Agenda of Finance and Council Controlled Organisations Committee

Notice of Meeting:

I hereby give notice that an ordinary meeting of the Finance and Council Controlled Organisations Committee will be held on:

Date: Monday 9 March 2020

Time: 1.00 pm

Venue: Edinburgh Room, Municipal Chambers, The Octagon, Dunedin

Sue Bidrose

Chief Executive Officer

Finance and Council Controlled Organisations Committee

PUBLIC AGENDA

MEMBERSHIP

Chairperson	Cr Mike Lord
Deputy Chairperson	Cr Doug Hall
Members	Cr Sophie Barker	Cr David Benson-Pope
	Cr Rachel Elder	Cr Christine Garey
	Mayor Aaron Hawkins	Cr Carmen Houlahan
	Cr Marie Laufiso	Cr Jim O'Malley
	Cr Jules Radich	Cr Chris Staynes
	Cr Lee Vandervis	Cr Steve Walker
	Cr Andrew Whiley

Senior Officer Dave Tombs, General Manager Finance and Commercial

Governance Support Officer Wendy Collard

Wendy Collard

Governance Support Officer

Telephone: 03 477 4000

Wendy.Collard@dcc.govt.nz

www.dunedin.govt.nz

Note: Reports and recommendations contained in this agenda are not to be considered as Council policy until adopted.

Finance and Council Controlled Organisations Committee

9 March 2020

ITEM TABLE OF CONTENTS PAGE

1 Public Forum 4

2 Apologies 4

3 Confirmation of Agenda 4

4 Declaration of Interest 5

Part A Reports (Committee has power to decide these matters)

5 Financial Result - Period Ended 31 January 2020 17

6 Financial Result - Period Ended 31 December 2019 34

7 Waipori Fund - Quarter Ending September 2019 and the Quarter Ending December 2019 44

8 Dunedin City Holdings Limited Parent Financials - Year ended 30 June 2019 54

9 Draft 2020/21 Statements of Intent - Dunedin City Holdings Limited Group Companies 62

Part B Reports (Committee has power to recommend only on these items)

10 Changes to the Constitution of Dunedin City Holdings Limited 68

Part A Reports (Committee has power to decide these matters)

11 Items for Consideration by the Chair

Any items for consideration by the Chair

Finance and Council Controlled Organisations Committee

9 March 2020

Part A Reports

Financial Result - Period Ended 31 January 2020

Department: Finance

EXECUTIVE SUMMARY

1 This report provides the financial results for the period ended 31 January 2020 and the financial position as at that date.

RECOMMENDATIONS

That the Committee:

a) Notes the Financial Performance for the period ended 31 January 2020 and the Financial Position as at that date.

BACKGROUND

2 This report provides the financial statements for the period ended 31 January 2020. It includes reports on: financial performance, financial position, cashflows and capital expenditure. The operating result is also shown by group, including analysis by revenue and expenditure type.

DISCUSSION

3 The year to date revenue variance included reduced activity at the Green Island Landfill and lower parking revenue due to delays in implementing the new pricing structure and the increased revenue from the new pricing structure being less than originally anticipated. These unfavourable variances were partially offset by an unbudgeted dividend from Civic Assurance, higher than expected building consent and resource consent activity, and unbudgeted revenue from the Provincial Growth Fund for economic development initiatives.

Grants revenue was ahead of budget due to additional NZTA income generated from higher than expected capital expenditure on roading projects.

4 Overall expenditure was an unfavourable spend of $997k on a year to date budget of
$190 million. Depreciation was higher than expected following the revaluation of Transport assets; Personnel Costs were higher than expected due largely to additional staffing required to support the delivery of 2GP and increased building consent activity. The unfavourable variances were partially offset by favourable interest expenditure, and delayed timing associated with the greenspace contracts and pre-reseal road maintenance costs.

5 The year to date Waipori result was ahead of budget, with higher than expected fair values gains across most investment portfolios.

6 Capital expenditure was running under budget, but higher than last financial year’s corresponding figure.

OPTIONS

7 Not applicable.

NEXT STEPS

8 Not applicable.

Signatories

Author:

Gavin Logie - Financial Controller

Lawrie Warwood - Financial Analyst

Authoriser:

Dave Tombs - General Manager Finance and Commercial

Attachments

	Title	Page
⇩a	Summary Financial Information	23
⇩b	Statement of Financial Performance	24
⇩c	Statement of Financial Position	25
⇩d	Statement of Cashflows	26
⇩e	Capital Expenditure Summary	27
⇩f	Summary of Operating Variances	28
⇩g	Financial Review	29

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

The financial expenditure reported in this report relates to providing local infrastructure, public services and regulatory functions which contribute to the well-being of the community.

Fit with strategic framework

	Contributes	Detracts	Not applicable
Social Wellbeing Strategy	☐	☐	☒
Economic Development Strategy	☐	☐	☒
Environment Strategy	☐	☐	☒
Arts and Culture Strategy	☐	☐	☒
3 Waters Strategy	☐	☐	☒
Spatial Plan	☐	☐	☒
Integrated Transport Strategy	☐	☐	☒
Parks and Recreation Strategy	☐	☐	☒
Other strategic projects/policies/plans	☐	☐	☒

This report has no direct contribution to the Strategic Framework, although the financial expenditure reported in this report has contributed to all of the strategies.

Māori Impact Statement

There are no known impacts for tangata whenua.

Sustainability

There are no known implications for sustainability.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report fulfils the internal financial reporting requirements for Council.

Financial considerations

Not applicable – reporting only.

Significance

Not applicable – reporting only.

Engagement – external

There has been no external engagement.

Engagement - internal

The report is prepared as a summary for the individual department financial reports.

Risks: Legal / Health and Safety etc.

There are no known risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

There are no known implications for Community Boards.

Finance and Council Controlled Organisations Committee

9 March 2020

Financial Result - Period Ended 31 December 2019

Department: Finance

EXECUTIVE SUMMARY

1 This report provides the financial results for the period ended 31 December 2019 and the financial position as at that date.

RECOMMENDATIONS

That the Committee:

a) Notes the Financial Performance for the period ended 31 December 2019 and the Financial Position as at that date.

BACKGROUND

2 This report provides the financial statements for the period ended 31 December 2019. It includes reports on: financial performance, financial position, cashflows and capital expenditure. The operating result is also shown by group, including analysis by revenue and expenditure type.

DISCUSSION

3 The Finance and Council Controlled Organisations Committee (“the Committee”) has received the financial results for January 2020.

4 The financial results for December 2019 have not previously been reported to the Committee and, being half-yearly results, are attached for noting.

5 The half-yearly results have to a large extent been superseded by the January 2020 results so this report, comprising the key financial reports, has been largely provided for information purposes only.

OPTIONS

6 Not applicable.

NEXT STEPS

7 Not applicable.

Signatories

Author:

Gavin Logie - Financial Controller

Lawrie Warwood - Financial Analyst

Authoriser:

Dave Tombs - General Manager Finance and Commercial

Attachments

	Title	Page
⇩a	Summary Financial Information	39
⇩b	Statement of Financial Performance	40
⇩c	Statement of Financial Position	41
⇩d	Statement of Cashflows	42
⇩e	Capital Expenditure Summary	43
⇩f	Summary of Operating Variances	44

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

The financial expenditure reported in this report relates to providing local infrastructure, public services and regulatory functions which contribute to the well-being of the community.

Fit with strategic framework

	Contributes	Detracts	Not applicable
Social Wellbeing Strategy	☐	☐	☒
Economic Development Strategy	☐	☐	☒
Environment Strategy	☐	☐	☒
Arts and Culture Strategy	☐	☐	☒
3 Waters Strategy	☐	☐	☒
Spatial Plan	☐	☐	☒
Integrated Transport Strategy	☐	☐	☒
Parks and Recreation Strategy	☐	☐	☒
Other strategic projects/policies/plans	☐	☐	☒

This report has no direct contribution to the Strategic Framework, although the financial expenditure reported in this report has contributed to all of the strategies.

Māori Impact Statement

There are no known impacts for tangata whenua.

Sustainability

There are no known implications for sustainability.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report fulfils the internal financial reporting requirements for Council.

Financial considerations

Not applicable – reporting only.

Significance

Not applicable – reporting only.

Engagement – external

There has been no external engagement.

Engagement - internal

The report is prepared as a summary for the individual department financial reports.

Risks: Legal / Health and Safety etc.

There are no known risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

There are no known implications for Community Boards.

Finance and Council Controlled Organisations Committee

9 March 2020

Waipori Fund - Quarter Ending September 2019 and the Quarter Ending December 2019

Department: Finance

EXECUTIVE SUMMARY

1 The attached reports from Dunedin City Treasury Limited provide information on the results of the Waipori Fund for the quarters ended 30 September 2019 and 31 December 2019.

RECOMMENDATIONS

That the Committee:

a) Notes the reports from Dunedin City Treasury Limited on the Waipori Fund for the quarters ended 30 September 2019 and 31 December 2019.

BACKGROUND

2 Not applicable.

DISCUSSION

3 Not applicable.

OPTIONS

4 Not applicable.

NEXT STEPS

5 Not applicable.

Signatories

Author:	Richard Davey - Treasury Manager
Authoriser:	Dave Tombs - General Manager Finance and Commercial

Attachments

	Title	Page
⇩a	Waipori Fund - September 2019 Quarter	48
⇩b	Waipori Fund - December 2019 Quarter	52

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This report relates to providing local infrastructure, public services and regulatory functions for the community.

Fit with strategic framework

	Contributes	Detracts	Not applicable
Social Wellbeing Strategy	☐	☐	☒
Economic Development Strategy	☐	☐	☒
Environment Strategy	☐	☐	☒
Arts and Culture Strategy	☐	☐	☒
3 Waters Strategy	☐	☐	☒
Spatial Plan	☐	☐	☒
Integrated Transport Strategy	☐	☐	☒
Parks and Recreation Strategy	☐	☐	☒
Other strategic projects/policies/plans	☒	☐	☐

This report has no direct contribution to the Strategic Framework.

Māori Impact Statement

There are no know implications for tangata whenua.

Sustainability

There are no known implications for sustainability.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report fulfils the financial reporting requirements for Council.

Financial considerations

Not applicable – reporting only.

Significance

Not applicable – reporting only.

Engagement – external

This report has been prepared for and approved by the Board of Dunedin City Treasury Limited.

Engagement - internal

There has been no internal engagement.

Risks: Legal / Health and Safety etc.

There are no known risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

There are no known implications for Community Boards.

Finance and Council Controlled Organisations Committee

9 March 2020

Dunedin City Holdings Limited Parent Financials - Year ended 30 June 2019

Department: Finance

EXECUTIVE SUMMARY

1 This report provides the financial results for the year ended 30 June 2019 and the financial position as at that date for the Dunedin City Holdings Limited parent company.

RECOMMENDATIONS

That the Committee:

a) Notes the Financial Performance for the year ended 30 June 2019 and the Financial Position as at 30 June 2019 for Dunedin City Holdings Limited Parent Company.

BACKGROUND

2 This report provides a commentary of the financial performance of Dunedin City Holdings Limited (Parent) for the year ended 30 June 2019 and the financial position as at that date.

DISCUSSION

3 The net surplus for the year was $2.977 million or $3.274 million greater than budget.

4 The variance against budget was primarily due to higher than expected dividend income from City Forests Limited.

5 Investment in Subsidiaries as at 30 June was represented as follows:

6 Total term loans as at 30 June 2019 were $19.800 million or $6.000 million lower than budget. This favourable variance was due to the additional dividend income received from City Forests Limited for the last two years.

OPTIONS

7 Not applicable.

NEXT STEPS

8 Not applicable.

Signatories

Author:	Gavin Logie - Financial Controller
Authoriser:	Dave Tombs - General Manager Finance and Commercial

Attachments

	Title	Page
⇩a	Financial Statements	61

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

The financial expenditure reported in this report relates to providing local infrastructure, public services, commercial activities and regulatory functions for the community.

Fit with strategic framework

	Contributes	Detracts	Not applicable
Social Wellbeing Strategy	☐	☐	☒
Economic Development Strategy	☐	☐	☒
Environment Strategy	☐	☐	☒
Arts and Culture Strategy	☐	☐	☒
3 Waters Strategy	☐	☐	☒
Spatial Plan	☐	☐	☒
Integrated Transport Strategy	☐	☐	☒
Parks and Recreation Strategy	☐	☐	☒
Other strategic projects/policies/plans	☐	☐	☒

This report has no direct contribution to the Strategic Framework, although the financial expenditure reported in this report has contributed to all of the strategies.

Māori Impact Statement

There are no known impacts for tangata whenua.

Sustainability

There are no known implications for sustainability.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report fulfils the DCHL parent company financial reporting requirements for Council.

Financial considerations

Not applicable – reporting only.

Significance

Not applicable – reporting only.

Engagement – external

There has been no external engagement.

Engagement - internal

This report is prepared based on information provided by DCHL.

Risks: Legal / Health and Safety etc.

There are no known risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

There are no known implications for Community Boards.

Finance and Council Controlled Organisations Committee

9 March 2020

Draft 2020/21 Statements of Intent - Dunedin City Holdings Limited Group Companies

Department: Finance

EXECUTIVE SUMMARY

1 This report presents the draft 2020/21 Statements of Intent of Dunedin City Holdings Group companies for Council comments and/or noting.

RECOMMENDATIONS

That the Committee:

a) Notes the draft 2020/21 Statements of Intent of Dunedin City Holdings Group companies;

b) Provides comments on the draft 2020/21 Statements of Intent by 1 May 2020.

BACKGOUND

2 Council Controlled Organisations (CCOs) are required to deliver draft Statements of Intent (SOIs) to Council each year.

3 The SOI demonstrates accountability to the shareholder and the public by outlining the company’s activities and intentions for the next three financial years. The SOI provides the basis for the accountability of the directors to their shareholder for the performance of their organisation.

4 Draft SOIs have been drafted to reflect the Letter of Expectation (LoE) from the Dunedin City Council dated 31 August 2019.

DISCUSSION

5 The DCHL Report that is included in the attachments to this report identifies key considerations that are relevant when reviewing these draft SOIs.

6 Please note that due to the compliance timeframes and the length of time between preparation of these draft SOIs and the final SOIs, the financial projections contained in draft SOIs are likely to be at a variance with those presented on or before 30 June 2019.

7 As a shareholder of DCHL the Council may provide comments on the draft SOIs to the Board of DCHL, who must consider any such comments. DCHL will also co-ordinate providing any feedback to subsidiary and/or associate companies. A workshop to discuss feedback has been scheduled for 31 March 2020.

8 Final SOIs must then be delivered to shareholders on or before 30 June 2019. SOIs are made available publicly on the DCC website on or before 1 July 2019.

OPTIONS

9 Not applicable.

NEXT STEPS

10 A workshop for discussion of the draft Statements of Intent for Councillors and Board Chairs or their representatives will be held on 31 March 2020.

11 Budget figures will be updated prior to the completion of final SOIs in June 2019.

Signatories

Author:	Dave Tombs - General Manager Finance and Commercial
Authoriser:	Sue Bidrose - Chief Executive Officer

Attachments

	Title	Page
⇩a	Report from Dunedin City Holdings	68
⇨b	Dunedin City Holdings Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨c	Aurora Energy Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨d	City Forests Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨e	Delta Utility Services Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨f	Dunedin City Treasury Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨g	Dunedin International Airport Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨h	Dunedin Railways Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨i	Dunedin Stadium Property Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)
⇨j	Dunedin Venues Management Limited Draft 2020/21 Statement of Intent (Under Separate Cover 1)

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This report relates to providing local infrastructure, public services and regulatory functions for the community.

Fit with strategic framework

	Contributes	Detracts	Not applicable
Social Wellbeing Strategy	☐	☐	☒
Economic Development Strategy	☐	☐	☒
Environment Strategy	☐	☐	☒
Arts and Culture Strategy	☐	☐	☒
3 Waters Strategy	☐	☐	☒
Spatial Plan	☐	☐	☒
Integrated Transport Strategy	☐	☐	☒
Parks and Recreation Strategy	☐	☐	☒
Other strategic projects/policies/plans	☐	☐	☒

All draft SoIs take Council’s Strategic Framework, and the themes of Council’s Letter of Expectation to DCHL into account. Each SoI includes the Strategic Framework as an Appendix.

Māori Impact Statement

There are no known impacts for tangata whenua.

Sustainability

There are no known implications for sustainability.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

The financial forecasts within the DCHL SOI (page 6) shows annual levels of interest ($5.9m) and dividend ($zero) payable to DCC that are consistent with the DCC Long Term Plan and current Annual Plan.

Financial considerations

Refer “LTP/Annual Plan/Financial Strategy/Infrastructure Strategy” section above. Also note that the draft DCHL SOI includes Term Loans figures for DCHL that include DCC’s current ‘fast tracked’ capital expenditure program. This will require DCHL’s share capital levels to be reviewed during the period covered by these SOIs.

Significance

This matter is considered Low in terms of Council’s Significance and Engagement Policy.

Engagement – external

There has been no external engagement outside of DCHL Group.

Engagement - internal

There has been no internal engagement to date. A workshop for Councillors and DCHL Group Chairs has been scheduled for 31 March 2020.

Risks: Legal / Health and Safety etc.

There are no known risks.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

There are no known implications for Community Boards.

Finance and Council Controlled Organisations Committee

9 March 2020

Part B Reports

Changes to the Constitution of Dunedin City Holdings Limited

Department: Finance

EXECUTIVE SUMMARY

1 This report seeks Council’s approval to update the Constitution of Dunedin City Holdings Limited (“DCHL”).

RECOMMENDATIONS

That the Committee:

a) Considers the new Constitution for the Board of Dunedin City Holdings Limited (DCHL).

b) Approves the new Constitution of DCHL.

c) Authorises the Mayor to sign the attached shareholder resolution on behalf of Council.

BACKGROUND

2 Recent updates have resulted in a small number of amendments being required to the Constitution of DCHL.

Share Capital (Section 4 of the Constitution)

3 The DCHL Constitution refers to the number of shares existing at date of adoption of the Constitution.

4 Council approved to increase the number of shares in DCHL in December 2019 to enable DCC Group future debt limits to be increased (uncalled share capital of DCHL provides the security for DCC Group debt).

5 As other changes to the Constitution are being proposed (below), the Constitution should also be updated to reflect the new level of share capital.

Annual Meeting (Section 8 of the Constitution)

6 Updates to the Companies Act provide that an annual meeting is not required where everything required to be done at the meeting can be done by written resolution or where there is nothing to be done at the meeting and the board has resolved that it is in the interests of the company to rely on this exclusion.

7 An amendment to the DCHL Constitution has been proposed (S8.2) that would enable the DCHL Directors to rely on this new Companies Act section if required.

Directors: Maximum Length of Service (Section 10 of the Constitution)

8 One of the amendments to the Council’s Procedure for Appointment and Remuneration of Directors of Dunedin City Holdings Limited made last year replaced the maximum length of time that a director can serve from being ‘three terms’ to ‘nine years’.

9 This change was deemed necessary as, although the maximum term a director can serve is three years, in certain situations a term may be for less than three years.

10 The DCHL Constitution refers to the maximum length of service as ‘three terms’ so it is proposed to change this to ‘nine years’.

Other

11 Minor grammatical amendments have also been made.

12 These changes and amendments have been reviewed by management of DCHL.

DISCUSSION

13 Not Applicable.

OPTIONS

Option One – Recommended Option

14 Approve the amended DCHL Constitution.

Advantages

· Constitution becomes aligned with the DCC Procedure for Appointment and Remuneration of Directors of Dunedin City Holdings Limited.

· Constitution incorporates recent changes to Companies Act.

· References to DCHL share capital are updated.

Disadvantages

· None identified.

Option Two – Status Quo

15 Do not approve the amended DCHL Constitution.

Advantages

· None identified.

Disadvantages

· Constitution is not aligned with the DCC Procedure for Appointment and Remuneration of Directors of Dunedin City Holdings Limited.

· Constitution does not incorporate recent changes to Companies Act.

· References to DCHL share capital are outdated.

NEXT STEPS

16 If approved the attached resolution will be signed and the Constitution will be amended.

Signatories

Author:	Dave Tombs - General Manager Finance and Commercial
Authoriser:	Sue Bidrose - Chief Executive Officer

Attachments

	Title	Page
⇩a	DCHL Constitution Track Changes	75
⇩b	DCHL Constitution Amended	92
⇩c	Special Resolution DCHL Constitution	109

SUMMARY OF CONSIDERATIONS

Fit with purpose of Local Government

This report relates to providing local infrastructure, public services and regulatory functions for the community.

Fit with strategic framework

	Contributes	Detracts	Not applicable
Social Wellbeing Strategy	☐	☐	☒
Economic Development Strategy	☐	☐	☒
Environment Strategy	☐	☐	☒
Arts and Culture Strategy	☐	☐	☒
3 Waters Strategy	☐	☐	☒
Spatial Plan	☐	☐	☒
Integrated Transport Strategy	☐	☐	☒
Parks and Recreation Strategy	☐	☐	☒
Other strategic projects/policies/plans	☐	☐	☒