami awareness and evacuation initiatives are in progress with Blue Lines and additional signage to highlight evacuation routes and city emergency management plans

Progress of actions plans to remediate gaps following 14 November 2017 earthquakes and storm to address our susceptibility to, resilience and preparedness for natural hazards.

Execution of Regional Asset Management Plan and investment in water infrastructure. Critical water supply pipelines and water reservoir seismic upgrades. Priority users have supply plans in place during in an event.

Water supply works in June 2017 on Knights Road and Cornwall St to enable a continuous ring around the Hutt Hospital that will improve the resilience of the water supply to Hutt Hospital and central Lower Hutt. Further, a series of double hydrants were installed along Knights Road to allow a number of tankers to simultaneously draw water from the well field should there be a significant earthquake. This water is then available for distribution via tankers for emergency use.

Water quality investigations underway since May 2017 to ensure safe water supply to Lower Hutt. Collaborative work between Hutt City Council, Greater Wellington Regional Council and Wellington Water Limited to track contamination.

Hutt City Mayor is the deputy chair committee overseeing the development and implementation of the 100 Resilient Cities plan.

6 Financial strategy

6.1 context: Council maintains $1.4 billion worth of assets and $155 million from annual income (as at 30 June 2017). Spending of $600 million over the next ten years is anticipated in order to maintain, improve and create new assets. Council has limited sources of revenue (rates, fees and charges, interest and dividends from investments, grants and subsidies) and borrowing to adequately fund agreed levels of service and facilities. Failure of income streams and/or unplanned expenditure could impact the level of funding and/or levels of service if:

§ A major adverse event, such as an earthquake or flood requiring substantial additional expenditure by Council;

§ Economic conditions changed such that there is a significant increase in Council costs or significant reduction in Council revenue (outstanding rates and other debt), such as severe financial market or economic downturn; and/or

§ There are significant new initiatives or projects that have community support despite funding implications.

6.1.1 Strategic risk description

This strategy is based on plans and assumptions regarding financial position, funding options, borrowings, asset management plans, resourcing etc., is set in public consultation and agreement and aims to ensure rates are affordable, competitive and promote the sustainable funding of Councils services being delivered efficiently.

The key risk is that Council is unable to adequately fund services to fully meet its objectives, projects and programmes to rejuvenate and create an exciting Hutt City now and into the future. Strong financial management enables investment where it’s needed – in recreation and community facilities, projects that improve the city’s resilience and incentives for developers to encourage growth.

6.1.2 Key Strategies / Plans

6.1.3 Risk Treatment, actionS

Long Term Plan 2015-2025 and Annual Plan 2016-2017

Treasury Risk Management Policy – including adherence to limits, liability management and investment policy, debt management and expert independent advice

Revenue and Financing Policy

Robust budget setting and financial forecasting processes

2017 Financial Strategy

Development Contributions Policy

Financial Strategy is agreed as part of the public consultation process. It strikes a balance between economic growth and affordability and provides for greater budgetary flexibility to finance Council’s programme of rejuvenation and revitalisation, while providing increased borrowing limits should the need arise following a significant natural disaster.

Long Term Plan / Annual Plan activities to be funded within the limits approved in the Financial Strategy.

Regular monitoring and year end forecasting to SLT and Councillors including recommended actions where a year end variance is forecast. Six weekly monitoring of strategic (significant) projects review status, risks and financial forecasts.

Standard and Poor’s AA long term with “stable” outlook and A-1+ short term credit rating affirmed 30 August 2017.

Strong history of rates revenue collection percentages and creditor/debtor controls.

Standby credit facility to provide quick access to emergency funding.

Adequate insurance cover is in place based on accurate reinstatement / replacement costs. Valuation review underway of above ground assets and modelling of maximum possible loss. Risk profiling to identify under and over insurance.

7 Organisational performance
7.1 context: Council operates in a complex and varied environment: regulatory, infrastructure, environmental, community, recreation and leisure, economy and city development, customer services etc. These operations are carried out within financial, technical, technology and workforce constraints. Council’s workforce is a diverse group of people who perform a wide variety of roles that contribute to making Hutt City a great place to live, work and play. Council must attract, retain and develop skilled and engaged staff and leaders in order to deliver its Vision, long term strategies and plans.
7.1.1 Strategic risk description The achievement of Council’s strategies and strategic execution are key matters that impinge on the whole organisation, rather than an isolated unit. People, processes and technology must be managed, maintained and developed in relation to workforce capability, capacity, engagement and retention, and workplace practices in order to achieve Council’s Vision and strategic priorities, be a well-governed city and avoid central government intervention. The achievement of Council’s vision, strategic priorities and to keep pace with the development of change requires an ongoing focus on organisation factors such as: § Health and safety risks being addressed; § Successful initiatives that drive high performing staff and grow confident and inspirational leaders; § Effective performance monitoring of progress against strategic outcome and strategic outputs; and § Alignment of systems, resources and decision making processes are adequate to the needs of the organisation to deliver the LTP.
7.1.2 Key Strategies / Plans	7.1.3 Risk Treatment update / actionS
Significance and Engagement Policy 2015-2018 Human Resources Plan Health and Safety strategy 2016-2021 and Plan 2016/17 2017 Well Being Programme Ongoing Operational Risk profiling Customer Commitments and Service Standards Strategic initiatives, plans and projects for all strategic priority strands – Best Local Government Services Initiatives and projects, Development of World-Class Community Facilities and Stimulate Economic and Social Development Performance Management, Competency Framework and objectives setting Remuneration framework and rewards system The organisational review effective 1 October, aims to improve culture, organisational capacity and capability pressures, processes, activities and alignment necessary to successfully achieve long-term priorities and ambition strategic outcomes. The updated structure allows for stronger accountability and great focus on working collaboratively, minimising silos for seamless connection across the organisation. An embedding period is expected before anticipated benefits gain traction.	There is additional perceived risk awareness of exposures in health and safety matters. Focus on implementing health and safety strategy that promotes a culture of health and safety ownership across the organisation to promptly identify, resolve and reduce risk as far as reasonably practicable. On the Road to High Performance programme and Performance Partnerships approach continues to grow confident and aspirational leaders and high performing teams. Recently reviewed performance and remunerations frameworks came into effect during 2017 to motivate and clarify how performance is measured. Planning and actions from Best Places to Work Survey. Business planning process aligns with strategic objectives and outcomes. Monitoring and reporting, particularly against initiatives and progress towards Best Local Government Services and Customer complaint and feedback management initiatives. Group Services Group aims to focus providing high quality, efficient, effective and innovative services across Council.

77 29 November 2017

Finance and Performance Committee

10 November 2017

File: (17/1734)

Report no: FPC2017/5/304

Insurance Update

Purpose of Report

1. To update the Committee on Council’s 2017/18 insurance renewal.

Recommendations

That the Committee notes the report.

Background

2. A comprehensive report on Council’s insurance arrangements was provided to the 2 August 2017 meeting of this Committee. This report is to inform the Committee on the outcomes and impact of the 1 October 2017 renewal of Council’s insurance policies.

3. Council together with Kapiti Coast District (KCDC), Porirua City (PCC) and Upper Hutt City Councils (UHCC), collectively known as the Outer Wellington Shared Services Insurance Group or OWSS, has been purchasing insurance for their respective assets on a combined basis since 2009.

4. Greater Wellington Regional Council (GWRC) joined the OWSS in 2016 to insure their above ground assets only through the collective. For insurance purposes, the OWSS Councils and GWRC are collectively known as the Wellington Councils Insurance Group (WCIG).

5. Aon is the insurance advisor and broker for both OWSS and WCIG. Aon were in London during September ahead of the 1 October 2017 renewal date to obtain the best renewal options and terms for the WCIG. A representative of the WCIG accompanied Aon in London.

6. As advised in the 2August 2017 report, insurers had suffered significant losses in the Wellington property market from the 14 November 2016 Kaikoura earthquake. With some insurers indicating they would not honour existing rate agreements, there was risk in securing replacement capacity particularly with domestic insurers, and material increases in premiums at renewal were expected.

Discussion

7. Council has a comprehensive range of insurance policies which are now renewed on 1 October each year;

Natural Catastrophe Damage to Infrastructure (NCDI)

(for underground assets)

Material Damage and Business Interruption (MDBI)

(for aboveground assets)

General Liability & Professional Indemnity

Statutory and Employers Liability

Residential Property

Crime

Hall Hirers’ Liability

Motor Vehicle

Overseas Travel

Fine Arts

Marine Hull

Cyber Risks

8. The NCDI policy (for infrastructure (underground) assets) and the MDBI policy (for aboveground assets), are Council’s largest insurance policies together accounting for 90% of policy premiums. These two policies were discussed in detail in the 2 August 2017 report.

9. Following several years of reducing insurance premiums, the insurance market had shown signs of tightening. During the 2016 renewal process, Aon recommended WCIG execute a Long Term Agreement (LTA) for both infrastructure assets (below ground) and above ground assets that secured insurance rates for two years from 1 October 2016 to 1 October 2018.

10. The LTA’s include provisions that allow insurers a right to review the terms and conditions, including premium rates and deductibles, if any of the following occur:

a. There had been a material change in risk;

b. Insured claims incurred under the policy exceeded 50 per cent of the net written premium received from the first period of insurance;

c. There was a reduction in insurers’ reinsurance facilities or substantial alterations to the terms and conditions of reinsurance previously offered to insurers.

11. The magnitude 7.8 Kaikoura earthquake that occurred on 14 November 2016 was significant. Numerous claims were lodged with insurers resulting in significant losses, particularly to domestic insurers, with a number of domestic insurers placing embargos on writing new business or changing limits and/or deductibles for existing policy holders.

12. In the 2 August 2017 report, Aon advised that New Zealand insurers were adopting different positions regarding LTA rates, with three main insurers signaling premiums in Wellington were being based on more expensive technical rates (ie., insurer’s general rates derived from their own loss modeling), resulting in premium increases ranging from 25 per cent to 500 per cent (depending on engineering reports and/or compliance with National Building Standards and/or the previous year’s base rate). In addition, New Zealand insurers were also looking to remove capped deductibles on losses to above ground assets caused from natural catastrophe.

13. Aon further advised the London property insurance market had incurred large losses from New Zealand catastrophes over the previous six years. Consequently, premium increases ranging from 10 per cent to 15 per cent were possible and preservation of LTA rates would be dependent on the loss ratio of incurred insured claims to net premiums not exceeding 50 per cent.

2017/18 Renewal

Natural Catastrophe Damage (Infrastructure) Policy (below ground assets)

14. Councils NCDI policy contains a LTA and the placement is predominately with offshore insurers. With a clean claims experience, the London market honoured the 2 year rate agreement however the small amount placed with domestic insurers resulted in an overall 6.2 per cent premium increase.

Material Damage and Business Interruption Policy (above ground assets)

15. The MDBI policy also contains a LTA. 50 per cent of Councils previous MDBI policy was underwritten by domestic insurers with Vero New Zealand (Vero) the lead underwriter and having 30 per cent of the total policy placement.

16. Vero incurred substantial losses in the Wellington market from the Kaikoura earthquake, and did not honour their two year rate agreement. Vero were prepared to continue their existing 30 per cent participation but at a significant (more than double) increase in premium. Aon found it difficult to get alternative capacity from the New Zealand market to replace or reduce Vero’s participation domestically due to a lack of available Wellington earthquake capacity.

17. Vero also write a substantial share (50 per cent) of the OWSS Residential Property programme as well as front for three reinsurers on the NCDI placement. Vero’s continued participation on the Residential and NCDI placements was subject to them being retained on the main MDBI policy, for which they stipulated a minimum level of placement.

18. Chubb NZ chose not to renew their placement.

19. Due to the difficulty in finding alternative capacity in the New Zealand market to replace Chubb NZ and Vero’s placements, and given Vero’s importance in the Residential programme and fronting for other insurers in the NCDI programme, and the need to maintain a breadth of ongoing relationships with domestic insurers to reduce future renewal risk, the WCIG accepted the need to maintain a placement with Vero at their increased price, but for a smaller (15 percent) placement.

20. AIG honoured their 2 year rate agreement for their previous 15 per cent placement and agreed to take up 10 per cent of Vero’s previous placement, at an increased price but not as significant as Vero’s. AIG also agreed to take over from Vero as the New Zealand lead underwriter for both the MDBI and Residential programmes.

21. Berkshire Hathaway NZ was one insurer who was prepared to write new business in the Wellington market and they have taken 10 per cent of the placement.

22. All existing London insurers confirmed their expiring participation at the expiring slip rates, ie, honouring the 2 year rate agreement. The London market agreed to increase their participation in the MDBI programme from 40 per cent to 50 percent, however the extra 10 per cent was at increased rates but significantly less than the rates offered by Vero NZ.

23. Previous and current placements are summarised in the following table;

Insurer	2016/17	2017/18
Aon Group (London)	40%	50%
Berkshire Hathaway NZ	-%	10%
Vero NZ	30%	15%
AIG NZ	15%	25%
Chubb NZ	15%	-%

Offshore (London)	40%	50%
Domestic	60%	50%

24. The impact from all the placement changes has resulted in a 31.4 per cent premium increase for Council’s MDBI policy.

Policy Premium Changes

25. Council’s other insurance policies have also incurred premium increases of varying degrees;

Policy	2016/17	2017/18	change
Natural Catastrophe Damage to Infrastructure (for underground assets)	$896,568	$952,267	6.2%
Material Damage and Business Interruption (for aboveground assets)	$770,833	$1,012,750	31.4%
General Liability & Professional Indemnity	$70,000	$73,782	5.4%
Statutory and Employers Liability	$7,655	$7,655
Residential Property	$15,806	$19,452	23.1%
Crime	$5,036	$6,286
Hall Hirers’ Liability	$525	$875
Motor Vehicle	$28,866	$44,526	54.3%
Overseas Travel	$407	$407
Fine Arts	$38,898	$44,293
Marine Hull	$1,440	$1,610
Cyber Risks	$10,933	$16,280	48.9%
	$1,846,967	$2,180,183	18.0%

26. The above are the gross premiums and include cover for Hutt Valley Water Service’s assets for which partial recovery is received from UHCC. UHCC also contribute to the premiums of the non HVWS water assets covered by Councils NCDI policy.

27. $45,000 of the MDBI increase is actually an increase in the Fire Service Levy (FSL), charged via insurance premiums on behalf of Fire & Emergency NZ (FENZ). From 1 July 2017, HCC ceased direct funding of rural fire services with this now being provided by FENZ resulting in the increased FSL.

28. The 23.1 per cent increase to the Residential Property policy premium is due to the 24 per cent average increase in Hutt Valley residential property valuations in October 2016.

29. The increase in Motor Vehicle premiums is due to an increase in claims over the last couple of years and to a lesser extent, an increase in fleet value. Aon also recommended changing to a flat premium, one without a ‘burning cost adjustment’ clause, to safe guard participating Councils against paying an additional premium in the event of another bad claims year.

Consultation

30. There is no need for consultation.

Legal Considerations

31. With the exception of the Motor Vehicle policy (refer above), there have not been any significant changes to policy terms and conditions. The detailed terms and conditions of our NCDI and MDBI policies, have previously been independently reviewed to ensure they provided adequate cover. Other policies which are less complex were reviewed internally and by Aon.

Financial Considerations

32. The insurance budget for 2017/18 was increased by $121,000 in the 2017 Annual Plan in anticipation of the expected (but unknown) premium increases following the Kaikoura earthquake.

33. Insurance costs for 2017/18 are forecast to be $2.060 million against a budget of $1.968 million resulting in an unfavourable forecast variance of $92,000. Costs for 2017/18 comprise 3/12’ths of the net premiums for the 1 October 2016 to 30 September 2017 insurance period and 9/12ths of the net premiums for the 1 October 2017 to 30 September 2018 insurance period.

34. Draft budgets for 2018/19 and future years will need to be increased to accommodate the 18.0 percent overall premium increase.

Other Considerations

35. 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 elected members with the information needed to undertake their governance role.

Appendices

There are no appendices for this report.

Author: Brent Kibblewhite

GM Corporate Services and Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

83 29 November 2017

Finance and Performance Committee

10 November 2017

File: (17/1732)

Report no: FPC2017/5/298

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 October 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 October 2017 is attached as Appendix 1 to the report.

Discussion

3. It is still early in the financial year. Some forecast adjustments have been made but a complete yearend reforecast has not yet been completed.

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

Year to Date: there is an operating deficit of $2.9M compared to a budgeted deficit of $4.5M giving a favourable variance of $1.6M. The variance is mainly due to operating costs across a number of activities being below budget to date due to the timing of work, offset by reduced rates and operating and capital subsidies being less than budget at this stage due to programmed work being behind schedule.

Year End: there is a year end unfavourable variance of $2.6M being forecast at this stage mainly due to reduced subsidies of $3.3M (in the main from budgeted shared path capital expenditure being deferred to next year and beyond), and a forecast over spend in CFT grants of $2.0M, offset by higher user charges of $1.4M and a forecast under spend in Development Stimulus payments of about $1.5M.

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

There is a year to date loss of $1.8M on interest rate swaps. This is a non-cash item.

6. Capital Expenditure:

Year to Date: there is a favourable variance of $14.2M against a year to date budget of $27.7M. Of this variance, $2.2M relates to the Town Hall / Events Centre, $4.0M relates to Strategic Property purchases, $2.4M relates to Parks & Reserves projects, and the balance is spread across a number of activities. These variances are mainly the result of delays in projects.

Year End: there is a forecast favourable variance of $7.1M mainly due to an expected underspend of $6.4M in the Shared Path projects, which will be carried over (along with the associated subsidy) to next year. The balance is attributable to a permanent $0.4M favourable project variance on the Stokes Valley Community Hub and $0.3M for the Huia Pool roof membrane project which is being carried over to next year.

A list of projects (operating and capital), is included as Appendix 2 to the report.

7. Asset Sales:

Asset sales at this stage are conservatively forecast to be $6.3M under budget with a corresponding carry over to 2018/19.

8. Net Debt:

Net Debt is currently forecast to be $161.5M at year end, $1.5M higher than budgeted primarily due to the deferral of asset sales.

9. Annual Leave Liability:

Annual leave liability at the end of October is at a similar level as October last year. The liability will continue to increase to December and will then drop as staff take leave over the Christmas/New Year period. Over the past two years the overall liability has shown a downward trend as reflected in the following graph.

Treasury Compliance

10. All limits within the Treasury Risk Management Policy have been fully complied with including debt limits. The Treasury Compliance Report as at 31 October 2017 is attached as Appendix 3 to the report.

Consultation

11. There is no requirement to consult.

Legal Considerations

12. There are no legal implications.

Financial Considerations

13. The financial considerations are included in the report.

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

Appendices

No.	Title	Page
1 ⇩	Financial Tables October 2017	86
2 ⇩	Projects List October 2017	108
3 ⇩	Treasury Compliance Report October 2017	119

Author: Philip Benseman

Budgeting and Reporting Manager

Reviewed By: Brent Kibblewhite

GM Corporate Services and Chief Financial Officer

Approved By: Tony Stallinger

Chief Executive

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)

§ Leisure and Wellbeing Strategy 2012-2032	§ Infrastructure Strategy 2015-2045
§ Urban Growth Strategy 2012-2032	§ Environmental Sustainability Strategy 2015-2045

Cycle 1	Officer	For Council
Rates Postponement Scheme for Residential Ratepayers Aged 65 and over	B Kibblewhite	·
Rating Policy Review for sporting, recreational, cultural and community facilities	B Kibblewhite	·
Council Asset Revaluations	D Newth	·
Draft SOIs for CCOs – CFT, SML, UPL	B Kibblewhite	·
Six Monthly Reports for CCOs	B Kibblewhite	·
Appointment of Director SML and UPL	B Kibblewhite	·
Six Monthly Report – Huia Pool Development and Funding	M Reid
Audit NZ Final Management Report	D Newth
Draft SOI for LGFA	B Kibblewhite
Finance Update	B Kibblewhite
Finance & Performance Work Programme	A Doornebosch

Cycle 2	Officer	For Council
Tax Risk Management Update	D Newth	·
CCO Lending – due for review June 2018	Chief Financial Officer	·
Review of Agreement with GWRC to collect rates – on or before 30 June 2018	Chief Financial Officer	·
Appointment of Directors to CFT	B Kibblewhite	·
Six Monthly Strategic Property Update	G Craig
Finance Update	Chief Financial Officer
Finance & Performance Work Programme	A Doornebosch

Determine and monitor: