2                                       26 September 2019

HUTT CITY COUNCIL

 

Finance and Performance Committee

 

Minutes of a meeting held in the Council Chambers, 2nd Floor, 30 Laings Road,
Lower Hutt on

 Thursday 26 September 2019 commencing at 5.30pm

 

 

 PRESENT:                       Cr L Sutton (Chair)           Cr C Barry

                                          Cr G Barratt                      Deputy Mayor D Bassett (from 5.32pm)

                                          Cr J Briggs                         Cr MJ Cousins

                                          Cr S Edwards                    Cr M Lulich

                                          Mayor WR Wallace

 

APOLOGIES:                  Cr Milne was an apology and Deputy Mayor Bassett was an apology for lateness.

 

IN ATTENDANCE:       Mr B Kibblewhite, General Manager, Corporate Services

Ms J Livschitz, Chief Financial Officer

Mr S George, Senior Accountant

Ms C Taylor, Senior Research and Evaluation Advisor (part meeting)

Mr D Bentley, Team Leader Environmental Health (part meeting)

Ms H Clegg, Minute Taker  

 

 

PUBLIC BUSINESS

1.       APOLOGIES 

Resolved(Cr Sutton/Mayor Wallace)                              Minute No. FPC 19401(2)

“That the apology received from Cr Milne be accepted and leave of absence be granted and the apology for lateness received from Deputy Mayor Bassett be accepted.”

Deputy Mayor Bassett joined the meeting at 5.32pm.

2.       PUBLIC COMMENT

Comments are recorded under the item to which they relate.      

3.       CONFLICT OF INTEREST DECLARATIONS      

          Deputy Mayor Bassett declared a conflict of interest in relation to items 8 and 9 and took no part in discussion or voting on these matters.

Cr Cousins declared a conflict of interest in relation to items 5 and 6 and took no part in discussion or voting on these matters.

4.       Recommendations to Council - 9 October 2019

i)

Hutt City Council Annual Report to June 2019 (19/1107)

 

Speaking under public comment, Mr Max Shierlaw expressed concern that the draft Annual Report did not show prudent or sustainable management.  He queried what the cumulative losses were.  He asked for clarification of the interest rate swaps.  He also asked that independent members sit on future Finance and Performance Committees as he had no confidence in the existing members knowledge of Council’s finances.

In response to a question from a member, Mr Shierlaw agreed to forward the relevant documentation to officers.

The Senior Research and Evaluation Advisor elaborated on the report.  The Chief Financial Officer introduced Mr Andrew Clark, Audit Director, Audit New Zealand.

The Chief Financial Officer advised that Audit New Zealand had completed and cleared the Annual Reports for all Council Controlled Organisations.  She stated a draft Annual Report was reported to this meeting with the completed Annual Report due to be reported to Council at its meeting to be held on 9 October 2019.   She added she was not expecting any material changes between the draft and final Annual Report.  She explained the non-financials section of the Annual Report, adding that this was a new section and elaborated on the summary.  She explained the interest rate swaps was an approved accounting method aided in keeping rates levels as low as possible.  She further added the practice was in line with PWC treasury advice.

Mr Clark advised that the audits of the Council Controlled Organisations were completed and clean.  He further advised the audit processes went smoothly with good engagement between all parties.  He presented an overview of the draft Annual Report, highlighting four key areas.  He advised that Audit New Zealand were pleased to see legal advice had been taken by Council with regard to the wording of the rates setting resolution and he now had no issue with it.  He also advised that Audit New Zealand noted a revaluation of Council assets was due in 2019/2020 financial year.  He highlighted that Audit New Zealand was working on how best to reflect the technical accounting treatments for earthquake prone buildings into the Annual Report.  He also highlighted that Audit New Zealand was working on the technical accounting matters relating to disclosure matters.  He summarised that all work was progressing as expected to present the final accounts to the Council meeting to be held on 9 October 2019.

In response to a question from a member, Mr Clark confirmed Audit New Zealand commended officers on their excellent engagement with Audit New Zealand and that the audit process for this year had been effective with no concerns.

In response to a question from a member regarding the accounting impact of the closure of the Naenae Pool, the Chief Financial Officer explained that officers had already impaired the value of the Naenae Pool and that was not expected to change the bottom line financial results.  Mr Clark added that the technical presentation of this information was currently been worked on.

In response to questions from members concerning the not achieved Key Performance Targets, the General Manager, Corporate Services explained the Community Hubs item reflected the deferment of spendings on the Naenae Hub and the spendings on the Fraser Park Sportsville complex.  He explained the Council accountability item was not achieved due to one Statement of Intent not being completed by 30 June due to pending decisions on the Naenae Hub.  He explained the Resilience item was not achieved as this was related to the number of households deemed ready after an emergency and that the readiness requirements had increased catching many people unaware.

In response to a question from a member regarding the Audit New Zealand areas focus for 2019/2020, Mr Clark explained these would be relayed to officers in early 2020.  He added the announcement of the focus areas would be followed by analysis work in April and May, with an Interim Report presented to Council followed by the final Accounts presented in October 2020.

Mayor Wallace commended officers on their professional work, processes and relationships with the Auditors.  He added that Council was well served by Council’s Finance team.  He commented the financial situation of Council boded well for the future with difficult decisions having to be made in light of the Naenae Pool closure.

Cr Cousins suggested that, in future, the format of the Annual Report be altered such that the non-financials were separate.  She added this would provide time for these to be properly assessed in a separate meeting to the financials.  Mayor Wallace suggested the 2019/2020 Annual Report reflected this change.

 

ReCOMMENDED(Cr Sutton/Mayor Wallace)    Minute No. FPC 19402(2)

“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 Report FPC2019/4/198;

(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)  notes that a subcommittee comprising of Mayor Wallace and the Council Committee Chairs namely Deputy Mayor Bassett, Cr Barratt, Cr Cousins and
Cr Milne will sign off the final documents;

(v)   approves the draft Annual Report and Annual Report Summary for the year ended 30 June 2019 attached as Appendix 1 and 2 to Report FPC2019/4/198, both subject to satisfactory resolution of the following outstanding items:

(a)   completion of final edit checking;

(b)   completion of any final audit adjustments; and

(c)   receipt of final audit clearance;

(vi)  receives Audit New Zealand’s opinion on the 2018-19 Annual Report; and

(vii) adopts the 2018-19 Annual Report.”

For the reasons outlined in the report.

 

 

Precedence of Business

 

Resolved:  (Cr Sutton/Deputy Mayor Bassett)                  Minute No. FPC 19403(2)

“That, in terms of Standing Order 10.4, precedence be accorded to items 6, 7, 8 and 9.”

The items are recorded in the order in which they were listed on the order paper.

 

ii)

Motor Vehicle Fleet and Budget Changes (19/1212)

 

 

 

The General Manager Corporate Services elaborated on the report.

In response to a question from a member regarding the advantages of allowing staff to house electric vehicles overnight whilst charging them, the General Manager Corporate Services explained there were Fringe Benefit Tax implications, issues regarding Council payment for the specialist plugs required and for the percentage of electricity used by the home owner, and whether these outweighed benefits of parking fleet vehicles in a carpark.  He added most City carparks were used by the public especially in the weekends.

In response to a question from a member, the General Manager Corporate Services explained most other local authorities and large businesses housed fleet vehicles overnight in carparks, rather than allow them to be driven to private residences. 

Mayor Wallace expressed support in the possibility of moving to an electric fleet happening faster than initially anticipated.  He commended officers for the work so far.

Deputy Mayor Bassett also congratulated officers for their work.

Cr Edwards agreed with Mayor Wallace comments.  He added that in the long term, there would be significant advantages in having an electric fleet.  He further added that selling the vehicles after three years would increase the number of electric vehicles in private ownership, positively helping the community.

Cr Briggs congratulated officers on a common sense policy adding that other efficiencies may be found across Council operations.

 

 

 

ReCOMMENDED: (Cr Sutton/Deputy Mayor Bassett)
                                                                       
Minute No. FPC 19404(2)

“That the Committee recommends that Council:

(i)    receives and notes this report;

(ii)   approves a policy change to move to a full ownership model for Council’s vehicle fleet and that electric vehicles be the default option when vehicles are replaced;

(iii)  notes an expected reduction of five vehicles in the motor vehicle fleet;

(iv)  approves additional budget of $946k over the next 20 years with $776k of this in 2019/20; and

(v)   agrees to amend operating and capital budgets as detailed in the officer’s report.”

For the reasons fleet ownership as opposed to leasing is financially advantageous for Council and replacing wherever possible combustion vehicles with electric vehicles aligns with Council’s environmental objectives and commitments.

 

   

5.

Sale and Supply of Alcohol (Fees) Regulations 2013 - Regulation 19(1) - Reporting by Territorial Authorities (19/999)

Memorandum dated 1 August 2019 by the Team Leader Environmental Health

 

Cr Cousins declared a conflict of interest and left the table for the duration of the item.

The Team Leader Environmental Health elaborated on the memorandum.

Mayor Wallace thanked Council’s Environmental Health Team for their work in what was often a difficult environment.  He highlighted that officers acted fairly and actively to resolve issues.

 

Resolved(Cr Sutton/Mayor Wallace)                        Minute No. FPC 19405(2) 

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

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

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

(c)   the undertaking of enforcement activities under the Act.”

 

6.

Hutt City Community Facilities Trust - Annual Report for the Year ended 30 June 2019 (19/1022)

Report No. FPC2019/4/199 by the Senior Management Accountant

 

Cr Cousins declared a conflict of interest and left the table for the duration of the item.

Mr Strahl, Chair, Hutt City Community Facilities Trust, elaborated on the report.  He explained the Ricoh Sports Centre (the Centre) was the biggest sports facility to be built by Council and that it was completed in March 2019.  He added that not only sports groups utilised the facility, but community groups as well.  Mr Strahl expressed confidence that usage would increase thereby ensuring the restaurant and bars would become more popular. 

In response to questions from a member, Mr Strahl advised the building was 100% complete and that while there had been some issues with the lighting in the auditorium, the correct lights had been installed according to specifications.  He added investigations were underway into replacement lighting at a cost of $20,000.

In response to a question from a member regarding the sqaush courts, the General Manager Corporate Services advised the courts were of a high standard and that the umpiring positioning was a changed situation from the previous building and was taking some getting used to.  He added if an international tournament was to be hosted, the transportable glass court from Squash NZ would be hired and dropped into the building.

In response to a question from a member, Mr Strahl acknowledged there were teething issues with the Centre.  However they related to the fact that many different clubs had been brought together for the first time.  He added the issues included where to house trophies and framed photos.

Mayor Wallace acknowledged the outstanding work of the Hutt City Community Facilities Trust and thanked Cr Cousins for her liaison work.  He added he was proud to have the facility within the City.

Cr Barratt supported Mayor Wallace’s comments.  She added that the City was now becoming known for its sporting facilities with more to come.

 

Resolved(Cr Sutton/Deputy Mayor Bassett)                  Minute No. FPC 19406(2)

“That the Committee receives and notes the Annual Report for the Hutt City Community Facilities Trust for the year ended 30 June 2019, attached as Appendix 1 to the report.”

 

7.

Seaview Marina Limited - Annual Report for the year ended 30 June 2019 (19/1023)

Report No. FPC2019/4/200 by the Senior Management Accountant

 

Mr McLellan, Chief Executive, Seaview Marina Limited (SML) elaborated on the report.  He noted the Chair of SML, Mr Walshe, had apologised for the meeting.  He explained that SML continued to maintain strong growth and was sitting at 100% occupancy.  He highlighted the highs for the year – 5% return on equity, increased berth occupancy, high client service satisfaction rates, having New Zealand’s first electric boat being built at the Marina and establishment of a successful café.  He stated that planning was underway for the construction of 37 new berths, the café was set to expand to take up three times its current space, investigations were underway to find a larger replacement for the Traval Lifter, power connections were being upgraded and improved gate security would be installed.

In response to a question from a member, Mr McLellan acknowledged it was disappointing that Saleability had to move.  He highlighted that SML did not have the space for the organisation to expand.

In response to a question from a member, Mr McLellan advised there had been no recent communications with the Marina User Group.

Mayor Wallace thanked the SML team for the work undertaken.  He adding that SML had continued to grow to become the best in the Wellington region. 

 

Resolved(Cr Sutton/Mayor Wallace)                              Minute No. FPC 19407(2)

“That the Committee receives and notes the Annual Report for Seaview Marina Limited for the year ended 30 June 2019, attached as Appendix 1 to the report.”

 

8.

Urban Plus Group - Annual Report for the Year ended 30 June 2019 (19/1024)

Report No. FPC2019/4/202 by the Senior Accountant

 

Deputy Mayor Bassett declared a conflict of interest and left the table for the duration of the item.

Mr Mackenzie, Director and Mr Walton, Chief Executive of Urban Plus Group were in attendance for the item.  An apology was received from Mr Walshe, Chair of Urban Plus Group.

Mr Mackenzie explained Urban Plus Group had made significant progress throughout the year.  He highlighted the strategic property developments completed or underway, including Fairview Waters, Parkview, Central Park and The Lane.  He explained profits were being channelled into providing more housing for low-income elderly clients.  He added a recent acquisition at 126 Jackson Street was currently being re-assessed due to construction costs of the preferred option (units for low-income elderly over five levels).  He thanked officers for the professional manner they have worked together with Urban Plus Group.

In response to a question from a member regarding the state of public toilets and halls, Mr Walton acknowledged these were difficult areas to gain public satisfaction in.  He advised that he would provide an update report to members.  The General Manager Corporate Services added that new cleaning contractors had recently been appointed.

In response to a question from a member, the General Manager Corporate Services advised a unit was defined as being self contained and that the recent acquisition of an 18 bedroomed house did not fit this definition.  He added the property could be developed in the future to provide full unit-type accommodation.

Mayor Wallace commended the Urban Plus Group Board and officers for an excellent year.  He added he had met with many tenants and new owners who were impressed with the quality of their accommodation.

Cr Briggs thanked all officers involved in the successful Urban Plus Group.  He added that it was important core public services provided by Council were well maintained.  He requested the incoming Council be kept informed.

Cr Cousins commented that the standard of public facilities was a recurring issue.

 

Resolved(Cr Sutton/Cr Barratt)                                      Minute No. FPC 19408(2)

“That the Committee receives and notes the Annual Report for Urban Plus Group to 30 June 2019, attached as Appendix 1 to the report.”

 

9.

Wellington Water Limited Annual Report for the Year ended 30 June 2019 (19/1174)

Report No. FPC2019/4/203 by the Strategic Advisor, City and Community Services

 

Deputy Mayor Bassett declared a conflict of interest and left the table for the duration of the item.

Mr Crampton, Chief Executive of Wellington Water Limited (WWL) elaborated on the report.  He explained the challenges faced this year included increasing costs, responses to the Growth Agenda and sustantial changes to operations with the alliance formed with Fulton Hogan.  He added all waste water treatment plants were now operated by the same company which would bring $660,000 in savings per annum.

The Chief Executive, WWL advised that WWL was continuing to build capacity and now employed 250 staff.  He further advised customer service surveys showed staff were well recognised.  He added there was good alignment between WWL and all regional local authorities.  He advised the lows of the past year included the conviction for a discharge in Porirua due to operator error and that WWL was in the process of rebuilding trust with the Porirua community and iwi.  He acknowledged the length of time currently taken to repair leaks and that this resulted in the public losing faith with WWL.  He explained that measures were being put in place to prioritise service leaks, and that the backlog of repairs would be slowly worked through.  He explained the future focus would be the customer hub (liasing between WWL and Council call centres), work crews and customer service would continue to be improved.  He added obtaining a sustainable water supply, reducing carbon emissions and complying with proposed new drinking water regulations would also be priorities.  He elaborated on the soon-to-be enacted Water Regulator. 

 

Resolved(Cr Sutton/Cr Barratt)                                      Minute No. FPC 19409(2)

“That the Committee;

(i)    receives and notes the Draft Annual Report for Wellington Water Limited for the year ended 30 June 2019;

(ii)   notes that the audit opinion had not been issued at the time of publication of the Order Paper;

(iii)  notes the verbal update from the Chief Executive of Wellington Water Ltd in regard to the finalisation and audit of the Annual Report; and

(iv)  notes that an update on the Wellington Water Ltd’s Annual Report will be reported to the Council meeting to be held on 9 October 2019.”

 

10.

New Zealand Local Government Funding Agency 2019 Annual Report (19/1155)

Report No. FPC2019/4/204 by the Chief Financial Officer

 

The Chief Financial Officer elaborated on the report.

 

Resolved(Cr Sutton/Mayor Wallace)                              Minute No. FPC 19410(2)

“That the Committee notes and receives the Local Government Funding Agency (LGFA) Annual Report for the year ended 30 June 2019.”

11.     QUESTIONS   

There were no questions.

 

 

There being no further business the Chair declared the meeting closed at 7.31pm.

 

 

 

 

                                                                                                                        Cr L Sutton

                                                                                                                               CHAIR

 

 

 

 

CONFIRMED as a true and correct record

Dated this 9th day of October 2019