PALMERSTON NORTH CITY
COUNCIL
Memorandum
TO: Finance and Performance Committee
MEETING DATE: 21 August 2017
TITLE: Treasury Report for 12 months ended 30 June 2017
DATE: 26 July 2017
AUTHOR/S: Steve
Paterson, Strategy Manager Finance, City Corporate
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RECOMMENDATION(S) TO Finance and Performance Committee
1. That the performance of the treasury activity for the 12 months
ending 30 June 2017 be noted.
2. That it be noted that as at 30 June 2017 the treasury policy
targets were complied with, except for the five year plus fixed rate maturity
profile band target of 15% to 60% and that as the level of non-compliance was
minimal no specific action is intended at this stage.
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1. ISSUE
To
provide an update on the performance of the Investment Fund (“the
Fund”) and the Council’s Term Debt portfolio for the 12 months
ended 30 June 2017.
2. BACKGROUND
2.1 Investment
Fund
In November 2008 Council endorsed an orderly exit strategy for the
Long Term Investment Fund which embraced holding the investments in bonds to
maturity or when they could be sold without realising a loss (ie if the yields
fall below the purchase price).
This strategy has
been encapsulated in subsequent 10 Year and Annual Plans and the realisation
process is nearing an end.
The bond portfolio
is managed directly by the Council with the assistance of MCA Ltd as investment
advisors.
2.2 Term
Debt
The Council’s
Annual Plan for 2016/17 forecast additional debt of $13.5m would need to be
raised during the year to fund the $28.9m of new capital expenditure programmes
(including assumed carry forwards from 2015/16). In June 2016 the Council
resolved to specifically authorise the raising of up to $14m of additional
debt.
Council’s
Financial Strategy (updated version adopted 24 June 2015) contains the
following ratios which the Council has determined to be prudent maxima:
• Net
debt as a percentage of total assets not exceeding 20%
• Net
debt as a percentage of total revenue not exceeding 175%
• Net
interest as a percentage of total revenue not exceeding 15%
• Net
interest as a percentage of annual rates income not exceeding 20%
The Treasury Policy
(embracing the Liability Management and Investment Policy) also contains a
number of other criteria regarding debt management.
3. Performance
3.1 Investment
Fund
Fund performance is monitored and reviewed
by Council’s investment advisor and Council’s own staff. Attached
as schedule 4 is a consolidated report prepared by Council’s
investment advisor covering the period 1 July 2016 – 30 June 2017.
The overall market value of the Fund is summarised in the following table:
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Market Value at
1 Jul 16
$m
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Market Value at
30 Sep 16
$m
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Market Value at
31 Dec 16
$m
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Market Value at
31 Mar 17
$m
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Market Value at
30 Jun 17
$m
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NZ Bonds
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$5.59
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$5.64
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$4.64 #
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$4.65 #
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$2.71 #
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# - a $1 million bond investment matured in
October 2016 and a $2 million bond matured in April 2017. Both were repaid to
the Council
Realised Fund
earnings from interest and dividends for the 12 months totalled $157k and there
were also unrealised gains of $120k. $3.157m was distributed back to the
Council during the period including $3m of maturing investments.
3.2 Term
Debt
Schedule 1 attached shows the details of Council’s debt as at 30
June 2017. Debt levels were within the policy parameters outlined
in clause 2.2. of this report.
The summarised gross
term debt movements are shown in the following table:
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Annual Plan for year (2016/17)
$000
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Actual – 3 months (2016/17)
$000
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Actual – 6 months (2016/17)
$000
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Actual – 9 months (2016/17)
$000
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Actual – 12 months (2016/17)
$000
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Opening Debt Balance at 1 July 2016
New Debt #
Debt repayments #
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101,530
13,516
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101,275
5,000
(4,495)
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101,275
5,000
(8,635)
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101,275
5,000
(9,275)
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101,275
15,000
(19,275)
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Closing Balance
Comprising:
Bank advance (on call)
Commercial paper
LGFA short term advance
LGFA & Council stock
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115,046
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101,780
4,780
0
97,000
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97,640
640
0
97,000
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97,000
0
0
97,000
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97,000
0
0
10,000
87,000
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# A portion of the Council’s debt is drawn on a
daily basis – daily drawdowns & repayments are not included in these
figures but the net draw or repayment for the year to date is shown as part of
new debt or debt repayment as appropriate.
Net debt at 30
June 2017 was $93.665m (ie gross $97m less investment fund of $2.71 m less call
investment of $0.625m) compared with $95.684m at 1 July 2016 (ie. gross
$101.275m less investment fund of $5.591m). Movements in recent years are shown
in the following graph:
Actual finance costs incurred
during the 12 months (including interest, line fees & the effects of swaps)
amounted to $6.223m compared with the annual plan budget for the year of
$6.288m.
The Council has entered a number of
financial instruments related to its debt portfolio utilising swap trading
lines established with Westpac and ANZ. The details of these are shown in
Schedule 2 attached.
The value of these instruments is
measured in terms of its “mark-to-market” ie the difference between
the value at which the interest rate was fixed and the current market value of
the transaction. Each of these transactions was valued at the date they
were fixed and again at balance date. Financial reporting standards
require the movement in values to be recorded through the Council’s
Statement of Comprehensive Income (Profit & Loss Account). They have
been revalued as at 30 June 2017 and show a decrease in book value of $142k for
the quarter and an increase of $4.6m for the 12 months.
The
Council’s Treasury Policy contains guidelines regarding the measurement
of treasury risk as follows:
a. Interest rate risk is managed by the Council
maintaining the ratio of debt that is subject to floating versus fixed interest
rates within pre-set limits.
b. Funding and liquidity risk is managed by the
Council maintaining a pre-set portion of its debt in a range of maturity
periods eg < 1 year, 1 – 3 years, 5 years +.
The position
compared to the policy is illustrated in the graphs in Schedule 3.
The overall ratio of fixed v floating interest rate debt is based on the
assessed level of total debt in 12 months’ time. For most of the
year we assumed a forecast overall debt, for the purposes of this policy, of
$112m. However at the time of the nine month review we advised that as a
consequence of the reassessment of the forecast capital expenditure programme
it was proposed that we would, for the purpose of this policy assessment,
reduce the forecast position to $105m. This lower figure has been used in
this report.
Because the
level of actual debt during the quarter was lower than had been forecast $10m
notional value of swap contracts was terminated in advance of the scheduled
maturity date.
As at 30 June
2017 all of the policy targets except one had been met. The policy
requires 15% to 60% of debt within the five year maturity band to be
fixed. Only 62% within this band was fixed.
The policy bands
are considered still to be appropriate and the level of non-compliance is
minimal. Following discussions with Council’s advisors no specific
action is being proposed at this stage though we continue to monitor market
conditions.
Council’s credit lines with
the banks include a $25m four year credit facility with Westpac Bank (maturing
31 July 2020) and a revolving $25m three year facility with ANZ Bank (maturing
31 March 2020).
4. CONCLUSION
& NEXT STEPS
Realised interest
and dividends returns for the 12 months from the Investment Fund of $157k was
close to budget. There were also unbudgeted unrealised gains of $120k.
Finance
costs for the 12 month period (including interest, line
fees & the effect of swaps) was $6.223m compared with Annual Plan budget
for the year of $6.288m.
In conjunction with
Council’s treasury advisors hedging instruments are regularly reviewed in
an effort to ensure the instruments are being utilised to best advantage as
market conditions change. The level of hedging cover is also reviewed as the
forecasts of future debt levels are revised
Following the latest
annual review published on 18 April 2017 Council’s S&P Global
Rating’s credit rating remains unchanged at AA / A-1+.
Council’s
borrowing strategy is continually reviewed, in conjunction with Council’s
treasury advisors, to ensure best advantage is taken of this quality credit
rating.
A further
performance report will be provided after the end of the September 2017
quarter.
Attachments
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1.
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Schedules 1 to 4 ⇩ 
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Steve Paterson
Strategy Manager Finance
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PALMERSTON NORTH CITY
COUNCIL
Memorandum
TO: Finance and Performance Committee
MEETING DATE: 21 August 2017
TITLE: Section 17A Review Venues & Events Palmerston North
DATE: 25 July 2017
AUTHOR/S: John
Lynch, Manager - Venues PN, City Enterprises
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RECOMMENDATION(S) TO Council
That Given the
information within this report on the considerable advancement and
achievements in relation to previously highlighted areas for improvement and
recommendations from the independent reviews undertaken by Horwarth HTL and
Freeman Associates it is recommended
1. That the Palmerston North Conference & Function Centre
continues to be run in house under joint management alongside Central Energy
Trust Arena.
2. Confirm the June 2015 resolution 87.1 that the Palmerston North
Conference & Function Centre continue to be delivered internally.
3. That the Central Energy Trust Arena continues to be run in house
under joint management alongside Palmerston North Conference & Function
Centre.
4. That the ongoing management and delivery of both venues be
continually reviewed in the best interests of Palmerston North.
5. That Council agrees
that the independent reviews of the Palmerston North Conference &
Function Centre and the Central Energy Trust Arena met the intent of the
Local Government Act s17A for the first round of s17A reviews
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1. ISSUE
Two years ago council engaged Horwarth HTL
to undertake a Market Analysis and Operational Review of the Convention Centre
and Freeman & Associates to undertake an Operational Review of Arena
Manawatu. These reviews were undertaken with a particular emphasis on the
Section 17A requirements of the Local Government Act and highlighted
significant areas where attention was needed and performance over a number of
areas needed to be addressed. Their reviews were considered by Council at
meetings in June 2015 where recommendations were made and a two year timeframe
given to address all concerns.
Over the past two years significant
progress has been made in relation to these findings and recommendations which
are detailed within this report. All of the areas of concern have been
addressed and both venues have performed very well and in line with budget over
the past financial year. With improvement across all areas including
management, reporting, operations and finance, the business is now in a
position to continue to operate in line with best industry practice and continue
to play its part in providing venues for the community while also providing
significant economic benefit to the city primarily from increased expenditure
associated with visitors traveling to and staying in the city.
Full details of the changes and responses
to the review recommendations were considered and discussed in detail at a
Councillor’s workshop on 19 June 2017 at the end of the 2 year period.
In light of the addressing of the key
issues previously identified and the reviews and recommendations of the
consultants engaged, this report recommends the continued governance of the
venues remain in house under joint management.
2. BACKGROUND
Palmerston North Conference &
Function Centre
In October 2014 Management commissioned an
Independent Market Analysis of the Palmerston North Conference & Function
Centre by Horwarth HTL. This report provided analysis on the wider New Zealand
conference business and highlighted the growth in competition expected through
new venues throughout the country over the next five years. The report also
provided analysis on the local market share and competitors and provided some
recommendations and options for consideration to react to the new venue supply
in the future.
In May 2015, council requested an
Operational Review of the Palmerston North Conference & Function Centre
consistent with the requirements of Section 17A of the Local Government
Act. This review also undertaken by Horwarth HTL highlighted a number of
areas for improvement within the business including a more targeted sales and
marketing approach and dedicated resource aimed towards sales generation. The
review also recommended the oversight of the Palmerston North Conference &
Function Centre remain internal to council having considered the other options
available, the advantages and disadvantages of all the different operating
models.
The October 2014 and May 2015 Horwath HTL
reports are circulated for information in the Part II agenda.
The two Horwath HTL reviews were presented
to council on 29 June 2015 along with a report from the General Manager- City
Enterprises and the following resolutions were carried:
RESOLVED:
87.1That the
Convention Centre continued to be delivered internally, subject only to this
being reviewed when the Arena S17A review was completed at 2 years to consider
all options, with the Chief Executive required to ensure the leadership and
management of the venue was in place with the entrepreneurial flair and
business acumen to implement proper business systems and procedures in
particular to ensure a “Strategic Sales & Marketing Plan” was
developed to primarily target multi-day conventions and events that create
economic benefit for the city.
87.2That the
upgrading and rebranding of the Convention Centre recommended by the market
analysis be considered for funding in the 2017/18 Annual Plan review once the
new systems and procedures are implemented and sales success can be demonstrated.
Central Energy Trust Arena
In June 2015, Freeman Associates Limited
undertook a LGA Section 17A and Operational review of Central Energy Trust
Arena. This review highlighted 14 action points identified as needing to be
addressed to create operational efficiencies and position the business better
in to the future. This review also reviewed options for governance going
forward. However detailed recommendations for the management and operation of
the facility were not possible at that time as new management, business systems
and procedures needed to be put in place to better inform any final decisions
(see resolution below). The consultant did indicate that retaining in-house
governance would be the most cost effective and retain direct control.
The June 2015 Freeman Associates review is
circulated for information in the Part II agenda.
This review was presented to council on 29
June 2015 along with a report from the General Manager- City Enterprises and
the following resolutions were made:
RESOLVED:
87.3That
Arena Manawatu continued to be delivered internally for an initial 2 year
period to allow the Chief Executive to put in place the leadership and
management of the venue with the entrepreneurial flair and business acumen to
implement proper business systems and procedures to address the issues
identified in the independent operational review.
87.4The
management and operational shortfalls identified (including pricing schedules)
be addressed to meet industry best practice at which time a better
understanding of existing and potential utilisation will be documented in
standard operating procedures and KPIs developed and measured to demonstrate
the true performance and potential of Arena Manawatu. This be given 2 years at
which time the s17a review be completed assessing the full range of management
options for governance, funding and delivery of Arena Manawatu, these are set
out in the review report and include:
(a) In house
delivery
(b) Delivery
through a standalone business Unit.
(c) Delivery
through a Council Controlled Organisation.
(d) Shared
Governance and funding with another local authority.
(e) Shared
Governance and funding with an organisation such as Sport Manawatu.
(f) Service
delivery by a private sector organisation
The completed
s17a review will then inform the 2018 (next) Long Term Plan review.
On 29 June 2015 the
General Manager- City Enterprises submitted a Part 2 report to council which
reported on the key findings of all of the above reviews/ reports. This report
highlighted the key points and summarised immediate actions needing to be
addressed to provide direction for the business. The findings were in line with
the recommendations of the reviews undertaken and council resolved to allow a
period of 2 years for changes to occur and for “best practice” to
be installed in the operations.
This memorandum now outlines the actions
taken in response to the resolutions 87.1 – 87.4 from June 2015.
3. outcomes
and actions – review recommendations
Palmerston North Conference & Function
Centre
1. A new Manager , John Lynch, was
appointed commencing in February 2016. The new Manager came with 14
years’ experience in the industry and events management having managed
similar facilities in Auckland, Whangarei and previously managed the then Arena
Manawatu for 4 years between 2002 and 2006. This appointment was made to
provide the leadership, direction and business systems to ensure best practice
was evident in operations going forward.
2. A Strategic Business Plan is now in
place with 8 Key Areas for focus and action. This plan has previously been
provided to elected members.
Strategic Business Plan- Key Areas of Focus and
Action
1. Leadership
Strategy 1: Leadership
2. Operational Effectiveness
Strategy
1: Ensure best practice is evident
in all business procedures and processes
Strategy
2: Develop skill base and offering
to clients and external event promoters
3. Marketing & Promotion/
Maximising Use
Strategy
1: Market and build brand profile
of Venues & Events Palmerston North, Central Energy Trust
Arena and the Palmerston North Conference & Function Centre
Strategy
2: Investigate opportunities to
develop new events/ Increase utilisation
Strategy 3: Develop a Strategic Sales &
Marketing Plan
4. Resourcing/ Structure
Strategy
1: Staffing structure and resource
levels are appropriate to implement Strategic Business and Sales and Marketing
Plans
5. Business Sustainability
Strategy
1: Maximise other revenue sale opportunities,
develop financial
plan
Strategy
2: Develop measures to define what success
looks like
Strategy
3: Work with regional agencies to raise the
profile and regional ownership
of the facilities
6. Financial
Strategy
1: Financial Reporting and
KPI’s
Strategy 2:
Pricing Structure/ Model
Strategy 3:
Review Financial Accounts Structure
7. Capital Improvement
Strategy 1:
Continually
Focus on Capital Improvement
8. Health & Safety
Strategy 1: Ensure
Compliance with the Health & Safety at Work Act 2015
3. A Sales & Marketing Plan is in
place in line with the Strategic Business Plan. The 6 key strategies identified
are listed below. This plan has previously been provided to elected members
Sales & Marketing Strategies
1. Market and build brand
profile of Venues & Events Palmerston North, Central Energy Trust Arena and
the Palmerston North Conference & Function Centre
2. Investigate opportunities
to develop new events/ Increase utilisation
3. Branding
4. Maximise other revenue
sale opportunities
5. Develop measures to
define what success looks like
6. Work with regional
agencies to raise the profile and regional ownership of the facilities
4. The Convention Centre underwent a
rebrand in May 2017 in line with recommendations from the Horwarth HTL market
analysis review report. The new name of Conference & Function Centre was
introduced to give a wider market presence and target events across all areas
of operation. The word convention gave the feel that the venue was only there
for very large events and did not cater for all functions and the community.
This change has had a major impact with much feedback about people not
realising we were able to cater for their events and bookings going forward are
very strong and well up on previous years. For example there are 154 events
currently booked in for the next 12 months compared to 105 at the same time
last year.
The aesthetic appearance has also been
addressed with vibrant colours and new signage evident to attract the eye and
make the venue stand out and be more identifiable.
Key Results 2016/ 2017
· 30% more conferences than
targeted, 89% increase on previous year (Key City economic target identified
by Horwarth HTL)
· 12% growth on total number
of bookings compared
to last year
· 14% more social events
than targeted, 39% increase on previous year
· Operated within
operational budgets
2016-17 Summary
· Comprehensive and detailed gathering
and reporting of utilisation data
· Economic benefit analysis to measure
success against council investment
o Economic evaluation based off average
daily spend figures supplied by CEDA and
PNCC
· $4.2M of Economic benefit to the
local economy over the last financial year
Key results and information for the
2016/2017 financial year are
· Conference activity made
up 35% of revenue but only 6% of the actual number of events
· Meetings and Seminars made
up 40% of revenue and 70% of the actual number of events
· Exhibitions made up 5% of
revenue and 3% of the actual number of events
· Weddings made up 4% of
revenue and 1% of the actual number of events
· Social/ Other made up 17%
of revenue and 20% of the actual number of events
Central Energy Trust Arena
1. As for the Palmerston North Conference
& Function Centre, the new manager was appointed and a Strategic Business
and a Sales & Marketing Plan developed for the business to set direction
and specific actions to be undertaken.
2. The Freeman Associates review
highlighted 14 key areas for operational improvements that needed to be
actioned at Central Energy Trust Arena. These 14 action areas are listed
below along with progress to date.
1. Leadership is provided to
transition Arena Manawatu from a “venue for hire” to “a
central city hub for sport”.
A new Manager, John Lynch, was appointed
and commenced in February 2016. The new Manager came with 14 years’
experience in the industry and events management having managed similar
facilities in Auckland, Whangarei and previously managed the then Arena
Manawatu for 4 years between 2002 and 2006. This appointment was made to
provide the leadership, direction and experience to ensure best practice was
evident in operations going forward.
2. Management and staff form close
relationships with user groups and work in partnership with them to get the
best possible outcome in terms of utilisation and ROI.
Emphasis has been placed on enhancing and
building relationships with regular users of the facilities through direct one
on one contact and regular feedback and communication. An annual event is also
held prior to the end of the year inviting all regular users to an evening
where more informal communications can happen in a more relaxed environment to
say thank you for their custom.
It is always a major balancing act in
regards to meeting regular user requests with most codes wanting to increase
number of evenings which often clash. The new emphasis on relationship
building has meant that a more holistic and co-operative approach has developed.
Parties have a better understanding of how to achieve best interests of all
parties and the venue.
Increasing utilisation of the facilities is
not a simple factor of filling available time as the main downtime is during
the day from 8am until 3pm. People are at work, school or otherwise engaged
normally so the potential to fill this space really is limited to a minimal
sized market. This free time is also important to the facility to be able to
undertake maintenance, cleaning and setting up for evening sporting codes.
Having said this, we are always looking for opportunities for groups, more
commercial or public event activity and of course pay to play activity that
occurs on a regular basis.
3. There is an operating manual that
documents all policies, standard operating procedures, contracts, customer and
supplier lists.
Operating Manuals including Standard
Operating Procedures have been formulated. These manuals form the basis of
operation at both venues and will continually be enhanced and added to as the
business develops and new ways of conducting our business are introduced.
4. Utilisation data is collected on
a reliable and consistent basis and the methodology is documented in a standard
operating procedure.
For the 2016/2017 financial year new
classifications and definitions as to how events are classified and measured
have been developed. The methodology is now documented and this has been
applied on a more consistent basis. Past practices were open to interpretation
and there were areas of double up which have now been rectified. The
classifications will now provide a platform to properly measure and analyse
utilisation going forward once the first year foundation has been set. The next
step is to align accounting structure and codes to these classifications for
multi facet ways to measure performance based of the one platform.
The new classifications and definitions are
as follows and are reported on a monthly basis and circulated to elected
members through a regular newsletter.
Public Events- Sport
· Sports events where the
public are able to attend and may be charged an admission fee.
o Example: Mitre 10 Cup, Speedway,
Silver Ferns, Super Rugby, Rose City Ballroom Dancing & Roller Derby
Public Events- Non Sport
· Events other than sports
events where the public are able to attend and may be charged an admission fee.
o Example: Home Show, Women’s
Lifestyle Expo, Big Boys Toys, Rail X, Red Cross Book Sale, Concerts, Pidgeon
& Poultry Show, Sort It Expo, PN Cat Show
Community Events- Sport
· Regular club/ school users
where local clubs/ associations organise weekly competitions, events or seasons
for community participation.
o Example: PN Basketball, Manawatu Club
Rugby, Marist Summer Soccer, Trainings, School sports tournaments, PN Volleyball,
PN Table Tennis, PN Badminton
Community Events- Non Sport
· Organisations/ not for
profit/ community groups organise events based around community participation.
o Example: PNBHS Prizegiving, Rotary
Club lunches/ dinners, Muslim Association, Church Services, Westmount School
Commercial Events
· Events organised by
private or commercial organisations for invited guests only.
o Example: Business Trade Shows,
Weddings, Business Dinners, Seminars, Business Training
National Sports Events
· National Sports
Tournaments organised by National bodies for Regional, North Island or National
Championships.
o Example: National Secondary School
Volleyball, National Youth Futsal Championships, AA Basketball Championships,
New Zealand Junior Team Badminton Championships, New Zealand Secondary School
Table Tennis Championships.
2016-17 Summary
· Commercial activity makes
up 12% of revenue but only 4% of our hours used and 1% of the actual number of
events
· Community Organisation
activity makes up 25% of revenue but 62% of our hours used and 95% of the
actual number of events
· Public Event activity
makes up 55% of revenue but 24% of our hours used and 3% of the actual number
of events
· There were a total of 2934
individual bookings of for the year.
· Total utilisation for the
year is 13,782 hours compared to 11,427 at the same time last year. An increase
of 20%.
KPI’s for the 2016/ 2017 financial
year are
· Maintain a minimum of 80%
Community Use
o Community use includes
public and community events 
· Maintain a minimum of 95%
Community Events
Community events includes public and
community events 
5. Financial information for each
unit of operation is captured on a consistent and reliable basis. The
methodology is documented in a standard operating procedure.
With the change in classification of events
and more accurate recording, the structure of the P & L accounts and coding
is being reviewed/ changed to align with the new ways of reporting (see Action
5 above). This is a work in progress being refined on an ongoing basis.
Accounts are structured to record against each individual venue at each of both
the Conference & Function Centre and Central Energy Trust Arena as well as
aligning with the event classification. Arena will be aligned with each
category and the Conference & Function Centre will be measured against
Conferences, Meetings/ Seminars, Exhibitions, Weddings and Social/ Other.
As the accounting system is refined and
structured to achieve this, the booking system will be aligned in coding to
create efficiencies in the way in which clients are charged. Currently this is
a manually intensive process but will be fully integrated once the coding
alignment is fully in place.
All processes and methodology will be added
to the standard operating procedures.
6. Courts are hired out on an
individual basis, so that any spare capacity is able to be hired out for other
purposes.
All courts are available for hire on either
an individual or collective basis. Many regular user groups although may not
use all courts in one particular stadium, prefer to hire the entire space to
alleviate potential interference if another user was next door. Arena do not
have adequate infrastructure to appropriately divide spaces for different codes
effectively either and quite an investment would be needed to be able to do
this. This will continue to be reviewed as and when utilisation and cost/
benefit dictate.
More importantly, there is not a high level
of capacity available during peak times after 3.30pm generally on a Monday to
Friday. Greater flexibility of users to access during non-peak or weekends
would allow for growth of their codes.
7. There is a standard hiring charge
for community sport courts, regardless of which arena they are hiring.
The reality is that different venues have
much different standard operating costs and positioned for differing types of
activity which are reflective in their cost. In saying this, some venues such
as the B & M Centre and Arena 3 are predominantly the community venues with
95% of their utilisation community based. Where these venues are already in use
and other venues such as Arena 2 are available, a flexible approach is taken to
community requests and Arena 2 offered at the same community rate. It is
important that we are seen as being open for business and flexible so as not to
discourage use or negatively impact on the groups and their activity.
A key consideration also is that Arena 2 is
free from permanent markings centre court to allow for higher level activity
such as Silver Ferns, National Netball, Basketball finals etc. If community
activity is regularly scheduled in this venue there are considerable costs for
court markings that if passed on make the hire fee unaffordable. These
additional costs cannot simply be absorbed as it would affect the level of
ratepayer subsidy.
The practicality of operations does not
strictly agree with the exact tenor of the recommendation.
8. A three year plan is developed for
utilisation of arena spaces, with long-term decisions made as to how the space
can best be utilised, and constant review to maximise utilisation.
Through the Strategic Business and Sales
& Marketing Plans, strategies have been formulated to increase and measure
utilisation of all of our venues across both venues by market segment and will
be further developed around specific venues once more accurate historical
information is gathered. Prior to the past full financial year and previous
management, data collected was incomplete and did not allow for proper trending
of key information. Specific action points have been formulated to target
continual growth and increased utilisation.
Targets for the Conference & Function
Centre are ambitious but realistic with 10% growth targeted across all areas.
Targets for Central Energy Trust Arena are
more fluid but based around KPI’s associated with community utilisation,
number of community events, living within the budgeted ratepayer contribution
and work is being prioritised with CEDA around measuring economic impact of
events on our city and region so more beneficial events are targeted in future.
Growth of utilisation is a key measurable and at the end of the 2016financial
year, Arena is showing growth in utilisation of 21% on the previous year. This
is in part due to recording more accurately time in use and tightening of
processes.
As more specific data is recorded under new
classifications and inputting of data, further KPI’s will be developed to
better define targets and set objectives and goals for the business. This
information being currently collected gives the business a better understanding
of where our business segments come from and the value of these and where our
focus should be prioritised.
9. Management and staff KPIs are
aligned and focused on achieving the overall business and organisational
objectives and measures.
All staff KPI’s, action plans and
work plans are aligned with the Strategic Business and Sales & Marketing
Plans to ensure focus from all areas is aimed to achieving the objectives of
the business. These are discussed and measured through individual performance
planning and evaluation agreements with all staff.
10. Business KPIs (as distinct from
organisational KPIs) are developed and used to inform decision-making on key
operational drivers of utilisation, customer service and financial.
As highlighted earlier, all KPI’s are
related to the Strategic Business and Sales & Marketing Plans and will
continually be developed and enhanced to gather key information and business
trends to assist in key decision making. KPI’s are distinctly
different from organisational KPI’s whilst always considering the objectives,
direction and values of the council to our community.
11. Decisions on price increases are linked to
the target for ratepayer subsidy and the budget, and not to CPI.
Venue, equipment and services pricing is
based around ratepayer contribution levels and ensuring affordability and
living within the set budgets. Further detailed benchmarking against like
venues in regional centres will also provide valuable information as to where
our rates sit on a like for like basis and help in decision making going
forward. Palmerston North competes for events and business so must meet the
market.
12. There is a strong focus on continual
improvement, including benchmarking operations against other venues, i.e.
Baypark for speedway, other indoor arenas for the indoor arenas.
The Strategic Business and Sales &
Marketing Plans are focussed on continual improvement in the way in which the
business is administered and operated. Benchmarking is done against other
venues of relevance throughout New Zealand as well as other venues where ideas
for operational improvement and efficiencies can be gained.
Part of the individual staff training plans
identified the need for staff to be involved with other like venues to view
operations and learn new ways of conducting our business. All staff have
received opportunities to visit other venues and taken part in industry
specific seminars and training sessions to develop their knowledge and skills.
At a senior level, regular interaction,
knowledge sharing and benchmarking is done on a regular basis and senior staff
meet quarterly with lower North Island venues in an operational sharing forum,
attend Event Venue Association of New Zealand seminars, mid-year meetings and
conference and are also involved with the Venue Management Association and follow
on-line trends, learning opportunities and attend the annual congress held.
A close relationship is held with all major
venues throughout New Zealand by many staff within the environment and this is
encouraged and promoted to regularly source new ideas and key information.
13. The website has relevant information
including the Booking Policy and Hire Agreement forms and a direct response
facility for ease of enquiries.
Since the review many forms including
booking enquiry, client satisfaction and marketing support are interactive
pdf’s within our website and there are many more streamlining and
informative changes been made as part of our new website build. The new website
was launched in late May and designed based on best industry practice to provide
key event, booking and promotional information. The new website has key facts
and figures added, is very intuitive and interactive and has a fresh and modern
look and feel to it.
The new website is inclusive of both the
Conference & Function Centre and Central Energy Trust Arena which is
consistent with the industry best practiceand similar structured organisations
that manage multiple type venues.
A new “App” is currently also
being tested and likely to launch in the next month for greater interaction and
promotional and marketing opportunities with smart devices.
14. The Marketing Plan is aligned with the
strategic direction that has been agreed for Arena Manawatu to be a central
sports hub.
The Strategic and Sales & Marketing
Plans are both aligned with the strategic direction for Central Energy Trust
Arena to be the “Central City Hub for Sport” and referenced.
Conclusions
Overall several areas of improvement and recommendations were
made by the consultants engaged in 2014 and 2015 and the above list of actions
implemented and underway together with evidence of considerable business
improvement across all areas. This includes management and
operations and highlights the effective change occurring within the business
over the past 24 months since the reviews and recommendations were made.
Key improvements that are evident are:
Conference and Function Centre
• New Manager
and Management systems in place
• Now managed
through Strategic Business and Sales & Marketing Plans
• Improved
performance
• Improved
reporting
• Upgrading and
rebranding completed
Central Energy Trust Arena
• New Manager
and Management systems in place
• Now managed
through Strategic Business and Sales & Marketing Plans
• 14 corrective
actions all addressed to meet industry best practice
• Improved
performance
• Improved
reporting
• Wayfinding and
branding completed
• Significant
social benefits and alignment with Active Recreation Strategies
• Significant
economic benefits while maintaining and balancing community needs
Options moving forward
As part of the Section 17A review, both
consultants looked at the various options and their findings are detailed
within the attached appendices. Options considered and discussed in detail in
the workshop held on 19 June 2017 are listed below with the consultants
recommendation following.
Conference and Function Centre
• In house
delivery
• Delivery
through a stand alone Business Unit
• Delivery
through Council Controlled Organisation
• Shared
Governance and funding with another local authority
• Shared
Governance and funding with another organisation
• Service
delivery by a private sector organisation
Horwath
HTL Recommendation
Notwithstanding the issues identified in our operational review,
we recommend that continuing oversight of the Convention Centre Palmerston
North internally within Council should be the most appropriate way to oversee
the management of the convention centre.
Central Energy Trust Arena
• In house
delivery
• Delivery
through a stand alone Business Unit
• Delivery
through Council Controlled Organisation
• Shared
Governance and funding with another local authority
• Shared
Governance and funding with an organisation such as Sports Manawatu
• Service
delivery by a private sector organisation
Freeman
Associates Opinion
6. Two options
for governance and funding.
• In house
• CCO
7. Continuing
with in-house governance and funding is a sustainable model.
8. Options for
service delivery
• In House
• Stand Alone
Business Unit
• Private Sector
• Community
Trust
4. next
steps
That
the recommendations be implemented and that Central Energy Trust Arena and the
Conference & Function Centre continue to be managed jointly directed by
Strategic Business and Marketing Plans.
NOTE:
The 3
independent reviews are provided as attachments in a Part II memorandum and are
recommended for public excluded, as permitted by s48(1)(a) and s7(2)(a) &
(i) the Local Government Official Information and Meetings Act 1987, to:
-
Protect the privacy of natural persons; and
- To
enable Negotiations to be carried out without prejudice or disadvantage.
5. Compliance
and administration
|
Does the Committee have delegated authority to
decide?
If Yes quote relevant clause(s) from Delegations
Manual <Enter
clause>
|
No
|
|
Are the decisions significant?
|
No
|
|
If they are significant do they affect land or a
body of water?
|
No
|
|
Can this decision only be made through a 10 Year
Plan?
|
No
|
|
Does this decision require consultation through the
Special Consultative procedure?
|
No
|
|
Is there funding in the current Annual Plan for
these actions?
|
Yes
|
|
Are the recommendations inconsistent with any of
Council’s policies or plans?
|
No
|
Attachments
NIL
|
John Lynch
Manager - Venues PN
|
|
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