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 31 August 2020
Time: 1.00 pm
Venue: Edinburgh Room, Municipal Chambers, The Octagon, Dunedin
Sandy Graham
Acting Chief Executive Officer
Finance and Council Controlled Organisations Committee
PUBLIC AGENDA
MEMBERSHIP
Chairperson |
Cr Mike Lord |
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Deputy Chairperson |
Cr Doug Hall
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Members |
Cr Sophie Barker |
Cr David Benson-Pope |
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Cr Rachel Elder |
Cr Christine Garey |
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Mayor Aaron Hawkins |
Cr Carmen Houlahan |
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Cr Marie Laufiso |
Cr Jim O'Malley |
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Cr Jules Radich |
Cr Chris Staynes |
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Cr Lee Vandervis |
Cr Steve Walker |
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Cr Andrew Whiley |
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Senior Officer Gavin Logie, Acting General Manager Finance
Governance Support Officer Wendy Collard
Wendy Collard
Governance Support Officer
Telephone: 03 477 4000
Wendy.Collard@dcc.govt.nz
Note: Reports and recommendations contained in this agenda are not to be considered as Council policy until adopted.
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Finance and Council Controlled Organisations Committee 31 August 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 Waipori Fund - Quarter Ending June 2020 17
6 Financial Result - Year Ended 30 June 2020 23
7 Items for Consideration by the Chair 39
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Finance and Council Controlled Organisations Committee 31 August 2020 |
At the close of the agenda no requests for public forum had been received.
At the close of the agenda no apologies had been received.
Note: Any additions must be approved by resolution with an explanation as to why they cannot be delayed until a future meeting.
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Finance and Council Controlled Organisations Committee 31 August 2020 |
EXECUTIVE SUMMARY
1. Members are reminded of the need to stand aside from decision-making when a conflict arises between their role as an elected representative and any private or other external interest they might have.
2. Elected members are reminded to update their register of interests as soon as practicable, including amending the register at this meeting if necessary.
That the Committee: a) Notes/Amends if necessary the Elected Members' Interest Register attached as Attachment A; and b) Confirms/Amends the proposed management plan for Elected Members' Interests. |
Attachments
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Title |
Page |
⇩a |
Elected Members' Register of Interests |
7 |
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Finance and Council Controlled Organisations Committee 31 August 2020 |
Waipori Fund - Quarter Ending June 2020
Department: Finance
EXECUTIVE SUMMARY
1 The attached report from Dunedin City Treasury Limited provide information on the results of the Waipori Fund for the quarter ended 30 June 2020.
That the Committee: a) Notes the report from Dunedin City Treasury Limited on the Waipori Fund for the quarter ended 30 June 2020. |
BACKGROUND
2 Not applicable.
DISCUSSION
3 Not applicable.
OPTIONS
4 Not applicable.
NEXT STEPS
5 Not applicable.
Signatories
Author: |
Richard Davey - Treasury Manager |
Authoriser: |
Gavin Logie - Acting General Manager Finance |
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Title |
Page |
⇩a |
Waipori Fund - June 2020 Quarter |
19 |
SUMMARY OF CONSIDERATIONS |
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Fit with purpose of Local Government This report relates to providing local infrastructure, public services and regulatory functions for the community. |
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Fit with strategic framework
This report has no direct contribution to the Strategic Framework. |
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Māori Impact Statement There are no know implications for tangata whenua. |
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Sustainability There are no known implications for sustainability. |
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LTP/Annual Plan / Financial Strategy /Infrastructure Strategy This report fulfils the financial reporting requirements for Council. |
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Financial considerations Not applicable – reporting only. |
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Significance Not applicable – reporting only. |
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Engagement – external This report has been prepared for and approved by the Board of Dunedin City Treasury Limited. |
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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 known risks. |
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Conflict of Interest There are no known conflicts of interest. |
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Community Boards There are no known implications for Community Boards. |
Finance and Council Controlled Organisations Committee 31 August 2020 |
Financial Result - Year Ended 30 June 2020
Department: Finance
EXECUTIVE SUMMARY
1 This report provides the financial results for the year ended 30 June 2020 and the financial position as at that date.
That the Council: a) Notes the Financial Performance for the year ended 30 June 2020 and the Financial Position as at that date. b) Notes that the year end result is subject to final adjustments and external audit by Audit New Zealand.
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BACKGROUND
2 This report provides the financial statements for the year ended 30 June 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 full year unfavourable revenue variance included the impact of the nationwide lockdown with a number of operating units recording little or no income in the month of April, flowing into May. The variance also included the previously reported reduced activity at the Green Island Landfill and lower parking revenue.
Grants revenue was also less than budget due to the lower than expected capital expenditure on roading projects.
These unfavourable variances were partially offset by an unbudgeted dividend from Civic Assurance and unbudgeted revenue from the Provincial Growth Fund for economic development initiatives.
Contributions revenue was also greater than budget primarily due to a higher than budgeted level of vested assets.
4 Overall expenditure was an unfavourable spend of $1.025 million.
The unfavourable variances included:
· higher depreciation following the revaluation of Transport and Three Waters assets,
· higher personnel costs due to additional staffing required to support the delivery of 2GP. Personnel costs were also impacted by an increase in the liability for annual leave due to the current restrictions on travel and staff electing to defer their holiday plans,
· higher grants & subsidies due to the payment of $500k in relation to the planned hockey turf at Kings High School originally budgeted in the 2017/2018 financial year,
· an increase in the aftercare provision related to the Green Island Landfill.
The unfavourable variances were partially offset by:
· lower than expected costs associated with Parks maintenance contracts (reserves, buildings and other facilities) resulting from the nationwide lockdown and improved management of scheduled and unscheduled spending,
· lower variable costs resulting from the reduced landfill activity,
· favourable interest costs due to a lower level of borrowing and favourable floating interest rate.
5 The full year Waipori result was close to budget with a significant degree of recovery in April/May following the initial market decline that occurred in March.
6 Capital expenditure ended the year below budget with delays for a number of projects including limited expenditure during the nationwide lockdown.
OPTIONS
7 Not applicable.
NEXT STEPS
8 Not applicable.
Signatories
Author: |
Lawrie Warwood - Financial Analyst |
Authoriser: |
Gavin Logie - Acting General Manager Finance |
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Title |
Page |
⇩a |
Summary Financial Information |
29 |
⇩b |
Statement of Financial Performance |
30 |
⇩c |
Statement of Financial Position |
31 |
⇩d |
Statement of Cashflows |
32 |
⇩e |
Capital Expenditure Summary |
33 |
⇩f |
Summary of Operating Variances |
34 |
⇩g |
Financial Review |
35 |
SUMMARY OF CONSIDERATIONS |
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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. |
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Fit with strategic framework
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. |
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Māori Impact Statement There are no known impacts for tangata whenua. |
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Sustainability There are no known implications for sustainability. |
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LTP/Annual Plan / Financial Strategy /Infrastructure Strategy This report fulfils the internal financial reporting requirements for Council. |
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Financial considerations Not applicable – reporting only. |
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Significance Not applicable – reporting only. |
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Engagement – external There has been no external engagement. |
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Engagement - internal The report is prepared as a summary for the individual department financial reports. |
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Risks: Legal / Health and Safety etc. There are no known risks. |
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Conflict of Interest There are no known conflicts of interest. |
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Community Boards There are no known implications for Community Boards. |
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Finance and Council Controlled Organisations Committee 31 August 2020 |
Financial Review
For the year ended 30 June 2020
This report provides a detailed commentary
on the Council’s financial result for the year ended
30 June 2020 and the financial position at that date.
net surplus/(Deficit) (including waipori)
The net surplus (including Waipori) for the
year ended 30 June 2020 was $405k or
$9.442 million lower than budget.
REVENUE
The total revenue for the year was $308.696 million or $8.323 million less than budget.
The major variances were as follows:
Other Operating Revenue
Actual $69.446 million, Budget $77.452 million, Unfavourable variance $8.006 million
Waste and Environmental revenue was unfavourable $3.402 million primarily due to lower than expected activity at the Green Island landfill.
Parking Operations revenue was unfavourable $2.750 million, resulting from delays in implementing the new pricing structure at the start of the financial year, and the budget being over-optimistic with regards to the additional income arising from this pricing structure. The variance also included the impact of providing free parking during/after the period of the nationwide lockdown.
A number of other operating units were impacted by the lockdown and subsequent alert level changes. The main areas included:
· Parking Services with lower level of infringement activity ($432k).
· Aquatic Services with reduced user fees ($915k).
· Ara Toi group with reduced visitor activity ($398k).
These unfavourable variances were partially offset by:
Investment account revenue included an unbudgeted dividend received from Civic Assurance ($355k).
Enterprise Dunedin revenue was favourable $285k mainly due to revenue from the Provincial Growth Fund for several initiatives, namely Otago Regional Economic Development, Construction Labour Forecast and the Code of Digital Excellence.
Grants and Subsidies Revenue
Actual $40.052 million, Budget $43.359 million, Unfavourable variance $3.307 million
Transportation revenue was unfavourable $3.527 million due to the lower than expected capital expenditure for the year including the impact of limited activity in April.
Contributions Revenue
Actual $6.116 million, Budget $3.332 million, Favourable variance $2.784 million
The full year actual included $4.900
million of vested infrastructure assets versus a budget of
$2.500 million.
Expenditure
The total expenditure for the year was $313.239 million or $1.025 million greater than budget.
The major variances were as follows:
Personnel Costs
Actual $67.488 million, Budget $64.973 million, Unfavourable variance $2.515 million
The full year variance reflected additional staffing and staffing cost required to support the delivery of the 2GP and process a higher than expected volume of building consents. The variance also reflected ongoing recruitment of staff into the higher salary grades and a reduction in annual leave taken across the organisation due to the nationwide lockdown resulting in a higher than expected accrued leave as at 30 June 2020.
Operations and Maintenance Costs
Actual $67.782 million, Budget $71.154 million, Favourable variance $3.372 million
Parks costs were favourable $1.693 million partly due to tighter management of scheduled and unscheduled work under the North and South Greenspace contracts. Some living asset, building and paving maintenance costs were also deferred. Contract costs savings attributed to the nationwide lockdown in April and May were estimated to be approx. $520k across the Greenspace, Ecological and tree maintenance contracts.
Three Waters costs were favourable $1.078 million partly due to the impact of the nationwide lockdown in April and May. A larger than expected amount of work under the City Care contract was capital in nature, resulting in savings in operational maintenance and contract overhead costs of $630k. There were also significant treatment savings in testing and chemicals.
Grants and Subsidies Costs
Actual $10.095 million, Budget $9.482 million, Unfavourable variance $613k
Parks costs were unfavourable $508k due to a grant relating to the Kings hockey turf budgeted in 2017/18 being paid in the 2019/20 year.
Depreciation
Actual $73.052 million, Budget $68.984 million, Unfavourable variance $4.068 million
Depreciation was unfavourable mainly due to revaluation of Transportation and Three Waters assets effective from 1 July 2019.
Interest
Actual $10.014 million, Budget $12.833 million, Favourable variance $2.819 million
Interest expenditure was less than budget primarily due to a favourable floating interest rate applied to the non-fixed interest borrowing, along with a lower loan balance.
WAIPORI FUND NET OPERATING RESULT
Actual $4.948 million, Budget $5.042 million, Unfavourable variance $94k
The Waipori Fund ended the year relatively close to budget following the earlier market decline in March.
Statement of Financial Position
A Statement of Financial Position is provided as Attachment C.
Short term investments of $7.163 million relate to the Waipori Fund.
Total Debt ended the year below budget following the lower level of capital expenditure, partially offset by the revenue shortfalls discussed above.
Capital Expenditure
A summary of the capital expenditure programme by Activity is provided as Attachment E.
Total capital expenditure for the year was
$92.319 million or 73.9% of the full year budget of
$124.958 million.
Community Planning capital expenditure was $1.406 million underspent
There was limited expenditure for the year on the Central City Plan and Citywide Amenity Upgrades.
Corporate Services capital expenditure was $2.551 million underspent
The underspend was primarily driven by lower than expected expenditure on a number of key IT projects including the Payroll System Replacement, Online Services, and Mobility Solutions, Infrastructure Program and Performance Management System.
Property capital expenditure was $7.999 million underspent
The underspend was due the delayed timing of projects including the South Dunedin Community Complex, School St and Palmyra Housing Upgrades, Tarpit Renewal, Ice Stadium Roof, Civic Centre Roof Renewal, and the Central Library Refurbishment project.
Parks and Recreation capital expenditure was $6.919 million underspent
This variance primarily reflected delays in key Aquatics projects (Moana upgrade and the Mosgiel Aquatic centre development) pending finalising of project scope and design.
Transport capital expenditure was $8.178 million underspent
A number of key projects were underspent for the year, partially driven by the impact of the nationwide lockdown and managed project recommencement in May and June.
Dunedin Urban Cycleways expenditure was underspent $1.969 million, with expenditure being deferred until 2021 to allow negotiations with Kiwirail to be concluded.
Three Waters capital expenditure was $3.548 million underspent
The underspend was primarily driven by delays in Mosgiel stormwater renewals while further investigative work on flood risks in Mosgiel is undertaken.
Comments from group activities
Attachment F, 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.
Corporate Services - $784k Favourable
BIS operating costs were favourable primarily due to project management costs being capitalised to the relevant software projects (including payroll).
Group depreciation was also favourable due to the delayed completion of some key IT projects.
Property - $962k Unfavourable
External revenue was impacted by reduced rental income during the nationwide lockdown period, partially offset by an unbudgeted net increase in the value of the investment property portfolio.
Operating costs were unfavourable due largely to unbudgeted fire compliance costs for several properties, including the Regent Theatre and Art Gallery, maintenance costs in the Civic Centre, Town Hall air condition systems maintenance and asbestos assessment costs at Toitu Settlers Museum.
Parks and Recreation - $718k Favourable
Parks costs were favourable due to tighter management of scheduled and unscheduled work under the North and South Greenspace contracts. Some living asset, building and paving maintenance costs were also deferred. Contract costs savings attributed to the nationwide lockdown in April and May were estimated to be approx. $520k across the Greenspace, Ecological and tree maintenance contracts.
Group revenue was unfavourable primarily due to the impact of the lockdown and subsequent alert level changes in Aquatic Services.
Customer and Regulatory Services - $2.856 million Unfavourable
Parking Operations and Parking Enforcement revenue was unfavourable due to less than budgeted parking meter revenue partially as a result of delays in implementing the new pricing structure, and the budget being over-optimistic with regards the additional income arising from this pricing structure. The variance also included the impact of providing free parking during/after the period of the nationwide lockdown.
Transport - $2.876 million Unfavourable
Depreciation was unfavourable as a result of latest revaluation of Transportation assets.
NZTA grants revenue was unfavourable due to lower operational expenditure on both maintenance and subsidised consultants during the nationwide lockdown as well as the underspend on major capital projects and subsidised renewals.
These unfavourable variances were partially
offset by unbudgeted vested asset income of
$3.200 million.
Waste and Environmental - $3.602 million Unfavourable
This variance reflected the net impact of a reduction in commercial tonnage at Green Island Landfill, along with an increase in the aftercare provision related to the landfill.