Agenda of Finance and Performance Committee

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

HUTT CITY COUNCIL

Finance and Performance Committee

Meeting to be held in the Council Chambers, 2nd Floor, 30 Laings Road, Lower Hutt on

Wednesday 17 October 2018 commencing at 5.30pm.

ORDER PAPER

Public Business

1. APOLOGIES

An apology has been received from Cr Edwards.

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 - 17 October 2018

i) Hutt City Council Annual Report to 30 June 2018 (18/1489)

Report No. FPC2018/4/288 by the Corporate Planner 7

Chair’s Recommendation:

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

ii) 2018 Local Government Funding Agency Annual General Meeting Shareholder Votes (18/1555)

Report No. FPC2018/4/289 by the Chief Financial Officer 11

Chair’s Recommendation:

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

5. Report on The Hutt City Community Facilities Trust for the Year Ended 30 June 2018 (18/1337)

Report No. FPC2018/4/290 by the Chief Financial Officer 28

Chair’s Recommendation:

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

6. Report on Seaview Marina Limited for the Year Ended 30 June 2018 (18/1338)

Report No. FPC2018/4/291 by the Chief Financial Officer 60

Chair’s Recommendation:

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

7. Report on Urban Plus Group for the Year Ended 30 June 2018 (18/1339)

Report No. FPC2018/4/292 by the Chief Financial Officer 96

Chair’s Recommendation:

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

8. Wellington Water Limited Annual Report for the Year Ended 30 June 2018 (18/1584)

Report No. FPC2018/4/294 by the Chief Financial Officer 131

Chair’s Recommendation:

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

9. New Zealand Local Government Funding Agency 2018 Annual Report (18/1344)

Report No. FPC2018/4/293 by the Chief Financial Officer 196

Chair’s Recommendation:

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

10. QUESTIONS

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

Donna Male

COMMITTEE ADVISOR

10 17 October 2018

Finance and Performance Committee

11 September 2018

File: (18/1489)

Report no: FPC2018/4/288

Hutt City Council Annual Report to 30 June 2018

Purpose of Report

1. The purpose of this report is for the Committee to consider Council’s Annual Report and Annual Report Summary for the year ended 30 June 2018 and recommend they be adopted by Council.

Recommendations

That the Committee recommends that Council:

(i) notes that a public notice will be published in the Hutt News, as well as on Council’s website and Facebook page advising of the availability of the Annual Report and Annual Report Summary attached as Appendix 1 and 2 to the report;

(ii) notes the Annual Report and Annual Report Summary will be available on Council’s website within one month of adopting the Annual Report;

(iii) agrees hard copies of the Annual Report Summary will be made available by request and in the City’s libraries, Community Hubs and at the main administration building;

(iv) appoints a subcommittee to sign off the final documents;

(v) approves the draft Annual Report and Annual Report Summary for the year ended 30 June 2018 attached as Appendix 1 and 2 to the report, both subject to satisfactory resolution of the following outstanding items:

(a) completion of final edit checking;

(b) completion of any final audit adjustments; and

(vi) receives Audit New Zealand’s opinion on the 2017-18 Annual Report; and

(vii) adopts the 2017-18 Annual Report.

Background

2. Under Section 98 of the Local Government Act 2002 (LGA) Council must complete and adopt an Annual Report within four months after the end of the financial year to which it relates (by 30 October 2018).

3. The purpose of an Annual Report is:

a. to compare the actual activities and the actual performance of the local authority in the year with the intended activities and the intended level of performance as set out in the Long Term Plan and the Annual Plan; and

b. to promote the local authority’s accountability to the community for the decisions made throughout the year by the local authority.

4. Within one month of adopting the Annual Report (by 17 November 2018), Council must make the Annual Report and a summary of the information (Annual Report Summary) publicly available.

Discussion

2017-18 Annual Report

5. The draft 2017-18 Annual Report is attached as Appendix 1. Any significant amendments requested by auditors following publication of the order paper will be highlighted at the meeting.

6. Consistent with previous years the document has been structured around the rejuvenation of Lower Hutt in line with our four key strategies and community outcomes.

7. There is greater use of infographics, photography and case studies this year to make the document more accessible and attractive for the community to read. This is consistent with the approach used in the 2018-2028 Long Term Plan and Consultation Document.

8. The Annual Report is complete, subject to final review following any changes requested by Council and any final audit adjustments.

9. Officers from Audit New Zealand will be present at the Finance and Performance Committee meeting to provide an update on the status of the audit. Audit New Zealand will issue their opinion on the Annual Report once the Report is approved by Council prior to adoption.

2017-18 Summary Annual Report

10. The Annual Report Summary is attached as Appendix 2. If any significant amendments are requested by the auditors following publication of the order paper, updated copies will be tabled at the meeting.

Customer research

11. Providing the best local government services is a priority for Council. To achieve this we need to know how satisfied our customers are, how we can do better and what is most important to our customers so we can prioritise and deliver better value for the community. To answer these questions we changed our research approach and provider in 2016-17.

12. While the change in research approach has delivered the information we need to build on the service Council already offers, it has meant the
2016-17 and 2017-18 results in this Annual Report while comparable to each other, are not directly comparable to previous years or the targets. This has resulted in us not achieving some of the targets sourced from customer research. This has been referenced throughout the document and is consistent with the approach taken to last year’s Annual Report.

13. Performance measures and targets were reviewed as part of the 2018-2028 Long Term Plan process to ensure future survey results are comparable to previous years and targets. We now have a strong research base for future years that will enable us to build consistent tracking data.

Publicity Considerations

14. A public notice advising the availability of the Annual Report and Annual Report Summary will be published in the Hutt News, on Council’s website and Facebook page.

15. As in previous years, the Annual Report and Annual Report Summary will be published on Council’s website. Hard copies of the Annual Report Summary will be available from all Council libraries, community hubs and the main administration building.

16. Council is committed to environmental stewardship and sustainability, using technology to make it easier for our customers to do business with us and greater use of online engagement consistent with our marketing and communication approach.

17. In the past hard copies of the Annual Report Summary were posted to approximately 500 rural households who do not receive the Hutt News. To reduce waste we propose making hard copies of the Annual Report Summary available by request through calling the contact centre, from any Council library, community hub and the main administration building. This is consistent with the approach for distributing the 2018-2028 Long Term Plan (LTP) Consultation Document. This approach was praised by at least two submitters during the LTP consultation process, with no submitters indicating they were unhappy about not receiving a hard copy Consultation Document.

18. The Local Government Act 2002 requires copies of both documents to be provided to the Secretary, the Auditor General and the Parliamentary Library within one month of adopting the Annual Report. Their preference is to receive copies electronically.

Legal Considerations

19. The Annual Report and Annual Report Summary have been prepared to meet the requirements of the Local Government Act 2002.

20. The Annual Report Summary must represent, fairly and consistently, the information regarding the major matters dealt with in the Annual Report.

21. The Local Government Act 2002 requires each Annual Report to be completed and adopted by resolution within four months after the end of the financial year to which it relates, ie, by the end of October.

22. The Local Government Act 2002 further requires that the Annual Report and Annual Report Summary be made publicly available within one month of adoption.

Financial Considerations

23. The cost of producing, printing and distributing the Annual Report and Annual Report Summary is provided for within current budgets.

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 local government in that it meets the requirements as outlined in Part 3 of Schedule 10. It does this in a way that is cost-effective, publishing online with a small print run.

Appendices

No.	Title	Page
1 ⇩	Annual Report 2017-18 (Under separate cover)
2 ⇨	Annual Report Summary (Under separate cover)

Author: Josie Askin

Corporate Planner

Author: Darrin Newth

Financial Accounting Manager

Reviewed By: Wendy Moore

Divisional Manager, Strategy and Planning

Approved By: Kim Kelly

General Manager, City Transformation

Finance and Performance Committee

01 October 2018

File: (18/1555)

Report no: FPC2018/4/289

2018 Local Government Funding Agency Annual General Meeting Shareholder Votes

Purpose of Report

1. The purpose of this report is to provide the Committee with the Agenda for the upcoming Annual General Meeting (AGM) of the Local Government Funding Agency (LGFA) and to confirm Council’s vote for each agenda item.

Recommendations

That the Committee:

(i) receives the report, including the proposed changes to the Local Government Funding Agency (LGFA) Foundation Policy, attached as Appendix 2 and 3 to the report; and

(ii) recommends that Council:

(a) authorises Brent Kibblewhite (General Manager Corporate Services) and/or Mark de Haast (Chief Financial Officer) to vote on behalf of Council, at the LGFA’s 2018 Annual General Meeting to be held on 21 November 2018, in accordance with Council’s votes on recommendations (aa) to (ee) inclusive, noting Committee recommendations in bold; or if Council officers are unable to attend the Annual General Meeting

(b) authorises Mark Butcher (Chief Executive Officer, LGFA) as Council’s proxy to vote on behalf of Council, at the LGFA’s 2018 Annual General Meeting to be held on 21 November 2018, in accordance with Council’s votes on recommendations (aa) to (ee) inclusive, noting Committee recommendations in bold:

(aa) re-elect John Avery as an independent director of the LGFA - (For/Against); and

(bb) re-elect Michael Timmer as non-independent director of the LGFA - (For/Against); and

(cc) re-elect Hamilton City Council as a Nominating Local Authority - (For/Against); and

(dd) re-elect Tauranga City Council as a Nominating Local Authority - (For/Against); and

(ee) approve, the amendments to the Foundation Policy of the LGFA - (For/Against).

Background

2. In May 2012, Council became a principal shareholding local authority in the LGFA. 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. As at 30 June 2018, the LGFA had 45 million ordinary shares on issue, 20 million of which remain uncalled (ie, not paid in full). All ordinary shares rank equally with one vote attached to each ordinary share. Ordinary shares have a face value of $1 per share. Council holds a total of 200,000 ordinary shares (with 100,000 shares uncalled), which equates to a 0.4% shareholding in the LGFA. Currently, the New Zealand Government is the largest shareholder with an 11.1% shareholding.

4. The LGFA meets the Local Government Act 2002 (the Act) definition of a Council Controlled Organisation (CCO) as one or more local authorities have the right, directly or indirectly, to appoint 50% or more of the directors.

5. As a shareholder in the LGFA, Council must regularly undertake performance monitoring to evaluate its contribution to the achievement of Council’s desired outcomes.

6. The LGFA is holding its next AGM on 21 November 2018 in Wellington and the Agenda items include:

· election of directors to the LGFA Board; and

· election of Nominating Local Authorities to the Shareholders’ Council; and

· proposed changes to the Foundation Policy that allows financial covenant compliance of Councils to be tested at the group level (including CCOs) where appropriate and to allow lending directly to a CCO.

Discussion

LGFA Director and LGFA Shareholders’ Council Positions

LGFA Director Positions

7. The LGFA Shareholders Agreement requires the Board to be comprised of five independent directors and one non-independent director. Currently, the five independent directors are John Avery, Philip Cory-Wright, Anthony Quirk, Linda Robertson and Craig Stobo and the non-independent director is Mike Timmer.

8. Independent directors are defined in the Shareholders Agreement as a director “who is not an employee of any shareholder, employee of a CCO owned (in whole or in part) by any shareholder or a Councillor of any Local Authority which is a shareholder and was not such an employee or Councillor at any time in the five years prior to the time that person’s appointment as a director. For the avoidance of doubt, a director (or former director) of a CCO shall not by virtue of this reason alone be precluded from being an independent director.”

9. The Shareholders Agreement sets out that one of the independent directors and one of the non-independent directors must retire by rotation each year. If they wish, they can offer themselves for re-election.

10. Accordingly, this year John Avery retires by rotation and offers himself for re-election as an independent director and Mike Timmer retires by rotation and offers himself for re-election as a non-independent director.

11. Both John Avery and Michael Timmer have the support of the Shareholders Council and the LGFA Board to continue as directors of LGFA. Michael Timmer is Treasurer at Greater Wellington Regional Council (GWRC) and is known by Officers.

12. Biographies for both candidates are provided in Appendix 1 to this report

LGFA Shareholders’ Council Positions

13. The Shareholders’ Council is comprised of between five and 10 members with the current members being the Crown and nine Council members. A Nominating Local Authority (NLA) can appoint a member to the Shareholders’ Council and the NLAs are currently Auckland Council, Bay of Plenty Regional Council, Christchurch City Council, Hamilton City Council, Tasman District Council, Tauranga City Council, Wellington City Council, Western Bay of Plenty District Council and Whangarei District Council.

14. The Shareholders Agreement requires two NLA members to retire by rotation each year. If they wish, they can offer themselves for re-election.

15. Accordingly this year Hamilton City Council (and not Western Bay of Plenty District Council as incorrectly advised in an earlier email), and Tauranga City Council will retire and seek re-election.

Officers Recommendation

16. Officers find no reason to vote against the candidates standing for re-election for either category, for the following reasons:

· the very successful performance to date of the LGFA;

· LGFA’s good engagement with Council, especially in recent times; and

· Council already has NLA representation for our region (via Wellington City Council).

Changes to the LGFA Founding Policy

17. There are two proposed changes to the Foundation Policy requiring shareholder approval by Ordinary Resolution:

· measurement of Council compliance with LGFA covenants at a group level; and

· direct lending to CCOs.

18. LGFA are proposing these changes in response to feedback received from both member and non-member Councils. This is a continuum of LGFA’s successful track record of continuous improvement and evolving to meet Council needs eg, short dated lending and bespoke lending.

Measurement of Council compliance with LGFA covenants at a group level

19. Currently LGFA tests each Council borrower’s compliance with either the Foundation Policy or Lending Policy covenants at the parent Council level ie, it excludes any debt, revenue or interest payments made by a subsidiary entity from the calculations.

20. This might not reflect the most accurate representation of a Council’s financial position if the parent Council delivers some of its services or activities or holds assets through a subsidiary entity eg, Auckland Council delivers a large amount of services through Watercare and Auckland Transport.

21. It is proposed that a Council can apply to the LGFA Board to be tested at the group level rather than at the parent level for compliance with LGFA covenants. It is important to note that:

· The Foundation Policy Covenants (for Councils that have an external credit rating) or Lending Policy Covenants (if no external credit rating) would still apply to Council regardless of being measured on a parent or group basis.

· The Senior Manager Credit and External Relationships (LGFA) would provide analysis and recommendation to the LGFA Board for consideration as to whether they should approve the request.

· To provide certainty to the applicant Council, the testing at the group level would apply for the life of the existing loans from the LGFA.

· At this stage, LGFA currently expects only Auckland Council would wish to have their covenants calculated at group level.

22. The current scale and activities of Council’s CCOs makes little difference to Council’s compliance with the LGFA covenants, whether measured at the parent Council or group level, as shown below:

Financial Covenant	Foundation Policy Covenants	Parent Council Covenants	Group Covenants
Net debt/Total Revenue	<250%	101%	102%
Net Interest/Total Revenue	<20%	4%	4%
Net Interest/Annual Rates Income	<30%	6%	6%
Liquidity⁽¹⁾	>110%	124%	131%

(1) Liquidity is defined as external debt plus committed loan facilities plus liquid investments (investments that can be readily converted to cash), divided by external debt.

Liquidity risk is the risk that Council will encounter difficulty raising liquid funds to meet its commitments as they fall due. Council exercises prudent liquidity management by maintaining sufficient cash and the availability of sufficient funding through a committed credit facility that would enable Council to close-out any adverse market conditions.

Direct Lending to CCOs

23. Currently LGFA only lends to the parent Council and not to any other related entities. This is not ideal as:

· Similar to Council, several other Councils also borrow funds directly and then on-lend to their CCOs eg, Auckland Council (on-lends to Watercare); Christchurch City Council (on-lends to Christchurch City Holdings Limited); New Plymouth District Council (on-lends to New Plymouth Airport); and Rotorua District Council (on lends to Rotorua Regional Airport, etc.

· LGFA cannot currently lend to multiple owned CCOs. While there are very few of these entities which have borrowings, they are more likely to be established in the future eg, the possibility of jointly owned water companies.

· Dunedin City Council (DCC) borrows via its Council Controlled Trading Organisation subsidiary company, Dunedin City Treasury Limited. This is one reason why DCC cannot become a member of LGFA.

24. To ensure that LGFA does not bear any additional risk than incurred with lending to a parent Council, it is proposed that LGFA could lend to a CCO provided that:

· The parent Council (or group of shareholding councils) of the CCO must each be a guarantor of the loan in favour of LGFA.

· LGFA will only lend to a CCO if there is uncalled capital from the parent Council that is at least equal to the financial obligations of the CCO or there is a guarantee from the parent Council in respect of the CCO.

· LGFA will undertake credit analysis on the CCO as well the parent Council.

· The CCO would be subject to LGFA Board approval before borrowing.

· The LGFA Board would apply bespoke financial covenants to the CCO taking into consideration factors such as the ownership structure, cash flow and balance sheet quality and what activity/services the CCO is delivering on behalf of the parent Council Shareholder(s).

25. The LGFA would require bespoke covenants for CCOs because whilst Councils are very similar to each other, there can be significant differences between CCOs. In addition, CCOs do not have rates revenue. Therefore, the LGFA Board, following advice from LGFA management and external legal advisors, would need to negotiate bespoke covenants with the CCO.

26. Currently, Council issues CCO borrowings directly from the LGFA and on-lends to its CCOs. In return, Council receives its cost of borrowings plus 1% (0.5% for Hutt City Community Facilities Trust), for administration and treasury management costs.

27. All of Council’s CCOs would qualify to lend directly from the LGFA, subject to Council’s approval and loan guarantee(s). Council has uncalled share capital in Urban Plus Limited only ($15M uncalled with a total shareholding of $27M) and the total on-lending to its CCOs are as follows:

CCOs	Uncalled Share Capital	Current on-lending	Maximum Council approved on-lending
Hutt City Community Facilities Trust	Nil	$3M	$3M*
Seaview Marina Limited	Nil	$2.7M	$3.5M*
Urban Plus Limited	$15M	$9M	$18M*

*Council recently approved CCO lending facilities up to 30 June 2021.

Officers Recommendation

28. Officers find no reason to vote against the proposed changes to the Foundation Policy for the following reasons:

· At this stage, LGFA only expect Auckland Council to request that their covenants be calculated at the group level and this would be consistent with how they are analysed by their credit rating agencies.

· There are some Council members who currently borrow and on-lend to their CCO subsidiaries, so this proposal will give them the option to streamline the borrowing process and provide more flexibility in how they restructure their borrowings. This could potentially benefit Council in the future if its CCOs increase the scale of their activities and borrowing requirements, but Officers do not recommend this at present.

· There is no increased risk to the LGFA. Regardless of being measured at the parent Council or group level, all Councils must remain compliant with the LGFA covenants and the LGFA has recourse over rates revenue as security. Additionally, where a CCO borrows from the LGFA, the LGFA has the benefit of a parent Council uncalled capital or guarantee.

· LGFA do not feel that credit rating agencies or investors would be concerned with these changes. Again, this is because all Councils must remain compliant with the LGFA covenants and the underlying security remains unchanged. Lending to CCOs will also diversify the LGFA lending book and could bring in new Council members to LGFA.

· LGFA think these changes would strengthen the case for keeping any possible new water entities in local government ownership as it allows lending to multiple owned CCOs. Any new water entity would also benefit from borrowing at lower cost of funds than in their own name. The bespoke covenants for a water entity could possibly be set higher than the current LGFA financial covenants so that the multiple owned water entities could borrow more and therefore reduce pressure on parent Council balance sheets.

· The proposed changes will not make it easier for Councils to borrow more or to avoid a covenant breach. This is because the Board approves testing of a Council at the group or parent level. The Board will consider whether a move to testing at the group level will weaken the credit profile of Council before deciding on the change. Regardless of the basis for measurement, the LGFA Board expects all Council borrowers to maintain sufficient headroom under the LGFA covenants.

29. The Foundation Policy documents (a final version and a track changes version) are attached as Appendix 2 and 3 to this report.

Consultation

30. There are no consultation requirements arising as a result of this report.

Legal Considerations

31. Council may appoint a representative to attend and vote at the AGM on Council’s behalf. Alternatively, Council may appoint a proxy to vote at the AGM on Council’s behalf.

32. The proxy does not need to be a shareholder and to be effective, LGFA must receive notice from Council, authorising the proxy to vote on its behalf not later than 48 hours before the start of the AGM, being 2pm on Wednesday 21 November 2018.

Financial Considerations

33. There are no financial considerations in addition to those already discussed within this report.

Other Considerations

34. 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 allows Council to operate in a cost-effective and transparent manner.

Appendices

No.	Title	Page
1 ⇩	Candidate Biographies for Re-election to the LGFA Board	19
2 ⇩	2018 LGFA Amended Foundation Policy (Final Version)	20
3 ⇩	2018 LGFA Amended Foundation Policy (Mark-Up Version)	24

Author: Mark de Haast

Chief Financial Officer

Reviewed By: Brent Kibblewhite

General Manager Corporate Services

Approved By: Tony Stallinger

Chief Executive

30 17 October 2018

Finance and Performance Committee

07 August 2018

File: (18/1337)

Report no: FPC2018/4/290

Report on The Hutt City Community Facilities Trust for the Year Ended 30 June 2018

Purpose of Report

1. To provide the Committee with the Annual Report for Hutt City Community Facilities Trust (CFT) for the year ended 30 June 2018.

Recommendations

That the Committee receives and notes the Annual Report for Hutt City Community Facilities Trust (CFT) for the year ended 30 June 2018, attached as Appendix 1 to the report.

Background

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

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

Discussion

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

5. CFT has taken the lead in five strategic infrastructure developments in Lower Hutt. Four of the projects are now complete and the largest at Fraser Park will be completed in the summer of 2018/19.

6. The Walter Mildenhall Park redevelopment was completed in 2017/18, which includes the construction of a world class indoor bowls arena, new clubrooms, renovated public tennis courts , a new community petanque piste, public parking, safety and lighting improvements and general park rejuvenation and landscaping. Through the use of a translucent, tension membrane fabric roof system, CFT has produced a strong, flexible and lightweight design that reduced building weight and costs that should create significant operational savings over the life of the building. Several clubs are now associated with this facility encompassing the sports of indoor bowls, darts, petanque, badminton and others.

7. In partnership with Hutt City Council, the Stokes Valley Community Hub was completed and opened in November 2017. This new multi-use facility has replaced the old library and community hall, both of which have now been demolished.

8. This year has seen real progress on the Fraser Park development, which may be argued as the most significant sports hub development in the Wellington region. As at 30 June 2018, this facility was 60% complete with 94.6% of the required $13.1M funding secured via $9.6M in contributions from Council plus $2.9M raised externally by CFT. CFT requires further funding of $620,000 in 2018/19 to complete every element of the project. CFT is positive it will achieve this funding target and predicts up to one million visitors per year will pass through the new hub.

9. CFT achieved a net surplus of $9.9M for year ending 30 June 2018, being $1.5M below budget. Whilst revenue was $2.8M below budget, this was offset by an unrealised gain of $1.3M achieved on property revaluations.

10. To align more closely with Council’s accounting policies, CFT revalued its buildings and site improvements as at 31 December 2017. Subsequent asset revaluations will be completed three-yearly (or sooner if necessary).

11. Total revenue was $2.8M below budget for the year mainly due to less funding received from the Council than planned, due to delays to the commencement of the Fraser Park Sportsville construction.

12. Operating expenditure (including depreciation) was $67,000 over budget. This was mainly due to a write-down in the value of the turfs at Fraser Park, higher maintenance costs as the Walter Nash floor required a recoat one year earlier than planned and high professional services fees to assist with CFT fundraising activities.

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

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

Consultation

15. There are no consultation requirements arising from this report.

Legal Considerations

16. The board of Trustees must deliver to the Council (shareholder), and make available to the public, its 2017/18 Annual Report by no later than 30 September 2018.

17. The final Annual Report was provided to Council Officers on 19 September 2018 and was made publicly available via the CFT’s website within the statutory deadline.

Financial Considerations

18. The audit has concluded and Audit New Zealand issued an unmodified audit opinion. At the time of writing this report, the final management letter had not been received from Audit New Zealand.

19. The Trustees of CFT approved the Annual Report on 10 September 2018 and the audit opinion was issued on the same date.

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 local government in that it contributes to the current and future needs of the community by providing an affordable service to the community.

Appendices

No.	Title	Page
1 ⇩	HCCFT Annual Report 2018	31

Author: Mark de Haast

Chief Financial Officer

Approved By: Brent Kibblewhite

General Manager Corporate Services

62 17 October 2018

Finance and Performance Committee

07 August 2018

File: (18/1338)

Report no: FPC2018/4/291

Report on Seaview Marina Limited for the Year Ended 30 June 2018

Purpose of Report

1. To provide the Committee with the Annual Report for Seaview Marina Limited (SML) for the year ended 30 June 2018.

Recommendations

That the Committee receives and notes the Annual Report for Seaview Marina Limited (SML) for the year ended 30 June 2018, attached as Appendix 1 to the report.

Background

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

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

Discussion

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

5. The surplus for the year was $337,159 compared to a budgeted surplus of $461,080 and $403,749 in 2016/17. The lower than expected result was due to a $119,121 (non-cash) write-down in the value of the Marine Centre. The overall result still provided a 5.8% return on equity (target 5.0%).

6. Revenue of $2,279,737 was 6.1% ahead of budget and 8.5% up on 2016/17, fuelled by record berth occupancy (86%) and continued near full occupancy of the trailer park (99%). Boat yard occupancy was 83%, another record, and live-aboard numbers reached the board approved cap of 60 vessels.

7. With berth occupancy rates improving to 86%, the development of commercial berths on the south side of pier H commenced in June 2018 and this was finished in July 2018. The development of the 10 metre berths on the north side of pier H will be revisited towards the end of 2018/19. The other major capital developments during the year were the completion of the walkway around the main marina causeway, and the opening of Compass Café, an over water café inclusive of boat moorings. The café is leased to an external operator.

8. A client service survey is completed by the marina every two years and this was completed again in early 2018. The overall customer satisfaction rating was 94% and management of the marina was rated 96.4% - both outstanding results.

9. There were no notifiable health and safety events reported during the year.

10. SML is well positioned as it continues on its multi-year capital programme.

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

Consultation

12. There are no consultation requirements arising as a result of this report.

Legal Considerations

13. The board of a CCO must deliver to Council (shareholder), and make available to the public, its 2017/18 Annual Report by no later than 30 September 2018.

14. The final Annual Report was provided to Council Officers on 20 September 2018 and was made publicly available via SML’s website within the statutory deadline.

Financial Considerations

15. The audit has concluded and Audit New Zealand issued an unmodified audit opinion. At the time of writing this report, the final management letter had not been received from Audit New Zealand.

16. The board of SML approved the Annual Report on 20 September 2018 and the audit opinion was issued on the same date.

Other Considerations

17. 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 contributes to the achievement of current and future needs of the community by providing a return on shareholder investment and retaining public access through the Seaview Marina.

Appendices

No.	Title	Page
1 ⇩	SML Annual Report 2018	63

Author: Mark de Haast

Chief Financial Officer

Approved By: Brent Kibblewhite

General Manager Corporate Services

98 17 October 2018

Finance and Performance Committee

07 August 2018

File: (18/1339)

Report no: FPC2018/4/292

Report on Urban Plus Group for the Year Ended 30 June 2018

Purpose of Report

1. To provide the Committee with the Annual Report for Urban Plus Group (UPL) for the year ended 30 June 2018.

Recommendations

That the Committee receives and notes the Annual Report for Urban Plus Group (UPL) to 30 June 2018, attached as Appendix 1 to the report.

Background

3. Mr Brian Walshe (Chairman) and either Mr Craig Walton (Chief Executive) or Mr Daniel Moriarty (Senior Development Manager) will be at the meeting to present the Annual Report and answer any questions.

Discussion

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

5. The Group achieved a surplus before tax and depreciation of $2.681 million compared to $0.690 million in 2016/17. The increase related primarily to the surplus generated on properties developed for sale. The surplus before tax (but after depreciation) was slightly down on budget (by $118,705), however profits on six of the 20 houses in the completed and sold out Fairfield Waters development were not able to be recognised in 2017/18. As these houses settled in early July and accounting standards require the associated revenue, development costs and profits be recognised in the 2018/19 financial year.

6. Comprehensive revenue and expenses for the year was $3.101 million inclusive of Gains on Property Revaluations of $1.290 million.

7. Equity for the UPL Group is now $23.897 million representing an increase of 14.9% from the previous year.

8. The Facilities Management division achieved all of its key performance indicators.

9. The Rental Housing division did not achieve some of its key performance measures with 79.6% of tenants (target 85%) identified their primary source of income being NZ National Superannuation, and rentals charged only being 80.3% of ‘market’ rent (target 90%), as market rentals outpaced tenant affordability.

10. Rental portfolio occupancy was maintained at greater than 97% throughout the year.

11. No new units were added to the rental portfolio during the year (target 6-10 added per year with target portfolio size of 220 by June 2020), however seven units were added in July 2018.

12. The Property Development division provided a significant contribution to the UPL Group surplus in 2017/18. UPL completed and sold out the Fairfield Waters subdivision and has plans for four further developments for low income elderly and affordable housing as outlined on pages three and four of the Annual Report.

Consultation

13. There are no consultation requirements arising as a result of this report.

Legal Considerations

14. The board of a CCO must deliver to Council (shareholder), and make available to the public, its 2017/18 Annual Report by no later than 30 September 2018.

15. The final Annual Report was provided to Council Officers on 20 September 2018 and was made publicly available via UPL’s website within the statutory deadline.

Financial Considerations

16. The audit has concluded and Audit New Zealand issued an unmodified audit opinion. At the time of writing this report, the final management letter had not been received from Audit New Zealand.

17. The board of UPL approved the Annual Report on 20 September 2018 and the audit opinion was issued on the same date.

Other Considerations

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

Appendices

No.	Title	Page
1 ⇩	UPL Annual Report 2018	99

Author: Mark de Haast

Chief Financial Officer

Approved By: Brent Kibblewhite

General Manager Corporate Services

139 17 October 2018

Finance and Performance Committee

03 October 2018

File: (18/1584)

Report no: FPC2018/4/294

Wellington Water Limited Annual Report for the Year Ended 30 June 2018

Purpose of Report

1. To provide the Committee with the Annual Report for Wellington Water Limited (WWL) for the year ended 30 June 2018.

Recommendations

That the Committee receives and notes the Annual Report for Wellington Water Limited for the year ended 30 June 2018, attached as Appendix 1 to the report.

Background

2. It is a requirement of the Local Government Act 2002 that Council Controlled Organisations (CCOs) deliver to the shareholders an annual report on the organisation’s operations.

3. Wellington Water Limited is a Council Controlled Organisation owned jointly by five shareholder Councils: Wellington City Council, Hutt City Council, Upper Hutt City Council, Porirua City Council and Greater Wellington Regional Council.

4. WWL does not operate to make a financial return and its purpose is to create excellence in regional water services so that communities prosper. WWL plans and delivers the three waters services (drinking-water, wastewater and stormwater) to the metropolitan Wellington region on behalf of the five shareholder Councils.

5. The three waters services include the collection, treatment and delivery of drinking water and the construction, operation, management and maintenance of the three waters network assets and systems, as well as treatment facilities, pump stations reservoirs and related networks.

6. WWL is governed by a Board of directors. The chair of the Board reports to the Wellington Water Committee, which is made up of representatives of all five shareholder Councils and is currently chaired by Lower Hutt’s Deputy Mayor, David Bassett.

7. The Wellington Water Committee provides governance oversight of WWL and its management of the network infrastructure for the delivery of the three waters services. This is done by considering WWL’s half-yearly and annual reports, monitoring WWL’s performance, appointing directors to the Board and providing recommendations to shareholders on WWL’s proposals.

8. The audited Annual Report is attached as Appendix 1 to this report.

9. The Deputy Mayor David Bassett and Mr Colin Crampton (WWL Chief Executive Officer) will be at the meeting to present the Annual Report and answer any questions.

Discussion

2017/18 Key Highlights

10. WWL has focussed on its customers. Customer experience experts from Scottish Water were hosted in August 2017, which resulted in WWL building a customer culture throughout the organisation using a customer plan, designed to better understand what customers’ value from the services provided. Further work will continue in 2018/19.

11. 2017 saw the driest November on record. Demand for water soared and water reserves from the Stuart Macaskill storage lakes at Te Marua was required to supplement water supply. To curb water demand, WWL introduced a total sprinkler ban and customers were provided advice and information on the importance of water conservation. This resulted in a significant decrease in water demand.

12. The metropolitan Wellington region’s drinking-water supply and wastewater networks are vulnerable. Underground pipes, pumps and reservoirs could be badly damaged in a significant earthquake, meaning that some suburbs could be without drinking water for more than 100 days and without wastewater for more than 120 days.

13. Over the past 12 months, WWL has worked with both central and local government to develop an emergency water network that will supply communities across the metropolitan Wellington region with water from day eight following a natural disaster. The first 22 emergency water stations were opened at a special event attended by Civil Defence Minister Kris Faafoi and senior representatives of the five shareholder Councils. This emergency water network, together with investigations into an alternative water source for Wellington’s southern and eastern suburbs and the construction of water reservoirs, will help Wellington communities to become more resilient.

14. WWL has also ensured that its customers remain confident that the drinking water it provides is safe. Following the discovery of E.coli in the water exiting the Waterloo Treatment Plant, ultraviolet (UV) light and chlorine was added to the treatment process. This now forms part of a multi-barrier system that ensures that water supplied to everyone in the metropolitan Wellington region is safe.

15. The findings from stage two of the governments Havelock North Drinking Water Inquiry proposed six fundamental principles of drinking-water safety and WWL has worked to better understand how these can be integrated into the services it provides.

16. As a result of Local Government Minister Nanaia Mahuta’s announcement to reform drinking water, stormwater and wastewater, WWL agreed to facilitate the development of a proposal on behalf of the five shareholder Councils that suggests improvements to the water sector in New Zealand.

17. The Wellington region is experiencing steady urban growth, with the population expected to increase by 21% in the next 30 years. WWL has continued to develop key planning documents such as the Regional Service Plan, which outlines all of the activities that are needed in the next three, 10 and 30 years. In addition, WWL has used its Three Waters Strategy (a 50 year view of our drinking-water, stormwater and wastewater networks), to identify a number of issues that could disrupt these water services. Over the next three years, WWL will investigate these issues further.

18. Lastly, WWL is on track to deliver an alliance approach to network maintenance and operations by June 2019, select a collaborative capex contractor panel to start work in 2019/20 and consolidate the wastewater treatment plan management contract by July 2019.

Shareholder Councils Performance Measures

19. Each shareholder Council sets specific performance measures against each of the three customer outcomes: safe and healthy water; respectful of the environment; and resilient networks that support the economy. WWL, on behalf of Council, has achieved 75% of Council’s 2017/18 performance measures. Those performance measures that were not achieved are discussed below.

Service Goal	Objective	Target Measure	2017/18 Result
Safe and healthy water: Minimise public health risks associated with water and stormwater.	The public is protected from direct exposure to untreated wastewater onto land.	Nil dry-weather network blockages that result in discharge to land.	Not achieved as Council had two dry-weather overflow events: (1) from Point Howard wastewater trunk due to a leak in an air valve; and (2) a local wastewater main blockage.
Service Goal	Objective	Target Measure	2017/18 Result
Respectful to the Environment: We manage use of resources in a sustainable way.	Our customers receive water services that are managed efficiently through minimising water loss.	Gross average drinking-water consumption is 335 litres per resident per day.	Not achieved as Council provided 378 litres per resident per day. This was mainly due to an extended and dry summer that resulted in higher-than-normal water consumption and an increase in water main bursts meant that less urgent leaks were not able to be responded as quickly as required.
Respectful to the Environment: We maintain or enhance the health of our waterways and the ocean.	The water quality of the waterways and harbours is not adversely affected by discharges from any of the three waters networks.	90% of monitored freshwater sites that have a rolling 12-month median value for E.coli (dry-weather samples) that does not exceed 1000cfu/100ml	Not achieved as Council achieved a rolling 12-month median value of 78%. This indicates that there may be faults and limitations in the wastewater network that are affecting water quality. Investigations are continuing in a number of catchments to identify public and private network issues.
Service Goal	Objective	Target Measure	2017/18 Result
Resilient networks support our economy: We minimise the impact of flooding on people’s lives and take into account climate change.	The potential impacts of higher sea levels and flooding on property and key transport links from stormwater are identified and minimised. The impact of an additional 1m sea-level rise is understood and preventative measures are implemented where practicable. Where prevention is not possible, the impacts are managed operationally.	100% of urban catchments are covered by detailed hydraulic stormwater models.	Not achieved. WWL is aiming to achieve hydraulic stormwater models by 2021.
Resilient networks support our economy: We provide three waters networks that are resilient to shocks and stresses.	The resumption of water services to customers is prioritised and managed appropriately.	80% of customers have access to sufficient potable water for at least seven days (using at least three litres per person per day).	Not achieved. Since the SOI was written, WWL has revised the target upwards to 22 litres per person per day. Further work is also needed to increase personal water storage.
Service Goal	Objective	Target Measure	2017/18 Result
Resilient networks support our economy: We plan to meet future growth and demand.	The water supply network meets normal demand except where a drought is more severe than a one-in-50-year return period event.	The assessed reliability of the potable water network shall not exceed an annual shortfall probability of 2% (assessed using the Sustainable Yield Model).	Not achieved. The assessed reliability is considered to have an annual shortfall of 5.7% following a review of the Te Marua Water Treatment Plant capacity. This will be addressed as part of the future service study: “Sustainable water Supply” already underway.
Resilient networks support our economy: We provide reliable services to customers.	Customers have access to reliable three waters services.	Median response time to fix water-supply service outages: 36 hours (attendance for non-urgent call-outs).	Not achieved as the median response time was 47.9 hours. The ability to fix some breakdowns remotely will help to reduce response times.

Financial Performance Overview

20. WWL earns most of its revenue from the five shareholder Councils by way of a management fee, ‘One Budget’ opex expenditure and ‘One Budget’ capital expenditure. Occasionally, additional revenue is earned from charging third parties for services.

21. WWL develops and agrees an annual opex work programme based on the shareholder Councils Long Term Plans and then manages these opex budgets, collectively referred to as ‘One Budget’ Opex programme. WWL enters into contracts directly with contractors to perform the work and manages the projects. At year-end, any unspent One Budget opex programme budget is retained (up to a cap) in an Unexpected Event Reserve. This reserve had an aggregate balance of $1.6M as at 30 June 2018, of which $200,000 belonged to Council. This has also been recognised in Council’s 2017/18 Annual Report.

22. Similarly, WWL develops and agrees an annual capital work programme jointly with the five shareholder Councils and then manages these capex budgets, collectively referred to as ‘One Budget’ Capex programme. WWL enters into contracts directly with contractors to perform the work and manages the projects. An unexpected event reserve is not used to retain any unspent One Budget Capex programme budget at year-end.

23. Finally, the management fee is agreed on an allocation based on the asset value and the three-year opex programme.

24. The 2017/18 Statement of Comprehensive Revenue and Expense budget differs from that presented in the WWL Statement of Intent (2017-2020). These budget revisions have no impact on the reported surplus/deficit before tax ($nil) and they were approved by the WWL Board in July 2017. These budget revisions were due to:

· WWL extended its trusted advisor model (One Budget) to consolidate the five shareholder Councils external water expenditure within WWL. The new model incorporates all five shareholder Councils’ operational (opex) and capital (capex) expenditure.

· Temporary timing differences as the Statement of Intent (2017-2020) reflects the five shareholder Councils draft budgets which have since been finalised by way of the respective 2017/18 Annual Plans.

25. WWL achieved an actual loss of $26,000 (after-tax) for the year ended 30 June 2018. In March 2018, the Company was forecasting to make a $300,000 loss for the financial year however, continued focus on staff annual leave utilisation and organisation cost savings (wherever possible), has resulted in a more favourable year-end outcome.

26. Revenue and operating expenses were approximately $1M higher than budget primarily due to a higher management fee and staff costs. Extra funding was required for additional staff, as agreed with the affected shareholder Councils. Depreciation and amortisation was $294,000 higher than budget mainly due to the budgeted depreciation not accounting for assets transferred from shareholder Councils at the end of 2016/17.

27. The One Budget Opex programme was $2M higher than budget at year end. This was mainly due to a $3.3M planned cost over-run for Greater Wellington Regional Council from the harbour bores work and a further planned cost over-run of $800,000 for Porirua City Council. These overspends were fully funded by both Councils by way of year-end wash-ups.

28. The One Budget capex programme was $3.7M less than budget at year end. This was due to a combination of savings and deferral of project works to 2018/19.

29. For the year-ended 30 June 2018, Council provided the following to WWL: a management fee of $3.3M (13% of total); One Budget Opex programme of $11.5M (23% of total); and One Budget capex programme of $12.8M (18% of total).

Financial Position Overview

30. Current assets were $16M higher than budget at year end, due to receivables. WWL delayed its June 2018 invoicing to shareholder Councils to ensure the invoiced amounts included all actual expenditure for the month. This meant that payments could not be made before year-end.

31. Current liabilities were $15M higher than budget at year end mainly because expenditure accruals were much higher due to the One Budget opex and capex programmes.

32. Non-current liabilities were $405,000 higher at year end than budget due to a capital grant received in advance by Porirua City Council. This grant provides for the future purchase of plant, equipment and vehicles, to be spent over the next ten years.

Consultation

33. There are no consultations requirements arising from this report.

Legal Considerations

34. The Board must deliver to the Council (shareholder), and make available to the public, its 2017/18 Annual Report by no later than 30 September 2018.

35. The final Annual Report was provided to the Wellington Water Committee (as representatives of the five shareholder Councils) on Friday 28 September 2018 and was made publicly available via the Wellington Water Limited website within the statutory deadline.

Financial Considerations

36. WWL’s share capital includes Class A and Class B ordinary shares. Each shareholder Council holds 150 Class A ordinary shares, which enables equal voting rights at any meeting of the shareholders on any resolution. The total number of authorised, issued and fully paid Class B ordinary shares at 30 June 2018 was 475 with a face value of $2,000 each. Council holds 100 Class B ordinary shares that equates to a 20% shareholding.

37. Council’s 20% equity share in the Company means that for accounting purposes only, the Company is treated as an associate and only Council’s share of the Company’s post tax surplus/(deficit) is included in Council’s group accounts. Council has recognised a $6,000 deficit in its consolidated results for the year ended 30 June 2018 (2017: $52,000 deficit), being its share of WWL’s after tax deficit for the same period.

38. Ownership of infrastructure assets is retained by each of the five shareholder Councils. Given WWL returns all benefits to shareholders, the ratio of shareholders’ funds to total assets should be low as this measure reflects the percentage of WWL’s assets that are owned by the shareholder Councils.

39. The Statement of Intent target for 2017/18 was 26%, however the actual ratio achieved for the year was 8%. This is mainly because total assets are temporarily inflated by $11M due to deliberate invoicing delays as already noted. Excluding $11M of receivables from shareholder Councils, the normalised shareholders ratio would be higher and equates to 17%.

40. The WWL Board approved the Annual Report on 20 September 2018 and Audit New Zealand issued their unmodified audit opinion on the same date.

Other Considerations

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

Appendices

No.	Title	Page
1 ⇩	Wellington Water Limited Annual Report for the Year Ended 30 June 2018	140

Author: Mark de Haast

Chief Financial Officer

Approved By: Brent Kibblewhite

General Manager Corporate Services

Attachment 1

Wellington Water Limited Annual Report for the Year Ended 30 June 2018

198 17 October 2018

Finance and Performance Committee

08 August 2018

File: (18/1344)

Report no: FPC2018/4/293

New Zealand Local Government Funding Agency 2018 Annual Report

Purpose of Report

1. The purpose of this report is to provide the Committee with the Local Government Funding Agency (LGFA) Annual Report for the year ended 30 June 2018.

Recommendations

That the Committee notes and receives the Local Government Funding Agency (LGFA) Annual Report for the year ended 30 June 2018, attached as Appendix 1 to the report.

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. Council became a principal shareholding local authority in the LGFA in May 2012.

3. The LGFA issues bonds to wholesale and retail investors and on-lends the funds raised to participating local authorities with borrowing needs. The quality of the LGFA’s credit rating, and the liquidity created by issuing homogenous local authority paper, ensures that participating Councils can raise funds from the LGFA on better terms than if they were issuing in their own name.

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

5. The LGFA meets the Local Government Act 2002 (the Act) definition of a Council Controlled Organisation (CCO) as one or more local authorities have the right, directly or indirectly, to appoint 50% or more of the directors.

6. As a shareholder in the LGFA, the Council must regularly undertake performance monitoring to evaluate its contribution to the achievement of the Council’s desired outcomes.

Discussion

7. By 30 June 2018, LGFA had loans outstanding of $7.9B to 56 participating Councils. During 2017/18, LGFA issued $180M of new debt and added three new member Councils. For the 12-month period, LGFA provided 70% of the local government sector borrowings.

8. The LGFA recorded a strong financial performance for the year ended 30 June 2018, realising a net operating profit of $11.8M (2017: $11.1M) for the year and Shareholder Equity of $64.3M (2017: $53.9M) as at 30 June 2018.

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

10. Council has borrowed $157M from the LGFA as at 30 June 2018 (2017:$97M). This is an increase of $60M since 30 June 2017. $20M was issued to re-finance debt maturing during the year, $20M was issued to part-fund Council’s 2017/18 capital works programme and $20M was issued to pre-fund $24M of debt maturing in 2018/19.

11. LGFA Borrowings include those on behalf of Council’s CCOs and all borrowings are in accordance with approved limits contained in Council’s Treasury Risk Management Policy.

12. Council had $2.5M of LGFA Borrower Notes as at 30 June 2018 (2017: $1.6M).

13. The full LGFA 2017/18 Annual Report is attached as Appendix 1 to this report.

Consultation

14. There are no consultation requirements arising from this report.

Legal Considerations

15. The Board of LGFA must deliver to Council (shareholder), and make available to the public, its 2017/18 Annual Report by no later than the 30 September 2018.

16. The final Annual Report was provided to Council Officers on 28 August 2018 and was made publicly available via the LGFA website within the statutory deadline.

Financial Considerations

17. The LGFA Board declared a dividend of $1.3M (2017: $1.4M) for the year ended 30 June 2018. The dividend rate was $0.0514 per paid up share. Council received a dividend of $5,140 (2017: $5,560) on 7 September 2018 from its $100,000 investment.

18. The Board of LGFA approved the Annual Report on 28 August 2018 and KPMG issued an unmodified audit opinion on the same date.

Other Considerations

19. 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 allows Council to operate in a cost-effective manner.

Appendices