Agenda of Finance and Performance Committee

HuttCity_TeAwaKairangi_BLACK_AGENDA_COVER

Finance and Performance Committee

23 February 2018

Order Paper for the meeting to be held in the

HCC Chambers, 2nd Floor, 30 Laings Road, Lower Hutt,

on:

Wednesday 28 February 2018 commencing at 5.30pm

Membership

Cr C Milne (Chair)

Cr C Barry (Deputy Chair)

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

Cr L Sutton	Mayor WR Wallace (ex-officio)

For the dates and times of Council Meetings please visit www.huttcity.govt.nz


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

PURPOSE

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

Determine and monitor:

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

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

• Revenue and expenditure targets of key City Development Projects.

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

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

• Oversight of external auditor engagement and outputs.

• Compliance with Council’s Treasury Risk Management Policy,

• Requests for rates remissions.

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

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

Consider and make recommendations to Council:

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

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

• The adoption of the Council’s Annual Report.

General:

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

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

HUTT CITY COUNCIL

Finance and Performance Committee

Meeting to be held in the Hutt City Council Chambers,

2nd Floor, 30 Laings Road, Lower Hutt on

Wednesday 28 February 2018 commencing at 5.30pm.

ORDER PAPER

Public Business

1. APOLOGIES

2. PUBLIC COMMENT

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

3. CONFLICT OF INTEREST DECLARATIONS

4. Recommendations to Council - 13 March 2018

a) Rates Postponement Scheme for Residential Ratepayers Aged 65 and over (18/249)

The report will be circulated separately prior to the Committee meeting.

Chair’s Recommendation:

“That the report be received and discussed.”

b) Hutt City Community Facilities Trust Draft Statement of Intent 2018/19 to 2020/21 (17/1888)

Report No. FPC2018/1/46 by the General Counsel 9

Chair’s Recommendation:

“That:

(i) the report be received and discussed; and

(ii) the Hutt City Community Facilities Trust be asked to sign off their Statement of Intent by 31 January each year.”

c) Seaview Marina Limited Draft Statement of Intent 2018/19 to 2020/21 (17/1878)

Report No. FPC2018/1/47 by the General Counsel 28

Chair’s Recommendation:

“That:

(i) the report be received and discussed; and

(ii) Seaview Marina Limited be asked to sign off their Statement of Intent by 31 January each year.”

d) UrbanPlus Limited Draft Statement of Intent 2018/19 to 2020/21 (17/1889)

Report No. FPC2018/1/48 by the General Counsel 46

Chair’s Recommendation:

“That:

(i) the report be received and discussed; and

(ii) UrbanPlus Limited be asked to sign off their Statement of Intent by 31 January each year.”

e) Notice of Motion - Councillor Barry (18/100)

Report No. FPC2018/1/32 by the Chief Executive 74

Chair’s Recommendation:

“That the notice of motion be discussed.”

5. Review of Draft Statement of Intent 2018/2019 for the New Zealand Local Government Funding Agency (18/158)

Report No. FPC2018/1/57 by the Chief Financial Officer 77

Chair’s Recommendation:

“That the report be received and discussed.”

6. Hutt City Community Facilities Trust Six Month Report to 31 December 2017 (17/1877)

Report No. FPC2018/1/52 by the Senior Management Accountant 93

Chair’s Recommendation:

“That the report be received and discussed.”

7. Seaview Marina Limited Six Month Report to 31 December 2017 (17/1876)

Report No. FPC2018/1/50 by the Senior Management Accountant 112

Chair’s Recommendation:

“That the report be received and discussed.”

8. Urban Plus Limited Six Month Report to 31 December 2017 (17/1875)

Report No. FPC2018/1/53 by the Senior Management Accountant 122

Chair’s Recommendation:

“That the report be received and discussed.”

9. Audit New Zealand Final Management Report for the Year Ended 30 June 2017 (18/154)

Report No. FPC2018/1/54 by the Financial Accounting Manager 143

Chair’s Recommendation:

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

10. Huia Pool Development Six Month Report (18/120)

Report No. FPC2018/1/51 by the Divisional Manager, Leisure Active 170

Chair’s Recommendation:

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

11. Finance Update (18/220)

Report No. FPC2018/1/58 by the Budgeting and Reporting Manager 177

Chair’s Recommendation:

“That the report be received and noted.”

12. Information Item

Finance and Performance Work Programme 2018 (17/1890)

Report No. FPC2018/1/28 by the Committee Advisor 218

Chair’s Recommendation:

“That the report be received and noted.”

13. QUESTIONS

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

14. EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

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

15. Appointment of Director - Seaview Marina Limited and UrbanPlus Limited (18/155)

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

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

Appointment of Director - Seaview Marina Limited and UrbanPlus Limited.	The withholding of the information is necessary to protect the privacy of natural persons. (s7(2)(a)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

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

Annie Doornebosch

COMMITTEE ADVISOR DEMOCRATIC SERVICES

10 28 February 2018

Finance and Performance Committee

15 December 2017

File: (17/1888)

Report no: FPC2018/1/46

Hutt City Community Facilities Trust Draft Statement of Intent 2018/19 to 2020/21

Purpose of Report

1. The purpose of the report is to provide a review of the draft Statement of Intent (SOI) for the Hutt City Community Facilities Trust (CFT) as delivered to Council for Council’s consideration.

Recommendations

That the Committee recommends that Council:

(i) notes that the Board of the Hutt City Community Facilities Trust (CFT) has submitted a draft Statement of Intent (SOI) 2018-2019, attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002;

(ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis;

(iii) receives the draft SOI;

(iv) reviews the draft SOI and considers if any modifications should be made; and

(v) provides comment for the Board of the Trust to consider in finalising its SOI (including any modifications suggested by the Committee arising under paragraph (iv) above).

Background

2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft SOI on or before 1 March of each year.

Discussion

3. The Board of Hutt City Community Facilities Trust (CFT) has submitted a draft SOI to Council. This is attached in Appendix 1 to the report.

4. The board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9, Schedule 8 of the LGA). The compliance of the company within the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2018/2019 –SOI are detailed below:

Required Content	Draft SOI Content
(a) the objectives of the Trust	The objectives of the CFT are stated.
(b) a statement of the board’s approach to governance of the group	A statement is included.
(c) the nature and scope of the activities undertaken by the group	The nature and scope of activities are outlined.
(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms	The terms are defined. No shareholder funds are distributed to CFT.
(e) the accounting policies of the group	Accounting policies are outlined.
(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives	Performance targets are included.
(g) an estimate of the amount or proportion of accumulated profits and capital reserves that is intended to be distributed to the shareholders	Information provided. There is no intention to pay a dividend to the shareholder.
(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report	The kind of information to be provided is outlined. The Trust will provide annual and six-monthly reports.
(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation	Information included. Express approval from Council is required.
(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation)	No compensation anticipated.
(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed	A statement as to the net value of shareholders investment is provided.
(l) any other matters that are agreed by the shareholders and the board	No other matters included.

5. The fundamental purpose and strategy of the CFT has not changed since the previous SOI.

6. This draft SOI has reduced the scope of the “Activities” undertaken by CFT to a very specific list of projects, following the trend from the previous year.

7. The structure of the Performance Targets is also focused on the specific projects the CFT is currently undertaking.

Consultation

8. There are no consultation considerations.

Legal Considerations

9. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the LGA. Also Council may suggest changes which the Board must consider in finalising its SOI.

10. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation should be met by Council officers in respect of the CFT SOI.

11. Note that despite anything in the Trust’s constitution, Council may, by resolution, require the Board to modify the SOI and the Board must comply (section 5, Schedule 8), provided that Council first consults the Board.

Financial Considerations

12. The Total Equity of CFT is estimated to be $38.717m at 30 June 2019.

Other Considerations

13. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it meets the current and future needs of the community through contributing the community outcomes.

Appendices

No.	Title	Page
1 ⇩	Community Facilities Trust Draft 2019-2021 Statement of Intent 21022018	13

Author: Bradley Cato

General Counsel

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

29 28 February 2018

Finance and Performance Committee

14 December 2017

File: (17/1878)

Report no: FPC2018/1/47

Seaview Marina Limited Draft Statement of Intent 2018/19 to 2020/21

Purpose of Report

1. The purpose of the report is to provide a review of the draft Statement of Intent for Seaview Marina Limited as delivered to Council for Council’s consideration.

Recommendations

That the Committee recommends that Council:

(i) notes that the Board of Seaview Marina Limited (SML) has submitted a draft Statement of Intent (SOI) 2018-2021, attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002;

(ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis;

(iii) receives the draft SOI;

(iv) reviews the draft SOI and considers if any modifications should be made; and

(v) provides comment for the Board of the company to consider in finalising its SOI (including any modifications suggested by the Committee arising under part (iv) above).

Background

2. The Local Government Act 2002 (LGA) requires the Board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft statement of intent on or before 1 March of each year.

Discussion

3. The Board of Seaview Marina Limited (SML) has submitted a draft SOI to Council. This is attached as Appendix 1 to the report.

4. The Board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9 Schedule 8 of the LGA). The compliance of the company with the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2018/2021 SOI are detailed below:

Required Content	SML Draft SOI Content
(a) the objectives of the company	The objectives of SML are stated.
(b) a statement of the board’s approach to governance of the group	A comprehensive statement is included.
(c) the nature and scope of the activities undertaken by the group	The nature and scope of activities are outlined.
(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms	Information not currently provided. Officers will request this be included.
(e) the accounting policies of the group	A reference to refer to the SML website or Annual Report for the accounting policies is included. Officers need to check if this is appropriate or if the detailed accounting policies need to be provided.
(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives	Performance targets are included.
(g) an estimate of the amount or proportion of accumulated profits and capital reserves that it is intended to be distributed to the shareholders	There is no intention to pay a dividend to the shareholder during the period covered by this SOI. However a specific statement on this is not currently provided. Officers will request this be included.
(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report	The kind of information to be provided is outlined, and includes half yearly reports and annual reports. Financial projections are included in the SOI.
(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation	Information included however this does not include the requirement to obtain the express approval from Council. Officers will request this amendment.
(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation)	A statement on this is provided.
(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed	A specific statement is currently not provided other than the estimated equity amounts in the Statement of Financial Position. Officers will request this be included.
(l) any other matters that are agreed by the shareholders and the board	Forecast financial statements provided as per previous agreement.

5. The fundamental purpose and strategy of SML has not changed since the previous SOI.

6. SML management has reduced some of the content that was in the previous SOI as it was thought unnecessary. Officers need further time to review the changes and will work with the SML board to ensure the SOI is fully compliant with legislative requirements.

Legal Considerations

7. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the Act. Council may also suggest changes which the Board must consider in finalising its SOI.

8. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation will be met by Council officers in respect of the SML SOI.

9. Note that despite anything in the company’s constitution, Council may, by resolution, require the board to modify the SOI and the Board must comply (section 5, Schedule 8), provided that Council first consults the Board.

Financial Considerations

10. The net shareholder’s investment in SML is estimated to be valued at $6.878m at 30 June 2019.

Other Considerations

11. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it meets the current and future needs of the community by providing marine recreational activities and facilities for the Wellington region.

Appendices

No.	Title	Page
1 ⇩	Seaview Marina Draft 2019-2021 Statement of Intent 21022018	32

Author: Bradley Cato

General Counsel

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

47 28 February 2018

Finance and Performance Committee

15 December 2017

File: (17/1889)

Report no: FPC2018/1/48

UrbanPlus Limited Draft Statement of Intent 2018/19 to 2020/21

Purpose of Report

1. The purpose of the report is to provide a review of the draft Statement of Intent for Urban Plus Limited Group (UPL) as delivered to Council for Council’s consideration.

Recommendations

That the Committee recommends that Council:

(i) notes that the Board of Urban Plus Limited Group (UPL) has submitted a draft Statement of Intent (SOI) 2018/2019-2020/2021, attached as Appendix 1 to the report to Council, in accordance with the Local Government Act 2002;

(ii) notes that officers have reviewed the draft SOI for compliance with the Local Government Act 2002 and provided their analysis;

(iii) receives the draft SOI;

(iv) reviews the draft SOI and considers if any modifications should be made; and

(v) provides comment for the Board of the company to consider in finalising its SOI (including any modifications suggested by the Committee arising under paragraph (iv) above).

Background

2. The Local Government Act 2002 (LGA) requires the board of a Council Controlled Organisation (CCO) to deliver to its shareholders a draft SOI on or before 1 March of each year.

Discussion

3. The Board of UPL has submitted a draft SOI to Council. This is attached as Appendix 1 to the report.

4. The Board of a CCO must provide information prescribed by the LGA for the SOI to the extent they consider appropriate (s9, Schedule 8 of the LGA). The compliance of the company with the legislative requirements for the SOI and a summary of the amendments proposed by the Board for their 2017/2018 SOI are detailed below:

Required Content	UPL Draft SOI Content
(a) the objectives of the company	The objectives of the UPL are stated.
(b) a statement of the board’s approach to governance of the group	A comprehensive statement is included.
(c) the nature and scope of the activities undertaken by the group	The nature and scope of activities are outlined – no significant changes.
(d) the ratio of consolidated shareholders’ funds to total assets, and the definition of those terms	Ratio provided.
(e) the accounting policies of the group	Accounting policies are outlined.
(f) the performance targets and other measures by which performance of the group may be judged in relation to its objectives	Performance targets are included.
(g) an estimate of the amount or proportion of accumulated profits and capital reserves that is intended to be distributed to the shareholders	Information provided. There is no intention to pay a dividend to the shareholder during the period covered by this SOI.
(h) the kind of information to be provided to the shareholders by the group during the course of those financial years, including the information to be included in each half yearly report (and, in particular, what prospective financial information is required and how it is to be presented)	The kind of information to be provided is outlined. The Company will provide annual and six-monthly reports. Forecast financial information is included in the SOI.
(i) the procedures to be followed before any member or the group subscribes for, purchases, or otherwise acquires shares in any company or other organisation	Information on procedures is not provided but it is noted that there is no intention to subscribe or invest in any other organisation. A further note states UPL has established a subsidiary. Established procedures are in place which require approval from the CEO of Council, who can grant authority to UPL on certain conditions.
(j) any activities for which the board seeks compensation from any local authority (whether or not the local authority has agreed to provide the compensation)	No compensation requested.
(k) the boards estimate of the commercial value of the shareholders’ investment in the group and the manner in which and the times at which that value is to be reassessed	A statement as to the net value of shareholder’s investment is provided.
(l) any other matters that are agreed by the shareholders and the board	Some additional information is provided.

5. The fundamental purpose and strategic direction of UPL has not changed since the previous SOI.

Legal Considerations

6. Council may require changes to the appended draft SOI by using the modification requirements in Schedule 8 of the LGA. Council may also suggest changes which the Board must consider in finalising its SOI.

7. There is an obligation to make the SOI available to the public “within one month after the date on which it is delivered to shareholders or adopted, as the case may be”. This obligation will be met by Council officers in respect of the UPL SOI.

8. Note that despite anything in the company’s constitution, Council may, by resolution, require the board to modify the SOI and the board must comply (section 5, Schedule 8), provided that Council first consults the board.

Financial Considerations

9. Shareholders’ funds at 30 June 2019 are estimated to be $25.187m.

Consultation

10. There are no consultation considerations.

Other Considerations

Appendices

No.	Title	Page
1 ⇩	Urban Plus Draft 2019-2021 Statement of Intent 21022018	50

Author: Bradley Cato

General Counsel

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

Attachment 1

Urban Plus Draft 2019-2021 Statement of Intent 21022018

75 28 February 2018

Our Reference 18/100

TO: Chair and Members

Finance and Performance Committee

FROM: Tony Stallinger

DATE: 02 February 2018

SUBJECT: Notice of Motion - Councillor Barry

Proposed Motion

“That the Committee recommends that Council:

(i) agrees to initiate a review into the purchase of 177 High Street by Council in 2015. This would be in order to gain learnings for any similar decisions in the future; and

(ii) agrees that Terms of Reference for this review be created based on the following points:

a. Review the process of when a third party (developer in this case) approaches Council to help facilitate a new development. Is a policy required for when this sort of thing happens?

b. Whether it was appropriate for Council to hold all risk in relation to purchasing 177 High Street. Could/should have this risk been spread between Council, the developer and/or Central Government?

c. How Council communicated with central government when attempting to facilitate this development. Could this be improved in the future? What learnings have been reached? How do other Councils do this?

d. What caused a 28 month delay between the purchase of the site, and a final decision that Central Government were no longer interested? Could this have been handled better?

Purpose of Memorandum

1. To consider a Notice of Motion received from Councillor Campbell Barry.

Background

2. The Chief Executive has received a Notice of Motion from Councillor Barry, within the timeframe specified in Standing Orders. This Notice of Motion is for inclusion on the agenda for the Finance and Performance Committee to be held on 28 February 2018.

3. Councillor Barry proposes to move the following motion:

“That the Committee recommends that Council:

(i) agrees to initiate a review into the purchase of 177 High Street by Council in 2015. This would be in order to gain learnings for any similar decisions in the future; and

(ii) agrees that Terms of Reference for the review be created based on the following points:

a. Review the process of when a third party (developer in this case) approaches Council to help facilitate a new development. Is a policy required for when this sort of thing happens?

b. Whether it was appropriate for Council to hold all risk in relation to purchasing 177 High Street. Could/should have this risk been spread between Council, the developer and/or Central Government?

d. What caused a 28 month delay between the purchase of the site, and a final decision that Central Government were no longer interested? Could this have been handled better?

4. Councillor Barry’s signed Notice of Motion is attached as Appendix 1 to the report.

Appendices

No.	Title	Page
1 ⇩	Notice of Motion - Councillor Campbell Barry	76

Author: Tony Stallinger

Chief Executive

78 28 February 2018

Finance and Performance Committee

10 February 2018

File: (18/158)

Report no: FPC2018/1/57

Review of Draft Statement of Intent 2018/2019 for the New Zealand Local Government Funding Agency

Purpose of Report

1. The purpose of this report is to provide the Finance and Performance Committee with the draft 2018/19 Statement of Intent (SOI), that sets out the intentions and expectations of the Local Government Funding Agency Limited (LGFA), for the three years ended 30 June 2021.

Recommendations

That the Committee:

i. notes the contents of the Local Government Funding Agency draft 2018/19 Statement of Intent; and

ii. agrees with the Local Government Funding Agency draft 2018/19 Statement of Intent and requires no changes to be provided to the LGFA Board for consideration and comment.

Background

2. The LGFA was incorporated on 1 December 2011 with the primary objective of optimising the debt funding terms and conditions for Participating Local Authorities. This includes providing savings in annual interest costs, making longer-term borrowings available and enhancing the certainty of access to debt markets.

3. The LGFA meets the Local Government Act (LGA) 2002 definition of a Council Controlled Organisation (CCO) and as a shareholder in a CCO, the Council must regularly undertake performance monitoring of that organisation to evaluate its contribution to the achievement of Council’s outcomes.

4. As a CCO, the LGFA must deliver to its shareholders a draft SOI on or before 1 March each year. The LGFA Board must consider any comments from its shareholders in relation to the draft SOI and deliver a final SOI to its shareholders on or before 30 June.

5. As a shareholder, Council is statutorily required to review the draft SOI and, as soon as is practicable after receiving it to either agree to it or, if it doesn’t agree to provide feedback with regard to any changes it wishes to be made. Feedback can be provided either directly to the LGFA Board or through the Shareholders Council before 30 April 2018.

6. The Shareholders Council comprises five to ten appointees from Council shareholders and the Crown and as part of its role, is required to make recommendations to the shareholders in relation to the draft SOI.

Draft 2018/19 SOI key Points Summary

7. For shareholder Councils, the LGFA is focused on delivering on strong financial performance, monitoring asset quality and enhancing their approach to treasury and risk management.

8. For borrowing Councils, the LGFA seeks to optimise funding terms and conditions by achieving savings in borrowing costs, provide longer-dated finding and provide certainty of access to markets.

9. No changes have been made to the on-lending margins given the base lending margin now averages 10 basis points (bps) or 0.01%. Any further reductions in the base margin are unlikely as LGFA need to ensure they have sufficient capital to match the growth in the balance sheet. LGFA on-lending margins are the narrowest when compared with their international peers.

10. Both issuance and on-lending costs (excluding Approved Issuer levy), are forecast to be similar to the forecast in each of the 2018/19 and 2019/20 financial years.

11. The SOI performance targets are the same as the targets in the 2017/18 SOI.

12. Profitability is forecast to remain strong with projections for net operating gain of $10.81 million, $10.44 million and $14.08 million for the next three years. Whilst controllable expenses remain close to the 2017/18 SOI forecasts, net interest income is expected to increase over the next three years as LGFA will need to hold additional liquid assets to manage the LGFA bond maturities.

13. Caution regards forecast performance in year 2020/21 has been emphasised given that over the next three years, $3.79 billion of LGFA bonds and $3.34 billion of Council loans mature. Assumptions have been made regarding the timing of Council loan refinancing and interest rates.

14. LGFA has however reduced their forecast Local Government loans outstanding as at 30 June 2019 to $8.02 billion (previously $8.19 billion) and to $8.26 billion as at 30 June 2020 (previously $8.39 billion). This reflects uncertainty regarding the impact on LGFA lending if Councils substitute LGFA borrowing for funding from the Housing Infrastructure Fund facility and other Central Government initiatives.

Appendices

No.	Title	Page
1 ⇩	Local Government Funding Agency Draft 2018/19 Statement of Intent	80

Author: Mark de Haast

Chief Financial Officer

Approved By: Brent Kibblewhite

General Manager Corporate Services

94 28 February 2018

Finance and Performance Committee

13 December 2017

File: (17/1877)

Report no: FPC2018/1/52

Hutt City Community Facilities Trust Six Month Report to 31 December 2017

Purpose of Report

1. To provide the Committee with an update on the Hutt City Community Facilities Trust (CFT) for the six months ending 31 December 2017.

Recommendation

That the Committee receives the half year report from the Hutt City Community Facilities Trust attached as Appendix 1 to the report.

Background

2. The Local Government Act requires Council Controlled Organisations to deliver to shareholders a half year report on the organisation’s operations within two months after the end of the first half of the financial year. The report should include information required to be reported as outlined in the organisation’s 2017/2018 Statement of Intent.

Discussion

3. The Chairperson and General Manager of CFT will be in attendance to present their report and answer any questions.

4. Overall, CFT achieved a surplus before depreciation of $5.857 million for the six months ended 31 December 2017, compared with a budgeted surplus of $8.316 million, resulting in a shortfall against budget of $2.459 million.

5. The shortfall against budget is due to lower than planned revenue, mainly as a result of capital funding from external sources and Council for Phase 2 of the Fraser Park Sportsville project, lagging the phased budget - a result of the delayed project start.

6. The Walter Mildenhall Bowls Centre and Koraunui Stokes Valley Community Hub were completed in the first half of the year and officially opened on 1 September and 27 October 2017 respectively.

7. The second stage of the Fraser Park Sportsville project has commenced with the second floor structure erected.

Options

8. It is a statutory requirement to present the half year report. There are no other options.

Consultation

9. There is no need for consultation.

Legal Considerations

10. There are no legal issues to be considered.

Financial Considerations

11. No further financial considerations noted.

Other Considerations

12. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002. Officers believe that this recommendation falls within the purpose of the local government in that it provides Councillors with the necessary information to fulfill their governance role over Council Controlled Organisations.

Appendices

No.	Title	Page
1 ⇩	Community Facilities Trust 6 Monthly Report to 31 December 2017	96

Author: Sharon Page

Senior Management Accountant

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

112 28 February 2018

Finance and Performance Committee

13 December 2017

File: (17/1876)

Report no: FPC2018/1/50

Seaview Marina Limited Six Month Report to 31 December 2017

Purpose of Report

1. To provide the Committee with an update for Seaview Marina Limited (SML), for the six month period to 31 December 2017.

Recommendation

That the Committee receives the half year report from Seaview Marina Limited attached as Appendix 1 to the report.

Background

2. The Local Government Act requires Council Controlled Trading Organisations (CCTO’s) to deliver to shareholders a half yearly report on the organisations operations within two months after the end of the first half of each financial year. The report should include information required to be reported as outlined in the organisation’s 2017/2018 Statement of Intent.

Discussion

3. The Chair and General Manager of SML will be in attendance to present their report and answer any questions.

4. Overall, SML reported a surplus of $261,441 for the 6 months to 31 December 2017. This was $33,996 above the year end budget and $116,526 greater than recorded for the same period last year.

5. Despite less than favourable weather throughout spring, revenue exceeded budget by $55,018 and is an $83,476 improvement on last year. Improvements in berth occupancy rates, increased live-aboard numbers and the strong performance of the hardstand business, contributed to this strong result.

6. Total expenses were over budget by 2.6%. Operational expenses were higher than planned due mainly to the additional costs incurred with the resignation of the Office Manager. There was a four month overlap with the new recruit, to provide the necessary training.

7. Finance charges were $30k lower than budget as a result of $2.7m loan from Council being renewed in August 2017 at the lower rate of 3.815% (previously 5.75%).

8. Overall berth occupancy rates have improved by 4.4% over the six months to close to 88%. A pleasing aspect of this increase has been the increase in 12m berths leased. Trailer boat occupancy continued to be close to 100%.

9. The boatyard business continued to be very buoyant and for the six month period, income was 122% of budget. Good demand for the spray booth and increases in net diesel income have also made a positive contribution.

10. The Wellington Marine Centre is operating slightly ahead of budget. Only one tenancy is untenanted, but this is being used by Sailability as office space until it can be leased.

11. Projections for the full year indicate the net surplus will be close to $585,000 which is 27% ahead of budget.

12. No notifiable health and safety issues were recorded. A number of upgrades and improvements to health and safety were implemented during the six month period, including a computer based contractor induction system and the installation of emergency call points on all piers.

13. The Board approved the development of 10 catamaran berths and 1 mono-hull berth on the south side of G Pier (1x20m mono-hull berth, 5 x 14m and 5 x 18m catamaran berths). This project will begin in April 2018.

14. The majority of the $168,000 capital expenditure went on the new western pedestrian walkway, new gate structures, the Compass Coffee Café project, and a number of health and safety initiatives.

15. Cash flows have been strong. Available cash at 31 December 2017 was $699,210, of which $674,000 was on call investments.

16. Total equity at 31 December 2017 was $6,078,766.

Options

17. No options are presented.

Consultation

18. No requirement for further consultation.

Legal Considerations

19. No further legal considerations noted.

Financial Considerations

20. No additional financial considerations noted.

Other Considerations

21. 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 fulfill their governance role over a Council Controlled Trading Organisation.

Appendices

No.	Title	Page
1 ⇩	Seaview Marina 6 Monthly Report to 31 December 2017	115

Author: Sharon Page

Senior Management Accountant

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

122 28 February 2018

Finance and Performance Committee

13 December 2017

File: (17/1875)

Report no: FPC2018/1/53

Urban Plus Limited Six Month Report to 31 December 2017

Purpose of Report

1. To provide the Committee with an update for Urban Plus Limited Group (UPL), for the six month period to 31 December 2017.

Recommendation

That the Committee receives the half year report from Urban Plus Group attached as Appendix 1 to the report.

Background

2. The Local Government Act requires Council Controlled Organisations to deliver to shareholders a half yearly report on the organisation’s operations within two months after the end of the first half of each financial year. The report should include information required to be reported as outlined in the organisation’s 2017/18 Statement of Intent.

Discussion

3. The Chair and Chief Executive of UPL will be in attendance to present their report and answer any questions.

4. For the first six months of 2017/18, UPL Group achieved a Surplus before Tax of $111,000 compared to a budgeted Deficit before Tax of $224,000 resulting in a favourable variance of $335,000. $239,000 of the favourable variance was from gains on unbudgeted property sales.

5. Other than the Fairfield Waters development at Summit Road, no properties were planned to be sold in the current financial year. The $239,000 of YTD gains from property sales are from 47 Laings Road and Shaftesbury Grove – both properties were expected to have settled in 2016/17. A net gain of circa $2.4m from the Summit Road development is expected by the end of this financial year. In addition, the property at Bell Road is no longer required and is expected to be sold by year end and realise a gain of circa $47,000.

6. Property Services achieved a surplus for the six months of $68,000 compared to a budgeted surplus of $41,000 largely due to allocated unbudgeted interest revenue received from funds invested, and lower than planned allocated expenses.

7. Rental housing achieved a surplus for the six months of $158,000 compared with a budget of $128,000. This was due to a combination of higher than planned revenue from rental properties (occupancy rates have remained high), allocated unbudgeted interest revenue received from invested funds, and lower than planned expenses (excluding depreciation). Depreciation (non-cash) is higher than planned due to the revaluation of properties at the end of June, after the budget had been approved.

8. Property development achieved a deficit of $30,000, compared to a budgeted deficit of $274,000. The improvement against budget is due to net gains from inventory sales relating to 47 Laings Road and Shaftesbury Grove.

9. Debt remains at the 30 June 2017 level of $9.0m. Cash invested on call as at 31 December 2017 was $3.972m and cash at bank was $41,000. Debt has not been repaid with cash received from property sales being accumulated to provide the bulk of the funding requirement for planned developments and pending land purchases (for further developments), to increase the social housing portfolio in line with UPL’s Statement of Intent.

10. A Net Surplus before Tax of $2.389m is forecast for the full year, $189,000 better than budget.

11. There are no significant events subsequent to the reporting period requiring additional disclosure.

Consultation

12. There is no requirement for consultation.

Legal Considerations

13. No further legal considerations noted.

Financial Considerations

14. No additional financial considerations noted.

Other Considerations

15. 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 fulfill their governance role over a Council Controlled Organisation.

Appendices

No.	Title	Page
1 ⇩	Urban Plus 6 Monthly Report to 31 December 2017	125

Author: Sharon Page

Senior Management Accountant

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

143 28 February 2018

Finance and Performance Committee

10 February 2018

File: (18/154)

Report no: FPC2018/1/54

Audit New Zealand Final Management Report for the Year Ended 30 June 2017

Purpose of Report

1. The purpose of the report is to update Councillors on the Audit New Zealand Management Report for the financial year ending 30 June 2017.

Recommendation

That the Committee notes the report.

Background

2. The 2017 Audit Management Report is attached as Appendix 1 to the report and outlines the findings from Audit New Zealand’s review of Hutt City Council. The primary purpose of the audit was to complete checks that enabled Audit New Zealand to issue an opinion on Council’s financial statements and performance information for the financial year ending 30 June 2017.

Discussion

3. On 18 October 2017 Audit New Zealand issued an unmodified audit opinion.

4. Audit New Zealand made two new recommendations as a result of their 2017 audit work, none of which are ‘significant’. These are detailed along with management comments from officers, in the Management Report attached as Appendix 1 to the report.

5. In terms of previous audits, 4 of the 18 issues raised in the 2016 or earlier Management Reports were cleared in 2016/17. Progress is being made with the remaining 14 (non significant) recommendations which officers plan to clear before the 2018 audit commences.

6. Given the absence of any significant recommendations, the Committee Chair and the CFO agreed that it was not necessary for Mr Andrew Clark, Audit Director for Audit New Zealand, to attend the Committee meeting.

Legal Considerations

7. There are no legal considerations.

Financial Considerations

8. There are no financial considerations.

Other Considerations

9. 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 gives elected members the necessary information to carry out their governance role.

Appendices

No.	Title	Page
1 ⇩	Council 2017 Audit Management Report - FINAL	145

Author: Darrin Newth

Financial Accounting Manager

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

Attachment 1

HCC 2017 Audit Management Report - FINAL

170 28 February 2018

Finance and Performance Committee

07 February 2018

File: (18/120)

Report no: FPC2018/1/51

Huia Pool Development Six Month Report

Purpose of Report

1. To provide information to Council on the performance of Huia Pool for the first six months of the 2017/18 financial year following opening of extensions on 24 July 2017.

Recommendation

That the Committee notes the report.

Background

2. Council committed $9.3m towards the redevelopment of Huia Pool in 2016/17 to add a dedicated Learn to Swim Pool, Hydrotherapy Pool and Fitness Gym to this facility.

3. Construction was completed on 19 June 2017, six weeks behind schedule. Client fit out was completed between 19 June and 20 July with maintenance and upgrading of services in the old pool completed between 7 and 21 July.

4. The pool re-opened for business on 24 July 2017 and operated for six months before a scheduled close down for seven days in January for warranty checks.

5. Only minor cosmetic issues were rectified at this time including replacement of defective screws on pool barge plate. Overall the pool has been operating to expected design parameters.

6. Total project cost as at 30 January 2018 is $8.6m with $200k in estimated future costs to cover defects and risk. The final project cost is expected to be $500k under the budget of $9.3M.

Discussion

7. The pool was rebranded huia pool + fitness with an official opening function held on 21 July and the pool then opening for business on 24 July. The launch event was well attended by Councillors, and business and community representatives and received positive coverage in local and national media.

8. A feature of the day was the donation of $22,000 by the Lower Hutt Branch of IHC for the purchase of a fully accessible wheelchair hoist in the hydrotherapy pool. This has had great usage to date attracting groups and individuals to use the facility.

9. Andrew, a local disabled child and his family, also featured on the day, which has led to corporate sponsorship from Opus for ongoing swimming lessons for special needs children.

Operational Usage

10. The redeveloped site includes a new learn to swim pool, hydrotherapy pool and fitness suite. Operational performance targets were set for the redeveloped site prior to project commencement and while still relatively early these targets are largely being met with one area of risk being the financial under achievement to date of the Swim School.

11. Usage by hydrotherapy users has outstripped original predictions with over 100 people per day using this facility. This has resulted in extending the hours available for this service.

12. Groups who use the Hydrotherapy Pool include Hutt Valley DHB, Thumbs Up, Idea Service (IHC), KimiOra, MASH, Sport Wellington, Physiotherapists with their clients and Gentle Movers Club. New programmes that have been developed for this facility include Baby Splash, Easy Move Aquarobics classes and Women’s Cultural night.

13. The old pool has also experienced increased usage with families thanks to the new development freeing up additional time.

14. Learn to Swim registrations have grown from just under 2,000 per term to just over 2,500 per term although still tracking slightly behind target. Enrolments in holiday courses have also increased.

15. Fitness suite memberships reached 606 at the end of December against a target of 700. Despite this budgets are being achieved due to reduction in staffing and operational costs.

16. Promotions have included a foundation membership special attracting 160 members and our Christmas Foodbank promotion attracting 119 new members.

17. A pleasing positive spin off of the Huia Fitness Suite has been the increase in memberships at our other sites by piggy backing off these promotions. For example at our other sites memberships have increased from 1,219 at 30 December 2016 to 1,361 in 2017.

18. The December fitness promotion where eight cans of food for the local foodbank provides the first two months of membership free resulted in 179 new members across all sites in what is traditionally a quiet period. These memberships start making financial contributions in February.

Financial Performance

19. The following table sets out current financial performance against budget and predicted year end variances.

20. Operational costs for the facility are largely running to expected limits.

21. The current negative variance for the gym is due to a revaluation resulting in increased depreciation charge against budget of $29k. This is expected to correct itself by year end.

22. Learn to Swim income at the end of December is $200k or 30% behind budget. While we have been experiencing some issues with Intelli-leisure incorrectly reporting income, these issues have now been largely resolved and any remaining adjustments are likely to have minimal effect on this variance.

23. Reasons for under performance include:

· No school holiday lessons in July due to delay in opening of the pool.

· Term 4 being only nine weeks long.

· Only seven weekends of lessons offered in Term 4.

· Increase in credits due to faecal accident closures.

· New enrolments being behind target.

24. Enrolments for Term 1 2018 are tracking well and are expected to be an increase on the previous term.

25. Areas of focus for the next six months are:

· Extended weekend lesson availability.

· Targeted promotions for under five lessons through public channels and within early childhood centres.

· Extending availability of adult and senior lessons.

Options

26. None as this is an information report only.

Consultation

27. There has been no consultation.

Legal Considerations

28. There are no legal considerations.

Financial Considerations

29. There are no financial considerations.

Other Considerations

30. In making this recommendation, officers have given careful consideration to the purpose of local government in section 10 of the Local Government Act 2002.

Appendices

There are no appendices for this report.

Author: Marcus Sherwood

Divisional Manager, Leisure Active

Approved By: Matt Reid

General Manager City and Community Services

176 28 February 2018

Finance and Performance Committee

19 February 2018

File: (18/220)

Report no: FPC2018/1/58

Finance Update

Purpose of Report

1. The purpose of this report is to present the Council’s year to date financial performance for the seven month period ended 31 January 2018 as well as the forecast for the year ended 30 June 2018.

Recommendation

That the Committee notes the Council’s January 2018 year to date financial performance and the current full year forecast for the year ending 30 June 2018.

Financial Performance Summary

2. Council’s January 2018 year-to-date performance as well as a full-year forecast to 30 June 2018 is attached as Appendix 1 to the report. A high level summary is provided below.

3. A list of operating and capital works projects is attached as Appendix 2 to the report. A high level summary is provided below.

4. Council’s treasury compliance report as at 31 January 2018 is attached as Appendix 3 to the report. A high level summary is provided below.

Net Operating Result – Year to Date

5. Excluding losses on asset sales, the Council is $1.9 million over budget as at 31 January 2018. This is mainly due to unbudgeted grant payments of $1.7 million paid to the Community Facilities Trust (CFT) for the Stokes Valley Community Hub. These payments were budgeted to be made in 2017/18 where there was a favourable variance of $2.0 million.

Net Operating Result – Full Year Forecast

6. Excluding losses on asset sales, the Council is currently expected to finish the financial year $2.9 million unfavourable to budget. As noted above, this is mainly due to $1.7 million of unbudgeted grant payments to CFT and less capital works subsidies are expected from NZTA as there have delays to the full 2018/19 capital works programme.

Gains/Losses on Revaluation of Financial Instruments and Property Revaluations

7. Council has a number of interest rate swap agreements in place to comply with its treasury management policy and to provide some certainty with future interest costs.

8. Due to fluctuations in the interest rate market, the overall value of these agreements is constantly changing. Year to date, there has been a $0.97 million unrealised loss in the revaluation of Council’s total interest rate swaps as interest rates have fallen.

9. It is however important to emphasis that Council has no intention to realise any interest rate swaps and this revaluation is a non-cash item.

10. Work continues on the 31/12/2017 accounting and insurance revaluations of Council’s infrastructure assets, land and buildings and parks and reserve assets. The final revaluation will be reported to the Committee at its next meeting in May 2018.

Capital Expenditure - Year to Date

11. Council is currently $24.7 million below budget. $4.5 million relates to the Events Centre, $6.8 million relates to Strategic Property Purchases, $2.2 million relates to Integrated Community Services, $2.9 million relates to Parks & Reserves projects, $4.2 million relates to Roading & Traffic, and the balance is spread across a number of other activities. These variances are mainly the result of delays in projects.

Capital Expenditure – Full Year Forecast

12. Council is currently expecting to not spend $12.3 million of the 2018/19 capital works programme as at 30 June 2018. This is mainly due to an expected underspend of about $6.4 million on the shared path /cycleway projects and an underspend of $6.8m on strategic property purchases. These underspends will be carried over to 2018/19.

Asset Sales

13. Asset sales are forecast to be $7.1 million under budget mainly due to the delay in the sale of Mitchell Park and the strategic properties, and the likely option to lease rather than sell the seawall/breakwater to Seaview Marina Limited (SML).

Net Debt

14. Net Debt is currently forecast to be about $167 million at year end. This is $7 million more than planned mainly due to the delays in asset sales and a potential change in direction regards sale of the seawall to SML as noted above.

Annual Leave Liability

15. Annual leave liability at the end of January is slightly higher than January last year but has reduced since December as staff have taken leave over the Christmas/New Year period. Over the past two years the overall liability has shown a downward trend as reflected in the chart below.

Treasury Compliance

16. All limits within the Treasury Risk Management Policy have been fully

complied with including debt limits.

Consultation

17. There is no requirement to consult.

Legal Considerations

18. There are no legal implications.

Financial Considerations

19. The financial considerations are included in the report.

Other Considerations

20. 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 Councilors with the necessary information to effectively undertake their governance role.

Appendices