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Albert-Eden
Local Board
03 September
2014
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Deferral of
2014/2015 capital projects
File No.: CP2014/19720
Purpose
1. To seek agreement from the
Albert-Eden Local Board to the list of capital projects outlined in Attachment
A that are proposed for deferral from 2014/2015, prior to consideration by the
Finance and Performance Committee on 18 September 2014.
Executive
summary
2. Prior to decisions being made by
the Finance and Performance Committee regarding a 2014/2015 capex deferral
programme, engagement was held with all local boards.
3. Between 12 and 19 August 2014,
staff attended 21 local board workshops to outline the capex deferral process
and obtain feedback on proposed deferrals affecting each local board area.
4. On 21 August 2014, the Finance
and Performance Committee resolved that decisions on the deferral of local
board capital projects from 2014/2015 to 2015/2016 be deferred until local
boards have formally considered and responded to each project in full (FIN/2014/47).
5. The list of capex projects
proposed for deferral is outlined in Attachment A.
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Recommendation/s
That the Albert-Eden Local
Board:
a) formally consider and agree the
deferral of capex projects outlined in Attachment A to 2015/2016.
b) note that any projects where
timing has been deferred, but project planning is underway, should be given
high priority in the 2015/2016 capital programme.
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Comments
Background
6. As foreshadowed
in the 2014/2015 Annual Plan and LTP workshops, operating budgets for 2015/2016
(the first year of the LTP 2015-2025) would need to be reduced by about $90
million to achieve a 2.5 per cent average rates increase.
7. It is not possible to reduce the average rates increase for 2015/2016
down to 2.5 per cent solely by reducing or deferring capex in that particular
year. The lagged impact of changes in the capital programme on operating
budgets means that reducing or deferring capex in 2014/2015 will have a greater
impact on rates for 2015/2016.
8. Since amalgamation the quantum
of planned projects each year has exceeded the council parent’s capacity to
deliver. While delivery capacity is now increasing, a significant bow wave has
built up. This historical underspend is acknowledged in the Annual Plan and
factored into council’s rates and debt projections by way of a $207 million assumed
underspend. However, the individual projects that will not be delivered are not
explicitly identified in the Annual Plan as they had not yet been identified.
9. Council staff have reviewed
2014/2015 capex budgets to identify work that must be completed this year as a
matter of practical necessity, or where not doing the project in this timeframe
would negatively impact existing service levels, external revenue or the
realisation of efficiency savings.
10. The specific categories used to
develop the list of deferred projects and process undertaken is explained
further in Attachment B which was circulated to Local Boards prior to the
proposed capex projects for deferral being discussed at a recent workshop.
11. In order to
develop a realistic capex programme for 2014/2015 and contain pressure on rates
in 2015/2016, staff recommend that the capex projects included in Attachment A
for the council parent be explicitly deferred from 2014/2015 to 2015/2016, and
be included as part of the LTP prioritisation process.
12. Between 12 and 19 August, staff
attended workshops for all 21 local boards to obtain feedback on the proposed
capital deferral schedules for 2014/2015. This engagement provided opportunity
for local boards to ask questions, reinforce the reason for deferring capital
funds and provide feedback on the status of projects in alignment to criteria
used to assess proposed deferrals.
13. Of the total
proposed projects for deferral tabled at the Finance and Performance Committee
on 21 August 2014, regional projects amounted to $80 million, local projects
amounted to $35 million and CCO’s collectively deferred $109 million.
14. Staff reduced
the total of local projects for deferral by approximately $7 million due to
responding to the information provided through the recent workshops held with
local boards. These reductions were due to corrections in applying the criteria
used for identifying potential deferrals. Attachment A takes into account these
reductions.
15. Local boards
also identified projects that are discretionary and could be deferred, but
which are very important to their local community. Rather than making decisions
about removing any high-priority discretionary projects from the deferral list,
staff included these comments in the schedule provided to the Finance and
Performance Committee.
16. The decisions
being made are budget adjustments that represent timing changes only. Any
decisions to drop or reprioritise projects should be made as part of the LTP
process.
17. Through September and October Local
Boards, the Governing Body, CCOs and council staff will all contribute to the
development of draft LTP 2015-2025 budgets in response to the Mayoral Proposal.
Decisions on discretionary local budgets will be made by Local Boards in
October and decisions on regional activities and local asset based services
will be made by the Budget Committee on 5-7 November.
18. Local Board Plans, along with the
Auckland Plan and the agreed spatial priorities will help inform this
prioritisation. Final decisions on which projects are included in the LTP
2015-2025 will be made by 30 June 2015, following full public consultation.
Attachments
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No.
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Title
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Page
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aView
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List of 2014/2015 projects proposed for deferral until
2015/2016 including Local Board feedback
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9
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bView
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Local Board Memo distributed prior to the workshops on
7 August 2014
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11
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Signatories
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Authors
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Taryn Crewe – Financial Planning Manager Council
Parent
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Authorisers
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Matthew Walker - Manager Financial Plan Policy and
Budgeting
Karen Lyons – Manager Local Board Services
Adam Milina - Relationship Manager - Albert-Eden &
Orakei Local Boards
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