Finance and Corporate Committee...2017/06/29 · Finance and Corporate Committee Notice of Meeting A meeting of the Finance and Corporate Committee will be held in the Council Chamber,

Finance and Corporate Committee

Notice of Meeting A meeting of the Finance and Corporate Committee will be held in the Council Chamber, Forum North, Whangarei on:

Thursday

29 June 2017 9.00 am

Committee Cr Shelley Deeming (Chairperson) Her Worship the Mayor Sheryl Mai

Cr Stu Bell Cr Crichton Christie Cr Vince Cocurullo

Cr Tricia Cutforth Cr Sue Glen

Cr Jayne Golightly Cr Phil Halse

Cr Cherry Hermon Cr Greg Innes

Cr Greg Martin Cr Sharon Morgan

Cr Anna Murphy

OPEN MEETING

APOLOGIES

DECLARATIONS OF INTEREST Members are reminded to indicate any items in which they might have an interest.

INDEX

Item No Page No

1. Minutes of the Finance & Corporate CommitteeMeeting Held 25 May 2017..................................................................................... 1

2. Financial Report for the Eleven Months Ending 31 May 2017.................................. 3

3. Corporate Capital Projects Report to 31 May 2017 ............................................... 10

4. Operational Report – Finance and Corporate – June 2017.................................... 13

5. Whangarei District Airport Statement of Intent 2017-2018 ..................................... 23

6. Northland Regional Landfill Limited Partnership Statement of Intent2017-2018 ........................................................................................................... 33

7. Delegations Review ............................................................................................. 49

Recommendations contained in this agenda may not be final decisions. Please refer to the minutes for resolutions.

Local Government Act 2002 Amendment Act 2012 Full consideration has been given to the provisions of the Local Government Act 2002 Amendment Act 2012 in relation to decision making and in particular the current and future needs of communities for good quality local infrastructure, local public services and performance of regulatory functions in a way that is most cost effective for households and businesses. Consideration has also been given to social, economic and cultural interests and the need to maintain and enhance the quality of the environment in taking a sustainable development approach.

Finance and Corporate Committee – Terms of Reference Membership Chairperson: Councillor Shelley Deeming

Members: Her Worship the Mayor Sheryl Mai

Councillors Stu Bell, Crichton Christie, Vince Cocurullo, Tricia Cutforth, Sue Glen, Jayne Golightly, Phil Halse, Cherry Hermon, Greg Innes, Greg Martin, Sharon Morgan, Anna Murphy

Meetings: Monthly Quorum: 7 Purpose:

To oversee Council and CCO’s financial management and performance, including operation of the administrative and internal support functions of council.

Key responsibilities include: • Progress towards achievement of the council’s financial objectives as set out in the

Long Term Plan.

• Preparation for recommendation to council:

- Advising and supporting the mayor on the development of the Long Term Plan (LTP) and Annual Plan (AP)

- Financial policy related to the LTP and AP - Setting of rates - Preparation of the consultation document and supporting information, and

the consultation process for the LTP and AP - Annual Report

• Financial/Planning and Control - Corporate accounting services - Treasury – debt and interest risk management - Procurement

• CCO Monitoring and Performance

- Monitoring the financial and non-financial performance targets, key

performance indicators and other measures of each Council Controlled Organisation (CCO) to inform the committee’s judgement about the performance of each organisation.

- Advising the mayor on the content of the annual Letters of Expectations (LoE) to CCOs.

• Overseeing and making decisions relating to an ongoing programme of service

delivery reviews as required under section 17A of the Local Government Act 2002

• Shared Services – investigate opportunities for Shared Services for

recommendation to council.

Delegations (i) All powers necessary to perform the committee’s responsibilities, including, but

not limited to:

(a) the approval of expenditure of less than $5 million plus GST. (b) approval of a submission to an external body. (c) establishment of working parties or steering groups.

(d) power to establish subcommittees and to delegate their powers to that

subcommittee.

(e) the power to adopt the Special Consultative Procedure provided for in Section 83 to 88 of the LGA in respect of matters under its jurisdiction (this allows for setting of fees and bylaw making processes up to but not including adoption).

(f) the power to delegate any of its powers to any joint committee established

for any relevant purpose under clause 32, Schedule 7 of the Local Government Act 2002

Finance and Corporate Committee 29 June 2017

1. Minutes: Finance and Corporate Committee Thursday 25 May 2017

Minutes of a meeting of the Finance and Corporate Committee held in the Council Chamber Forum North on Thursday 25 May 2017 at 9.00am Present: Cr Shelley Deeming (Chairperson) Her Worship the Mayor Sheryl Mai, Crs Stu Bell, Vince Cocurullo, Crichton Christie, Tricia Cutforth (9.04am), Sue Glen, Jayne Golightly, Phil Halse, Cherry Hermon, Greg Innes, Greg Martin, Sharon Morgan and Anna Murphy In Attendance: Chief Executive (Rob Forlong), General Manager Finance and Corporate (Alan Adcock), Democracy Manager (Jason Marris), Legal Counsel (Kathryn Candy), Information Services Manager (Jo Wheat-Connelly), Maori Relationships Manager (Solomon Tipene), Financial Accountant (Delyse Henwood), Management Accountant (Nicole Butturini), Treasury & CCO Accountant (Nathan Wright), and Senior Meeting Coordinator (C Brindle) 1. Confirmation of minutes of a Meeting of the Finance and Corporate Committee

held on 27 April 2017 Moved Cr Martin Seconded Cr Glen

“That the minutes of the Finance and Corporate Committee Meeting held on Thursday

27 April 2017, have been circulated, be taken as read and now confirmed and adopted as a true and correct recording of proceedings of that meeting.”

CARRIED 2. Financial Report for the 10 Months Ending 30 April 2017

Moved Cr Morgan Seconded Her Worship the Mayor “That the Finance and Corporate Committee receives the financial report for the ten months ending 30 April 2017.”

CARRIED Cr Cutforth joined the meeting at 9.04am.

3. Corporate Capital Projects Report for the Month Ending 30 April 2017

Moved Cr Martin Seconded Cr Innes “That the Finance and Corporate Committee receive the Corporate Capital Projects Report for the month ending 30 April 2017.”

CARRIED

1


4. Operational Report – Finance and Corporate – May 2017

Moved Cr Innes Seconded Cr Glen “That the Finance and Corporate Committee notes the operational report for May 2017.”

CARRIED 5. Service Delivery Review – Legal Services

Moved Cr Deeming Seconded Cr Cutforth “That the Finance and Corporate Committee notes the completed Service Delivery Review for legal services.”

CARRIED 6. Whangarei District Council Credit Rating

Subsequent to the agenda being circulated supplementary agenda No 1- Item 8 was distributed separately but within the timeframe specified in LGOIMA. Moved Her Worship the Mayor Seconded Cr Hermon

“That the Finance and Corporate Committee receives the 2017 Standard and Poors credit rating report and notes its contents.”

CARRIED The meeting closed at 9.57am

Confirmed this 29th day of June 2017

Shelley Deeming (Chairperson)

2


2 Financial Report for the 11 Months Ending 31 May 2017 Reporting officer: Alan Adcock (General Manager - Corporate/CFO) Date of meeting: 29 June 2017

1 Purpose

To provide the financial report for the eleven months ending 31 May 2017.

2 Recommendation/s That the Finance and Corporate Committee notes the financial report for the eleven months ending 31 May 2017.

3 Background With only a month in the year to go, Council remains on track to achieve a positive financial result for the 2016-2017 year.

3.1 Operating Result – Full Year Forecast

The forecast net surplus for the financial year ending 30 June 2017 is $9.2m compared with a budgeted surplus of $5.3m, resulting in a favourable variance of $3.9m.

3.2 Capital Project Expenditure – Full Year Forecast

The Capital Projects expenditure as at 31 May 2017 is currently $14.0m less than budget. Council is forecasting to spend a total of $39.7m against the $56.8m budget, with a forecast carry forward of $17.9 m to the next financial year (the major carry forwards relate to One Building, Cycleways, Whau Valley Water Treatment Plant, Tarewa Tank (Wastewater), Pohe Island Projects (Sports and Recreation) and IT Projects.)

3.3 External Net Debt and Treasury

Total net external debt at the end of May 2017 was $115.8m compared to revised budgeted net debt of $146.7m, resulting in net debt being $30.9m under budget.

This positive variance is a result of several factors including:

• Difference in the 2016/17 opening debt compared to the annual plan • Year to date operating result (see 3.1) • Unbudgeted property sales • Timing of capital expenditure.

3


WDC Treasury Operations

As at 31 May 2017 cash and term deposits held of $46.2m was comprised of:

• $20.0m of term deposits relating to prefunding undertaken in March 2017.• $10.0m of term deposits relating to short term borrowings not yet required.• $12.5m of term deposits relating to excess cash from the May rates instalment not

currently required.• $3.7m cash on hand.

Council is currently receiving slightly higher interest rates than the borrowing rate on most of these deposits.

Economic

The OCR remained at 1.75% in the May MPS as expected. Treasury signalled that the next rate movement would likely be an increase but indicated that this may not occur until March 2020. On the back of some strong inflation data some banks have moved to an expectation of a hike as early as February 2018, although the RBNZ views this inflation as ‘temporary’. The market is almost fully pricing in an OCR hike by May 2018.

Long term rates reduced further during May on the back of some uncertainty regarding President Trump’s ability to deliver policy with NZ 10-year swap rates falling from 3.36% to 3.19%.

The low long term swap rates are partially offset by higher global credit spreads which will increase the cost of any future borrowing. Council has utilised prefunding to reduce its exposure to this.

4 Accounts receivable in arrears Total arrears as at 31 May 2017 was $2.9m, compared to $4.5m in the previous year.

5 Significance and engagement The decisions or matters of this Agenda do not trigger the significance criteria outlined in Council’s Significance and Engagement Policy, and the public will be informed via agenda publication on the website.

6 Attachments 1. Monthly key indicators

2. Monthly activity summary3. Monthly income statement4. Capital projects expenditure - graphs

5. Treasury report

4

YTDRevisedBudget Variance YTD YTD

Full YearForecast

RevisedBudget Variance YTD

(Surplus)/ Deficit

(Surplus)/ Deficit

(Surplus)/ Deficit Indicator

(Surplus)/ Deficit

(Surplus)/ Deficit

(Surplus)/ Deficit Indicator

$ m $ m $ m $ m $ m $ mOPERATINGTotal Rates (80.9) (80.5) (0.4) (88.2) (88.0) (0.2) Favourable to budgetUser Fees (18.3) (18.3) 0.0 (20.5) (20.1) (0.4)Operating Subsidies and Grants (6.3) (5.8) (0.5) (6.5) (6.6) 0.1Total Operating Income (109.7) (108.3) (1.4) (119.9) (119.1) (0.8)Personnel Costs 23.2 23.7 (0.5) 25.2 25.7 (0.5) Unfavourable to previous month

23.3 22.9 0.4 27.4 26.2 1.2Other Operating Expenditure 25.3 26.5 (1.2) 29.6 31.2 (1.6)Total Operating Expenditure 113.4 114.9 (1.5) 128.5 129.9 (1.4)(Surplus)/Deficit from Operations 3.6 6.6 (3.0) 8.6 10.8 (2.2)

CAPITALCapital Subsidies (10.1) (9.5) (0.6) (10.2) (10.7) 0.5Development Contributions (4.5) (2.8) (1.7) (4.6) (3.0) (1.6)Total Capital Income (15.1) (12.7) (2.4) (17.9) (16.7) (1.2)External Net Debt 115.8 146.7 (30.9)Net Interest on debt 6.4 7.3 (0.9) 7.1 8.0 (0.9)

Total (Surplus) / Deficit (11.4) (5.5) (5.9) (9.2) (5.3) (3.9)

Key Contributors to Year End Forecast Unfavourable Variances:Operating Subsidies and GrantsThe unfavourable variance is due to the $1.3m of expenditure (53% subsidy) for Mangakahia Road being removed from the forecast. Some of this has been offset by additional subsidies due to flood damage.Professional Fees / R&M / Asset Operating ExpenditureThe unfavourable variance is due to professional fees for leaky building litigation, rental arbitration expenses, Marsden City legal expenses, resource consents processing, and environmental policy plan changes currently tracking higher than budget. Some of this is due to staff vacancies and partially offset by a favourable variance in salaries.Capital SubsidiesThe unfavourable variance is due to the subsidy budgeted for replacement of bridges which did not get NZTA funding approved, and carry forward of cycleways.

Note: The above information includes excerpts taken from the Monthly Income Statement. The shaded lines above represent key totals from the Monthly Income Statement but are not totals of the lines above.

MONTHLY KEY INDICATORSMAY 2017

YTD to 31 May 2017 Full Year Forecast

Professional Fees / R&M / Asset Operating Expenditure

TrendCurrent / previous

month

Unfavourable, but within 5% of budget

KEY

Unfavourable, over 5% of budgetFavourable to previous month

5A

TTAC

HM

ENT 1

Actual YTDBudget

YTD Variance YTDYTD

TrendFull Year Forecast

RevisedBudget Variance Full Year

(Surplus) / Deficit

(Surplus) / Deficit

(Surplus) / Deficit Indicator

(Surplus) / Deficit

(Surplus) / Deficit

(Surplus) / Deficit Indicator

$m $m $m $m $m $m

Total Council (11.4) (5.5) (5.9) (9.2) (5.3) (3.9)

Transportation 10.9 11.9 (1.0) 14.5 15.2 (0.7)

Water (3.1) (0.4) (2.7) (3.0) (1.5) (1.5)

Solid Waste (3.1) (3.0) (0.1) (2.2) (2.3) 0.1

Waste Water (5.7) (4.9) (0.8) (5.0) (4.2) (0.8)

Storm Water 4.6 4.0 0.6 4.2 3.4 0.8

Flood Protection (0.1) (0.1) 0.0 (0.1) 0.0 (0.1)

Community Facilities 19.9 20.7 (0.8) 25.8 26.7 (0.9)

Economic Growth 2.1 2.4 (0.3) 2.0 2.1 (0.1)

Planning & Regulatory 6.9 7.1 (0.2) 8.0 7.9 0.1

Support Services (43.9) (43.2) (0.7) (53.4) (52.7) (0.7)

KEY:Favourable to budget

Favourable to previous month Unfavourable to previous month

Key Contributors to Year End Forecast Unfavourable Variances: Storm WaterThe unfavourable year end position is due to legal expenses for Marsden City legal case.

MAY 2017MONTHLY ACTIVITY SUMMARY

YTD to 31 May 2017 Full Year Forecast

Unfavourable, over 5% of budgetUnfavourable, but within 5% of budget

TrendCurrent /previous

month

6 ATTACHMENT 2

Actual Revised Budget Forecast Revised

Budget VarianceYTD YTD 2016-17 2016-17 2016-17$000 $000 $000 $000 $000

Operating IncomeGeneral Rates (46,285) (46,837) (50,505) (51,064) 558Activity Targeted Rates (22,391) (22,215) (24,433) (24,275) (157)Metered water (12,186) (11,494) (13,218) (12,634) (584)User Fees (18,330) (18,251) (20,461) (20,073) (388)Other Income (3,553) (3,605) (4,047) (4,433) 386Interest Received - Cash Balances (695) (50) (769) (55) (714)Operating Grants & Subsidies (6,286) (5,820) (6,498) (6,575) 77Total Operating Income (109,725) (108,273) (119,931) (119,108) (823)

Operating ExpenditurePersonnel Costs 23,213 23,652 25,153 25,694 (541)Professional Fees 5,126 3,813 6,764 4,681 2,083Repairs and Maintenance 13,927 14,871 15,571 16,612 (1,042)Asset Operating Expenditure 4,286 4,184 5,038 4,890 147Other Operating Expenditure 25,321 26,514 29,645 31,205 (1,561)Depreciation 34,356 34,476 38,521 38,714 (193)Interest Expense - External Borrowings 7,139 7,385 7,819 8,086 (267)Total Operating Expenditure 113,367 114,896 128,510 129,883 (1,373)

(Surplus)/Deficit from Operations 3,641 6,622 8,578 10,774 (2,196)

Capital IncomeCapital Subsidies (10,142) (9,479) (10,247) (10,724) 476Capital Scheme Rates (381) (373) (414) (407) (7)Lump Sum Contributions (135) (49) (135) (49) (87)Development Contributions (4,475) (2,836) (4,639) (3,000) (1,639)Non Cash - Vested Assets 0 0 (2,500) (2,500) 0Total Capital Income (15,133) (12,737) (17,936) (16,680) (1,257)

Capital Grant ExpenditureCapital grant expenditure 72 580 162 580 (418)Total Capital Grants 72 580 162 580 (418)

(Surplus)/Deficit from Operating Capital (15,061) (12,157) (17,774) (16,100) (1,675)

Total (Surplus)/Deficit (11,420) (5,534) (9,196) (5,325) (3,871)

MONTHLY INCOME STATEMENT 31 MAY 2017

Council Summary

7 ATTACHMENT 3

CAPITAL PROJECT EXPENDITURE AS AT 31 MAY 2017

$3,283

$42

$5,261

$1,513

$4,496

$31

$1,506

$18,081

$34,213

0% 20% 40% 60% 80% 100% 120%

Support Services

Economic Growth

Community Facilities & Services

Storm Water

Waste Water

Solid Waste

Water

Transportation

Total Complete YTD

% of YTD Capital Projects Completed v YTD Revised Budget

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Forecast

Cumulative YTD Project Expenditure vs. Revised Budget

CarryforwardsForecastRevised Budget YTDActual YTD

8 ATTACHMENT 4

As at 31 May 2017162,000,000

Plus loans raised during month - Less loan repayments made during month (Note: Facility movement has been netted) -

- 162,000,000

Less: Cash balances (excluding funds held on behalf) 3,744,891 Term deposits (Funds held on deposit until required for project funding) 42,500,000

46,244,891115,755,109

30,000,00039,000,000

3-5 Years 33,000,00060,000,000

162,000,000

9,912,808Property Reinvestment Reserve - Available for Reinvestment 5,348,194Property Reinvestment Reserve - Accumulated 28,183,056

33,531,250Water Reserve 27,106,384

70,550,442Note: Reserves Funding is disclosed to ensure transparency of Council’s use of cashflow management to fund capital works. Where funds are raised through property sales or targeted rates for Water, but they are not required for immediate investment in that asset category, Council’s Revenue and Financing policy allows them to be used for other purposes, rather than being held on deposit.To ensure total transparency of this we create Reserve Accounts so that the appropriate funding can be made available and transferred back when it is required. The timing of projects requiring these funds is set out in our Long Term Plan (LTP) and/or Annual Plan (AP). These Reserves are not a liability to an external party, and are not part of Council’s debt obligations.The Property Reinvestment Reserve is split to record funds that were used specifically for capital works in previous years; and a smaller amount representing recent unbudgeted sales where the funds received have offset external debt.The only situation where our Net Debt would increase as a result of these Reserves is if major expenditure on Water Assets or property purchases is brought forward from the dates set out in the LTP/AP.

Net movement in external debtTotal External Debt

Total Net External DebtTotal cash and term deposits

Total

Internal Funding

Note: Council also holds $2.3m of LGFA borrower notes. These are not included in net external debt as per Council's Treasury Risk Management Policy.

NET EXTERNAL DEBT COMPARED TO BUDGET:

External debt is represented by:Less than 1 Year1-3 YearsGreater than 5 YearsTotal

Community Development Funds

TREASURY REPORT

External DebtOpening public debt as at 1 May 2017

DEBT SUMMARY:

STANDARD AND POORS CREDIT RATING: AA Outlook: Stable

31 MAY 2017

100.00

110.00

120.00

130.00

140.00

150.00

160.00

June Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

$ Millio

ns

Months

Net Debt 2015-2016Revised Bugeted Net Debt 2016-2017Net Debt 2016-2017Net Debt Target (Annual plan,$156M)

9 ATTACHMENT 5


3 Corporate Capital Projects Report for the Month Ending 31 May 2017

Reporting officer: Alan Adcock (General Manager - Corporate) Date of meeting: 29 June 2017

1 Purpose

To provide the Corporate Capital Projects Report for the month ending 31 May 2017.

2 Recommendation/s That the Finance and Corporate Committee: a) Note the Corporate Capital Projects Report for the month ending 31 May 2017.

3 Background An update on Corporate projects expenditure to date, and forecast spend and carry forwards against budget.

3.1 Capital Project Expenditure to date and Full Year Forecast

The Capital Projects expenditure for Corporate as at 31 May 2017 is currently $3.7m less than budget. Corporate is forecasting to spend a total of $3.3m against the $8.4m budget, with a forecast carry forward of $5.7m to the next financial year.

The main variance to budget and forecast carry forward is for the Council Premises of $3.0m as this project is still in its preliminary phase.

Information Services projects also have some delays with the:

• Digitisation project, largely due to resourcing challenges, forecasting a carry forward of $1.3m

• One Council (OC) project, which is forecasting a carry forward of $0.6m due to delays in the availability of TechnologyOne’s CiA Property and Rating Module.

There was also an unbudgeted spend of $0.5m for the Herekino Street property, however this is being funded by the Property Reinvestment Reserve.

10


4 Significance and engagement The decisions or matters of this Agenda do not trigger the significance criteria outlined in Council’s Significance and Engagement Policy, and the public will be informed via agenda publication on the website.

5 Attachments 1. Corporate Capital Projects Report to 31 May 2017

11

1 of 1

ActualYTD

Revised Budget

YTD Variance

YTDFull Year Forecast

Full Year Revised Budget

Forecast (Underspent)/ Overspent

Forecast Carry

Forwards

Total (Underspent)/ Overspent

$000 $000 $000 $000 $000 $000 $000 $000

Support ServicesCouncil OfficesCouncil Premises 0 3,010 (3,010) 0 3,010 (3,010) 3,010 0Information Centre Upgrade 2 110 (108) 2 150 (148) 148 0

Council Offices Total 2 3,120 (3,118) 2 3,160 (3,158) 3,158 0

GovernanceCouncil Chambers Upgrades 0 0 0 0 0 0 0 0Councillor Mobile Devices 36 0 36 36 0 36 0 36

Governance Total 37 0 37 36 0 36 0 36

Human ResourcesCouncil Vehicle Replacements 65 142 (77) 243 204 39 0 39Office Furniture 16 0 16 15 0 15 0 15

Human Resources Total 81 142 (61) 258 204 54 0 54

Information ServicesAsset Management Software Upgrade 8 55 (47) 66 161 (95) 95 (0)Computer Tech for Building, Animal Control & Parking 0 0 0 0 129 (129) 129 (0)Customer Access - Online Services 0 0 0 0 213 (213) 213 0Decision Support System Development 0 115 (115) 0 215 (215) 215 0Digitisation of Records 171 1,314 (1,143) 262 1,545 (1,283) 1,283 (0)Electronic Agenda Management System 32 60 (28) 88 60 28 0 28IB Project 960 451 509 933 451 482 0 482InCompass 846 540 307 838 540 299 0 299LIDAR 0 0 0 125 0 125 0 125OC Project 170 518 (348) 200 1,581 (1,380) 596 (784)Software Application Integration 0 150 (150) 0 150 (150) 0 (150)

Information Services Total 2,187 3,202 (1,015) 2,513 5,045 (2,532) 2,532 0

PropertyProperty Purchases 524 0 524 524 0 524 0 524Water Services Building Renewals 0 20 (20) 0 20 (20) 20 0

Property Total 524 20 504 524 20 504 20 524

Support Services Total 2,830 6,484 (3,654) 3,332 8,428 (5,096) 5,710 614

Total 2,830 6,484 (3,654) 3,332 8,428 (5,096) 5,710 614

CORPORATE CAPITAL PROJECTS REPORTAS AT 31 May 2017

(Figures include both Operating and Capital Expenditure)

12A

TTAC

HM

ENT 1


4 Operational Report - Finance and Corporate - June 2017

Reporting officer: Alan Adcock (General Manager - Corporate/CFO) Date of meeting: 29 June 2017

1 Purpose To provide a brief overview of work across services that the Finance and Corporate Committee is responsible for.

2 Recommendation That the Finance and Corporate Committee notes the operational report for June 2017.

3 Background The purpose of the Finance and Corporate Committee is to oversee Council and CCOs financial management and performance, including operation of the administrative and internal support functions of Council.

This report provides a brief overview of some of the operational highlights for June 2017 and provides some further comment on future planned activities.

4 Significance and engagement The decisions or matters of this report do not trigger the significance criteria outlined in Council’s Significance and Engagement Policy, and the public will be informed via report publication.

5 Attachment Operational Report – Finance and Corporate – June 2017

13

1

Operational Report – Finance and Corporate – June 2017

Information Services Activities across the Information Services functions continue to progress as per last month’s report. Cyber intrusion affecting services worldwide was closely monitored by the team, however our new platform was not a direct target of the latest crypto locker virus attack and updated security patches ensured that any potential threat was very minimal for our organisation.

We continue to monitor threats and activity daily as part of normal activities, however when threats emerge on a global scale such as those seen during May, our team moves to a heightened level of awareness, monitoring activities and risk at a very granular level.

Across each of the teams, planning for the ongoing delivery of the ICT roadmap is continuing with several projects expected to kick off in early July. This is in addition to managing the IT logistics resulting from the recent restructure process.

IT Infrastructure

The infrastructure functions are continuing to operate within normal workload levels with nil disruption to our infrastructure platform services provided via the Cloud during the month of May. The key activities include:

• Preparation for the rollout of the new Canon Print services.

• Finalising the disposal of desktop assets replaced by Trilogy.

• Decommissioning and disposal of the WDC Server Room assets and surplusdesktop assets (Citrix thin clients).

• Support for various business operations projects.

• Continuous monitoring of intrusion attempts (computer viruses etc).

IT Applications

Workload across the month of May and continuing into June for the IT Applications team will continue to increase with the close of the fiscal year requiring the coordination of system tasks, along with the system changes required by the restructure. Activities include:

• Delivery of E-scribe – user acceptance testing is in progress, with a July go liveexpected.

• Preparing for the next upgrade of the Technology One Cloud platform.

• Implementing approved KETE changes.

14 ATTACHMENT 1

2

• Rolling out the upgraded Technology One Mobility system with the BuildingConsent team.

• Reviewing the automation of Accounts Payable processing.

• Providing IT support for upcoming end of fiscal year changes and activities.

Information and Records

Digitisation of our property files remains a key focus and continues to progress well and to plan. Business as usual activities are also continuing to operate within the normal service levels.

Other key activities include:

• Providing data services for legislative requests – for example boundary/warddata.

• Reviewing changes to the taxonomy (the way we group documents) in KETEand implementing any approved changes.

15

3

Finance

Financial Management

Finance has been completing final adjustments to the budget pack for the 2017/18 Annual Plan in readiness for adoption. Finance has also been working through its other deliverables for finalising the Annual Plan.

Planning continues to progress for the financial aspects of the LTP. Some of this involves adjustments to TechOne to reflect the impacts of the restructure.

Work required in the lead up for year end and this year’s Annual Report has been taking place.

The team assisted the external provider of an internal audit of discretionary expenditure.

Recent focus on payables processing has ensured that approved payments to suppliers are now being completed on time, which is important especially leading into year end.

The graph below shows the number of invoices staff process each year. A review of suppliers and procurement processes saw a significant decline in 2011/12 (with corresponding efficiency gains. However, increases in business activity is seeing invoice numbers rising again. We are currently introducing new technology, such as OCR scanning and automated invoice/PO matching, to drive further efficiencies and reduce staff time.

-

5,000

10,000

15,000

20,000

25,000

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

Number of Creditor Invoices processed annually

16

4

Revenue and Rates

Work towards finalising the rates ready for the strike in early July continues to progress including finalising the Funding Impact Statement.

The rates review continues to progress although has taken a back seat with year end and the Valuation Service Provider (VSP) implementation project, which sees Opteon take over from Quotable Value.

A focus of the VSP implementation project for handover on 1 August 2017 has been to work though and document the business processes to identify the major interfaces required. Good progress has been made with this. Progress has also been made with the contracts; the VSP contract has been signed and the District Valuation Roll (DVR) contract is being finalised.

We continue to see a high volume of property activity in the District, which flows onto settlement statements and database administration.

Procurement

We continue to support numerous other procurement processes across Council. A notable delivery is the roll out of new photocopiers across the organisation, with operating savings of more than $100k p.a. likely to be achieved.

Staff have also begun preparatory work for a planned review of the Procurement Policy.

$-

$2

$4

$6

$8

$10

$12

$14

$16

1-Jul 1-Aug 1-Sep 1-Oct 1-Nov 1-Dec 1-Jan 1-Feb 1-Mar 1-Apr 1-May 1-Jun

Mill

ions

Dollar Value of Creditor Invoices Processed Monthly

2013/14

2014/15

2015/16

2016/17

17

5

Communications The major activity for this period has been the development of all communications material for the early engagement on the 2018-2028 Long Term Plan. In addition to this, the team were heavily involved with development of marketing and promotional materials for the DHL New Zealand Lions Series, including city signage, the Fan Trail and the Late Lunch. The Matariki Festival booklet and Whanau Festival advertising material was also produced over the past month.

Media Relations

Council was approached for comment on the following topics in May:

• DHL New Zealand Lions series: o City activations – street flags, Fan Trail, Late Lunch, liquor licences o Visitor numbers / accommodation bookings, campervans, buses,

expected traffic o Ticket sales, financial benefit to the District.

• Rates Review.

• 3.9% rates increase for Whangarei – as foreshadowed in the LTP.

• Standard and Poors Credit Rating.

• Crash data on Otaika Road.

• Dog awareness training by Armourguard.

• Economic growth - Mayor’s Taskforce for Jobs.

• Slip on Rauhomaumau Road Tutukaka, storm damage.

• Six IPCC under 20 games for Whangarei next summer.

• Traffic issues - Kamo/Whau Valley area, Porowini Ave lane closure.

• J Day at William Fraser Memorial Park.

• Large banner hanging from slip on Parihaka.

• Clean-up of Saleyards Road fly-tipping.

• Frying Pan corner opening.

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6

People and Capability

Organisation Review

We are continuing to work through the processes required for the Organisation Review.

We have advertised a number of vacancies as a result of the changes. We have been fielding a lot of interest from high quality candidates in the advertised positions. Closing dates are spread over the next month.

Remuneration Review

Performance reviews for the year are being completed, alongside the annual remuneration review process.

Governance

Service Delivery Reviews

The legal services review was reported to the May Finance and Corporate Committee meeting. Progress is continuing to be made on the outstanding reviews, with all reviews scheduled to be completed prior to the August statutory timeframe.

An updated programme report will be presented to the June Audit and Risk Committee.

Official Information Requests

This month requests have been made for information about weathertight homes, elected member register of interests, elected member code of conduct complaints, development contributions, street names and noise and dog issues.

Annual Plan and Long Term Plans (LTP)

Annual Plan

Work is on track to ensure that the Annual Plan can be adopted at today’s (29 June) Council meeting. A public briefing was held on 20 June to review the preliminary document, prior to adoption. As with every year, Council is being asked to adopt the Annual Plan, the Fees and Charges, and strike the rates at the June Council meeting.

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7

Long Term Plan

The theme for the LTP engagement is ‘Whangarei: Here to where?’. The LTP website www.heretowhere.co.nz was launched on 6 June. The early engagement schedule was adjusted to add three more community meetings, with the first being held during the week starting 12 June. Scheduled LTP briefings are ongoing and asset managers are continuing their work on their Asset Management Plans which feed into the LTP process.

Democracy

Key activities in the last month have been:

Escribe agenda management system - We have now almost completed User Acceptance Testing. The Project Plan for the rollout of Escribe is on track for a Go Live towards the end of June, which will mean the system will be ready and online mid to late July.

Council hearings - Post July Democracy staff will become responsible for the administrative tasks associated with Hearings (District Plan and Resource Consent) and the District Licensing Committee. Planning for the handover of workflows and processes from the business has commenced.

Audit

The internal audit on discretionary expenditure against Council’s Sensitive Expenditure Policy was completed, with the final report received on 12 June. This will be reported to the June Audit and Risk Committee.

The elected member panel delegated to recruit the independent advisor to the Audit and Risk Committee have completed the recruitment process. The appointment will also be reported to the June Audit and Risk Committee.

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http://www.heretowhere.co.nz/

8

Maori Liaison and Development

Te Huinga Priorities

On 13 April Councillors completed the prioritisation of a list of 25 tangible priorities that would be negotiated with Te Huinga.

Te Huinga members on the other hand are currently completing their list that they wish to negotiate with Council.

It is hoped that both lists are available at the next Te Karearea Strategic Forum scheduled for the 4 July 2017 where a joint list of Primary and Secondary priorities will be established.

The agreed priority list will be considered at the formal LTP process and will provide both strategic partners with a roadmap moving forward in the 2017 – 2018 period.

Maori Protocols and the processes of Tikanga within Council

Departmental staff were extremely busy throughout the recent DH Lions Rugby Tour not only planning various events in collaboration with kaumatua and kuia from throughout the region but also participating in those activities.

These events included the powhiri/welcome for the Provincial Barbarians team and the handing back ceremony of the taiaha known as Te Hiku.

It is heartening to see that Council has the capability and capacity to front these events but due credit should go to organisations such as Te Kapehu Whetu and Whangarei Intermediate School who willingly participated in the programmes.

Te Paparahi o Te Raki – Te Tiriti Claims

Councillors and Council staff are warmly invited to attend the closing submissions for the Whangarei Taiwhenua (Region) which are being held at the Terenga Paraoa Marae during the week of 19 – 23 June 2017.

With the closing submissions being finalized throughout the six Ngapuhi taiwhenua or regions, the Tribunal will then sit ‘in committee’ to draft their final documentation outlining all the Crown breaches and their recommendations to the numerous parties that have been involved.

Myrtle Rust – A Tangata Whenua perspective

Alarm bells are ringing throughout Maori economic circles in New Zealand as the reports come in from both MPI and DOC.

The concern is largely associated with the potential loss of native species such as manuka which supports the honey industry. Other species that are being affected are taonga.

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9

• Myrtle rust is confirmed in New Zealand (in a Kerikeri plant nursery) on 3 May2017

• Myrtle rust was confirmed in New Plymouth on 17 May 2017• MPI confirms two additional positive finds in Taranaki and one other in Kerikeri• There are now 39 confirmed myrtle rust finds with 33 in Taranaki, 4 in Northland

(Kerikeri) and 2 in Waikato (Te Kuiti)• The affected sites include private (25), nursery (8), commercial (1), depot (1),

golf course(1), retailer (1), public land(1)• While most infections are on seedlings, more recent detections were in

established pohutukawa• Manawhenua are working with DOC to collect seeds of taonga species.• The aim is to conserve the biodiversity of native plants in New Zealand

Ture Whenua Bill 126 progression through the House

Currently the Bill still sits in the Committee of the Whole House. On completion of that stage, the bill will then move to its Third reading and finally the Royal assent is given.

There have been no significant changes to the Bill as it follows due process through the house. The primary focus of the bill remains the same

The new legislative powers and a dedicated Maori Land Service will enable Maori landowners to plan for their futures by removing barriers and addressing issues that for years have unfairly alienated owners from their land and restricted the development of Maori land.

The primary changes to the law emphasise the three pou or principles of:

• Taonga tuku iho• Mana motuhake• Whakawhanake

Taonga tuku iho will enhance protections to ensure that the remaining Maori land stays in Maori hands while manamotuhake will provide Maori land owners with greater autonomy to make decisions about their land and whakawhanake will provide better support to land owners to develop their land.

Districts such as the Whangaruru coast and the Pipiwai lands will be a test case for the new Act.

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5 Whangarei District Airport Statement of Intent - 2017/2018

Reporting officer: Mike Hibbert (Property Manager) Date of meeting: 29 June 2017

1 Purpose To adopt the Whangarei District Airport Statement of Intent (SOI) in accordance with Section 64 of the Local Government Act 2002.

2 Recommendation That the Finance and Corporate Committee:

a) Adopt the Statement of Intent 2017/2018 for the Whangarei District Airport.

3 Background The Draft Statement of Intent was approved by Council in February for appropriateness in delivery of services, management and governance of the Whangarei District Airport and obligations to meet Section 64 of the Local Government Act 2002.

The main point of the SOI included:

• Airport Compliance costs to implement new Civil Aviation Authority Safety ManagementSystem (SMS):

- Safety Management System (SMS) plan development and implementation.- provision for new signage and flood lighting associated with rule changes.- Possible crash/fire requirements.

In addition to the draft, the final SOI contains two additional performance measures to formalise future development of existing and new business development opportunities at the Airport.

These are detailed on page 3, f. Performance Measures:

vii. ‘To explore economic development opportunities in attracting new business and job creation.’

viii. ‘Explore existing service providers and encourage expansion and investment.’

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a. Financial/budget considerations

Attachment 1 details the Statement of Intent (SOI) and the financial summary for theWhangarei Airport over the next three-year period. No financial impacts that wouldaffect Council’s budgets have been identified.

A loss after depreciation for each of the years 2018/2019/2020 is highlighted.

The main contributing factors include:

• An increase in depreciation cost because of significant capital works taking placein 2015/16 and 2016/17

Although not included, additional revenue is being investigated:

- Car Parking and charges report will be presented to Council for consideration- Landing Fees schedule are under review with possible increases.

b. Risks

The Local Government Act 2002 required that a Statement of Intent is adopted no later than June each year. To not adopt the Statement of Intent would be in breach of legalrequirements.

4 Significance and Engagement Having considered the Significance and Engagement Policy this proposal or decision is not considered significant and the public will be informed via Agenda publication on the website.

5 Attachment 1. Whangarei District Airport - Statement of Intent 2017/18

24

Whangarei District Airport

Statement of Intent

For the Year Ending 30 June 2018

Prepared May 2017

25 ATTACHMENT 1

2 Whangarei District Airport

Whangarei District Airport

Statement of Intent For the Year Ending 30 June 2018

The following statement has been prepared in accordance with The Local Government Act 2002, (s9, Schedule Eight).

Introduction

The Whangarei District Airport (Airport), situated at Onerahi in Whangarei, is operated under a joint venture partnership agreement between the Whangarei District Council (Council) and the Crown, represented by the Ministry of Transport (MoT). The day-to-day operational activities of the Airport are managed under the aegis of Council by way of a management contract with a contractor (currently Northland Aviation Limited). The Airport acts as a gateway to the Whangarei District and Northland, and this aspect remains a focus of Council in providing an airport service of high quality and efficiency.

a. Objectives

i. That the Airport is operated as a fully serviceable District Airport for the use of visitors, residents and ratepayers of the Whangarei District;

ii. That the short and long term objectives of the Airport operation meet the needs of scheduled and non-scheduled aviation operators and their customers;

iii. That standards of safety are promoted and maintained, recognising New Zealand Civil Aviation Authority (CAA) and other safety and health requirements;

iv. That the Airport is operated with regard to appropriate environmental practices, legislation, and in recognition of the designation requirements in the District Plan.

b. Governance The airport is owned and operated under a joint venture agreement between the Whangarei District Council and the Crown. Council operates the airport as the Airport Authority under the Airport Authorities Act 1966 (s3). Day to day management is effected by way of a management contract with Northland Aviation Limited.

c. Nature and Scope of Activities to be Undertaken

i. The Airport Authority is engaged in operating the Airport in a cost effective and efficient manner to meet the objectives set out above, and in accordance with the terms of the Aerodrome Operating Certificate issued by the Civil Aviation Authority;

ii. Meet the Civil Aviation Authority certification requirements;

iii. The Authority will continue to seek opportunities to widen its revenue base in areas consistent with the Airport operation. Such activities include leasing land within the Airport precinct for aviation related activities and reviewing both existing charges and exploring other options.

26


d. The Ratio of Consolidation Shareholders’ Funds to Total Assets, and the Definitions of ThoseTerms

The airport is operated as a joint venture with the land being owned 100% by the Crown, buildings andlighting being owned 100% by Council, and runways, plant and equity being 50% owned by the Crown and50% by Council. The ratio of the joint venture partners’ funds to total assets is calculated as at 30 June2016 as 97.6%.

e. Financial Statements

See Appendix A.

f. Performance Measures

i. To operate to financial budgets;

ii. To meet or exceed Airport Certification Standards as laid down by the Civil Aviation

Authority for the Airport and reported by random audit;

iii. To conduct a survey of airport users and determine their views on Airport facilities and

future facility developments.

iv. To implement the new Civil Aviation Authority requirement for a Safety Management

System.

v. Engage third party quality auditor to report each June.

vi. To implement necessary changes to Health and Safety policy/procedures to address any

changes to legislation.

vii. To explore economic development opportunities in attracting new business and job

creation.

viii. Explore existing service providers and encourage expansion and investment

g. Distribution of Accumulated Profits and Capital ReservesThere is to be no distribution of accumulated profits or capital reserves to Joint Venture Partners

during the year.

h. Information to be Provided to Partners During the Year

i. Monthly report on financial position including variance reporting on revenue and

expenditure comparing actual figures with estimated figures, and statement of monthly

financial position to be provided to the Airport Authority Board (via Whangarei District

Council Property Manager/Finance Team);

ii. Management to report via email to Council staff on notable events and seek approval prior

to any extraordinary expenditure;

27


iii. Annual financial estimates, for operational activities and capital expenditure, to the Joint

Venture Partners;

iv. Report all findings, documenting all suggestions, no later than 30 June of each operating year for the purpose of improving customer satisfaction;

v. Annual Statement of Intent to the Airport Authority Board;

vi. Annual financial statements, including statement of accounting policies; statement of

balance sheet; statement of income; statement of movements in equity; statement of cash

flows; notes to the financial statements and Auditors’ report to be provided to Joint Venture

Partners together with Auditors’ management letter;

vii. Annual statement of performance, based upon performance measures to be provided to

Joint Venture Partners;

viii. Half yearly report including financial statements (as detailed in (v) above) and financial forecast for the balance of the year to be provided to the Joint Venture Partners.

i. Statement of Procedures for Acquisition of Shares by Partners in Other Entities

Partners will not acquire shares in any other organisation related to the Airport operation without

the prior written agreement of both Joint Venture Partners.

j. Activities for Which the Board Seeks Compensation From any Local Authority Council has provision in its capital estimates for the expenditure of funds on non-aviation related

items at the Airport as a community contribution to amenities at the airport and occasional capital

sum investment in the assets owned by Council at the airport.

k. Commercial Value of the Joint Venture Partners’ Investment in the Group and the Manner in Which, and the Times at Which, That Value is to be Reassessed

The commercial value of the partners’ investment is set out in the statement of accounting policies

included in this statement. It is noted that the land is a restricted asset and revaluation on a

commercial basis would be misleading. The financial statements for the year ended 30 June 2016

record the total equity in the partnership of $5,039,212 (2015 $4,626,296).

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Statement of Accounting Policies

29

30

PROSPECTIVE STATEMENT OF COMPREHENSIVE INCOME BUDGET BUDGET BUDGET

30 June 2018 30 June 2019 30 June 2020 Income Landing fees 345,000 350,000 360,000 Sundry income advertising 8,000 8,000 8,000 Other Recoveries 6,000 6,000 6,000 Operational Recoveries 22,000 22,000 22,000 Rent received 145,000 150,000 150,000 Interest received 10,000 10,000 10,000 Carpark Income - - -

Total Income 536,000 546,000 556,000

Less Expenses Airfield Expenses Drainage 5,000 5,000 5,000 Fencing 5,000 1,000 1,000 Grounds R&M 30,000 30,000 30,000 Runway R&M 10,000 10,000 10,000 Lighting R&M 10,000 10,000 10,000 Other R&M 20,500 15,100 15,600

80,500 71,100 71,600 Terminal Expenses Insurance 12,500 13,000 13,000 Cleaning 32,000 35,000 35,000 Advertising 3,000 3,000 3,000 Rates 19,187 19,902 20,646 Electricity 32,000 32,000 32,000 Weather station 3,500 4,000 7,000 Security 8,000 8,000 8,000 Other expenses 10,200 10,200 10,200

120,387 125,102 128,846 Administration Expenses Management Fee 105,000 105,000 105,000 Telephone 1,600 1,600 1,600 Audit fees 20,000 20,000 20,000 Accounting Fees 12,000 13,000 13,000 Certification 10,000 2,000 2,000 Conferences 4,500 4,500 4,500 Other Professional fees 25,500 15,500 15,500

178,600 161,600 161,600

Total Expenses before depreciation 379,487 357,802 362,046

Net Surplus (Loss) before depreciation 156,513 188,198 193,954

Depreciation 184,515 208,205 212,370 Net Surplus (Loss) before tax - 28,002 - 20,008 - 18,416

31

30 June 2018 30 June 2019 30 June 2020 Capital Expenditure Crash fire 200,000 Electric gate 12,000 Lighting 20,000 Other 25,500

Total capital expenditure 57,500 200,000 -

PROSPECTIVE STATEMENT OF MOVEMENTS IN EQUITY 30 June 2018 30 June 2019 30 June 2020

Opening Equity as at 1 July 5,043,061 5,015,059 4,995,052

Plus Profit (Loss) for the year - 28,002 - 20,008 - 18,416

Total increase/(decrease) in equity - 28,002 - 20,008 - 18,416

Closing Equity as at 30 June 5,015,059 4,995,052 4,976,636

PROSPECTIVE STATEMENT OF FINANCIAL POSITION 30 June 2018 30 June 2019 30 June 2020

Equity 5,015,059 4,995,052 4,976,636

Total Equity 5,015,059 4,995,052 4,976,636

Current Assets Cash and Cash equivalents 668,101 656,299 850,253 Trade and other receivables 81,200 81,200 81,200

749,301 737,499 931,452

Current Liabilities Trade and other payables and accruals 126,537 126,537 126,537

Working Capital 622,763 610,961 804,915

Non Current Assets Property plant and equipment 4,392,296 4,384,090 4,171,721

Long Term Liability Deferred income tax liability - - -

Total Net Assets 5,015,059 4,995,052 4,976,636

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6 Northland Regional Landfill Limited Partnership Statement of Intent - 2017/2018

Reporting officer: Andrew Carvell (Waste and Drainage Manager) Date of meeting: 29 June 2017

1 Purpose

To receive and agree with the Northland Regional Landfill Statement of Intent in accordance with Section 64 of the Local Government Act 2002.

2 Recommendation

That the Finance and Corporate Committee; a) Agrees with the Statement of Intent 2017/2018 for the Northland Regional Landfill Limited

Partnership.

3 Background

Northland Regional Landfill Limited Partnership (NRLLP) is a For Profit Entity operating as a best practice business financially, environmentally, socially and culturally.

NRLLP’s Draft Statement of Intent was presented at the Finance Committee in February 2017. The Statement of Intent (SOI) has been reviewed for appropriateness in relation to the delivery of services, management and governance of NRLLP and obligations to meet Section 64, Schedule 8, clause 9 (contents of the SOI) under the Local Government Act 2002.

4 Discussion 4.1 SOI Objectives and Targets for 2017/18

The Final SOI is attached. Although NRLLP’s long term objectives have not changed, specific objectives for 2017/18 are:

a. To maintain processes to divert green waste from the waste stream. b. Where financially viable, to continue recycling and resource recovery programmes. c. To continue to investigate opportunities to attract waste from throughout the region

and northern Auckland to increase profitability.

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NRLLP’s SOI includes ‘high level’ performance targets. More detailed and specific targets are set and monitored within the entity through its annual Business Plan. These are not included in the SOI for business confidentiality reasons.

Performance is reported to Council bi-annually. The “high level” targets are:

a. To operate at a profit.b. To open both Puwera Landfill and Re:Sort facilities for a minimum of 40 hours each

week.c. To ensure that its principal contractor employed to run Puwera and Re:Sort

maintains ACC Accreditation standards for its Health and Safety ManagementSystem.

d. To ensure no serious harm incidents occur at all operational sites owned by NRLLP.e. To ensure Re:Sort facilitates a minimum of 40% diversion away from landfill of all

material being handled through the site.f. To maintain a compaction of 0.7 tonnes of placed refuse per cubic meter of airspace

used at Puwera landfill.g. To ensure six months landfill capacity is maintained at all times.h. To achieve 70% landfill gas destruction.

4.2 Financial/budget considerations Waste management is a highly competitive business and therefore commercially sensitive information including financial statements are not included in the SOI.

NRLLP intends to fund increases in capacity and improvements to facilities and services using cashflow generated rather than requiring further funding injection from the Partners. NRLLP’s Shareholder/ Limited Partnership Agreement and Accounting Policies are included in the appendices of the SOI.

4.3 Risks The Local Government Act 2002 required that a Statement of Intent is adopted no later than June each year. To not adopt the Statement of Intent would be in breach of legal requirements.

5 Significance and Engagement Having considered the Significance and Engagement Policy this proposal or decision is not considered significant and the public will be informed via Agenda publication on the website.

6 Attachment 1. Northland Regional Landfill Limited Partnership - Statement of Intent 2017/18

34

NORTHLAND REGIONAL

LANDFILL LIMITED PARTNERSHIP

STATEMENT OF INTENT 2017/2018

35 ATTACHMENT 1

NRLLP – Statement of Intent 2017-18- 1 -

NORTHLAND REGIONAL LANDFILL LIMITED

PARTNERSHIP Statement of Intent

For the Year Ending 30 June 2018

The following statement has been prepared in accordance with The Local Government Act

2002, (s9, Schedule Eight).

1. Introduction

The Northland Regional Landfill Limited Partnership (NRLLP) comprises two limited partners;

Whangarei District Council (WDC) and Northland Waste Limited (NWL). The General Partner

is Whangarei Waste Limited (WWL). The operation is governed by a joint venture agreement

under which neither party has absolute control of the organisation but is deemed a Council

Controlled Organisation (CCTO) by virtue of the Local Government Act (LGA).

The main activity of the partnership is to operate the Puwera Landfill and provide waste

disposal facilities in the Whangarei District.

NRLLP is a For Profit Entity operating as a best practice business financially, environmentally,

socially and culturally.

36

NRLLP – Statement of Intent 2017-18

- 2 -

2. Background

Following a competitive process seeking requests for proposals, NRLLP was

formed on 2 July 2009 and purchased the consented Puwera Landfill and Resort

RRP from WDC.

The design and build of the Landfill was undertaken by Quay Contracting Limited

(QCL). Subsequent management and development of facilities is undertaken by

QCL

3. Associated Interests of Partners

WDC domestic rubbish collections and rural transfer stations waste contribute to

Puwera waste streams.

NWL and related companies collection operations acquire waste from throughout

the Whangarei, Far North and North Auckland which contribute to Puwera waste

streams.

QCL is a subsidiary of NWL.

4. Objectives

4.1 The long term objectives of the partnership are set out in the

partnership agreement and are included in Appendix A of this

document.

4.2 Specific Objectives for 2017/2018:

a. Maintain processes to divert green waste from the waste stream.

b. Where financially viable, continue recycling and resource recovery

programmes

c. Continue to investigate opportunities to attract waste from

throughout the region and northern Auckland area to increase

profitability.

5. Governance

The Northland Regional Landfill Limited Liability Partnership is a Council Controlled Trading

Organisation as defined by Section 6 of the Local Government Act 2002 and is a 50/50

37


- 3 -

partnership between the limited partners, WDC and NWL. The partnership is constituted under

the Limited Partnerships Act 2008 and is governed by the limited partnership agreement dated

30 June 2009 and which may be amended from time to time by agreement between the

Partners.

The management of the partnership is undertaken by the general partner (WWL), a company

registered under the Companies Act 1993 which is jointly owned by WDC (Group A shares) and

NWL (Group B shares). This company is governed by four directors, two group A directors and

two Group B directors appointed by the respective shareholders. No remuneration is paid by

the company to the directors, the shareholders will pay the directors appointed by them as

they see fit. A quorum consists of one Group A director and one Group B director.

6. Nature and Scope of Activities to be Undertaken

The scope of activities of the Limited Partnership will be:

a. to own and operate disposal facilities including haulage of conforming

waste to the Puwera Landfill;

b. to undertake post-closure responsibilities including capping, contouring

and monitoring of the Puwera Landfill;

c. to own, operate and manage the ReSort RRP, subject to the continuance

of the Paper Reclaim Lease for the duration of that lease;

d. to conduct other waste collection and disposal activities as the Parties

agree shall be dealt with by the Limited Partnership from time to time;

e. to promote and conduct recycling and waste minimisation activities

within the operating area and investigate and develop further

minimisation opportunities, consistent with the organisations profit

objectives.

f. to investigate and, where appropriate, promote and/or undertake clean

fill operations in the defined operating area.

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- 4 -

7. Performance Measurement and Reporting

The following information will be available to WDC based on an annual balance of

30 June.

7.1 Annual Report

Within three months after the end of each financial year, the Board

shall deliver to the WDC, audited financial statements in respect of

that financial year, containing the following information:

a. Audited financial statements for that financial year consisting of;

i. Statement of Financial Position;

ii. Statement of Comprehensive Income;

iii. Statement of Performance against Financial and Non-

Financial Performance Targets;

iv. Auditor’s report

v. such other statements as may be necessary to fairly reflect

the financial position of the Company and its subsidiaries,

the resources available to the Company and its subsidiaries

and the financial results of the operations of the Company

and its subsidiaries.

7.2 Financial Performance Targets

Indicative Financial Performance Targets:

Operate at a Profit

7.3 Non-Financial Performance Targets

Indicative Non-Financial Performance Targets:

To open both the Puwera Landfill and Re-Sort facilities for a minimum of 40 hours each week.

NRLLP to ensure that its principal contractor employed to run Puwera and Resort maintains ACC Accreditation standards for its Health and Safety Management System.

Ensure no serious harm incidents occur at all operational sites owned by NRLLP

39


- 5 -

Ensure Resort facilitates a minimum of 40% diversion away from landfill of all material being handled through the site

Maintain compaction of 0.7 tonnes of placed refuse per cubic metre of airspace used.

Ensure 6 months landfill capacity is maintained at all times

Achieve a minimum of 70% landfill gas destruction

8. The Ratio of Consolidated Partners Funds to Total Assets, and the Definitions

of Those Terms

At the date of formation the ratio of partners’ funds to total assets was 23% ($3M

equity, $10M liabilities and $13M assets). The $10m liability was vendor finance

from WDC for the acquisition of the properties. Partners’ funds means capital

contribution from partners. Total assets means the book value of all assets of the

partnership.

At 30 June 2016, net equity (partners funds) is $15.34 million, liabilities $9.266

million and assets $24.606 million. The ratio of partners funds to total assets was

62%.

9. Statement of Accounting Policies

As outlined in Appendix B.

10. Financial Statements

Due to the commercial sensitivity of the business, prospective financial statements are not

included with the Statement of Intent.

11. Distribution of Accumulated Profits and Revaluation Reserves

All profits are allocated to Partners Current Accounts effective at balance date.

Unrealised Capital Gains are held in Revaluation Reserve and classified as Equity.

40


- 6 -

12. Information to be Provided to Partners During the Year

i. Annual financial estimates, for operational activities and capital expenditure, to the

Limited Partners;

ii. Annual Statement of Intent to the WDC Finance and Support Committee;

iii. Half Year Financial Statements (unaudited), including Statement of Financial

Position; Statement of Financial Performance; Statement of Movements in Equity

iv. Half Year progress against Statement of Performance, based upon Performance

Measures to be provided to Limited Partners

v. Annual Financial Statements, including Statement of Accounting Policies; Statement

of Financial Position; Statement of Financial Performance; Statement of Movements

in Equity; Statement of Cash flows; Reconciliation of Surplus after Taxation to Cash

flow from Operating Activities; Notes to the Financial statements and Auditors’

Report to be provided to Limited Partners together with Auditors’ Management

Letter;

vi. Annual Statement of Performance, based upon Performance Measures to be

provided to Limited Partners.

13. Statement of Procedures for Acquisition of Shares by Partners in Other

Entities

Partners will not acquire shares in any other similar organisation without the prior written

agreement of both Joint Venture Partners.

14. Activities for Which the Board Seeks Compensation From any Local Authority

It is expected there will be no activities for which the board will seek compensation.

15. Commercial Value of the Joint Venture Partners’ Investment in the Group

and the Manner in Which, and the times at Which, That Value is to be

Reassessed

As at 30 June 2016 net equity (partner’s funds) amounted to $15.340 million.

The annual accounts will show each Partners investment at book values. It is not proposed to

seek an independent assessment of the commercial value of the entity.

16. Treaty of Waitangi Statement of Commitment

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- 7 -

Northland Regional Landfill Limited Partnership as a WDC CCTO, understands local body

obligations to the Treaty of Waitangi and expects that the Treaty of Waitangi will be honoured.

Appendix A

Extract from WWL NRLLP Shareholders/Limited Partnership Agreement dated 30 June 2009

Long term Objectives for the Limited Partnership

The objectives of the Limited Partnership are to:

(a) Develop and operate the Puwera Landfill so that it is capable of

serving the Waste disposal needs of the Shareholders and the

Partners to the Limited Partnership and the Northland Region and

providing competitive Waste disposal services to third party Waste

operators and other local authorities within the Operating Area in

an environmentally sound and economically efficient manner and in

accordance with all relevant resource consents.

(b) Operate as a successful business including achieving sufficient

earnings to support the continued operations of the Limited

Partnership and to achieve an appropriate risk adjusted return on

investment;

(c) Manage the Waste stream so enough Waste is secured to ensure

that the Landfill is operated to its commercial advantage taking into

account the benefits of maximising the life of the Landfill and

financial return to the Shareholders and the Partners to the Limited

Partnership .

(d) Ensure construction and operation of the Landfill is undertaken in

such a manner as to maximise the life of the Landfill, both for

Stage One of the Landfill as contemplated by the existing resource

consents and for any future stages.

(e) Operate the ReSort:RRP as a transfer station to serve the needs of

the Whangarei District in an environmentally sound and

economically efficient manner and in so doing ensure that current

levels of service, including services such as Hazardous Wastes

collection and vegetation separation, are maintained with

operations to be undertaken using the best practicable option.

(f) Promote Waste Minimisation where it is financially viable to do so.

(g) Be responsive to the market demand for its services in terms of the

criteria of quantity, quality and price.

(h) Develop business plans consistent with WDC’s Waste Management

and Minimisation Plan and all relevant statutory and regulatory

obligations.

(i) Behave in an environmentally sustainable manner by promoting

and maintaining the standards of environmental protection applied

by the RMA and to minimise the impact of its activities on the

environment.

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(j) Comply with relevant provisions of the LGA applying to a CCTO.

(k) Promote and maintain standards of health and safety in accordance

with all applicable statutes and regulations, and including best

practice.

(l) Act as a good employer and effectively manage staff.

(m) Commit to consult with and be sensitive to the concerns of the

Landfill and ReSort:RRP host communities.

(n) Act as a good corporate citizen with regard to its business dealings

and relations with key stakeholders and tangata whenua and the

Northland community.

(o) Be customer focussed and ensure good customer relationships and

service provision.

(p) Enter into and manage procurement contracts to deliver the

Limited Partnership’s services.

(q) Maximise long run economic and environmental benefits to key

stakeholders.

Appendix B 1 Statement of accounting policies

Reporting Entity Northland Regional Landfill Limited Liability Partnership (the Partnership) is a joint venture

between Whangarei District Council and Northland Waste Limited as limited partners and Whangarei Waste Limited as a general partner.

The Partnership is domiciled in New Zealand and is a council-controlled trading organisation as defined under section 6 of the Local Government Act 2002, by virtue of the Council’s right

to appoint 50% of the directors to the Board and the corresponding voting rights controlled by Council.

The primary objective of the Partnership is to provide waste facilities in the Whangarei

District.

Basis of preparation Statement of compliance

The financial statements of the Partnership have been prepared in accordance with the

requirements of the Local Government Act 2002, which includes the requirement to comply with generally accepted accounting practice in New Zealand (NZ GAAP).

The financial statements comply with NZ IFRS, and other applicable Financial Reporting

Standards, as appropriate for profit orientated entities.

Measurement base

The financial statements have been prepared on a historical cost basis.

Functional and presentation currency

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The financial statements are presented in New Zealand dollars and all values are rounded to

the nearest thousand dollar. The functional currency of the Partnership is New Zealand dollars (NZ$).

Changes in accounting policies

Gains and Losses on revaluation of Investments are now taken to Revaluation Reserves

rather than Comprehensive Income.

Early adopted amendments and revisions to standards The following amendments and revision to standards have been early adopted:

NZ IFRS 7 Financial Instruments: Disclosures – The effect of early adopting these

amendments is the following information is no longer disclosed:

the carrying amount of financial assets that would otherwise be past due or impaired

whose terms have been renegotiated; and

the maximum exposure to credit risk by class of financial instrument if the maximum

credit risk exposure is best represented by their carrying amount.

NZ IAS 24 Related Party Disclosures (Revised 2009) – The early adoption of NZ IAS 24 has

had no effect on related party disclosures.

SIGNIFICANT ACCOUNTING POLICIES

Revenue

Revenue is measured at the fair value of consideration received. Grants Grants received are recognised as revenue when they become receivable unless there is an

obligation to return the funds if conditions of the grant are not met. If there is such an

obligation, the grants are initially recorded as grants received in advance and recognised as revenue when

conditions of the grant are satisfied. Vested assets Where a physical asset is gifted to or vested in the Partnership for nil or nominal

consideration, the fair value of the asset received is recognised as income. Such income is

recognised when control over the asset is obtained.

Interest income Interest income is recognised using the effective interest method.

Borrowing costs All borrowing costs are recognised as an expense in the financial year in which they are

incurred.

Leases

Finance leases A finance lease is a lease that transfers to the lessee substantially all the risks and rewards

incidental to ownership of an asset, whether or not title is eventually transferred.

At the commencement of the lease term, finance leases are recognised as assets and liabilities in the statement of financial position at the lower of the fair value of the leased item

or the present value of the minimum lease payments.

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The finance charge is charged to the surplus or deficit over the lease period so as to produce

a constant periodic rate of interest on the remaining balance of the liability. The amount recognised as an asset is depreciated over its useful life. If there is no certainty

as to whether the Partnership will obtain ownership at the end of the lease term, the asset is fully depreciated over the shorter of the lease term and its useful life.

Operating leases An operating lease is a lease that does not transfer substantially all the risks and rewards

incidental to ownership of an asset. Lease payments under an operating lease are recognised as an expense on a straightline basis over the lease term.

Lease incentives received are recognised in the surplus or deficit over the lease term as an

integral part of the total lease expense.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

Debtors and other receivables Debtor and other receivables are initially measured at fair, less any provision for impairment.

A provision for impairment of a receivable is established when there is objective evidence that

the Partnership will not be able to collect amounts due according to the original terms of the receivable. Significant financial difficulties of the debtor, probability that the debtor will enter

into bankruptcy, receivership or liquidation, and default in payments are considered indicators

that the debt is impaired. The amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted using the

original effective interest rate. The carrying amount of an impaired receivable is reduced through the use of an allowance account, and the amount of the loss is recognised in the

surplus or deficit. When the receivable is uncollectible, it is written-off against the allowance

account for receivables.

Overdue receivables that have been renegotiated are reclassified as current (that is, not past due).

Investments Investments in bank deposits are initially measured at fair value plus transaction costs (if

any).

After initial recognition, investments in bank deposits are measured at amortised cost using the effective interest rate, less any provision for impairment. The indicators and the

accounting for impairment of bank deposits is the same as explained for debtors and other

receivables.

Carbon Credits held for future surrender under the Emissions Trading Scheme are valued at indicative market value at Year End and the increase or decrease taken to Revaluation

Reserve. Any units surrendered in the following year are taken to the Statement of

Comprehensive Income at the re-valued amount. Revaluation Reserves associated with surrendered units are released to Partner Current Accounts.

Inventories

Inventories held for distribution in the provision of services that are not supplied on a commercial basis are measured at cost (using the FIFO method), adjusted, when applicable,

for any loss of service potential. The loss of service potential of inventory held for distribution

is determined on the basis of obsolescence. Where inventories are acquired at no cost or for nominal consideration, the cost is the current replacement cost at the date of acquisition.

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Inventories held for use in the provision of goods and services on a commercial basis are

valued at the lower of cost (using the FIFO method) and net realisable value.

The amount of any write-down for the loss of service potential or from cost to net realisable value is recognised in the surplus or deficit in the year of the write-down.

Property, plant, and equipment Property, plant, and equipment is shown at cost, less accumulated depreciation and

impairment losses. Additions The cost of an item of property, plant, and equipment is recognised as an asset only when it

is probable that service potential associated with the item will flow to the Partnership and the

cost of the item can be measured reliably. Disposals Gains and losses on disposals are determined by comparing the disposal proceeds with the

carrying amount of the asset. Gains and losses on disposals are presented net in the surplus

or deficit. Subsequent costs Costs incurred subsequent to initial acquisition are capitalised only when it is probable that

service potential associated with the item will flow to the Partnership and the cost of the item can be measured reliably.

The costs of day-to-day servicing of property, plant, and equipment are recognised as an expense as they are incurred.

Depreciation

Depreciation is provided on a straight-line basis on all property, plant, and equipment at rates

that will write off the cost of the assets to their estimated residual values over their useful lives. The useful lives and associated depreciation rates of major classes of assets have been

estimated as follows:

Land (other than landfill) indefinite (0%)

Building and improvements 40 to 100 years (2% to 36%)

The residual value and useful life of an asset are reviewed, and adjusted if applicable, at each financial year end.

Intangible assets

The current resource consents expire in 2038 but consent extensions are expected and amortisations are calculated on the expected closure date calculated by reference to latest fill

rates.

Landfill consents Landfill consents are capitalised on the basis of the amount paid to the Council for resource

consents to construct a landfill at Puwera.

Aftercare Costs The Partnership has an obligation to monitor and manage risks of the landfill post closure.

The aftercare period is estimated at 30 years and the estimated costs have been capitalised

as an intangible asset after applying an inflation factor and discounting to present value.

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Impairment of property, plant, and equipment and intangible assets

Property, plant, and equipment and intangible assets are reviewed for indicators of impairment as at each balance date. When there is an indicator of impairment, the asset’s

recoverable amount is estimated. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

Value in use is depreciated replacement cost for an asset where the service potential of the asset is not primarily dependent on the asset’s ability to generate net cash inflows and where

the Partnership would, if deprived of the asset, replace its remaining service potential.

If an asset’s carrying amount exceeds its recoverable amount, the asset is impaired and the carrying amount is written-down to the recoverable amount. The impairment loss is

recognised in the surplus or deficit.

Creditors and other payables

Creditors and other payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest method.

Borrowings Borrowings are initially recognised at their fair value plus transaction costs, if any. After initial

recognition, all borrowings are measured at amortised cost using the effective interest method.

Borrowings are classified as current liabilities unless the Partnership has an unconditional

right to defer settlement of the liability for at least 12 months after balance date or if the

borrowings are not expected to be settled within 12 months of balance date.

Provisions A provision is recognised for future expenditure of uncertain amount or timing when there is

a present obligation (either legal or constructive) as a result of a past event, it is probable

that expenditure will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditure expected to be required to settle the obligation using a pre-tax discount rate that reflects current market assessments of

the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised in “finance costs”.

Goods and services tax

All items in the financial statements are presented exclusive of goods and service tax (GST),

except for receivables and payables, which are presented on a GST-inclusive basis. Where GST is not recoverable as input tax, then it is recognised as part of the related asset or

expense. The net amount of GST recoverable from, or payable to, the IRD is included as part of

receivables or payables in the statement of financial position.

The net GST paid to, or received from the IRD, including the GST relating to investing and

financing activities, is classified as a net operating cash flow in the statement of cash flows. Commitments and contingencies are disclosed exclusive of GST.

Income tax

The Partnership incurs no taxation expense or tax liability. Taxable Surplus or Loss is borne by each partner according to profit share arrangements.

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Any withholding tax or imputation credits arising from investment income are taken to the

respective Partner Current Accounts.

Equity Equity is measured as capital contributions of the Partners plus Revaluation Reserves and

Partner Current Accounts less Distributions that have been authorised prior to Balance Date

Segment reporting

The Partnership operates in one business segment, waste disposal, and in one geographical segment, Northland.

Critical accounting estimates and assumptions

In preparing these financial statements, the Partnership has made estimates and assumptions

concerning the future.

These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other

factors, including expectations of future events that are believed to be reasonable under the

circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial

year are discussed below: Estimating useful lives and residual values of property, plant, and equipment At each balance date, the Partnership reviews the useful lives and residual values of its

property, plant, and equipment. Assessing the appropriateness of useful life and residual

value estimates requires the Partnership to consider a number of factors such as the physical condition of the asset, expected period of use of the asset by the Partnership, and expected

disposal proceeds from the future sale of the asset.

An incorrect estimate of the useful life or residual value will affect the depreciable amount of

an asset, therefore affecting the depreciation expense recognised in the surplus or deficit and the asset’s carrying amount. The Partnership minimises the risk of this estimation uncertainty

by:

• physical inspection of assets;

• asset replacement programs; • review of second hand market prices for similar assets; and

• analysis of prior asset sales.

The Partnership has not made significant changes to past assumptions concerning useful lives and residual values.

Critical judgements in applying the Partnership’s accounting policies Judgement is exercised when recognising grant income to determine if conditions of the grant

contract have been satisfied. This judgement will be based on the facts and circumstances that are evident for each grant contract.

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7 Delegations Review Reporting officer: Jason Marris (Governance Manager) Date of meeting: 29 June 2017

1 Purpose

To update the Committee on the review of the Whangarei District Council delegations.

2 Recommendation/s

That the Finance and Corporate Committee notes the update on the review of the Whangarei District Council Delegations.

3 Background To ensure clarity about who are delegated to make decisions, and to provide transparency to the public, Council adopts a delegations manual. Our current manual was adopted by Council in 2014, after a substantial review. Built in to this review was the requirement to review the delegations manual each triennium. It is now time to review the manual.

The general approach to this review was signalled to the Finance and Corporate Committee via the operational report at the May committee meeting. It is timely to provide the Committee with this update on the approach to the review.

4 Discussion A cross organisational project team has been established to undertake the review. This involves:

Updating the current register to reflect legislative change Reviewing other councils’ approach to delegations to establish best practice Amending our register to reflect the above, and the approach from Council Implementing an internal electronic tool to ensure ease of use, access and

transparency for staff

We are taking a phased approach to the review.

Phase 1

Phase 1 is mapping the current staff delegations across to the new organisation structure which takes effect on 1 July. The delegations manual allows the Chief Executive to authorise amendments to change position titles, and also any change in position due to an

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organisational restructure. This work will be completed by 1 July 2017 as an intermediate step to ensure that the business of Council can continue.

Phase 2

The research undertaken to date on other councils’ delegations as part of the project, has identified best practice for the management of Council’s delegations. We are investigating changing the format of our register and policy so that the delegations from Council to the Chief Executive, and then from the Chief Executive to staff are more clearly defined. The ability for the Chief Executive to administer the delegations efficiently and effectively will be improved through this process. Clarity around what has been delegated will also be improved.

Phase 2 of the project will be to discuss this approach with Council, at a public briefing, to obtain feedback and direction. This will be held in July or August.

Phase 3

Phase 3 of this project will be to present an updated delegation register and approach to council for adoption. Following adoption, we will continue to work with staff to educate and update them on the manual, and its importance.

5 Significance and engagement The decisions or matters of this report do not trigger the significance criteria outlined in Council’s Significance and Engagement Policy, and the public will be informed via report publication on the website.

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Documents

Finance and Corporate Committee...2017/06/29 · Finance and Corporate Committee Notice of Meeting A meeting of the Finance and Corporate Committee will be held in the Council Chamber,