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Finance and Council
Controlled Organisations Committee
3 September 2019
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Financial Review
For the year ended 30 June 2019
This report provides a detailed commentary
on the Council’s financial results for the year ended 30 June 2019 and
the financial position at that date.
net surplus/(Deficit) (including
waipori)
The net surplus (including Waipori) for the
period ended 30 June 2019 was $22.312 million or $7.100 million better
than budget.
REVENUE
The total revenue for the period was
$314.004 million or $15.519 million greater than budget.
The major variances were as follows:
Other Operating Revenue
Actual $76.567 million, Budget $72.261
million, Favourable variance $4.306 million
Property revenue was greater than budget
$2.760 million primarily due to an unrealised fair value gain in relation to
investment properties.
Regulatory Services revenue was favourable
$635k, mainly due to increased building services activity.
Transportation revenue was favourable $613k
mainly due to greater than expected corridor accessway revenue as well as
higher than budgeted recoverable expenditure.
Parking Operations revenue was favourable
$182k reflecting increased usage of parking facilities, both on-street and
off-street.
Revenue from cemeteries and crematorium was
favourable $176k primarily due to an increase in the number of cremations.
Resource consents revenue was favourable
$176k due to the high level of applications received.
Grants
Actual $45.519 million, Budget $39.040
million, Favourable variance $6.479 million
Transport grants and subsidy revenue was
favourable $5.477 million primarily due to the higher level of capital project
delivery.
Investment Account revenue was favourable
$820k due to the unbudgeted Waterfront grant from the Provincial Growth Fund.
Contributions
Actual $5.992 million, Budget $3.172
million, Favourable variance $2.820 million
This variance was primarily due to higher
than expected non-cash vesting of infrastructure assets in new developments
across the city.
Expenditure
The total expenditure for the period was
$300.263 million or $12.017 million greater than budget.
The major variances were as follows:
Personnel Costs
Actual $62.353 million, Budget $60.011
million, Unfavourable variance $2.342 million
This unfavourable variance was primarily
due to higher than expected recruitment costs, unbudgeted costs associated with
the 2GP and a budget understatement in Aquatics (remedied for the 2019/20
budget).
Operations and Maintenance Costs
Actual $68.222 million, Budget $64.534
million, Unfavourable variance $3.688 million
Property costs were unfavourable $1.357
million and included increased reactive maintenance in the housing portfolio
along with unbudgeted costs with demolition work and asbestos removal at Thomas
Burns St and Dukes Road.
Investment Account expenditure was
unfavourable $844k due to unbudgeted costs relating to the establishment of the
project management office.
Waste and Environmental Services
expenditure was $767k unfavourable due to adjustments to landfill aftercare
provisions.
Transportation expenditure was unfavourable
$736k due to higher than expected subsidised maintenance
costs across the network.
Parks costs were unfavourable $473k due to
greater than budgeted building maintenance and reserves work.
Civic and Admin Services were unfavourable
$212k due to costs associated with the second-generation district plan.
These unfavourable variances were partially
offset by:
BIS costs were favourable $694k with
project management and other contracted services costs being less than
expected.
Consumables and General Costs
Actual $22.549 million, Budget $19.277
million, Unfavourable variance $3.272 million
Property costs were $777k greater than
budgeted primarily due to unrealised fair value write-down for 3 investment
properties ($964k).
Waste and Environmental Services
consultants costs were unfavourable $551k due to unbudgeted expenditure
relating to the Waste Futures project.
Resource Consents was unfavourable $397k
mainly due to the need to use planning consultants to deal with the number of
consent applications.
Transportation was unfavourable $685k due
mainly to unbudgeted expenditure on the Central City, harbourside and hospital
projects. A portion of these costs will be recoverable from external
organisations.
Regulatory Services was unfavourable $231k
due partly to the cost of offsite processing of consents.
Depreciation
Actual $68.597 million, Budget $63.388
million, Unfavourable variance $5.209 million
This variance was due
to a revaluation of Three Waters and Transportation assets impacting both the
depreciable replacement cost and asset useful lives.
Interest
Actual $10.470 million, Budget $12.937
million, Favourable variance $2.467 million
Interest expenditure was less than budget
primarily due to a favourable floating interest rate applied to the non-fixed
interest borrowing.
WAIPORI FUND NET OPERATING RESULT
Actual
$8.571 million, Budget $4.973 million, Favourable variance $3.598 million
The Waipori result was reflective of
current market conditions which has seen positive market movements over the
past few months across most portfolios.
Statement of Financial Position
A Statement of Financial Position is
provided as Attachment C.
Short term investments of $7.723 million
relate to the Waipori Fund.
Statement of Cashflows
A Statement of Cashflows is provided as
Attachment D.
Net cash inflow from operating activities
was favourable to budget due to the lower interest expenditure and increased
funding for Transport capital projects.
Capital Expenditure
A summary of the capital expenditure
programme by Activity is provided as Attachment E.
Total capital expenditure for the year was
$101.284 million or 108.9% of the amended full year budget of $92.986
million.
Community
and Planning capital expenditure was $1.164 million
underspent
This
underspend was due to delays in completing warehouse precinct upgrades.
Corporate
Services capital expenditure was $583k underspent
The underspend was primarily driven by
lower than expected expenditure related to the implementation of the new
Electronic Document and Records Management system.
Property capital
expenditure was $4.585 million overspent
The overspend was due unbudgeted property
purchases - South Dunedin and White Street.
Work on the Mosgiel Library re-roof and the
54 Moray Place compliance upgrade projects is underway. The Edgar Centre
structural strengthening work is well progressed as is the work on the Central
Library roof.
Tenders for the construction of new housing
units at School St have been called, with asbestos removal underway.
Construction is expected to commence from September 2019.
Parks and Recreation capital expenditure was $1.637 million underspent
Aquatic Services capital was underspent
$1.237 million due to the delayed timing of works at Moana Pool while detailed
scoping is completed, and the timing of expenditure related the Mosgiel pool
development project.
Transport capital
expenditure was $4.664 million overspent
The variance primarily related to the
continued delivery of the peninsula connection safety improvement project,
partially offset by delays for a number of other projects while scoping and
design work is completed (LED lighting, Tertiary Precinct, Central City &
City to Waterfront connection).
Three Waters
capital expenditure was $3.556 million overspent
The overspend was primarily driven by costs
associated with the completion of the Ross Creek Reservoir Refurbishment
project. There was also some unbudgeted emergency works including
wastewater pipe renewals on Brighton Road.
Debt
Refer to
Attachments F and G.
Attachment F
provides a summary of the debt servicing ratios.
All three
targets were within policy.
Comments from group activities
Attachment G, the Summary of Operating
Variances, shows by Group Activity the overall net surplus or deficit variance
for the year. It also shows the variances by revenue and expenditure
type.
Property - $1.568 million Favourable
This variance was primarily driven by a net overall unrealised fair
value gain across the investment property portfolio ($1.791 million).
Customer and Regulatory - $568k Favourable
External revenue was favourable $866k with
increased activity across a number of operational areas – in particular
parking operations and building services.
Transport - $5.965 million Favourable
Transport operating revenue was greater
than budget ($8.179 million) due to higher than budgeted NZTA funding for
capital projects including the Green Island, urban cycleways, peninsula road
widening and flood response work. The level of income was also impacted
by unbudgeted non-cash vesting of assets in new developments, and higher than
expected corridor access revenue.
Transport expenditure was $1.477 million
unfavourable due mainly to unbudgeted expenditure on the Central City,
harbourside and hospital projects and higher than expected subsidised
maintenance costs across the network.
Waste and Environmental - $1.081 million Unfavourable
Expenditure was unfavourable $1.287 million
due to expenditure relating to the Waste Futures project as well as a non-cash
increase in the landfill aftercare provisions.
Three Waters - $2.352 million Unfavourable
This unfavourable variance was primarily
due to higher than budgeted depreciation resulting from the revaluation of
Three Water assets impacting on both the depreciable replacement cost and asset
useful lives. Network maintenance costs on both the stormwater and water
networks were also unfavourable.
These unfavourable variances were partially
offset by savings in personnel costs due to vacancies in the Planning activity,
higher than budgeted development contributions and unbudgeted vested asset
income associated with new developments.
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Finance and Council Controlled Organisations
Committee
3 September 2019
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Mayoral Chains and Mayoral Portrait
Department: Civic
EXECUTIVE SUMMARY
1 At
the end of each triennium, Council has in place certain traditions to
acknowledge the service of the Mayor. This includes recognition on the
Council honours board, the commissioning of a civic portrait, and the inclusion
of a gold link in the mayoral chain. This report suggests changes to how
two of these traditions are continued.
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RECOMMENDATIONS
That the Committee:
a) Recommends
an amendment to the policy for the Mayoral portrait, enabling the
commissioning of a photographic portrait for each Mayors.
b) Notes that
the resolution of 16 June 2008, which stated “That the Council
reconfirms it policy of engaging an artist to paint a portrait of each
Mayor”, will need to be revoked at a subsequent meeting of Council, in
order to give effect.
c) Recommends that
new links to the mayoral chain are funded by Council.
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Mayoral portrait
2 Council
policy states that an artist be commissioned to paint a portrait of each
Mayor. This policy was most recently confirmed at a meeting of Council on
16 June 2008 (Attachment A). The portraits are displayed in the Council
Chamber.
3 It
is proposed that given the cost of a portrait, (the last painting cost $23,000
GST exclusive), the policy be amended to provide for a photographic portrait to
be commissioned. It is estimated that a photographic portrait, suitably
framed, would cost in the region of $3,500. If agreed, revocation of the
previous resolution passed at the meeting of 16 June 2008 would be
required.
4 Currently
the Mayoral portraits are all oil paintings with the exception of the
photographic portrait of Mayor Turner.
5 If
council decides it wishes to continue with the practice of a painting, then
staff will seek expressions of interest from local painters.
mayoral chain
6 The
Dunedin City mayoral chain was a gift from the Dunedin Chamber of Commerce in
1909 and portrays the City Crest in gold and enamel. The links were
purchased by or on behalf of most of the previous Mayors and are so
inscribed. Each subsequent mayor to the present time has personally
funded a link at the end of their term as Mayor.
7 In
1959, the mayoral chain was made into two chains. Wearing the full chain
became prohibitive given its weight. The second (unworn) chain is kept in
storage. It is proposed that for future appropriate events, this chain be
brought out and put on display.
8 Traditionally,
the outgoing Mayor personally funds a link to the mayoral chain, which in the
past has cost around $2,400.
9 Council
is asked to give consideration to funding new links to the mayoral chain, as
the cost of the link is not cheap and places a financial burden on the
Mayor.
OPTIONS
Option
One – Recommended Option
10 That
the Mayoral portrait policy be amended to commission photographic portraits,
and that Council agrees to fund new links to the mayoral chain.
Advantages
· Significant
cost savings will be achieved.
· The
personal financial obligation of funding new links is taken away from each
Mayor.
Disadvantages
· No
disadvantages have been identified.
Option
Two
11 That
the existing Mayoral portrait policy be amended to commission photographic
portraits. Each Mayor continues to personally fund new links for the
mayoral chain.
Advantages
· Significant
cost savings will be achieved.
Disadvantages
· Each
Mayor will continue to have a personal financial obligation for funding new
links.
Option
Three – Status Quo
12 Council
continues to engage an artist to paint a portrait of each Mayor. Each
Mayor continues to personally fund new links for the mayoral chain.
Advantages
· No
advantages have been identified.
Disadvantages
· Cost
savings will not be achieved.
· Each
Mayor will continue to have a personal financial obligation for funding new
links.
NEXT STEPS
13 If
agreed, the policy will be amended to have photographic portraits, and a
photographic portrait of Mayor Cull will be commissioned.
14 If
agreed, a new link to the mayoral chain will be commissioned and funded by
Council.
Signatories
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Author:
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Sharon Bodeker - Team Leader Civic
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Authoriser:
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Sue Bidrose - Chief Executive Officer
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Attachments
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Title
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Page
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⇩a
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Resolution of 16 June
2008
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50
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SUMMARY OF CONSIDERATIONS
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Fit with purpose of Local Government
This decision
enables democratic local decision making and action by, and on behalf of
communities.
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Fit with strategic framework
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Contributes
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Detracts
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Not applicable
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Social Wellbeing Strategy
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☐
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☐
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☒
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Economic Development
Strategy
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☐
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☐
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☒
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Environment Strategy
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☐
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☐
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☒
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Arts and Culture Strategy
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☐
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☐
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☒
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3 Waters Strategy
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☐
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☐
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☒
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Spatial Plan
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☐
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☐
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☒
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Integrated Transport
Strategy
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☐
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☐
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☒
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Parks and Recreation
Strategy
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☐
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☐
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☒
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Other strategic
projects/policies/plans
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☐
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☐
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☒
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There is no contribution to
the Strategic Framework.
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Māori Impact Statement
There are no known impacts
for tangata whenua.
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Sustainability
There are no implications
for sustainability.
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LTP/Annual Plan / Financial Strategy /Infrastructure
Strategy
There are no implications.
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Financial considerations
There is no money in Civic
budget to fund a portrait, photographic or painted, or links for the mayoral
chain.
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Significance
This decision is considered
to be of low significance in terms of the Council’s Significance and
Engagement Policy.
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Engagement – external
There has been no external
engagement.
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Engagement - internal
There has been no internal
engagement.
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Risks: Legal / Health and Safety etc.
There are no identified
risks.
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Conflict of Interest
Mayor Cull will have a
conflict of interest in the decisions being made and so will not take part in
the discussion.
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Community Boards
There are no implications
for Community Boards.
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