Agenda of Finance Committee

Finance Committee - 14 May 2019 - Open Agenda Item 1

Agenda Items

1. Financial Forecast to 30 June 2019

Type of Report:	Legal and Operational
Legal Reference:	Local Government Act 2002
Document ID:	731958
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

1.1 Purpose of Report

To report to Council the financial forecast to the 30 June 2019 for the whole of Council.

Officer’s Recommendation

That the Finance Committee:

a. Receive the financial forecast to 30 June 2019.

b. Approve the 2018/19 financial forecast to 30 June 2019 including the proposed carry forward commitments to 2019/20.

Chairperson’s Recommendation

That the Council resolve that the officer’s recommendation be adopted.

1.2 Background Summary

The purpose of this report is to provide a financial forecast for Council’s operating and capital expenditure to 30 June 2019. The operating and capital forecasts are based on actual expenditure January year to date, plus estimated remaining spend for the 2018/19 financial year. Attachment A provides a summary of the variations between the financial forecast and the amended budget for 2018/19 for both capital and operational items. The amended budget includes carry forwards transferred from 2017/18.

Net operating expenditure

The operational forecast shows a forecast net deficit of $3m at 30 June 2019 which is below the revised surplus of $13.6m (see Attachment A). The main drivers of the unfavourable net operating variance are to an unplanned regulatory settlement and changes to timing of the Parkland development.

Capital plan

Officers have reviewed the timing of the capital programme and this has resulted in a number of projects being reprioritised. Officers are seeking approval for these projects to be carried forward and included in the 2019/20 Annual Plan. The following table sets out the proposed carry forward commitments to 2019/20 by business unit:

Business Unit	Carry forward request	Reason
Transportation	2,483,585	Not approved NZTA work. Business case to be completed 18/19
Water Supply	1,482,706	Projects delayed (water supply systems upgrade, district modelling & monitoring, bore improvements, Church Rd booster pump station, reservoir inlets & outlets)
Stormwater	1,018,373	Projects delayed (Bay View pump station, stormwater study, SCADA upgrade, Taradale stormwater diversion, Tennyson St outfall improvements, Onehunga pump station upgrade)
Wastewater	495,505	Projects delayed (SCADA upgrade, Pandora industrial main, Taradale wastewater diversion)
Public Toilets	33,840	Parent facility delayed
Reserves	727,000	Playground renewals and Te Roera Trail Pathway
Cemeteries	66,620	Awaiting completion of Heritage report
Housing (rental)	85,000	Planned renewals delayed until housing review is complete
Aquarium	2,353,829	Awaiting completion of business case
Aquatic centre	1,766,453	Project delayed
Inner Harbour	510,000	Awaiting agreement from NZTA for cost contribution before proceeding with Iron Pot public access work
TOTAL	11,022,911

The 2018/19 year end forecast includes the carry forward requests outlined in the table above.

The capital plan for 2018/19 (including vested assets) is forecast at $33.4m compared to amended budget of $44.6m (see Attachment A).

Activity	2018/19 Forecast capex	2018/19 Amended budget	Variance
City Strategy	722,996	647,000	(75,996)
Community & Visitor Experiences	11,012,502	16,327,739	5,315,237
Other Infrastructure	1,870,333	1,920,842	50,509
Property Assets	813,592	2,105,001	1,291,409
Stormwater	1,750,849	2,267,045	516,196
Support Units	2,528,201	2,780,500	252,299
Transportation	10,848,256	12,288,718	1,440,462
Wastewater	1,839,213	2,711,000	871,787
Water Supply	2,003,157	3,580,091	1,576,934
TOTAL CAPITAL	33,389,099	44,627,936	11,238,837

1.3 Issues

The proposed capital plan for Annual Plan 2019/20 will include capital projects that have transferred from 2018/19.

1.4 Significance and Engagement

The issues for discussion are not significant in terms of Council’s Significance and Engagement Policy and no consultation is required.

1.5 Implications

Financial

Attachments B and C include a summary schedule by activity group, and shows the net movement between forecast and amended budget for both operating and capital expenditure.

Attachment D sets out all rate funded and non-rate funded movements. The following capital projects have either been included in the Draft Annual Plan or moved out to future years:

Business Unit	Amount	Funding	Project	Moved to
Transportation	1,200,000	Rates	Te Awa Avenue (Ellison to NBHS)	2020/21
Stormwater	200,000	Rates	Taradale stormwater diversion	Included in Draft Annual Plan 19/20
Stormwater	200,000	Loans	Tennyson St outfall improvements	2020/21
Wastewater	400,000	IAR	Guppy Rd pumping main installation	Included in Draft Annual Plan 2019/20
Cemeteries	20,000	Rates	Taradale cemetery concept plan implementation	Included in Draft Annual Plan 2019/20
TOTAL	2,020,000

Social & Policy

N/A

Risk

Officers have undertaken a risk assessment on project timing. It was assessed that there is no change in risk as a result of these project movements. Officers will continue to monitor and identify any variance to the capital work programme and will report to management on a monthly basis.

1.6 Options

The options available to Council are as follows:

a. Council can receive the financial forecast to 30 June 2019 and approve the carry forward commitments to 2019/20.

1.7 Development of Preferred Option

The preferred option is that Council receive the financial forecast to 30 June 2019 and approve the carry forward commitments to 2019/20.

1.8 Attachments

a Attachment A ⇩

b Attachment B ⇩

c Attachment C ⇩

d Attachment D ⇩

Finance Committee - 14 May 2019 - Open Agenda Item 2

2. Policies - CCTV and Disposal of Surplus Assets

Type of Report:	Operational
Legal Reference:	N/A
Document ID:	727324
Reporting Officer/s & Unit:	Duncan Barr, Manager Information Services Bryan Faulknor, Manager Property

2.1 Purpose of Report

To present the CCTV and Disposal of Surplus Assets Policy to Council to be approved.

Officer’s Recommendation

That the Finance Committee:

a. Approve the updates made to the CCTV Policy for finalisation and publication.

b. Approve the updates made to the Disposal of Surplus Assets Policy for finalisation and publication.

Chairperson’s Recommendation

That the Council resolve that the officer’s recommendation be adopted.

2.2 Background Summary

Council undertakes regular reviews of its policies to ensure that they are still pertinent, clear and accurate to reflect any shifts in best practice.

As part of the current review process, two external (public facing) policies have been assessed as follows:

CCTV Policy (Attachment A)

A small number of wording and formatting changes have been made to the policy in order to remain consistent with requirements under the Privacy Act 1993.

Disposal of Surplus Assets Policy (Attachment B)

This policy has been reconfirmed with minor formatting changes.

2.3 Issues

No issues

2.4 Significance and Engagement

Policy reviews are an internal operational process and do not require consultation.

2.5 Implications

Financial

N/A

Social & Policy

N/A

Risk

N/A

2.6 Options

The options available to Council are as follows:

a. To approve the updates/ actions recommended by officers.

b. To propose other updates or actions for consideration.

2.7 Development of Preferred Option

It is recommended that the proposed updates/ actions be adopted.

2.8 Attachments

a CCTV Policy ⇩

b Disposal of Surplus Assets Policy ⇩

Finance Committee - 14 May 2019 - Open Agenda

Finance Committee

Open Minutes

Meeting Date:	Tuesday 2 April 2019
Time:	3.00pm – 3.59pm
Venue	Graeme Lowe Stand Corporate Lounge 2 McLean Park Latham Street Napier

Present

Mayor Dalton, Councillor Wise (In the Chair), Councillors Boag, Brosnan, Dallimore, Hague, Jeffery, McGrath, Price, Tapine, Taylor, White and Wright

In Attendance

Chief Executive, Director Infrastructure Services, Director City Services, Director City Strategy, Manager Communications and Marketing, Chief Financial Officer, Manager Community Strategies

Tony Porter – Hawke’s Bay Airport Ltd (item 1)

Stewart Ainslie – Hawke’s Bay Airport Ltd (item 1)

Rachel Orchard – Hawke’s Bay Airport Ltd (item 1)

Administration

Governance Team

Apologies

Nil

Conflicts of interest

Nil

Public forum

Nil

Announcements by the Mayor

Nil

Announcements by the Chairperson

Nil

Announcements by the management

Nil

Confirmation of minutes

Councillors Dallimore / White

That the Minutes of the meeting held on 27 November 2018 were taken as a true and accurate record of the meeting.

Carried

Questions from Councillors for follow up

Item	Requestor	Action	Responsible
3	Cr Wise	Quarterly Report - Advise on how the KPI targets were set for Par 2 Golf, the Aquarium and MTG	Director Community Services
3	Cr Brosnan	More information to be provided on the three resource Consent applications which missed their processing deadlines	Director City Strategy

Agenda Items

1. Hawke's Bay Airport Ltd Half Year Report to 31 December 2018

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	714397
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

1.1 Purpose of Report

To receive the half year report to shareholders from Hawke’s Bay Airport Limited to 31 December 2018.

At the Meeting

Representatives of the Hawke’s Bay Airport Ltd provided a presentation on the half yearly report to stakeholders – please see Appendix One.

The following further points were made in response to questions from Councillors:

· Passenger numbers have been climbing steadily even prior to Air New Zealand’s announcement regarding lower price points for some flights.

· With second tier providers also joining the market there may be opportunities for different routes to be explored. Conversation is also underway with Air New Zealand and Jetstar as well as Christchurch airport to gain a better understanding of possibilities as to route expansion and diversification opportunities.

· Although it is expected that any noise impacts would be more affected by increased fleet movements than by a change in fleet models, a full review of noise contours is scheduled to be undertaken.

· Car rental stand concessions have been increased following a review of national rates (in August 2018) which indicated that Hawke’s Bay was very low in the range.

· Better visibility of available car parking is expected to be a further flow on effect of the upcoming changes to the entrance and exit paths from the facility.

The Airport team were thanked for their swift and effective response in addressing the Voluntary Administration scenario.

Committee's recommendation

Councillors Hague / Taylor

The Finance Committee:

a. Receive the Hawke’s Bay Airport Limited half year report to shareholders, to December 2018.

Carried

2. Elected Members' Remuneration - 2019 Information Update

Type of Report:	Operational
Legal Reference:	Local Government Act 2002
Document ID:	713356
Reporting Officer/s & Unit:	Devorah Nícuarta-Smith, Team Leader Governance

2.1 Purpose of Report

To present to Council an information update on the 2019 process provided by the Remuneration Authority, the national body charged with matters in relation to elected members’ remuneration.

At the Meeting

In response to a Councillors question in relation to the status of Council’s investigations into the living wage, it was advised that a report has recently been received and is under review. It will be brought to a workshop once finalised.

Committee's recommendation

Councillors Wright / White

The Finance Committee:

a. Receive the information update on the 2019 elected members’ remuneration process provided by the national Remuneration Authority.

Carried

3. Quarterly Report for the six months ended 31 December 2018

Type of Report:	Legal
Legal Reference:	Local Government Act 2002
Document ID:	711016
Reporting Officer/s & Unit:	Caroline Thomson, Chief Financial Officer

3.1 Purpose of Report

To consider the Quarterly Report for the six months ended 31 December 2018.

At the Meeting

The Chief Financial Officer spoke briefly to the report, noting that there have been some changes to the designs in the Parklands development for better environmental outcomes which have led to slower sales in the previous quarter.

In response to questions from Councillors it was advised that it’s difficult to quantify whether the option to have two storey builds has had any adverse effect on sales. It’s possible that there could be other more effective ways to market the options also.

The increase in reporting on water clarity issues may be due both to the effect of operational changes that were underway in December 2018, and also the improvements in capturing live data in relation to service requests.

Should a Health and Safety incident occur when the public are using a Council facility the Health and Safety team investigate, and liaise with the appropriate business unit in addressing any issues. Due to the nature of incidents these are addressed on a case by case basis rather than a “one size fits all” approach.

A review into the MTG was recently undertaken, following which the Working Group will bring suggested reporting measures back to Council as part of a proposed management plan.

Officer’s will respond separately to questions regarding the targets for Par 2 Golf, the Aquarium and MTG being lower than last year’s achieved levels, and the three Resource Consent application which missed their processing time.

Committee's recommendation

Councillors Hague / Wright

That the Finance Committee:

a. Receive the Quarterly Report for the six months ended 31 December 2018.

Carried

4. Consent to land being declared road

Type of Report:	Legal
Legal Reference:	Public Works Act 1981
Document ID:	715741
Reporting Officer/s & Unit:	Jenny Martin, Property and Facilities Officer

4.1 Purpose of Report

Seek approval by Council under the Public Works Act to consent to the land at 243 Awatoto Road be declared road.

At the Meeting

There was no discussion on this item.

Committee's recommendation

Councillors Jeffery / Tapine

The Finance Committee:

a. Recommends that Council Resolve:

i. That in accordance with the provisions of Section 114(2) of the Public Works Act 1981, to consent to the land described in the Schedule hereto to be declared road and vested in the Napier City Council.

SCHEDULE

Hawkes Bay land District – Napier City

Area

(hectares)

Legal Description

Part of Record

Of Title

0.0039

Section 1 SO Plan 531110

651679

Carried

The meeting closed at 3.59pm

Approved and adopted as a true and accurate record of the meeting.

Chairperson .............................................................................................................................

Date of approval ......................................................................................................................

Appendix One

Meeting Date:	Tuesday 14 May 2019
Time:	3pm
Venue:	Breakout Room 2 Napier Conference Centre Napier War Memorial Centre Marine Parade Napier

Committee Members	Councillor Wise (In the Chair), Acting Mayor White, Councillors Boag, Brosnan, Dallimore, Jeffery, McGrath, Price, Tapine and Wright
Officer Responsible	Director Corporate Services
Administration	Governance Team
	Next Finance Committee Meeting Tuesday 25 June 2019