Finance and Performance Committee
Minutes of a meeting held in the Council Chambers, 2nd Floor, 30 Laings Road,
Lower Hutt on
Wednesday 6 March 2019 commencing at 5.30pm
PRESENT: Cr C Milne (Chair) Cr C Barry (until 6.49pm)
Cr G Barratt Acting Mayor D Bassett
Cr J Briggs Cr MJ Cousins
Cr S Edwards Cr M Lulich
Cr L Sutton (Deputy Chair)
APOLOGIES: An apology was received from Mayor Wallace.
IN ATTENDANCE: Cr G McDonald (part meeting)
Mr T Stallinger, Chief Executive (part meeting)
Mr L Allott, Chief Information Officer (part meeting)
Mr B Kibblewhite, General Manager, Corporate Services
Mr M Reid, General Manager, City and Community Services
Mr P Benseman, Acting Chief Financial Officer (part meeting)
Mr B Hodgins, Strategic Advisor, City & Community Services (part meeting)
Mr B Cato, General Counsel
Ms H Stringer, Rates and Receivables Team Leader (part meeting)
Mr R Newton, Business Transformation Manager (part meeting)
Ms H Clegg, Minute Taker
PUBLIC BUSINESS
1. APOLOGIES
|
Resolved: (Cr Milne/Cr Sutton) Minute No. FPC 19101 “That the apology received from Mayor Wallace be accepted and leave of absence be granted.” |
2. PUBLIC COMMENT
Comments are recorded under the item to which they relate.
3. CONFLICT OF INTEREST DECLARATIONS
Cr Milne declared a conflict of interest in relation to items 4iii) and 8 and took no part in discussion or voting on the matter.
Acting Mayor Bassett declared a conflict of interest in relation to items 4i), 4iv) and 9 and took no part in discussion or voting on the matters.
Cr Cousins declared a conflict on interest in relation to items 4ii) and 13 and took no part in discussion or voting on the matters.
|
Precedence of Business |
|
Resolved: (Cr Milne/Cr Briggs) Minute No. FPC 19102 “That, in terms of Standing Order 10.4, precedence be accorded to items 10a), 10b) 5, 6, 7, 10c), 10d), 8 and 9 for the purpose of the most expeditious order of business, to allow for the later arrival of key personnel for certain items and to permit officers to leave the meeting immediately after their relevant items.” |
|
The items are recorded in the order in which they were listed on the order paper. |
4. Recommendations to Council - 26 March 2019
|
i) |
Wellington Water Limited's Shareholders Agreement and Constitution (19/205) |
||||
|
|
Acting Mayor Bassett declared a conflict of interest in the item and took no part in voting on the matter. |
||||
|
|
The Chair elaborated on the report. He advised that he supported the change to both the Constitution and Shareholders’ Agreement, in relation to the ability to bring in new shareholding Councils. Regarding the mana whenua representation provisions, he noted that other Councils were seeking legal advice and he considered that the item should lie on the table, pending receipt of the advice. He noted that numerous versions of the proposed changes to the report were circulating and he believed that members should be considering the correct and final version of the report. The Chief Executive elaborated on the report. He explained the proposed changes required unanimous support of all the shareholdering Councils. He advised that a theme was coming from Central Government which legislated for Civil Defence management to include Iwi representation on governing bodies for civil defence, both regionally and nationally. He confirmed that GWRC had sought further legal advice concerning the introduction of up to three Iwi representatives to participate on the Wellington Water Committee (WWC). He advised the introduction would not result in a loss of control for shareholdering Councils and would represent a valuable gesture to our Treaty partners with their participation in the decision-making regarding water. He also advised that his advice to members was to agree to the recommendations as outlined in his report. |
||||
|
|
The Chair expressed concern with the proposed changes. He noted there was no reference to the limit of up to three Iwi representatives and there appeared to be no protection for shareholdering Councils with mana whenua appointees having equal voting rights. He highlighted that anyone could claim to be mana whenua. The Chief Executive acknowledged that he may have got the limit of three representatives from the Civil Defence documents. He noted that each representative would be required to be individually considered and appointed. The General Counsel advised that WWC’s Terms of Reference had been included in the final report being brought before the Committee. He stated that the number of mana whenua representatives could not outnumber the number of shareholding Councils present at meetings. He confirmed that he had spoken with officers at GWRC. They had advised that GWRC had no specific issue with the documents but asked that the proposed constitutional changes be approved by an independent legal firm prior to their Council’s approval. In response to questions from members, the Chair elaborated on his concerns. He advised that at the draft agenda meeting he had requested the officer to expand on the specific benefits mana whenu would bring to the City by participating in the WWC meetings and highlighted that had not occurred. He also advised the proposed changes appeared to be a dilution of the shareholding Councils control and WWC was a governance entity not an operational entity. He considered that Iwi had special rights under the Resource Management Act and that by affording them a place at the WWC table amounted to a double level of representation resulting in a conflict in policy decisions. In response to questions from members, the Chief Executive explained it was proposed that Iwi participate on WWC with limited voting rights and there was no changes proposed to the Board of Wellington Water Limited (WWL). He acknowledged the concerns raised by the Chair but believed that delaying the decision may not allay the Chair’s concerns. Cr Briggs supported the officer’s recommendations contained the report. He considered that it was positive to provide for mana whenua at the WWC table. The Chair requested that his concerns be recorded in the minutes. He believed the process for bringing the matter before the meeting was flawed as a new version of the papers had been substituted by officers, without notice to the Chair. He was not confident that he understood what it was that the Committee was being asked to approve. He noted it was a complex matter. He further reiterated his concerns as previously raised earlier in the debate. Cr Cousins foreshadowed a consequential motion requesting officers to provide further information to Council on GWRC’s legal advice, the position of other shareholding Councils and the benefits to the City by mana whenua participating in the WWC meetings. The Chief Executive apologised for not addressing the Chair’s concerns regarding expanding on the benefits mana whenua would bring to the City. He noted that he had been on leave and had not received the request from the officers attending the draft agenda meeting. |
||||
|
|
|
||||
|
|
REcommended: (Cr Briggs/Cr Sutton) Minute No. FPC 19103 “That the Committee recommends that Council: (i) receives the report; (ii) agrees to the proposed changes to the Shareholders’ Agreement attached as Appendix 1 to the report; (iii) agrees to the proposed changes to the Constitution attached as Appendix 2 to the report; (iv) agrees to the proposed changes to the Wellington Water Committee Terms of Reference attached as Appendix 3 to the report; and (v) delegates to the Chief Executive, Hutt City Council, the power to finalise the Shareholders’ Agreement and Constitution and make minor amendments to make them consistent with what is approved by other shareholders.” |
||||
|
|
The motion was declared carried by division with the voting as follows:
|
||||
|
|
REsolved: (Cr Cousins/Cr Milne) Minute No. FPC 19104 “That the Committee requests that Council has clear, updated information provided to it, to include: (i) an update on the position of all other councils’ decisions with regards to the item; (ii) a summary of the Greater Wellington Regional Council situation be provided in terms of the legal advice they have sought; and (iii) that paragraph 8 of the report be expanded to advise on the benefits to the city of Lower Hutt resulting from the proposed Wellington Water Committee constitutional changes.” |
||||
|
|
Acting Mayor Bassett, speaking as Chair of WWC, explained South Wairarapa District Council had commenced the process to becoming a shareholder Council of the WWC. He elaborated on the membership of WWC. Cr Sutton left the meeting at 6.47pm and rejoined the meeting at 6.48pm. Acting Mayor Bassett further explained the process he had undertaken which resulted in the proposed constitutional changes including input from each of the Council’s Mayors and Chair of GWRC. Cr Barry left the meeting at 6.49pm. Acting Mayor Bassett acknowledged the Chair’s concerns regarding the proposed Iwi involvement. He highlighted that Iwi had an affiliation with water and their input into the decision-making concerning water was invaluable. |
|
ii) |
Hutt City Community Facilities Trust Draft Statement of Intent 2019/20 to 2021/22 (19/166) |
|
|
Cr Cousins declared a conflict of interest in the item and took no part in discussion or voting on the matter. Mr David Butler, Acting Chair of Hutt City Community Facilities Trust (CFT) elaborated on the report. He elaborated on the existing situation with the Walter Nash Centre and the Naenae Bowls Centre. He noted that the Fraser Park development was well advanced. He highlighted that CFT was looking forward to new challenges and to welcoming the new Chair to the CFT Board. Cr Barratt left the meeting at 8.22pm and rejoined the meeting during the public excluded part of the meeting at 8.26pm. In response to a question from a member, the Acting Chair of CFT advised that Council’s Manager, Sustainability and Resilience had spoken with CFT and that pragmatic and sustainable goals were being set as a result of the discussions. |
|
|
RECOMMENDED: (Cr Milne/Acting Mayor Bassett) Minute No. FPC 19105 “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) 2019/20 - 2021/22, attached as Appendix 1 to the report, 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 recommendation (iv) above).” |
|
iii) |
Seaview Marina Limited Draft Statement of Intent 2019/20 to 2021/22 (19/167) |
|
|
The Chair declared a conflict of interest in the item and took no part in discussion or voting on the matter. Cr Sutton assumed the Chair for the duration of the item. |
|
|
Acting Mayor Bassett and the Chair left the meeting at 7.47pm and rejoined the meeting at 7.49pm. The General Manager, Corporate Services elaborated on the report. He explained that officers would continue working with the Seaview Marina Limited (SML) Board and management to finalise the Statement of Intent. Mr Alan McLellan, Chief Executive of SML, added that it was not anticipated to be a great deal of change between the draft and final Statement of Intent. He noted that a multi-year view was being developed. He explained that SML sought to finish the in-water development projects before making dividend payments. The General Manager, Corporate Services advised that the return on equity was forecast to drop over the next two years and then increase from year three. He noted that the large capital investment was increasing the asset base and there were some step changes in operational expenditure due to continued growth at the Marina. |
|
|
RECOMMENDED: (Cr Sutton/Cr Lulich) Minute No. FPC 19106 “That the Committee recommends that Council: (i) notes that the Board of Seaview Marina Limited (SML) has submitted a draft Statement of Intent (SOI) 2019-2022, attached as Appendix 1, 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 SML to consider in finalising its SOI (including any modifications suggested by the Committee arising under part (iv) above).” |
|
iv) |
Urban Plus Group Draft Statement of Intent 2019/20 to 2021/22 (19/168) |
|
|
Acting Mayor Bassett declared a conflict of interest in the item and took no part in discussion or voting on the matter. |
|
|
The General Manager, Corporate Services elaborated on the report. He advised that profits from development projects and earlier asset sales of some of the Urban Plus rental portfolio had provided cash flow to enable Urban Plus Group (the Group) to further grow the rental portfolio. He added that until Council made a final decision on the proposed Housing Strategy, the future direction of the Group could not be finalised. Therefore the draft Statement of Intent (SOI) was a continuation of the current Urban Plus strategy. The General Manager, Corporate Services advised officers would continue to work with the Group to finalise its SOI with the inclusion of e-carbon zero targets. Mr Craig Walton, Chief Executive of Urban Plus Group added that development was capital driven. The General Manager, Corporate Services advised there was an amendment to the draft SOI document which related to the Financial Forecasts section contained in the Supplementary Order Paper. He confirmed the Central Park development sales stood at 28. He also advised there was an amendment to the Urban Plus Rental Portfolio table noting that the 17 Britannia Street purchase figure should appear in the 2018/19 column. |
|
|
Recommended: (Cr Milne/Cr Edwards) Minute No. FPC 19107 “That the Committee recommends that Council: (i) notes that the Board of Urban Plus Group has submitted a draft Statement of Intent (SOI) 2019-2022, attached as Appendix 1, 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 Urban Plus Group to consider in finalising its SOI (including any modifications suggested by the Committee arising under part (iv) above).” |
|
5. |
Progress Update on the Re-design of Council's Combined Rates Invoice (19/43) Report No. FPC2019/1/6 by the Rates and Receiveables Team Leader |
|
|
The Acting Mayor Bassett left the meeting at 6.51pm and rejoined the meeting at 6.53pm. The Rates and Receiveables Team Leader elaborated on the report. She confirmed that Greater Wellington Regional Council had provided its consent to the proposed new rates invoices. In response to a question from a member, the Rates and Receiveables Team Leader advised that each page was mass printed and there would be considerable costs involved to highlight the rates instalment that each particular page referred to. |
|
|
Resolved: (Cr Milne/Acting Mayor Bassett) Minute No. FPC 19108 “That the Committee receives the report and notes the revised design of Council’s combined rates invoice, attached as Appendix 1 to the report.” |
|
6. |
2019/20 Revenue Increase and Cost Reduction Target Update (19/218) Report No. FPC2019/1/37 by the Acting Chief Financial Officer |
|
|
The Acting Chief Financial Officer elaborated on the report. |
|
|
Resolved: (Cr Milne/Cr Barratt) Minute No. FPC 19109 “That the Committee: (i) notes the progress update on identifying $300,000 of cost reductions for the 2019/20 Annual Plan; and (ii) notes the action taken to generate $500,000 of additional revenue that is now included in the 2019/20 Draft Annual Plan.” |
|
7. |
Financial Report for the Quarter Ended 31 December 2018 (19/29) Report No. FPC2019/1/5 by the Acting Chief Financial Officer |
|
|
Speaking under public comment, Mr M Shierlaw expressed concern with the forecast development stimulus package overspend adding that an overspend represented revenue foregone. He expressed further concern that the overspend was proposed to be offset by capital urban growth expenditure of $2.9M. He believed the development incentives had to be paid to offset the extra infrastructural requirements and to prevent existing ratepayers subsidising such requirements. He asked members to reject the $3.2M budget variance. He considered the budget should be treated in a similar way to Council’s Grants Budget. He asked members to exercise strong governance with regard to the matter.
The Acting Chief Financial Officer acknowledged the public speaker’s concerns. He explained that it was proposed to offset the overspend in Council’s Developments Incentives Package Project (‘the scheme’). He noted it was an operating cost by transferring budget from Council’s Urban Growth Strategy capital project. He explained that the scheme and the Urban Growth Strategy Capital project were both intended as ways to stimulate growth and development in the City. He highlighted that this was in line with what was intended in Council’s Long Term Plan (LTP). He highlighted that while it was a transfer of funds it this was appropriate and reasonable with no additional monies being requested.
The Chair noted that in hindsight, having the two budget items aimed at the same outcome may not have been best practice. He advised that the scheme closed on 31 December 2018 with the current draw-down on the budget occurring to honour all applications made. He also advised the critical point was that the proposal was for revenue foregone as opposed to a ‘cheque being written.’ This resulted in increasing the rates base which had long term benefits for the City. He added that the scheme was more successful than forecasted was a positive outcome. |
|
|
The Acting Chief Financial Officer elaborated on the report. He corrected an error within his report which related to the tables on pages 167 and 168 of the order paper. He highlighted that the graphs had been inserted the wrong way around. He explained that the tables reported the statement of income in accordance with Council’s LTP and that the split out the costs related to the Hutt City Community Facilities Trust grants and costs related to the scheme. |
|
|
The Acting Chief Financial Officer elaborated on the impact of the scheme, the additional consent fees and the expected higher landfill fees. He also elaborated on the impact of higher bulk water costs, the increase in landfill operating costs and an overspend in the events’ costs. He mentioned the forecast overspend on depreciation and explained that depreciation was complex and difficult to budget due to difficulty in arriving at the correct depreciation rates, the timing of when projects were completed and the deferral of some projects. He advised that officers were looking at ways to improve the accuracy of the depreciation budgets and further noted that depreciation was a non-cash item and had no bearing on debt levels. |
|
|
RESOLVED: (Cr Milne/Cr Sutton) Minute No. FPC 19110 “That the Committee agrees that errors identified in Finance and Performance Committee’s Order Paper be corrected including on Council’s website.” |
|
|
Resolved: (Cr Milne/Cr Sutton) Minute No. FPC 19111 “That the Committee notes Council’s financial performance and position for the quarter ended 31 December 2018.” |
|
8. |
Seaview Marina Limited Six Month Report to 31 December 2018 (19/71) Report No. FPC2019/1/35 by the Senior Management Accountant |
|
|
Cr Milne declared a conflict of interest in the item and took no part in discussion or voting on the matter. Cr Sutton assumed the Chair for the duration of the item. |
|
|
Mr Alan McLellan, Chief Executive of Seaview Marina Limited (SML), and Cr Milne, as Council’s representative on the Board of SML, elaborated on the report. The Chief Executive of SML advised that it had been an excellent six months for SML. He added that since the end of December 2018, occupancy had increased to 95% from 90%. He highlighted that plans were underway to construct more berths in the next financial year resulting in an increase in revenue, along with payments for the leasing of the breakwater estimated at $100,000 each year for 10 years. He said there had been no complaints received from the user group and that walkways and other beautification works had been completed. He advised that the power rate had been corrected, which had resulted in a doubling of power costs and security costs had also increased. The General Manager, Corporate Services advised the business was operating efficiently and that dividends could be expected in the future. |
|
|
In response to a question from a member, the Chief Executive of SML advised the breakwater structure was owned by Council and it was not insured at present. He noted that investigations into SML insuring the structure was underway. He highlighted that an engineering survey completed five years ago reported the structure to be in excellent condition. Cr Milne advised that the breakwater was re-inspected after the Kaikoura earthquake and no impacts were found on its structure. In response to a questions from members, the Chief Executive of SML explained it would cost approximately $400,000 in 2019 to replace all non-compliant power pedestal boxes. He added water usage was being carefully monitored pier by pier. He confirmed that SML staff were working with officers regarding the carbon zero resolution. |
|
|
Resolved: (Cr Sutton/Acting Mayor Bassett) Minute No. FPC 19112 “That the Committee receives the half year report from Seaview Marina Limited attached as Appendix 1 to the report.” |
|
9. |
Urban Plus Group Six Month Report to 31 December 2018 (19/75) Report No. FPC2019/1/36 by the Senior Management Accountant |
|
|
Acting Mayor Bassett declared a conflict of interest in the item and took no part in discussion or voting on the matter. |
|
|
Mr Craig Walton, Chief Executive of Urban Plus Group (UPL), elaborated on the report. He advised the Group had experienced a strong six months with the Fairfield, Avalon, Waterloo and Central Park developments progressing well. He added the Britannia Street apartments had been purchased and would slowly be transitioned to public housing. In response to questions from members, the Chief Executive, UPL advised that occupancy over all properties was close to 100%. He explained that the net purchase yield for the Britannia Street property was 7% and there was a large plot of land associated with this property which could be developed in the future with up to 10 units. With regard to the Britannia Street property, he advised that the profile from the existing tenants was not clear without detailed analysis. In response to a question from a member, the Chief Executive of UPL agreed to liaise with officers concerning Council’s proposed Homelessness Strategy and would await further direction from Council. In response to a question from a member, the Chief Executive, UPL explained a detailed Construction Management Plan was in place for the Jackson Street apartments which included a Traffic Management Plan. He added that talks were planned with the owner of the neighbouring supermarket concerning site access. He said that a final decision had yet to be made on the long term plan for the apartments. In response to a question from a member, the Chief Executive of UPL confirmed discussions with officers continued with regard to the management of all Council buildings. |
|
|
Resolved: (Cr Milne/Cr Sutton) Minute No. FPC 19113 “That the Committee receives the half year report from Urban Plus Limited Group attached as Appendix 1 to the report.” |
10. Information Items
|
a) |
TechnologyOne SaaS Project Update (19/219) Report No. FPC2019/1/31 by the Business Transformation Manager |
|
|
The Business Transformation Manager elaborated on the report. In response to a question from a member, the Business Transformation Manager confirmed the information used in TechnologyOne to the Document Management System intregration may not be available through the Cloud Integration method. |
|
|
In response to a question from a member, the Business Transformation Manager advised that a Solutions Architect provided the overall technical design for how the integrations would work and these were then handed to developers who completed the actual build. The Chair thanked officers for their work to date and complimented the management of the project. |
|
|
Resolved: (Cr Milne/Acting Mayor Bassett) Minute No. FPC 19114 “That the report be noted and received.”
|
|
b) |
Memorandum dated 7 February 2019 by the Strategic Advisor, City and Community Services |
|
|
The Strategic Advisor, City and Community Services elaborated on the report. He explained that the increase in water usage throughout the City could not be attributed to growth or leaks which had remained at a constant level. He acknowledged that without water meters it was difficult to accurately explain the increase. He added there was a known 18% loss of water due to undetected reasons and the average daily use of water per person in the City was 270 litres for 2018/19. He further added this compared to the 220 litres per person for the rest of the Wellington region. He highlighted that a workshop on water was planned for early May with representatives from Wellington Water Limited (WWL) to speak about projected future demand for bulk water in the region. In response to questions from members, the Strategic Advisor, City and Community Services explained that at the beginning of the year, officers estimated the amount of bulk water the commercial users would use based on figures from previous years and paid WWL for that amount. He added that this year, the actual commercial usage figures were lower than estimated which resulted in the unfavourable budget variance. He noted there that no further data was available to better assess the increased water usage of the City. He added that the upcoming workshop would address the water conservation options. The General Manager, City and Community Services advised that the cost of installing meters could be approximately $200 per residential meter. |
|
|
Resolved: (Cr Milne/Cr Lulich) Minute No. FPC 19115 “That the information be received.” |
|
c) |
Health & Safety Officer Due Diligence Report July 2018 to December 2018 (19/85) Report No. FPC2019/1/32 by the Health and Safety Wellbeing Advisor |
|
|
The General Manager, Corporate Services elaborated on the report. He highlighted that reporting on the matter would be moving to a six monthly reporting cycle. |
|
|
In response to questions from members, the General Manager, Corporate Services advised that officers were continually reminded to report near miss incidents and over time the reporting of these incidents was expected to improve. Acting Mayor Bassett left the meeting at 7.22pm. The General Manager, Corporate Services acknowledged the work of the Health and Safety Wellbeing Advisor. |
|
|
Resolved: (Cr Milne/Cr Sutton) Minute No. FPC 19116 “That the report be noted and received.“ |
|
d) |
Finance & Performance Committee Work Programme 2018 (19/30) Report No. FPC2019/1/7 by the Committee Advisor |
|
|
The General Manager, Corporate Services advised there would likely to be a meeting on 1 May 2019 which was not indicated on the work programme. He elaborated on the reports that would be covered at the meeting. Acting Mayor Bassett rejoined the meeting at 7.24pm. |
|
|
Resolved: (Cr Milne/Cr Sutton) Minute No. FPC 19117 “That the work programme be noted and received, with the insertion of the 1 May 2019 meeting.” |
11. QUESTIONS
There were no questions.
12. EXCLUSION OF THE PUBLIC
|
Resolved: (Cr Milne/Cr Sutton) Minute No. FPC 19118 “That the public be excluded from the following parts of the proceedings of this meeting, namely: 13. The Hutt City Community Facilities Trust Six Month Report to 31 December 2018 (19/84) 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:
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.” |
Cr C Milne
CHAIR
CONFIRMED as a true and correct record
Dated this 26th day of March 2019