Agenda of Finance and Performance Committee

PALMERSTON NORTH CITY COUNCIL

Finance and Performance Committee MEETING

18 February 2019

Order of Business

NOTE: The Finance and Performance Committee meeting coincides with the ordinary meeting of the Audit and Risk Committee meeting. The Committees will conduct business in the following order:

- Finance and Performance Committee

- Audit and Risk Committee

1. Apologies

2. Notification of Additional Items

Pursuant to Sections 46A(7) and 46A(7A) of the Local Government Official Information and Meetings Act 1987, to receive the Chairperson’s explanation that specified item(s), which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded, will be discussed.

Any additions in accordance with Section 46A(7) must be approved by resolution with an explanation as to why they cannot be delayed until a future meeting.

Any additions in accordance with Section 46A(7A) may be received or referred to a subsequent meeting for further discussion. No resolution, decision or recommendation can be made in respect of a minor item.

3. Declarations of Interest (if any)

Members are reminded of their duty to give a general notice of any interest of items to be considered on this agenda and the need to declare these interests.

4. Public Comment

To receive comments from members of the public on matters specified on this Agenda or, if time permits, on other Committee matters.

(NOTE: If the Committee wishes to consider or discuss any issue raised that is not specified on the Agenda, other than to receive the comment made or refer it to the Chief Executive, then a resolution will need to be made in accordance with clause 2 above.)

5. Confirmation of Minutes Page 7

“That the minutes of the Finance and Performance Committee meeting of 17 December 2018 Part I Public be confirmed as a true and correct record.”

6. Acquisition of Fitzherbert East Road site for Landfill Purposes Page 11

Memorandum, dated 8 January 2019 presented by the Property Manager, Bryce Hosking.

7. E-Waste Recycling at Ferguson Street - First Six Months of Reduced Fees Page 17

Memorandum, dated 30 January 2019 presented by the Waste Management Manager, Stewart Hay.

8. Quarterly Performance and Finance Report - Quarter Ending 31 December 2018 Page 25

Memorandum, dated 1 February 2019 presented by the Finance Manager, Stuart McKinnon.

9. Treasury Report for 6 months ended 31 December 2018 Page 101

Memorandum, dated 25 January 2019 presented by the Strategy Manager Finance, Steve Paterson.

10. Committee Work Schedule Page 111

11. Exclusion of Public

To be moved:

“That the public be excluded from the following parts of the proceedings of this meeting listed in the table below.

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:

General subject of each matter to be considered		Reason for passing this resolution in relation to each matter	Ground(s) under Section 48(1) for passing this resolution
12.	Award of Contract 3696 for Engagement of Legal Advisor for the Wastewater BPO Project	Third Party Commercial	s7(2)(b)(ii)

This resolution is made in reliance on Section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by Section 6 or Section 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 as stated in the above table.

Also that the persons listed below be permitted to remain after the public has been excluded for the reasons stated.

Chief Executive (Heather Shotter), Chief Financial Officer (Grant Elliott), Chief Infrastructure Officer (Tom Williams), General Manager – Strategy and Planning (Sheryl Bryant), General Manager - Community (Debbie Duncan), Chief Customer and Operating Officer (Chris Dyhrberg), Human Resources Manager (Wayne Wilson), General Manager - Marketing and Communications (Sacha Haskell) because of their knowledge and ability to provide the meeting with advice on matters both from an organisation-wide context (being members of the Council’s Management Team) and also from their specific role within the Council.

Legal Counsel (John Annabell), because of his knowledge and ability to provide the meeting with legal and procedural advice.

Committee Administrators (Penny Odell, Rachel Corser and Courtney Kibby), because of their knowledge and ability to provide the meeting with procedural advice and record the proceedings of the meeting.

Transport & Infrastructure Manager (Robert van Bentum) and Commercial Advisory Manager (Fiona Dredge) because of their knowledge and ability to assist the meeting in speaking to their report and answering questions, noting that such officer will be present at the meeting only for the item that relate to their respective report.

[Add Third Parties], because of their knowledge and ability to assist the meeting in speaking to their report/s [or other matters as specified] and answering questions, noting that such person/s will be present at the meeting only for the items that relate to their respective report/s [or matters as specified].

Palmerston North City Council

Minutes of the Finance and Performance Committee Meeting Part I Public, held in the Council Chamber, First Floor, Civic Administration Building, 32 The Square, Palmerston North on 17 December 2018, commencing at 9.00am

Members

Present:

Councillor Susan Baty (in the Chair), The Mayor (Grant Smith) and Councillors Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor and Bruno Petrenas.

Non Members:

Councillors Brent Barrett, Rachel Bowen, Aleisha Rutherford and Tangi Utikere.

Apologies:

The Mayor (Grant Smith) (on Council Business) and Councillors Duncan McCann (late arrival) and Aleisha Rutherford (early departure)

The Mayor (Grant Smith) was not present when the meeting resumed at 1.15pm. He was not present for clauses 95 to 99 inclusive.

Councillor Duncan McCann was present when the meeting resumed at 1.15pm. He was not present for clause 94.

Councillor Adrian Broad was not present when the meeting resumed at 1.15pm. He entered the meeting at 1.19pm during consideration of clause 96. He was not present for clause 95.

Councillor Tangi Utikere left the meeting at 1.26pm during consideration of clause 96. He was not present for clauses 96 to 99 inclusive.

Councillor Aleisha Rutherford left the meeting again at 1.46pm during consideration of clause 97. She was not present for clauses 97 to 99 inclusive.

94-18

Apologies

Moved Susan Baty, seconded Aleisha Rutherford.

The COMMITTEE RESOLVED

1. That the Committee receive the apologies.

Clause 94-18 above was carried 14 votes to 0, with 1 abstention, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

Abstained:

The Mayor (Grant Smith).

The meeting adjourned at 9.01am

The meeting resumed at 1.15pm

When the meeting resumed The Mayor (Grant Smith) and Councillor Adrian Broad were not present.

When the meeting resumed Councillor Duncan McCann was present.

95-18

Confirmation of Minutes

Moved Susan Baty, seconded Aleisha Rutherford.

The COMMITTEE RESOLVEDD

1. That the minutes of the Finance and Performance Committee meeting of 19 November 2018 Part I Public and Part II Confidential be confirmed as a true and correct record.

Clause 95-18 above was carried 14 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas, Aleisha Rutherford and Tangi Utikere.

96-18

2018 Rating Valuations - Impact on Rating Incidence

Memorandum, dated 3 December 2018 presented by the Strategy Manager Finance, Steve Paterson.

Councillor Adrian Broad entered the meeting at 1.19pm

Councillor Tangi Utikere left the meeting at 1.26pm

Moved Susan Baty, seconded Lorna Johnson.

The COMMITTEE RECOMMENDS

1. That it be noted the new rateable land values will significantly alter the incidence of rates both within and between the differential rating groups of property and, in particular, transfer a significantly greater share of the rates to the residential sector with greater than average increases in rates on residential properties with lower values.

2. That it be noted it is possible to alter the incidence of rates by mechanisms such as altering the level of the uniform annual general charge or the differential surcharges applying to the general rate or a combination of both.

3. That the Chief Executive be instructed to develop a scenario for public consultation through the 2019/20 annual budget process that seeks to moderate the effects of the revaluation on rates incidence by changing the level of the uniform annual general charge and the differential surcharges for the general rate.

Clause 96-18 above was carried 14 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Susan Baty, Rachel Bowen, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor, Bruno Petrenas and Aleisha Rutherford.

97-18

Papaioea Place Redevelopment Quarterly Update

Memorandum, dated 29 November 2018 presented by the Property Manager, Bryce Hosking.

Councillor Aleisha Rutherford left the meeting at 1.46pm

Moved Leonie Hapeta, seconded Brent Barrett.

The COMMITTEE RESOLVED

1. That the memorandum dated 29 November 2018 and titled `Papaioea Place Redevelopment Quarterly Update’ be received for information.

Clause 97-18 above was carried 13 votes to 0, the voting being as follows:

For:

98-18

Committee Work Schedule

Moved Susan Baty, seconded Leonie Hapeta.

The COMMITTEE RESOLVED

1. That the Finance and Performance Committee receive its Work Schedule dated December 2018.

Clause 98-18 above was carried 13 votes to 0, the voting being as follows:

For:

99-18

Disposal of Excess Land at the McGregor Street Drainage Reserve

Memorandum, dated 19 November 2018 presented by the Property Manager, Bryce Hosking.

Moved Jim Jefferies, seconded Brent Barrett.

The COMMITTEE RECOMMENDS

1. That Council agree to undertake a boundary adjustment on the McGregor Street drainage reserve, and in doing so, agree to dispose of the excess land by transferring the ownership of said land, at no cost, to the respective neighbours.

Clause 99-18 above was carried 12 votes to 0, the voting being as follows:

For:

Councillors Brent Barrett, Rachel Bowen, Adrian Broad, Gabrielle Bundy-Cooke, Vaughan Dennison, Lew Findlay QSM, Leonie Hapeta, Jim Jefferies, Lorna Johnson, Duncan McCann, Karen Naylor and Bruno Petrenas.

Note:

Councillor Susan Baty declared a conflict of interest and withdrew from voting and discussion on clause 101 above.

Councillor Jim Jefferies chaired the meeting during consideration of clause 101 above.

The meeting finished at 1.57pm

Confirmed 18 February 2019

Chairperson

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 18 February 2019

TITLE: Acquisition of Fitzherbert East Road site for Landfill Purposes

DATE: 8 January 2019

Presented By: Bryce Hosking, Property Manager, Infrastructure

APPROVED BY: Tom Williams, Chief Infrastructure Officer

RECOMMENDATION(S) TO Council

1. That Council agrees to enter into the Reverse Sensitivity Encumbrance arrangement as part of the acquisition of the Fitzherbert East Road site for Landfill Purposes.

1. ISSUE and background

1.1 This report is regarding 3 parcels of land on Fitzherbert East Road, which are currently owned by the Crown, via the New Zealand Transport Agency (NZTA):

· Section 6 on Survey Office Plan (SO) 33243 being 0.9824 hectares;

· The legal road comprising 0.4719 hectares shown as Section 5 of SO 33243; and

· The legal road comprising 0.3985 hectares shown as Section 7 of SO 33243.

The combined area is 1.8528 hectares and is shown below:

1.2 Council has agreed to reacquire the land from the Crown for $1, with Council paying for the legal and disbursement costs associated with the acquisition transaction. These costs have been capped at $6,500 + GST. This is standard practise in these situations.

1.3 As part of this reacquisition, NZTA require Council to enter into a Reverse Sensitivity Encumbrance arrangement for the site to protect their continued interest in, and safety regarding, State Highway 57 (Fitzherbert East Road).

1.4 The encumbrance term is 999 years, and has a rental of $10 per annum. Being a Reverse Sensitivity Encumbrance, the rental will only be payable if Council does not fully meet the obligations imposed by the encumbrance. For clarity, if Council meets the obligations of arrangement, no rental is payable.

1.5 Council’s obligations under this encumbrance are summarised in Clause 3 of this report, with a full copy of the encumbrance document attached as Appendix A.

1.6 As the term of the arrangement exceeds 3 years, Council approval must be obtained prior to entering into the arrangement.

2. BACKGROUND

2.1 The land was originally within the Oroua County Council ownership and developed in the 1980s as the site for a landfill for Ashhurst.

2.2 Following the nation-wide amalgamation of Councils in 1989, Palmerston North City Council took over responsibility for the site and continued to operate the landfill until its closure in 1996. Since this time Council has continued to manage the site both in terms of undertaking maintenance and meeting the consent obligations under the closed landfill consent.

2.3 In 2012 Council applied for a renewal of consent for the closed landfill, however, during this process it was discovered that the landfill was not in Council ownership but instead was acquired in 1996 by the Crown through the Public Works Act 1981 for roading purposes.

2.4 The original road corridor was planned to run around the rear of what became the Ashhurst landfill, however, when Fitzherbert East Road was formed as the State Highway in its current alignment, the land boundaries were not amended. It is unclear why this process was not done at the time.

2.5 Ownership at this stage should have been transferred back to Palmerston North City Council. In other words. the legalisation and land ownership transfer discussed in this report addresses a long-standing anomaly in respect of the ownership.

2.6 The Public Works Act 1981 requires land that was acquired, but no longer required, to be offered back to whomever it was acquired from. Given the Crown no longer have a use for the land in this report, they are obligated to offer the land back to Council. Refer to Clause 1.2 for the agreed terms.

2.7 For clarity, Council has been managing the site since 1996 despite it not being in Council ownership. This has included undertaking maintenance (i.e. mowing and weed removal), as well as meeting the consent obligations under the closed landfill consent (i.e. on-going monitoring). This has been at Council’s cost. Council has already budgeted for these ongoing costs and in acquiring this land Council will not be spending any more ongoing operational monies on the site other than what Council has already allowed for and been spending.

2.8 Also for clarity, given the site is a closed landfill there is no prospect of it being on-sold by Council to another party as it is not suitable for any other residential or rural use.

3. SUMMARY of obligations under the reverse sensitivity encumbrance

3.1 Council’s obligations within the Reverse Sensitivity Encumbrance are detailed under the Operative Provisions section of the encumbrance document. Refer Appendix A.

3.2 A summary of Council’s obligations can be paraphrased as:

· Any new buildings constructed on the site within 30m of the boundary meet the current standards for noise and vibration;

· All lighting on the land must be designed, installed and maintained so that it is shielded from or directed away from the State Highway.

· Any signage on the property that faces the State Highway has written approval from NZTA prior to being erected.

· Council acknowledges and accepts that the land can be adversely affected by effects arising from the construction, operation, upgrading and maintenance of the State Highway. As such Council will not do anything to hinder, prevent or obstruct this, nor will Council have a compensation claim to any adverse effects.

4. NEXT STEPS

4.1 Vest the land back into Council’s ownership via a Gazette Notice to LINZ along with the Reverse Sensitivity Encumbrance.

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

The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions is Not Applicable
Contribution to strategic direction	This is an administrative manner and good governance.

Attachments

Appendix A - Reverse Sensitivity Encumbrance ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 18 February 2019

TITLE: E-Waste Recycling at Ferguson Street - First Six Months of Reduced Fees

DATE: 30 January 2019

Presented By: Stewart Hay, Waste Management Manager, Infrastructure

APPROVED BY: Tom Williams, Chief Infrastructure Officer

RECOMMENDATION(S) TO Finance and Performance Committee

1. That the information provided in the Memorandum dated 30 January 2019 and titled ‘E-Waste Recycling at Ferguson Street – First Six Months of Reduced Fees’ be received by the Finance and Performance Committee.

1. ISSUE

1.1 Following consideration of a report titled ‘E-Waste Recovery Options in Palmerston North’, the Finance and Performance Committee requested: That the information provided in the Report dated 30 October 2018 and titled ‘E-Waste Recovery Options in Palmerston North’ be received and used to inform a further report on the results of the first six months of reduced E-Waste Recovery fees to be considered by the Finance and Performance Committee in February 2019.

2. BACKGROUND

2.1 In the absence of any mandated or government funded stewardship scheme for end of life electrical and electronic waste in New Zealand, e-waste recycling services are either fragmented or patchy. The majority comprise: voluntary, not for profit initiatives or fee for service provided by commercial companies. This is in contrast to overseas examples where product stewardship or extended producer responsibility schemes provide funding for e-waste recycling and recovery. A levy is charged at point of sale to cover the recycling and recovery costs at end of life.

2.2 E-waste recycling typically comprises end of life disposal of electronic and electrical items once any residual life has been exhausted following re-sale. Larger appliances such as washing machines, fridge and freezers can usually be disposed of through metal recyclers. However, many smaller items have limited easily recoverable component materials.

2.3 For a majority of items, the cost of responsibly recycling and re-processing items to recover the valuable materials far outweighs any returns achieved. As a result, significant funding is required to support e-waste recycling and recovery.

2.4 Council historically provided e-waste recycling services on a full cost recovery basis, whereby the fee charged for items covered the transport costs and reprocessing charges from Council’s Auckland based provider E-Cycle. Council staff costs for managing the e-waste are not charged, but recovered as part of the operating costs for the Ferguson Street Recycling Centre, which is funded from the public rubbish and recycling targeted rate.

2.5 The volumes of e-waste presented at Ferguson Street had been relatively modest, for 2017/18 around 2.8 tonnes per month (33 tonnes per year), comprising up to 3,050 items annually. The quantity of e-waste being presented has remained steady since the introduction of the service in 2014. The fees charged are certainly a factor in any increase in tonnages of e-waste that is bought in for recycling. E-waste recycling is expensive when compared to disposal within the household rubbish collection (PNCC or privately provided).

2.6 To encourage an increase in the quantities of e-waste being diverted from landfill to recycling and recovery, Officers recommended a reduction in the fees and charges effective 1 July 2018, this was presented in the fees and charges report to the 19 March 2018 Finance and Performance Committee Meeting. The proposal was adopted by Committee. However, an additional resolution was adopted as follows:

2.7 That fees for household e-waste categories of ‘TV and Electronics”, ‘Consumer Electronics’ and ‘Other’ excluding photocopiers, be set to $0 on a trial basis, for a 6 month period FY19, subject to a financial analysis report being bought back to Finance and Performance April 2018.

2.8 A report was presented to the 23 April 2018 Meeting of the Finance and Performance Committee, presenting information on e-waste recycling and a financial analysis of setting the fee for e-waste to $0, excluding photocopiers for a period of 6 months in 2018/19. The following recommendation were made at this meeting:

2.9 That the decision on zero waste fees be deferred until after the results of the first six months of reduced fees are available.

2.10 That the Chief Executive report back on options for Palmerston North City Council to increase e-waste recovery in the city.

2.11 That the report, estimating an additional cost of $300,000 for a six month trial of e-waste charges for $0 for ‘TV and Electronics’, ‘Consumer Electronics’ and ‘Other’ excluding photocopiers be received.

2.12 A report was presented to the 19 November 2018 Meeting of the Finance and Performance Committee, titled ‘E-Waste Recovery Options in Palmerston North’, presenting information on current actions to increase e-waste diversion and impact on the reduced fees for the period July – September 2018. Potential options to increase e-waste recovery was also included in the report.

2.13 The Finance and Performance Committee at the 19 November 2018 made the following recommendations:

2.14 That the information provided in the Report dated 30 October 2018 and titled ‘E-Waste Recovery Options in Palmerston North’ be received and used to inform the preparation of a further Report on the results of the first six months of reduced E-Waste Recovery fees to be considered by the Finance and Performance Committee in February 2019.

2.15 That the Chief Executive be instructed to lobby Central Government to introduce a mandatory product stewardship for e-waste diversion.

2.16 This report seeks to respond to the recommendation in Clause 2.15: That the information provided in the Report dated 30 October 2018 and titled ‘E-Waste Recovery Options in Palmerston North’ be received and used to inform the preparation of a further Report on the results of the first six months of reduced E-Waste Recovery fees to be considered by the Finance and Performance Committee in February 2019.

3. E-Waste Waste Diversion – First six months of Reduced Fees

3.1 The fees and charges were reduced effective 1 July 2018 as adopted by Council following the fees and charges report presented to the 19 March 2018 Finance and Performance Committee.

3.2 A summary of the quantities received in the six-month period 1 July 2018 – 31 December 2018 are shown in Table 1 below, along with the extrapolated figures for 2018/219 and a comparison the quantities received in 2017/18.

Table 1: E-Waste – Quantities of items received July – December 2018

Item	Qty (July-Dec 2018)	Qty (est.) 2018/19	Qty 2017/18
TV’s and Computers
Desktop Computers and Servers	22	44	201
Mice			-
Small Computer Items (e.g. speakers/keyboards/docking stations/hubs/modems/switches/routers)	382	764	494
Copier Toner (per kg)	9	18	-
UPS	23	43	9
Laptops and Tablets	189	378	231
Computer Monitors	271	542	331
Printers/Scanners/Fax Machines	277	554	442
TV’s	582	1,164	464
Photocopiers	8	18	13
Consumer Electronics
Mobile Phones/GPS/Digital Camera’s	0	0	1
Stereos/Car Stereos/Gaming Consoles	247	494	119
Miscellaneous (per kg)	295*	590*	579*
DVD/VCR/CD Players	163	326	179
Household Appliances
Small Appliances (e.g. Heaters/fans/toasters/kettles/blenders/alarm clocks/phones/cameras)	430	860	253
Medium Appliances (e.g. vacuum cleaners/microwaves)	312	624	287
Large Appliances (e.g. fridges/freezers/washing machines/dryers/dishwashers)	37	74	30
TOTAL ITEM COUNT	2,952	5,903	3,054

* Not included in total item count as this is a weight figure

3.3 The impact of the reduced fees effective 1 July 2018, and associated communications has seen a noticeable increase in the number of items received at Ferguson Street. There was significant increase in the first month (July) of the reduced fees, this has fallen away but has remained fairly steady during the period August – December 2018.

3.4 Table 1 above shows that in the first six months the number of e-waste items bought into Ferguson Street for recycling is almost the total number received in 2017/2018. If this trend continues, Officers expect almost 6,000 items for 2018/19 – which represents a 100% increase (doubling) in the number of e-waste items compared with 2017/18.

3.5 Officers have noticed a small decrease in the number of computer related e-waste items since the introduction of the Tech Collect service in October 2018 – this relates to items that Council charge a small fee for but are free through the Tech Collect service. Other items appear to have remained consistent.

3.6 A total of approximately 33 tonnes of e-waste was recycled in 2017/18. Officers expect that approximately 55-60 tonnes will be diverted in 2018/19.

3.7 Officers has recently signed an agreement with a local provider who will be able to take a portion of the e-waste. This provider will largely take computers and computer accessories for recycling and recovery. Where possible, items will be refurbished for reuse.

4. SUMMARY

4.1 The fee reduction effective 1 July 2018 has seen a significant increase in the number of electrical items received at Ferguson Street for recycling.

4.2 Officers will be working with the communications team to further promote the e-waste service provided at Ferguson Street.

4.3 Officers consider that the current pricing structure for e-waste provides a service that enables responsible recycling while still acknowledging that there is a cost for the of end of life disposal.

4.4 Officers believe the current e-waste service strikes a balance between providing an appropriate disposal method for e-waste whilst not unduly burdening the ratepayers of the City.

5. Compliance and administration

Does the Committee have delegated authority to decide? If Yes quote relevant clause(s) from Delegations Manual <Enter clause>		Yes
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

The recommendations contribute to Goal 4: An Eco City
The recommendations contribute to the outcomes of the Eco City Strategy
The recommendations contribute to the achievement of action/actions in the Waste Plan The actions are: Provide a greenwaste drop-off collection service at Ashhurst and Awapuni, for a small fee, and E-Waste, compact fluorescents and batteries collection service at Ferguson St, for a fee Investigate asset management for the rubbish and recycling activity
Contribution to strategic direction	Contribute to the development of future options to assist with the planning of the future direction for the Waste Activity

Attachments

Nil

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 18 February 2019

TITLE: Quarterly Performance and Finance Report - Quarter Ending 31 December 2018

DATE: 1 February 2019

Presented By: Stuart McKinnon, Finance Manager, Finance

APPROVED BY: Grant Elliott, Chief Financial Officer

Sheryl Bryant, General Manager - Strategy & Planning

RECOMMENDATION(S) TO Finance and Performance Committee

1. That the Committee receives the December 2018 Quarterly Performance and Financial Report.

1. ISSUE

1.1 To provide a quarterly update on the performance and financial achievements of the Council for the period ending 31 December 2018. This is the second quarterly report for the year.

2. BACKGROUND

2.1 Details of operating and financial performance are included in the following sections. Reports are against the new goals as detailed in the 10 Year Plan 2018-28.

3. Compliance and administration

Does the Committee have delegated authority to decide?		Yes
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?		No
Are the recommendations inconsistent with any of Council’s policies or plans?		No
The recommendations contribute to Goal 5: A Driven and Enabling Council
The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy
The recommendations contribute to the achievement of action/actions in a plan under the Driven and Enabling Council Strategy The action is: to enable Council to exercise governance by reviewing financial performance and operating performance and provide accountability for these to the public.
Contribution to strategic direction	As above.

Attachments

1.	December Quarterly Performance and Finance Report (Financials) ⇩
2.	December Quarterly Performance and Finance Report (Performance Measures) ⇩
3.	December Quarterly Performance and Finance Report (Supplementary Materials) ⇩

PALMERSTON NORTH CITY COUNCIL

Memorandum

TO: Finance and Performance Committee

MEETING DATE: 18 February 2019

TITLE: Treasury Report for 6 months ended 31 December 2018

DATE: 25 January 2019

PRESENTED BY: Steve Paterson, Strategy Manager Finance, Finance

APPROVED BY: Grant Elliott, Chief Financial Officer

RECOMMENDATION TO FINANCE AND PERFORMANCE COMMITTEE

1. That the performance of the treasury activity for the 6 months ending 31 December 2018 be noted.

1. ISSUE

To provide an update on the Council’s treasury activity for the 6 months ended 31 December 2018.

2. BACKGROUND

The Council’s 10 Year Plan Budget for 2018/19 forecast additional debt of $38.71m would need to be raised during the year to fund the $47.89m of new capital expenditure programmes (including assumed carry forwards from 2017/18). In June 2018 the Council resolved to specifically authorise the raising of up to $39m of additional debt.

Council’s Financial Strategy (updated version adopted 25 June 2018) 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 200%

• 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), adopted in December 2017 and updated on 25 June 2018, also contains a number of other criteria regarding debt management.

3. PERFORMANCE

Following the latest annual review published on 9 April 2018 Council’s S&P Global Rating’s credit rating remains unchanged at AA / A-1+.

Schedule 1 attached shows the details of Council’s debt as at 31 December 2018. Debt levels were within the policy parameters outlined in section 2 of this report.

The summarised gross term debt movements are shown in the following table:

10 Year Plan Budget for year (2018/19)

$000

Actual – 3 months (2018/19)

$000

Actual – 6 months (2018/19)

$000

Debt Balance at 1 July 2018

New Debt #*

Debt repayments #

106,153

38,710

99,875

15,000

(2,875)

99,875

30,000

(2,875)

Closing Balance

Comprising:

Bank advance (on call)

LGFA short term advance

LGFA & Council stock

144,863

112,000

10,000

102,000

127,000

10,000

117,000

# 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.

* $15m new debt was raised in July originally to pre-fund debt maturing in March 2019, however later used to fund capital expenditure undertaken in the latter part of last year and paid for early this year. A further $15m of new debt was raised in December 2019 to pre-fund maturing debt in March 2019. This sum was placed on short term deposit until March 2019 at an interest rate that more than covers the cost of borrowing.

Net debt at 31 December 2018 was $111m (i.e. gross $127m less short-term deposits of $16m compared with $98.875m at 1 July 2018 (i.e. gross $99.875m less short-term deposits of $1.0m).

Council’s Treasury Policy requires the Council to be informed if deposits over $10m are held with a registered bank. As at 31 December a short-term deposit of $15m is held at ANZ Bank to be used to repay maturing LGFA debt in March 2019.

Movements in recent years are shown in the following graph:

Actual finance costs incurred during the 6 months (including interest, line fees & the effects of swaps) amounted to $3.01m compared with the budget for the year of $7.284m.

The Council has entered 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” i.e. 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 the reporting 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 31 December 2018 and show a decrease in book value of $577k for the quarter and $704k for the year to date.

The Council’s Treasury Policy contains guidelines regarding the measurement of treasury risk as follows:

· 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.

· 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.

The interest rate risk position graph shows that as at 31 December two of the target policy sub-limits are not being met. However these will self-correct by April. Such an outcome is contemplated and permitted by the policy.

As at 31 December 2018 all remaining policy targets had been met.

Council’s credit lines with the banks include a $18m four-year credit facility with Westpac Bank (maturing 31 July 2020) and a revolving $25m three-year facility with ANZ Bank (maturing 31 March 2021).

4. CONCLUSION & NEXT STEPS

Finance costs for the 6-month period (including interest, line fees & the effect of swaps) was $3.01m compared with budget for the year of $7.284m.

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.

Council’s borrowing strategy is continually reviewed, in conjunction with Council’s treasury advisors, to ensure best advantage is taken of Council’s quality credit rating.

A further performance report will be provided after the end of the March 2019 quarter.

5. Compliance and administration

Does the Committee have delegated authority to decide?	Yes
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

The recommendations contribute to Goal 5: A driven and enabling Council

The recommendations contribute to the outcomes of the Driven and Enabling Council Strategy

The recommendations contribute to the achievement of action/actions Not Applicable

Contribution to strategic direction

Routine

Attachments

Schedules 1 and 2 ⇩

Susan Baty (Chairperson)
Jim Jefferies (Deputy Chairperson)
Grant Smith (The Mayor)
Adrian Broad	Leonie Hapeta
Gabrielle Bundy-Cooke	Lorna Johnson
Vaughan Dennison	Karen Naylor
Lew Findlay QSM	Bruno Petrenas