AGENDA - Buller Districtbullerdc.govt.nz/.../FA-Agenda-Mar_18-PUBLIC-COPY.pdf · - Manager...

AGENDA:Meeting of theFINANCE & AUDIT COMMITTEE

Wednesday 14 March 2018commencing at 5:00pm

at:Clocktower Chambers, Palmerston Street, Westport

Finance & Audit Committee Members:• His Worship the Mayor Garry Howard• Cr J Cleine• Cr D Hawes• Cr S Roche (Chair)• Cr R Nahr• Cr P Rutherford

Public Copy

Terms of Reference

Finance & Audit Committee______________________________________________________________________

PurposeThe Finance and Audit Committee will monitor and assess the following:• The correct level of service is being delivered within the approved financial parameters.• External financial funding is on track to be received within the budgeted financial year.• Council’s level of borrowing is financially sustainable and intergenerational equity requirements are achieved.• Council’s investments are growing as predicted and invested as per Treasury Management Policy and that all

breaches of policy are reported and approved by Council.• Rates are being collected and that debt recovery is under control.• Monitoring of Council’s fiscal prudence indicators.• Both external and internal audit requirements are met.

Delegated Powers• The Finance and Audit Committee has authority to undertake the following functions and to make recommendations

to Council as required:

Financial and Performance Monitoring • Monitoring financial performance to budgets• Monitoring service level performance to key performance indicators • Monitoring of Rates and General Debt collection

External Reporting and Accountability• Enquire of external auditors for any information that affects the quality and clarity of the Council’s financial statements,

and assess whether appropriate action has been taken by management.• Satisfy itself that the financial statements are supported by appropriate management signoff on the statements

and on the adequacy of the systems of internal control (ie letters of representation), and recommend signing of the financial statements by the Chief Executive and Mayor and adoption by Council.

External Audit• Confirm the terms of the appointment and engagement, including the nature and scope of the audit, timetable and

fees, with the external auditor.• Receive the external audit report(s) and review action to be taken by management on significant issues and audit

recommendations raised• Enquire of management and the independent auditor about significant business, political, financial and control risks

or exposure to such risks. Internal Audit• Review the internal audit coverage and annual work plans.

Frequency of Meetings Monthly

Reporting ToCouncil

Reporting TimelineMonthly dashboard report

MembershipChair:• Sharon Roche

Members:• Garry Howard• Robyn Nahr• Phil Rutherford• Dave Hawes• Jamie Cleine

FINANCE & AUDIT COMMITTEE MEETING14 MARCH 2018

INDEX

ITEM: PAGE:

Apologies

1. Members Interest .............................................................................................1

2. Confirmation of Minutes ...................................................................................2

3. Action Point List ...............................................................................................7

4. Financial Performance ....................................................................................8

5. Investments and Borrowings Report ..............................................................17

6. Capital Income and Capital Expenditure Report ...........................................23

7. Debt Recovery Report ...................................................................................29

8. Audit Management Action Points ...................................................................34

Finance & Audit Committee

FINANCE AND AUDIT COMMITTEE

14 MARCH 2018

Agenda Item No 1

Prepared by - Dean Phibbs - Manager Corporate Services

MEMBERS INTEREST _____________________________________________________________________

Councillors are encouraged to consider the items on the agenda and disclose whether they believe they have a financial or non-financial interest in any of the items in terms of Council’s Code of Conduct.

Councillors are encouraged to advise the Personal Assistant, Corporate Services, of any changes required to their declared Members Interest Register.

The follow flowchart may assist Councillors in making that determination (Appendix A from Code of Conduct).

DRAFT RECOMMENDATION

What is the matter being decided?

Do not discuss or vote.

No conflict. Can discuss and vote.



NO

YES

YES

NO

YES

NO

NO NO

YES YES

Declaration of InterestsGuidance for Elected Members

Who is to make a decision? Council, Council Committee or

Community Board?

Do I have a financial interest in the matter? That is, do I have a reasonable expectation of gain or loss of money as a result of any decision on this matter.

It my financial interest in the matter being decided an interest that is in

common with the public?

Do any of the other exceptions in the Act apply?

Pecuniary conflict of interest.

Could I apply for an exemption or declaration?

Application granted

Can discuss and vote.

That Councillors disclose any financial or non-financial interest in any of the agenda items.



14 MARCH 2018

Agenda Item No 2


CONFIRMATION OF MINUTES _____________________________________________________________________

Minutes of the meeting held 15 January 2018.


That the minutes from the meeting held 15 January 2018 are confirmed.


MEETING OF THE BULLER DISTRICT COUNCIL FINANCE AND AUDIT COMMITTEE, COMMENCED AT 5pm, 15 JANUARY 2018, AT CLOCKTOWER CHAMBERS,PALMERSTON STREET, WESTPORT

PRESENT:Mayor G Howard, Councillor’s S Roche (Chair), P Rutherford, R Nahr and J Cleine.

IN ATTENDANCE:

Manager Corporate Services (D Phibbs) and PA Corporate Services (M Wilson).

Councillor G Hart.

APOLOGIES:

No apologies were received

1. MEMBER’S INTEREST

No Members Interests were disclosed.

2. MINUTES

Amend minutes to include Councillor D Hawes, who was present.

RESOLVED that the minutes of the 6 December 2017 meeting be accepted with the above amendment.

P Rutherford/J CleineCARRIED UNANIMOUSLY

3. ACTION POINTS

111. An update is expected for the March 2018 meeting.137. An update is expected for the March 2018 meeting.145. Change date to March 2018.147. Change date to March 2018.

RESOLVED that the report be received for information and discussion.R Nahr/S Roche

CARRIED UNANIMOUSLY


4. FINANCIAL PERFORMANCE

RESOLVED that the report be received for information and discussion.P Rutherford/J Cleine

CARRIED UNANIMOUSLY

5. INVESTMENTS AND BORROWINGS

RESOLVED that the report be received for information and discussion.G Howard/P Rutherford

CARRIED UNANIMOUSLY

6. SIGNIFICANT PROJECTS REPORT

RESOLVED that the report be received for information and discussion.J Cleine/G Howard

CARRIED UNANIMOUSLY

7. AUDIT NZ MANAGEMENT REPORT: 2016/2017 Annual Report

AP: Update the Audit Management Action Points report to include the 2016/2017 recommendations.

RESOLVED that the report be received for information purposes.D Hawes/S Roche

CARRIED UNANIMOUSLY

8. AUDIT MANAGEMENT ACTION POINTS

RESOLVED that the report be received for information and discussion.S Roche/R Nahr

CARRIED UNANIMOUSLY

9. PUBLIC EXCLUDED

RESOLVED that the public be excluded from the following parts of the proceedings of this meeting.Item No

Minutes/Report of:

General Subject

Reason for Passing Resolution

1. Lynn Brooks -Management Accountant

Aged debt Section 7 (f) i maintain the effective conduct of public affairs through the free and frank expression of opinions.

S Roche/G HowardCARRIED UNANIMOUSLY


FINANCE WORK PLANReviewed.

There being no further business the meeting concluded at 6:10pm Next meeting: 5pm, Wednesday 14 March 2018, Council Chambers, Palmerston

Street, Westport.

Confirmed: ………………………………..…………………Date: ……………………..

Name: ………………………..……………………………….



14 MARCH 2018

Agenda Item No 3


ACTION POINT LIST_____________________________________________________________________

Com

plet

ed

No. Meeting of: Action Point Responsible? Progress: Date required by:

111 11 May 2016 Leases and Licences to Occupy: Update register and provide report

Mike Duff An update was provided by Mike Duff and Rick Barry.

On-going.

February 2018

137 17 May 2017 WestReef Services: work with WestReef Services to tidy-up how H&S KPI’s are measured to provide consistency to the reporting.

Wendy ThompsonRobyn Nahr

Quarterly report to go to Councils October meeting.

February 2018

145 15 Nov 2017 Peel Street yard: remediation report to be provided by Mike Duff.

Sharon Roche

December 2017

147 6 Dec 2017 Westport Airport Grazing: a full report to be pre-sented to Council regard-ing loss of grazing at the Westport Airport, issues to be discussed.

Andy Gowland-Douglas

Sonia Creswell

January 2018

148 15 Jan 2018 Audit Management Report from 2016/2017 Annual Report: Update the Audit Management Action Points list to include the 2016/2017 recommendations.

Dean Phibbs March 2018


That the report be received for information.



14 MARCH 2018

Agenda Item No 4

Prepared by - Wendy Thompson - Financial Accountant

Reviewed by - Dean Phibbs - Manager Corporate Services

FINANCIAL PERFORMANCE: 31 DECEMBER 2017_____________________________________________________________________

1. Report Summary :

To provide Council with a financial performance update for the six month period ending 31 December 2017.

2. Recommendation/draft resolution:

That this report be received for information and discussion.

3. Analysis and Discussion

3.1 Statement of Financial Performance

Operating Result Council has budgeted for a half yearly deficit of ($1,245,000). The actual result is a

deficit of ($1,598,000) which is an unfavourable difference of $353,000. Analysis of the half yearly result is detailed below.

Operating Revenue Overall operating revenue totals $10.5 million compared to a budget of $10.4

million. The significant variance items are within subsidies and grants revenue; being DWC Economic Development Fund $150,000 unbudgeted and NZTA subsidy $112,000 over budget. These are offset by Investment Revenue under budget by $69,000, timing of metered water consumption $58,000 under budget and a number of smaller variances.

Operating Expenditure Operating expenditure totals $12.1 million compared to a budget of $11.6

million. The total unfavourable variance is $500,000 and includes recognition of the book loss on Derivative Contracts of $183,000; which is directly related to market interest rate movements since 1 July 2017. Other significant variances are the DWC Economic Development Fund payments $150,000 unbudgeted and Westport Water electricity over budget $80,000.

3.2 Statement of Financial Position Net debt (being external debt less term deposits) has remained stable since the

end of the last financial year. However, debt is expected increase by the end of the


financial year to fund some of Council’s significant capital projects including the Westport Water Supply tunnel repairs.

3.3 Cash Flow Statement Net operating cash flow of $2.3 million remains positive during the six months

to 31 December 2017. This was offset by fixed asset purchases of $2.1 million. Overall Council’s cash position increased by $0.3 million since 1 July 2017.

3.4 Dashboard – Operational Financial Performance Indicators

Rev

enue

Expe

nditu

re

Activity CommentDemocracy Property Amenities & Reserves Economic Development, Tourism & Museum Support

Community Services Regulatory Roading Solid Waste Support Wastewater Water Westport electricity and Punakaiki

maintenanceAirport

4.0 Dashboard - Non Financial Performance Measures

4.1 Background A well balanced reporting system will include both financial and non-financial

measures. Ideally non -performance reporting measures should provide information on key risk areas for Council to enable it to more effectively manage those risks.

The table of non- performance measures was developed to help monitor key risk areas of Council and to help monitor organisational efficiency within Council.

5.0 Considerations

5.1 Strategic impact The quarterly financial reports provide an overview of Council’s financial

performance and position during the financial year. This allows Council to monitor trends and evaluate progress against the strategies, financial budgets and service delivery adopted in the 2015/25 Long Term Plan and subsequent 2017/18 Annual Plan.


5.2 Significance assessment The Significance and Engagement policy sets out the criteria and framework for

a matter or transaction to be deemed significant. The content included in this report is not considered significant for the purpose of public consultation but is an important component of monitoring progress against the 2017/18 Annual Plan.

5.3 Values assessment The Buller District Councils values are: One Team; Community Driven; We Care;

Future Focussed; and Integrity.

A performance reporting system aligns most strongly with Integrity.

Public reporting of Council’s performance against budgets and key performance indicators encourages open and honest discussion and decision making.

5.4 Risk analysis Risk is assessed by taking into account the likelihood of an event occurring and

the result of that event.

Council prepares financial budgets to balance income and spending for each financial year. Budgets are based on the best information available at the time but subsequent financial performance will be affected by events outside Council’s control during the year. Regular monitoring of financial performance reduces the risk of financial pressure on Council because income and expenditure variances are identified early and mitigating actions can be put in place as required.

5.5 Policy / legal considerations The Local Government Act (2002) and associated regulation govern the activities

of Buller Council including preparation of Long Term and Annual Plans, financial prudence requirements and annual financial reporting.

The terms of reference of Finance and Audit Committee include monitoring financial performance to budgets.

5.6 Tangata whenua considerations Not applicable.

5.7 Views of those affected Council’s financial budgets are consulted on with the community during Long Term

and Annual Plan processes.

5.8 Costs Because this report is for information purposes it does not generate activity or any

associated costs.

5.9 Benefits The benefits of a quarterly financial reporting regime include early identification of

budget variances and intervention measures at a Council wide level.

5.10 Media / publicity There are no media or publicity opportunities with this report.


STATEMENT OF COMPREHENSIVE REVENUE & EXPENSEFOR THE 6 MONTHS ENDED 31 DECEMBER 2017

ParentDec-17Actual

$000

Dec-17 Budget

$000

2017/2018Budget - Full Year

$000OPERATING REVENUEGeneral Rates 4,146 4,157 8,314Targeted Rates (excluding Metered Water) 2,750 2,759 5,517Metered Water Charges 44 102 204Rate Penalties 80 75 150Subsidies and Grants 1,619 1,345 4,442Dividend & Subvention Revenue 0 0 910Investment Revenue 249 318 636Development and Financial Contributions 17 53 105Fees & Charges 1,618 1,550 3,091Gain on Derivative Contracts 0 0 0Vested Assets 0 0 101Total Operating Revenue 10,523 10,359 23,470

OPERATING EXPENDITUREEmployee Costs 2,303 2,329 4,658Depreciation & Amortisation 2,737 2,731 5,462Finance Costs 487 558 1,115Other Expenses 6,410 5,987 11,499Assets Written Off 0 0 350Loss on Derivative Contracts 183 0 0Loss on Sale of Investment Property 1 0 0Total Operating Expenditure 12,121 11,604 23,084

Net Surplus (Deficit) Before Taxation (1,598) (1,245) 386 Income Tax Expense 0 0 0Net Surplus (Deficit) After Taxation (1,598) (1,245) 386

Other Comprehensive Revenue & ExpensesIncrease/(decrease) in Infrastructure Revaluation Reserves

0 0 0

Total Comprehensive Revenue and Expenses (1,598) (1,245) 386


STATEMENT OF CHANGES OF EQUITYFOR THE 6 MONTHS ENDED 31 DECEMBER 2017

ParentDec-16

7Actual$000


$000

Equity as at 1 July 318,476 325,979Total Comprehensive Revenue and Expense (1,598) 386 Total Equity at End of Period 316,878 326,365

Components of EquityAccumulated Funds 167,842 166,725Reserves 4,993 5,385 Asset Revaluation Reserve 144,043 154,255Total Equity at End of Period 316,878 326,365


STATEMENT OF FINANCIAL POSITIONPERIOD ENDED 31 DECEMBER 2017

ParentDec-17Actual

$000

2016/2017Actual

$000


$000CURRENT ASSETSCash and cash equivalents 3,271 3,245 1,030Trade and other receivables 2,462 4,518 4,858Inventories 13 11 13Other current assets 22 35 35Short term investments 14,998 12,684 13,784Assets held for sale 161 161 0Total Current Assets 20,927 20,654 19,720

NON CURRENT ASSETSInvestment in council controlled organisations 19,645 19,576 20,035Other investments 494 2,753 0Investment property 7,632 7,687 7,568Infrastructural assets 275,667 276,324 294,822Other non current assets 21,096 21,170 19,595Intangible assets 75 106 50Total Non Current Assets 324,609 327,616 342,070Total Assets 345,536 348,270 361,790

CURRENT LIABILITIESTrade and other payables 1,786 3,018 3,982Derivative financial instruments 0 0 55Employee entitlements 533 580 451Provisions 35 35 0Current portion of term debt 36 8,510 107Total Current Liabilities 2,391 12,143 4,595

NON CURRENT LIABILITIESDerivative financial instruments 939 756 1,100Provisions 1,566 1,566 1,483Bond deposits 82 83 82Employee entitlements 246 246 140Term debt 23,434 15,000 28,025Total Non Current Liabilities 26,267 17,651 30,830

EQUITYAccumulated Funds 167,842 169,441 166,725Reserves 4,993 4,992 5,385Asset Revaluation Reserve 144,043 144,043 154,255Total Equity 316,878 318,476 326,365Total Liabilities & Equity 345,536 348,270 361,790


STATEMENT OF CASHFLOWSFOR PERIOD ENDED 31 DECEMBER 2017

ParentDec-17 Actual

$000


$000

CASHFLOWS FROM OPERATING ACTIVITIESCash was provided from:Rates 7,402 13,981Other revenue 3,656 7,532Interest received 266 636Dividends and subvention payments received 475 1,220

11,798 23,369Cash was applied to:Payments to suppliers and employers 9,126 17,227Interest paid 487 1,115Net GST movement (66) 0

9,546 18,342Net Cash From Operating Activities 2,251 5,027

CASHFLOWS FROM INVESTING ACTIVITIESCash was provided from:Sale of investment property 0 100Investment realised 7,865 0

7,681 100Cash was applied to:Purchase of fixed assets 2,110 7,225Purchase of investments 7,755 500Purchase of equity investments 0 35

9,865 7,760Net Cash From Investing Activities (2,185) (7,660)

CASHFLOWS FROM FINANCING ACTIVITIESCash was provided from:Loans raised 0 2,585

Cash was applied to:Repayment of loans 40 107Net Cash From Financing Activities (40) 2,478

Net Increase (Decrease) in Cash 26 (155)Opening Cash as at 1 July 3,245 1,185 Closing Cash as at 31 December 3,271 1,030


NON-FINANCIAL REPORTING MEASURESFOR PERIOD ENDED 31 DECEMBER 2017

Ach

ieve

d /

N

ot A

chie

ved

Activity No. Measure Target CommentaryRegulatoryBuilding 1 Ensure quality

assurance requirements for building consent authorities are met as required by regulation 17 of the Building Consent Authorities Regulations 2006

Continue to retain accreditation by passing ANZ Audits

Audit completed and new Certificate of Accreditation has been received. Next accreditation audit due December 2019.

Resource Management

2 Process non-notified resource consents within statutory deadlines

100% of consents processede within statutory timeframes

100% Compliance. There have been 26 Resouce consents completed since 1 July 2017 (2017: Full year 60 consents).

Emergency Management

3 Maintain 3 teams of trained civil defence volunteers

30 trained volunteers (3 teams)

100 volunteers. Focus is on increased BDC staff and volunteer participation throughout the district.

Water SuppliesAll Water Supplies

4 Safety of drinking water

Meets 100% bacteria/ protozoa compliance criteria

Westport, Reefton & Inangahua Junction compliant. Punakaiki & other rural supplies non-compliant.

Westport Water

5 Maintenance/Renewal of water reticulation main

Number of shutdowns for Westport water trunkmain

Wastewater / SewerageAll Sewerage Systems

6 Provide adequate capacity by measuring how often does the sewer overflows

less than 5 dry weather sewage overflows from Councils sewerage system per 1,000 sewerage connections

1 recorded in September 2017 due to an issue within the property boundary.

StormwaterAll Stormwater Systems

7 Provide adequate capacity by measuring for each flood event the number of habitable floors affected.

No more than 5 houses inudated by stormwater flooding per event per 1,000 properties connected to Councils stormwater system

NIL houses.

Solid WasteSolid Waste (Litter)

8 Provide adequate capacity for the collection of litter

The number of extra litter bins empties by the contractor above that provided for in the contract with Council

377 bins (1st quarter 106 bins).


NON-FINANCIAL REPORTING MEASURESFOR PERIOD ENDED 31 DECEMBER 2017

Ach

ieve

d /

N

ot A

chie

ved

Activity No. Measure Target CommentarySupportHealth and Safety

9 To comply with Health and Safety policies and legislation by monitoring incidents and lost time due to work related accidents for Buller District Council and Buller Holding Subsidiaries

No incidences or lost time from work related accidents for Council and subsidiaries

377 bins (1st quarter 106 bins).

Health and Safety

10 To comply with Health and Safety policies and legislation

Setup systems, procedures and policies to comply with legislation (commentary on progress required)

Implemeting Vault software to manage, record and report on systems, policies & procedures and incidents.

Other Key AreasAll Activities 11 Commitment to

customer service as measured by the number of complaints or action required as measured by the number of service level requests outstanding in Council and subsidiaries

Number and type of service level requests outstanding for Council and Subsidiaries

Council currently has completed and closed 367 service requests between 1 July and 31 December 2017. At 31 December there were 190 outstanding requests for various reasons including ongoing monitoring.

Westport Airport Authority

12 Passenger numbers remain high enough to continue a viable air passenger service to and from Westport

Level of passengers does not drop below the level as stipulated in the contract between Council and the service provider

Required level of passengers achieved



14 MARCH 2018

Agenda Item No 5

Prepared by - Wendy Thompson - Financial Accountant

Reviewed by - Lynn Brooks - Management Accountant

INVESTMENTS AND BORROWINGS: FEBRUARY 2018_____________________________________________________________________

REPORT SUMMARYThis report summarises Councils cash investments and borrowings for the month ended February 2018, interest earned for the period from 1 July 2017 to 28 February 2018 and policy compliance.

RECOMMENDATION/DRAFT RESOLUTIONThat the report be received for information.

ISSUES AND DISCUSSION

InvestmentsInvestments have decreased by $0.6 million in total from the last report circulated to the end of December 2017. This is mainly due to the effect of the rates billing cycle and monthly creditor payment obligations. The trading account closing balance is $1,469,700. This relatively high end of month balance is the result of rates instalment three falling due on 28 February.

Interest RevenueInterest revenue to the end of February 2018 is $678,734 compared to a budget of $667,144. Council will continue to reinvest term investment funds at the most favourable interest rate when deposits are up for renewal. There are often opportunities to take advantage of bank pricing differences to maximise returns even in time of low interest rates.

Borrowings and Net Debt PositionTotal borrowings have reduced gradually as the EECA loan is paid down, with a current balance of $23,450,000.

Net debt (borrowings less term investments) has increased to $6,651,805 from the $6,072,000 balance in October due to the movement in investments and the trading account balance.


Considerations

1. Strategic impact It is important that Council retains suitable cash holdings and credit facilities to

ensure its activities and capital projects are able to be funded in a timely and affordable manner.

2. Significance assessment The significance policy sets out the criteria and framework for a matter or transaction

to be deemed significant. The content included in this report is not considered significant because the matters disclosed are of a routine nature, and not large in terms of total assets and total annual operations of council.

3. Values assessment � The Buller District Councils values are: One Team; Community Driven; We Care; Future Focussed; and Integrity.

� Treasury management functions and reporting align most strongly with the values of Future Focussed and Integrity.

� Consideration of current and future cash requirements and intergenerational equity are required when managing cash deposits and credit facilities.

� Public reporting of investments and borrowings encourages open and honest discussion and decision making.

4. Risk analysis � Risk is assessed by taking into account the likelihood of an event occurring and

the result of that event. � Cash flow management is an integral part of ensuring Council is able to deliver the services and projects it has committed to in successive Long Term and Annual Plans.

� This risk is mitigated by establishing policies and procedures, engaging staff to manage investment and borrowings and regular reporting to Council to ensure high level oversight.

5. Policy / legal considerations � The Local Government Act (2002) and associated regulations prescribe prudent

financial management and nationwide benchmarks. The financial prudence benchmarks are now compulsory sections included in Council Long Term/Annual Plans and Annual Reports.

� Council’s Investment Policy and Treasury Policy govern the management of cash assets and borrowings.

6. Tangata whenua considerations None identified

7. Views of those affected Council’s financial strategies, investment levels and borrowing projections are

included in the Long Term Plan and Annual Plan consultation processes.

8. Costs There are no extraordinary costs relating to investments and borrowings.

9. Benefits The benefits of structured Treasury management include risk minimisation, prudent

cash management and long term financial stability.

10. Media / publicity None identified.


INVESTMENTS AND BORROWINGS REPORT1. BANK BALANCE

This Month28 Feb-18

Last Month31 Jan-18

Last Year30 Jun-17

Council $1,469,689 $187,908 $585,661

2. MONTH END BANK BALANCE

-$200,000$0

$200,000$400,000$600,000$800,000

$1,000,000$1,200,000$1,400,000$1,600,000

Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun

Month End Bank Balance

2015/16

2016/17

2017/18

3. SUMMARY OF INVESTMENTS

This Month28 Feb-18

Last Month31 Jan-18

Last Year30 Jun-17

Term Deposits 16,798,148 17,098,148 17,098,148Other Loans (includes loan to Holding Company)

2,464,277 2,487,923 2,537,348

Total Investments $19,262,425 $19,586,071 $19,635,496

4. SOURCE OF FUNDS

This Month28 Feb-18

Last Month31 Jan-18

Last Year30 Jun-17

Depreciation Funds 1,000,000 1,000,000 1,000,000West Coast Package (Govt subsidy for halt to logging)

2,829,551 2,829,551 2,829,551

Harbour (profit from past harbour operations)

1,979,092 1,979,092 1,979,092

Freeholding Proceeds (sale of leasehold land)

2,840,838 2,840,838 2,840,838

Capital Sponsorship (deposits from V2010 sponsors)

5,034,038 5,034,038 5,034,038

Reserves Contribution Funds 1,314,630 1,314,630 1,314,630Short Term Funds (rates income plus tds held pending debt reduction )

1,800,000 2,100,000 2,100,000

$16,798,148 $17,098,148 $17,098,148


5. INVESTMENTS PORTFOLIO PERFORMANCE (12 Month Average)

3.69%

2.06%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

Actual Benchmark

Investments Portfolio Performance (12 Month Average)

6. INTEREST REVENUEActual

YTDBudget

YTDBudget

Full YearInterest Revenue $678,734 $667,144 $1,220,715

7. COMPLIANCE WITH INVESTMENT POLICY

All term deposits are held with New Zealand Registered banks with no more than $10 million with any one institution. The terms and maturity dates of investments are spread to minimise Council’s exposure to interest rate fluctuations while still aiming to optimise interest earned.

Council has approved the investment in NBS which sees us in breach of the Treasury Management Policy. This breach will continue as investments mature and are rolled over.

8. SUMMARY OF BORROWINGSThis Month

28 Feb-18Last Month

31 Jan-18Last Year30 Jun-17

External Debt:Westpac Loan Facility 3,433,860 3,433,860 3,433,860LGFA Loan Facility 20,000,000 20,000,000 20,000,000EECA Loan 16,093 35,989 66,241

$23,449,953 $23,469,849 $23,500,101Weighted Average Interest Cost 4.00% 4.00% 4.60%

Net Debt:Total Borrowings 23,449,953 23,469,849 23,500,101Less: Term Deposits 16,798,148 17,098,148 17,098,148

$6,651,805 $6,371,701 $6,401,953


9. DEBT AND INVESTMENTS 3-YEAR TREND

$5

$7

$9

$11

$13

$15

$17

$19

$21

$23

$25

Mar/15

Jun/15

Sep/15

Dec/15

Mar/16

Jun/16

Sep/16

Dec/16

Mar/17

Jun/17

Sep/17

Dec/17

$ MillionsDebt and Investments: Three Year Trend

Debt

Term Deposits

Net Debt

10. COMPLIANCE WITH TREASURY POLICY

10.1 Interest Expense / Total Income

4.6%

10.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Actual Limit

Interest Expense / Total Income

10.2 Gross Debt / Total Income

0.95

2.50

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Actual Limit

Debt / Total Income


10.3 Gross Debt per Rateable Property

$3,120

$5,500

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Actual Limit

Debt Per Rateable Property

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Total Debt

10.4 Fixed Rate Debt - Compliance with Treasury Policy

-

5

10

15

20

25

Mar/17 Mar/18 Mar/19 Mar/20 Mar/21 Mar/22 Mar/23 Mar/24 Mar/25 Mar/26 Mar/27

$ Millions

Maximum Fixed Rate Minimum

Current borrowings are in compliance with the limits specified in Council's Treasury Policy.

Investments are in breach of Councils Treasury Management Policy in respect that there is more than 10% of the portfolio invested in a Building Society. Council ratified this breach via resolution to obtain ongoing sponsorship proceeds for the NBS Theatre.



14 MARCH 2018

Agenda Item No 6

Prepared by - Lynn Brooks - Management Accountant

Reveiwed by - Dean Phibbs - Manager Corporate Services

CAPITAL INCOME AND CAPITAL EXPENDITURE REPORT_____________________________________________________________________

1. REPORT SUMMARY

This report presents a high level overview of the annual budget and projected end of year totals for capital income and capital expenditure. This report is presented for information and monitoring purposes.

The following (two) extract pages provide further detail of the capital income and expenditure for the year to date.

There are not any issues that require a decision Council to progress the collection of capital income or utilisation of capital expenditure processes which are underway and ongoing by Council staff.

2. RECOMMENDATION/DRAFT RESOLUTION

That the report is accepted for information purposes.

3. ISSUES & DISCUSSION

This report is presented to Council to monitor capital income and expenditure movements.

Council requires a high level overview of the capital works progress of Buller District

Council. This information, when taken in conjunction with all other aspects of the financial results provides a full view of the financial performance and financial position of Buller District Council at 31 December 2017.

3.1 Capital Income

Community Services capital funding includes the NBS sponsorship agreement which is in place until March 2019 and the Pulse Energy Recreation Centre sponsorship agreements which are in place until April 2022.

The Roading and Urban Development program involves negotiation with NZTA for agreed works programmes and associated subsidies. The budget of $1.16m as set in the Buller District Council Annual Plan has a variance with NZTA’s funding budget because it is expected BDC will receive $274k additional funding if all the capital works are completed by year end. This additional funding offsets the funding variances in the prior two years which saw less NZTA funding received


than budgeted for. The timing of NZTA income received correlates to the capital expenditure incurred which is generally completed during February to April when weather conditions are more favourable for this type of activity, so we expect to see the largest portion of work being completed in the summer months and into the later part of the financial year.

The Water project for Waimangaroa has been held up while an appropriate bore site option is decided. The approved subsidy for this project will be available for drawdown once the scheme is completed which may fall into the next financial year. The Ngakawau Hector drinking water project and subsidy income has not progressed as planned and receipt of capital funding for this project has not been budgeted for.

Property, Amenities and Reserves includes a budget of $200,000 Government funding for the Fox River Toilets. The actual subsidy to be received is expected to be $255,160.

3.2 Capital Expenditure

Airport capital expenditure is over budget due to the purchase of a mower which was unbudgeted. It is expected the costs will be somewhat offset by lower mower maintenance costs for the remainder of the year.

Community Services expenditure includes library books, library furniture and NBS theatre equipment. It is expected the expenditure will meet budget.

Environmental Services expenditure includes two items which are unbudgeted, including some necessary communication assets for Civil Defence.

Property, Amenities and Reserves expenditure includes budgets for the Punakaiki Community Centre, cemetaries, new public toilets at Fox River, $70,000 for the sea wall at Punakaiki Beach Camp and sundry capital for Council buildings. Of these, it is expected $100,000 may not be required for Punakaiki Community Centre as there is further planning and community input required before this project proceeds. There is also $80,000 that will be incurred for the Clocktower. The two public toilets are expected to cost more than budget, however this is offset in full by a subsidy being received.

Water projects are closely monitored. It is expected the Westport water supply tunnel repairs will be completed by the first quarter of 2018/2019 financial year, so we have indicated the deferral of $2.6m of budgeted expenditure in the attached schedule. It is also expected that the Waimangaroa water supply will not progress until later in the year, therefore the associated costs and income have been deferred until the next financial year.

4. CONSIDERATIONS

4.1. Strategic impact

The capital income & capital expenditure report provides an overview on the provision of capital expenditure projects and helps readers to understand if Councils’ strategic position taken in the last long term plan (where it was agreed to minimise rates increases and limit capital expenditure to those assets that could be used as a springboard for District economic growth) is being met.

The provision of capital projects within timeframes and approved budgets provides


a measure against this core strategic priority and its probable long term impact on our community.

4.2. Significance assessment

The significance and engagement policy sets out the criteria and framework for a matter or transaction to be deemed significant. The content included in this report is not considered significant by nature as value as Council’s capital program is integral to service provision.

4.3. Risk analysis

Risk is assessed by taking into account the likelihood of an event occurring and the result of that event.

Capital projects are perceived to have some greater than usual potential to place council at risk as the funds involved are usually significant. The project may be an irregular or unusual kind, therefore the costings may need to be revised as the work progresses. The scale of capital projects may result in project delays which result on Council not delivering the assets or services as envisioned in Long Term or Annual Plans.

This risk is mitigated by engaging staff to monitor and regularly report on the projects therefore acting on any issues that arise early on, and to ensure project progress is well understood by staff and governance.

4.4. Policy / legal considerations

The Local Government Act 2002 governs the activities of Buller District Council and sets out the requirement for consulting on the annual plan and long term plan to agree the budget and the key performance indicators with the community.

This report assists with two key purposes of that act (located at section 3) stating the purpose of the act is to promote the accountability of local authorities to their communities, and provide for local authorities to play a broad role in meeting the current and future needs of their communities for good-quality local infrastructure, local public services, and performance of regulatory functions.

4.5. Values The Buller District Council values are: we care, integrity, one team, community

driven and future focussed. This report aligns with those values as it presents information about the capital projects for our community.

4.6 Tangata whenua consultation considerations

The contents of the report are not a matter requiring consultation with Tangata whenua.

4.7 Views of those affected

Council’s capital projects are consulted on with the community during Long Term and Annual Plan processes.

4.8 Costs

There are no extraordinary costs for the capital projects predicted at this stage of


the financial year. The amounts which may need to be carried forward to the next financial year are identified so they can be included in the next annual plan budget.

4.9 Benefits

The benefits of reviewing the capital income and expenditure periodically are the capital projects and their funding are monitored at a Council wide level.

4.10 Media / publicity

There are no media or publicity opportunities with this report.


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y p

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pro

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uld

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kn

ow

n n

ext

qua

rte

r.



14 MARCH 2018

Agenda Item No 7

Prepared by - Lynn Brooks - Management Accountant

Reveiwed by - Dean Phibbs - Manager Corporate Services

DEBT RECOVERY REPORT_____________________________________________________________________

1. REPORT SUMMARY

This report presents and classifies the outstanding balances of rates and sundry debtors as at December for monitoring and information purposes.

There are not any customers with arrears that require a decision of Council to progress the debt recovery processes which are underway and continuous.

2. RECOMMENDATION/DRAFT RESOLUTION

The recommendation is this report be accepted for information purposes.

3. ISSUES AND DISCUSSION

This report is presented to provide monitoring information on debt trends for Council.

Council requires a high level overview of the debt owed to Buller District Council. This information, when taken in conjunction with all other aspects of the financial results provides a full view of the financial performance and financial position of Buller District Council at 31 December 2017.

Rates debt follows an expected pattern whereby every third month, when the rates are accrued the rate debt increases, then it decreases for the following two months. The total rates debt at December 2017 is slightly lower compared to December 2016. Comparing the amount of serious default as a proportion of total debt at December 2017 to December 2015 and 2016, this has reduced. Rates debt has decreased over the total timeframe reported in the graph.

Looking into the detail further, the “long term serious monitored” (which is the red category in the graph) is showing downward movement in the past three months. The trend was that this category was growing slightly over time, but this has been curbed . We are closely monitoring the debt trends and applied many different approaches to combat current debt so that it does not reach the long term and at external debt collection stage as well as worked closely on target cases. The use of Facebook and text messaging continues to provide some positive results.

Sundry Debtors decline over the timeframe shown in the graph. The serious default category indicated in red in the graph is due to non-payment of leasehold property.


This continues to be an area of focus and increasing collection measures. Arrears overall are lesser during the nine month period to September 2017 compared to the last two prior years. This can be attributed to one significant sponsorship debtor being transferred to Councils’ CCO as direct sponsorship, and some greater debt collection measures in place.

4. CONSIDERATIONS

4.1 Strategic impact The debt recovery report provides feedback on the effectiveness of the strategic

direction of Council and the interaction between Council and our District economy. .

In the last long term plan it was agreed to minimise rates increases and limit new services or assets to only those that could be used as a springboard for District economic growth.

The change in Council customers’ debt levels and their classification provide a measure against this core strategic priority and provides an overview of its impact on our community.

This report also assists with understanding the current local economic climate along with the impacts of Council charges, and the community ability and willingness to meet those charges.

4.2 Significance assessment The Significance and Engagement Policy is written in accordance with The Local

Government Act 2002 (LGA 2002) section 76AA. This part of the Act sets the general approach to determine if a proposal or decision is significant requiring the Council to make judgements about the likely impact of that proposal or decision on:

a) The District; b) The persons who are likely to be particularly affected by, or interested in, the

proposal or decision; c) The financial impact of the proposal or decision on the Council’s overall

resources; and d) The capacity of, the Council to perform its role and carry out its activities, now

and in the future.

The Significance and Engagement Policy sets out the criteria and framework for a matter or transaction to be deemed significant. The content included in this report is not considered significant because the matters disclosed are of a routine nature, and not large in terms of total assets and total annual operations of Council.

4.3 Risk analysis Risk is assessed by taking into account the likelihood of an event occurring and

the result of that event.

When credit is extended by Council a risk arises that the amounts owing are not recovered when due, or that over time total debt owing grows to an unsustainable level and puts pressure on cash flow.

This risk is mitigated by engaging staff to monitor and recover debt therefore acting on indebtedness early on which yields better results, and regular reporting to Council to ensure oversight.


4.4 Values The Buller District Values are: Integrity, Future Focussed, Community Driven, One

Team and We Care. Monitoring debt and undertaking debt collection processes most closely aligns to the values of integrity and future focussed.

4.5 Policy/legal considerations The collection of rates debt is enforceable under the Local Government (Rating)

Act 2002. Other legislation dealing with credit extended by Council and debt recovery include the Property Law Act 2007, Residential Tenancies Act 1986 and the Resource Management Act 1991. The Financial Delegations Policy, Treasury Management Policy and Rates Remission Policies also apply to the collection of Council debt.

4.6 Tangata whenua consultation considerations The contents of the report are not a matter requiring consultation with tangata

whenua.

4.7 View of those affected It is equitable for all our ratepayers, the public and individual debtors that all

amounts outstanding should be collected through consistent processes.

4.8 Costs There are no extraordinary costs for debt recovery and the costs for continuing

debt recovery are included in the annual plan budget.

4.9 Benefits The benefits to collection of debt is the cash flow of Council is maintained. There is

also fairness and equity for all ratepayers and service consumers in that everyone is paying their portion of the cost.

4.10 Media/publicity There are no media or publicity opportunities with the content of this report.


Rate

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7



14 MARCH 2018

Agenda Item No 8


AUDIT MANAGEMENT ACTION POINTS_____________________________________________________________________

RECOMMENDATION/DRAFT RESOLUTION:

That the report be received for information and discussion.


OU

TSTA

ND

ING

AU

DIT

MA

NA

GEM

ENT

AC

TIO

N P

OIN

TS:

2015

No.

Subj

ect

Det

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ents

Plan

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pr

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form

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ses

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ed in

the

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as

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prov

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t pla

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m. C

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to e

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appr

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regi

me

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his

proc

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t val

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201

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ates

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plet

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tes

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m w

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20

18/2

019

at th

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Febr

uary

201

8


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TSTA

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2015

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ect

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e1

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atio

n of

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frast

ruct

ure

asse

ts

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ncil

had

plan

ned

to re

valu

e its

infra

stru

ctur

e as

sets

, effe

ctiv

e 30

Jun

e 20

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nd in

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e th

ese

reva

lued

am

ount

s w

ithin

the

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Ann

ual R

epor

t.

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in li

ne w

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coun

ting

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y to

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valu

e th

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asse

t cla

sses

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ry th

ree

year

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as p

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rmed

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014.

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up

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ager

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frast

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ess

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ovem

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dres

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g de

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rting

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t rec

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end

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ew th

e tim

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l Rep

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esse

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ill be

put

in p

lace

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prov

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e qu

ality

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tim

elin

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of n

on-fi

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rman

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porti

ng, p

artic

ular

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man

dato

ry m

easu

res.

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amew

ork

will

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evel

oped

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prov

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llect

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ion

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aint

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ncil.

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ar-

bour

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t req

uest

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ncil

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agem

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rmed

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tions

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ing

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8.

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ager

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info

rmed

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proc

ess.

4As

set

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s

This

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e hi

ghlig

hts

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rtanc

e of

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ncil

havi

ng g

ood

asse

t man

agem

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lans

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lace

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gh-q

ualit

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set c

ondi

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ion

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rlyin

g th

e pl

an.

Asse

t man

agem

ent p

lans

will

be im

plem

ente

d m

ore

effici

ently

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olio

co-

ordi

nato

rs to

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r res

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nten

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and

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l as

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c al

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ent

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bilit

y by

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agem

ent.

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up

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ager

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and

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frast

ruct

ure

OU

TSTA

ND

ING

AU

DIT

MA

NA

GEM

ENT

AC

TIO

N P

OIN

TS:

2015

No.

Subj

ect

Det

ail

Resp

onsi

ble

Stat

usC

omm

ents

Plan

ned

Com

plet

ion

Dat

e1

Valu

atio

n of

in

frast

ruct

ure

asse

ts

Cou

ncil

had

plan

ned

to re

valu

e its

infra

stru

ctur

e as

sets

, effe

ctiv

e 30

Jun

e 20

17 a

nd in

clud

e th

ese

reva

lued

am

ount

s w

ithin

the

2017

Ann

ual R

epor

t.

This

was

in li

ne w

ith it

s ac

coun

ting

polic

y to

re

valu

e th

ese

asse

t cla

sses

eve

ry th

ree

year

s as

th

e la

st re

valu

atio

n w

as p

erfo

rmed

in 2

014.

Gro

up

Man

ager

As

sets

and

In

frast

ruct

ure

Proc

ess

impr

ovem

ents

for C

ounc

il’s

reva

luin

g of

infra

stru

ctur

e as

sets

is b

eing

ad

dres

sed,

incl

udin

g de

dica

ted

reso

urci

ng

and

sche

dulin

g.

2N

on-fi

nanc

ial

perfo

rman

ce

repo

rting

Audi

t rec

omm

end

Cou

ncil

revi

ew th

e tim

elin

es a

nd

qual

ity a

ssur

ance

pro

cess

es o

ver t

he n

on-fi

nanc

ial

info

rmat

ion

incl

uded

in th

e dr

aft A

nnua

l Rep

ort.

Th

is is

par

ticul

arly

impo

rtant

for p

erfo

rman

ce

targ

ets

rela

ting

to th

e m

anda

tory

mea

sure

s in

ac

cord

ance

with

und

erly

ing

legi

slat

ion.

Gro

up

Man

ager

As

sets

and

In

frast

ruct

ure

Proc

esse

s w

ill be

put

in p

lace

to im

prov

e th

e qu

ality

and

tim

elin

ess

of n

on-fi

nanc

ial

perfo

rman

ce re

porti

ng, p

artic

ular

ly

man

dato

ry m

easu

res.

A fr

amew

ork

will

be d

evel

oped

to im

prov

e co

llect

ion

of

info

rmat

ion

arou

nd c

ompl

aint

s to

Cou

ncil.

3D

ises

tabl

ishm

ent

of W

estp

ort H

ar-

bour

Lim

ited

Audi

t req

uest

that

Cou

ncil

and

man

agem

ent k

eep

them

info

rmed

dur

ing

the

dise

stab

lishm

ent p

roce

ss

as W

estp

ort H

arbo

ur L

imite

d tra

nsfe

rs it

s as

sets

an

d lia

bilit

ies

and

win

ds d

own

its o

pera

tions

dur

ing

2017

/201

8.

Man

ager

C

orpo

rate

Se

rvic

es

Cou

ncil

are

wor

king

in p

artn

ersh

ip w

ith

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r Hol

ding

s Li

mite

d to

dis

esta

blis

h W

estp

ort H

arbo

ur L

imite

d an

d w

ill ke

ep

Audi

t NZ

info

rmed

thro

ugh

the

proc

ess.

4As

set

man

agem

ent

plan

s

This

issu

e hi

ghlig

hts

the

impo

rtanc

e of

the

Cou

ncil

havi

ng g

ood

asse

t man

agem

ent p

lans

in p

lace

with

hi

gh-q

ualit

y as

set c

ondi

tion

info

rmat

ion

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rlyin

g th

e pl

an.

Asse

t man

agem

ent p

lans

will

be im

plem

ente

d m

ore

effici

ently

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olio

co-

ordi

nato

rs to

ow

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pect

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nten

ance

and

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ent

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sets

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AGENDA - Buller Districtbullerdc.govt.nz/.../FA-Agenda-Mar_18-PUBLIC-COPY.pdf · - Manager...

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