|
|
Council
10 November 2020
|
Reports
COVID-19 Response Fund
Department: Enterprise Dunedin
EXECUTIVE SUMMARY
1 On
28 May 2020, Council requested a report outlining options for allocating a
COVID-19 Support Fund of $950k. The COVID-19 Support Fund aims to strengthen
social wellbeing and economic development activities in response to the local
impact of the pandemic.
2 The
purpose of this report is to seek Council approval to allocate up to $160k from
the COVID-19 Support Fund for three proposals identified during the Great
Dunedin Brainstorm. This funding will be administered by Enterprise Dunedin and
be allocated subject to further development, project planning and contracting.
|
RECOMMENDATIONS
That the Council:
a) Approves the
proposed allocation of up to $160k of the COVID-19 Support Fund to be
administered by Enterprise Dunedin.
b) Notes that
an update on further proposals for the COVID-19 Support Fund will be
presented to Council in February 2021.
|
BACKGROUND
3 As
part of the Draft 2020/21 Annual Plan deliberations on 27 and 28 May 2020,
Council resolved the following:
Moved (Cr Chris Staynes/Cr Christine
Garey):
That the Council:
a) Approves
an overall rates increase of 4.1% for the Annual Plan 2020-21
b) Allocates
$950k to a COVID-19 Support Fund
c) Requests
staff provide a report to the 30 June 2020 meeting outlining options for allocating
the support fund towards COVID-19 recovering initiatives for social wellbeing
and economic development objectives; and
d) Acknowledges
combined borrowing for the Dunedin Railway Limited mothballing costs and the
2020-21 revenue shortfall currently budgeted at $7.538m.
Division
The Council voted by division:
For: Crs
Sophie Barker, David Benson-Pope, Rachel Elder, Christine Garey, Doug Hall,
Carmen Houlahan, Marie Laufiso, Mike Lord, Jim O'Malley, Jules Radich, Chris
Staynes, Steve Walker, Andrew Whiley and Aaron Hawkins (14).
Against: Cr
Lee Vandervis (1).
Abstained:
Nil
The division was declared CARRIED
by 14 votes to 1
Motion carried (AP/2020/001)
4 At
the 30 June 2020 Council meeting, Community Development and Events presented a
report proposing the allocation of $435k of the COVID-19 Support Fund for
social wellbeing activities. The proposed allocation was approved, leaving a
balance of $515k.
5 The
Grants Subcommittee considered the allocation of the $435k for social wellbeing
activities at its meeting on 5 November 2020.
DISCUSSION
6 The
Grow Dunedin Partnership (GDP) which includes the University of Otago, Otago
Polytechnic, Ngāi Tahu, Otago Chamber of Commerce, Otago Southland
Employers Association and the Dunedin City Council undertook a series of
workshops to develop a coordinated response to the economic and social impacts
of COVID-19 between April and June 2020.
7 This
work, using Investment Logic Mapping (ILM) identified a number of initial
economic and social challenges, possible solutions and actions (see Attachment
A).
8 GDP
proposed the concept of the Great Dunedin Brainstorm to engage the community on
ideas to respond to the economic and social challenges arising from COVID-19.
This idea-generating workshop (an approach not previously used by GDP) was held
on 11 and 12 September 2020.
9 46
people participated in the Great Dunedin Brainstorm. The event was facilitated
by Steve Renata and participants were supported by experienced mentors. At the
conclusion of the event 11 potential projects were presented to GDP.
10 GDP
and Enterprise Dunedin have further reviewed and engaged with the teams on the
proposals. Three proposals totalling $160k have been identified for initial
support through the COVID-19 Support Fund:
|
Initiative
|
Project Details
|
Strategy Link
|
Allocation
|
|
Improving diversity in
the construction workforce
|
Based on a successful model from the
United States and sponsored by a team led by a lecturer from the
University of Otago. This proposal aims to increase diversity in the
construction workforce. Those disproportionately impacted by COVID-19 (Maori,
Pasifika and women) will be prioritised.
|
Economic Development
Social Wellbeing
|
$50k
|
|
Support
for the local film sector
|
This proposal was sponsored by members
of the Dunedin film industry and will provide seed funding for early
development of three projects that will create employment, training, and
investment in the city’s screen sector.
|
Economic Development
Arts and Culture
Social Wellbeing
|
$60k
|
|
A
place-based community model for intergenerational skill-sharing
|
This proposal was sponsored by Otago
Polytechnic staff and will target tertiary graduates whose immediate plans
have been disrupted by COVID-19. It will include the development of the
soft skills important for future
employment, and the creation of a sense of purpose
in uncertain times through engagement with the wider community.
|
Economic Development
Social Wellbeing
|
$50k
|
|
Total Proposed
|
|
|
$160k
|
11 Subject
to Council approval, this report proposes allocating up to $160k to the three
proposals which will be administered by Enterprise Dunedin. Staff will
undertake further work with the sponsors of each proposal, which subject to
further development and project planning will be contracted for delivery in
accordance with Council process.
12 Several
additional projects that could be developed further or enhanced by the COVID-19
Support Fund have been also been identified in addition to those generated at
the Great Dunedin Brainstorm. These initiatives align with the objectives of
the COVID-19 Support Fund and ILM developed by the GDP, however additional
scoping is required before further recommendations are made.
OPTIONS
13 Two
Options are presented below.
Option
One – Recommended Option
14 Council
approves the three initiatives developed and recommended from the Great Dunedin
Brainstorm.
Advantages
· Allows
the development and implementation of three initiatives to improve diversity in
the construction workforce, support for the local film sector and support for
tertiary graduates impacted by COVID-19;
· The
proposed initiatives are within the scope of the GDP ‘Coordinated City Response
and Recovery to COVID-19’ ILM; and
· The
proposed initiatives were developed with community input and are supported by
the GDP.
Disadvantages
· No
identified disadvantages.
Option
Two – Status Quo
15 Council
does not approve some or all three of the proposed initiatives.
Advantages
· $160k
retained for other initiatives under the COVID-19 Support Fund.
Disadvantages
· This
option does not follow the advice from GDP; and
· No
initiatives would be taken forward from the Great Dunedin Brainstorm.
NEXT STEPS
16 Enterprise
Dunedin will undertake further due diligence and work on the development of the
proposals with the project sponsors. This will include engagement with the
project teams that participated in the Great Dunedin Brainstorm, formulation of
more detailed project plans, contracting and procurement of services.
17 Updates
on the proposals will be provided through the Economic Development Committee
activity report. Additional proposals associated with the ILM and generated at
the Great Dunedin Brainstorm will be further developed and brought back to
Council for consideration in February 2021.
Signatories
|
Author:
|
Fraser Liggett - Economic Development Programme Manager
|
|
Authoriser:
|
John Christie - Director Enterprise Dunedin
|
Attachments
|
|
Title
|
Page
|
|
|
⇩a
|
Grow Dunedin
Partnership: Investment Logic Map
|
25
|
|
|
SUMMARY OF CONSIDERATIONS
|
|
Fit with purpose
of Local Government
This decision promotes the social
well-being and economic development of communities in the present and for the
future.
|
|
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
|
☐
|
☐
|
☒
|
The proposed allocation has been developed to primarily
support economic development and social wellbeing objectives. The proposed
allocation also supports the implementation of the Otago Regional Economic
Development Strategic Framework, and the Ōtepoti Youth
Vision.
|
|
Māori Impact
Statement
Ngāi Tahu are a member of the Grow Dunedin
Partnership. Mana whenua, who have been disproportionately impacted by
COVID-19, will be prioritised in the implementation of the proposed projects.
|
|
Sustainability
The proposals are expected to positively contribute to
economic and social sustainability.
|
|
LTP/Annual Plan /
Financial Strategy /Infrastructure Strategy
Provision for the fund has been included in the 2020-21
Annual Plan.
|
|
Financial
considerations
Provision of $950k has been made in accordance with the resolution
of Council on 27-28 May 2020.
|
|
Significance
This decision is considered of low significance in terms
of the Council’s Significance and Engagement Policy.
|
|
Engagement –
external
46 individuals and a number of external agencies,
including the Grow Dunedin Partners, the Ministry of Social Development, the
Otago Community Trust, Aukaha and Great Dunedin Brainstorm participants have
been engaged.
|
|
Engagement -
internal
Enterprise Dunedin, Ara Toi, Community Development and
Events, Parks and Recreation, Property and Policy were involved in
discussions on the proposed events.
|
|
Risks: Legal /
Health and Safety etc.
There are no known legal or health and safety risks associated
with the three proposals. Project risks will be managed through further
development of the proposals, contracting and Enterprise Dunedin support.
|
|
Conflict of
Interest
There are no known conflicts of interest.
|
|
Community Boards
There are no implications for Community Boards.
|
|
|
Council
10 November 2020
|
Financial Strategy - Debt Limit
Department: Executive Leadership Team
EXECUTIVE SUMMARY
1 This
report presents options for setting a debt limit to be used in the preparation
of the 10 year plan 2021-31. The approved option would be included in the
Financial Strategy and would be used to inform a proposed level of capital
expenditure over the 10 year period.
|
RECOMMENDATIONS
That the Council:
a) Approves
setting a debt limit as a percentage of revenue;
b) Considers the
percentage of revenue to be used in the
preparation of the 10 year plan, and for inclusion in the draft Financial
Strategy.
|
BACKGROUND
2 The
Local Government Act 2002 (LGA) requires all councils to prepare and adopt a
Financial Strategy. The purpose of a Financial Strategy is:
· To
facilitate prudent financial management by providing a guide for considering
proposals for funding and expenditure; and
· Provide
a context for consultation, by making transparent the overall effects of
proposals on services, rates, debt and investments.
3 The
LGA sets out the information that must be contained in a Financial Strategy and
includes statements on:
· Factors
that will have a significant impact on the 10 year plan, e.g., change in
population, land use, and capital expenditure;
· Limits
on rate increases and debt;
· Ability
to provide and maintain levels of service, and meet additional demands within
the rate and debt limits;
· Policy
on giving securities for debt;
· Objectives
for holding investments; and
· Targets
for investment returns.
4 The
focus of this report is on debt limits for Council only, i.e., not the Group
being Council and its Council Controlled Organisations. A report on the
full Financial Strategy will be presented to Council at a future date, and this
will consider the broader issue for the Group.
DISCUSSION
Current position
5 Council
uses debt to fund the cost of new capital. The use of debt allows the
financial burden of new capital expenditure to be spread across a number of
financial years, recognising that the expenditure is on intergenerational
assets, i.e., the assets have a long life and generate benefits both now and to
future generations.
6 Debt
is also used to fund the portion of capital renewals that is not covered by
funded depreciation.
7 The
Financial Strategy in the current 10 year plan (2018-28) provides for a fixed
debt limit of $350 million. The graph below shows the level of actual
debt at 30 June 2020 as $243 million, and debt is forecast to reach $346
million by 2027/28.
8 Setting
a debt limit is required to inform the level of capital expenditure that can be
provided for in the 10 year plan 2021-31. The capital budget in the
current 10 year plan (2018-28) totals $878 million.
Preliminary capital budgets
9 Preliminary
capital budgets developed for the draft 10 year plan 2021-31 show between $1.3
billion to $1.5 billion proposed total capital expenditure. Of this,
approximately $900 million is for renewals, with the remainder for new
capital. Options informing the preliminary capital budgets will be
considered as part of the 14-16 December 2020 Council meeting.
10 The
preliminary capital programme has been developed, taking into consideration the
need for greater investment in infrastructure renewals, and the impacts that
COVID-19 has had on the economy. This preliminary programme can not be
delivered within Council’s current debt limit of $350 million.
11 The
budgeted debt for 2020/21 (see graph above) is $309 million, so the forecast
debt based on the preliminary programme uplift would fall in the range $731
million to $931 million.
Options for setting debt
limits
12 The
LGA requires that debt limits are quantifiable, for example, set as a
percentage of revenue, or set as a fixed limit. If set as a percentage of
revenue, the debt limit will change as activity changes, and therefore would
provide some flexibility throughout the life of the 10 year plan. A fixed
limit does not recognise the impact of changing costs and / or activity.
13 The
Local Government Funding Authority (LGFA) quantifies lending to its members on
a percentage to revenue basis. It has a generic covenant that limits the
level of net debt to total revenue, with all its member local authorities that
have an external credit rating (such as from Standard & Poors) of
“A” or higher, and these are shown in the table below.
Council’s current rating is AA, so these ratios would apply.
Table 1
|
Year
|
Net debt to total revenue ratio
|
|
2019/20
|
< 250%
|
|
2020/21
|
< 300%
|
|
2021/22
|
< 300%
|
|
2022/23
|
< 295%
|
|
2023/24
|
< 290%
|
|
2024/25
|
< 285%
|
14 A
temporary uplift in the percentage ratio over the two year period from 2020/21
-2021/22 was in response to the impacts of COVID-19. This is being phased
down in later years.
15 The
LGFA defines net debt as total debt less liquid financial assets and
investments. The DCC’s Waipori Fund is an example of a liquid financial
asset. For the purposes of providing options for consideration, numbers
used are based on total debt, rather than net debt.
16 The
table below shows a sample of debt limit options for Council, based on setting
debt as a percentage of revenue.
Table 2
|
Financial Ratio
|
Debt limit %
|
Limit $
|
Revenue 2020/21
|
|
Debt/Total
Revenue
|
125%
|
$350m
|
$279m
|
|
175%
|
$488m
|
$279m
|
|
200%
|
$558m
|
$279m
|
|
250%
|
$698m
|
$279m
|
|
300%
|
$837m
|
$279m
|
17 The
current fixed debt limit of $350 million equates to 125% of the 2020/21
budgeted revenue.
18 For
comparative purposes, the table below shows the debt limits for the NZ metro
councils and Invercargill, from the 10 year plans 2018-28. All of these
councils except for Invercargill City and DCC, determine their debt limit as a
percentage of revenue. The equivalent calculation for these two councils
is shown.
Table 3
|
Council
|
10 YP limit
% to revenue
|
Interest exp % to revenue
|
Estimated
10 YP Debt
2028
|
Estimated Debt Limit
2028
|
% of debt taken up
|
|
Auckland
|
265%
|
N/A
|
$13.1 B
|
$14.3 B
|
91.6%
|
|
Porirua
|
250%
|
20%
|
$127.4 M
|
$310 M
|
41.1%
|
|
Queenstown Lakes
|
250%
|
20%
|
$323 M
|
$555 M
|
58.2%
|
|
Tauranga
|
250%
|
20%
|
$1.07 B
|
$1.18 B
|
90.7%
|
|
Hamilton
|
230%
|
N/A
|
$776 M
|
$906 M
|
85.6%
|
|
Christchurch
|
221%
|
20%
|
$2.73 B
|
$3.38 B
|
80.8%
|
|
Palmerton North
|
200%
|
15%
|
$367 M
|
$367 M
|
100.0%
|
|
Upper Hutt
|
175%
|
10%
|
$114 M
|
$130 M
|
87.7%
|
|
Wellington
|
175%
|
N/A
|
$1.16 B
|
$1.32 B
|
87.9%
|
|
Whangarei
|
175%
|
25%
|
$237.6 M
|
$378 M
|
62.8%
|
|
Hutt
|
170%
|
10%
|
$241 M
|
$495 M
|
48.7%
|
|
Dunedin
|
Fixed $350 M
(125%)
|
N/A
|
$346 M
|
$350 M
|
98.9%
|
|
Invercargill
|
15% of total assets (103%)
|
N/A
|
$132 M
|
$186 M
|
70.9%
|
19 Tables
4 and 5 below show two methods for setting debt limits along with a variety of
options for each.
20 Based
on the remainder years of the current 10 year plan 2018-28, with 2021/22
modified to reflect the current Annual Plan, Table 4 shows what the debt limit
would be, calculated at various percentage of revenue.
Table 4
|
Year
|
Revenue
|
Debt limit
10 yr plan (2018-28)
|
Debt limit 175% of revenue
|
Debt limit 200% of revenue
|
Debt limit 225% of revenue
|
Debt limit 250% of revenue
|
|
2020/21
|
$279m
|
$350m
|
$488m
|
$558m
|
$628m
|
$697m
|
|
2021/22
|
$285m
|
$350m
|
$499m
|
$570m
|
$641m
|
$712m
|
|
2022/23
|
$287m
|
$350m
|
$502m
|
$574m
|
$646m
|
$717m
|
|
2023/24
|
$295m
|
$350m
|
$516m
|
$590m
|
$664m
|
$737m
|
|
2024/25
|
$305m
|
$350m
|
$534m
|
$610m
|
$686m
|
$762m
|
|
2025/26
|
$316m
|
$350m
|
$181m
|
$632m
|
$711m
|
$790m
|
|
2026/27
|
$325m
|
$350m
|
$569m
|
$650m
|
$731m
|
$812m
|
|
2027/28
|
$335m
|
$350m
|
$586m
|
$670m
|
$754m
|
$837m
|
21 If
Council’s preference is to have a fixed debt limit rather than a limit
based on a percentage of revenue, then two options are available. The
first option is to have a set limit for the 10 year period, and the second
option is to have a fixed limit with incremental increases over the period of
the 10 year plan. Table 5 below provides an example of incremental
increases, taking the current debt limit of $350m and applying a 5% and 10%
increase per annum.
Table 5
|
Year
|
Debt limit
5% increase
|
Debt limit
10% increase
|
|
2020/21
|
$367m
|
$385m
|
|
2021/22
|
$386m
|
$423m
|
|
2022/23
|
$405m
|
$466m
|
|
2023/24
|
$425m
|
$512m
|
|
2024/25
|
$447m
|
$564m
|
|
2025/26
|
$469m
|
$620m
|
|
2026/27
|
$492m
|
$682m
|
|
2027/28
|
$517m
|
$750m
|
OPTIONS
22 A
debt limit is required to be used in the preparation of the 10 year plan as
part of the Financial Strategy. Four options for setting the debt limit
are provided below, including the status quo. The advantages and
disadvantages presented for each option are dependent on the debt limit that is
agreed to.
Option
One – Debt limit calculated as a percentage of revenue (Recommended
Option)
23 This
involves Council approving that the debt limit is set as a percentage of
revenue. Council then needs to approve the percentage of revenue, which
will be used to develop the 10 year plan and will be included in the draft
Financial Strategy.
Advantages
· The
debt limit would increase or decrease year on year for the period of the plan,
in line with activity changes. This provides some flexibility throughout
the life of the 10 year plan.
· Is
the approach adopted by all NZ metro sector councils, except Dunedin.
· Would
provide sufficient funds to allow the Council to deliver its capital programme
for the 10 years 2021-2031.
· This
approach would be responsive to any sector reform.
Disadvantages
· Certainty
of absolute debt will be removed.
· Depending
on the percentage chosen, this will result in an increase in Council debt, and
the cost of borrowing.
Option
Two – Debt is set as a fixed limit for the period of the 10 year plan
24 This
option approves a fixed debt limit, to be used in the development of the 10
year plan, and to be included in the draft Financial Strategy.
Advantages
· Provides
certainty of an absolute set debt limit over the 10 year period.
· Could
provide sufficient funds to allow the Council to deliver its capital programme
for the 10 years 2021-2031, depending on the level of the set limit.
Disadvantages
· Does
not respond to changes in activity levels, and therefore lacks flexibility over
the 10 year period.
· Capital
programme may be impacted.
· This
approach would not be responsive to any sector reform.
· Depending
on the set limit chosen, this will result in an increase in Council debt, and
the cost of borrowing.
Option
Three – Debt is set as a fixed limit, but with incremental increases over
the period of the 10 year plan
25 This
option approves a fixed debt limit, that has staged increases over the period
of the 10 year plan, to be used in the development of the 10 year plan, and to
be included in the draft Financial Strategy.
Advantages
· Provides
certainty of a set debt limit that will increase over the 10 year period.
· May
respond to changes in activity levels.
· Could
provide sufficient funds to allow the Council to deliver its capital programme
for the 10 years 2021-2031 depending on the level of the set limit.
Disadvantages
· While
staged increases are provided for, does not directly respond to changes in
activity levels, and therefore lacks flexibility over the 10 year period.
· Capital
programme may be impacted.
· This
approach would not be responsive to any sector reform.
· Depending
on the set limits chosen, this will result in an increase in Council debt, and
the cost of borrowing.
Option
Four – Debt is set as a fixed limit of $350m over the period of the 10
year plan (Status Quo)
26 This
option approves a fixed debt limit of $350m for the period of the 10 year plan,
to be used in the development of the 10 year plan, and to be included in the
draft Financial Strategy.
Advantages
· Provides
certainty of a set debt limit.
· No
increase in Council debt, or cost of borrowing.
Disadvantages
· Neither
the current or preliminary capital programme of renewals and new capital can be
delivered.
· Does
not respond to changes in activity levels, and therefore lacks flexibility over
the 10 year period.
· This
approach would not be responsive to any sector reform.
NEXT STEPS
27 The
approved debt limit will be used in the development of the 10 year plan and be
included in the draft financial strategy.
28 The
debt limit set will inform the development of the 10 year capital programme.
29 Regular
reporting on capital expenditure and debt levels will be provided to Council.
Signatories
|
Author:
|
Gavin Logie - Acting General Manager Finance
|
|
Authoriser:
|
Sandy Graham - Chief Executive Officer
|
Attachments
There are no attachments for
this report.
|
SUMMARY OF CONSIDERATIONS
|
|
Fit with purpose
of Local Government
This decision enables democratic local
decision making and action by, and on behalf of communities, and promotes the
social, economic, environmental and cultural well-being of communities in the
present and for the future.
|
|
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
|
☒
|
☐
|
☐
|
The 10 year plan contributes to all of the objectives and
priorities of the strategic framework as it describes the Council’s
activities, the community outcomes, and provides a long term focus for
decision making and coordination of the Council’s resources, as well as
a basis for community accountability. This decision impacts directly on
the development of the 10 year plan.
|
|
Māori Impact
Statement
There are no known impacts for tangata whenua.
|
|
Sustainability
The 10 year plan contains content regarding the
Council’s approach to sustainability. Major issues and implications for
sustainability are discussed in the 30 year Infrastructure Strategy and
financial resilience is discussed in the Financial Strategy.
|
|
LTP/Annual Plan /
Financial Strategy /Infrastructure Strategy
The debt limit will impact directly on the development of
the 10 year plan, the level of capital works that could be undertaken over
the 10 year period, and therefore levels of service provided.
|
|
Financial considerations
The debt limit will impact directly on the development of
the 10 year plan, and the level of capital works that could be undertaken
over the 10 year period.
|
|
Significance
This decision is significant in terms of the Significance
and Engagement Policy. The debt limit will be consulted on as part of
the 10 year plan process.
|
|
Engagement –
external
While there has been no external engagement with other
territorial authorities, researching current debt limits for the NZ metro
councils and Invercargill City Council has been undertaken. An initial
discussion has been held with DCHL about the recommended option.
|
|
Engagement -
internal
Various departments have been consulted, including
finance, corporate leadership, and those areas that have a proposed programme
of capital expenditure.
|
|
Risks: Legal /
Health and Safety etc.
There are no identified risks.
|
|
Conflict of
Interest
There are no known conflicts of interest.
|
|
Community Boards
There are no implications for Community Boards.
|
