I hereby give notice that an ordinary meeting of the Finance and Performance Committee will be held on:
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Date:
Time:
Meeting Room:
Venue:
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Thursday, 11
December 2014
9.30am
Reception
Lounge
Auckland Town Hall
301-305 Queen Street
Auckland
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Finance and Performance Committee
OPEN AGENDA
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MEMBERSHIP
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Chairperson
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Cr Penny Webster
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Deputy Chairperson
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Cr Ross Clow
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Members
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Cr Anae Arthur Anae
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Cr Calum Penrose
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Cr Cameron Brewer
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Cr Dick Quax
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Mayor Len Brown, JP
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Cr Sharon Stewart, QSM
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Cr Dr Cathy Casey
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Member David Taipari
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Cr Bill Cashmore
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Member John Tamihere
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Cr Linda Cooper, JP
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Cr Sir John Walker, KNZM, CBE
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Cr Chris Darby
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Cr Wayne Walker
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Cr Alf Filipaina
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Cr John Watson
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Cr Hon Christine Fletcher, QSO
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Cr George Wood, CNZM
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Deputy Mayor Penny Hulse
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Cr Denise Krum
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Cr Mike Lee
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(Quorum 11 members)
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Crispian Franklin
Democracy Advisor
5 December 2014
Contact Telephone: (09) 373 6205
Email: crispian.franklin@aucklandcouncil.govt.nz
Website: www.aucklandcouncil.govt.nz
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TERMS OF REFERENCE
Responsibilities
This committee will be responsible for monitoring overall
financial management and the performance of the council parent organisation and
the financial monitoring of the Auckland Council Group. It will also make
financial decisions required outside of the annual budgeting processes. Key
responsibilities include:
·
Financial management
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Approval of non-budgeted expenditure
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Write-offs
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Acquisition and disposal of property relating to the Committee’s
responsibilities
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Monitoring achievement of financial and other measures of
performance and service levels
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Recommending the Annual Report to the Governing Body
Powers
(i) All powers necessary
to perform the committee’s responsibilities.
Except:
(a) powers that the Governing Body
cannot delegate or has retained to itself (see Governing Body responsibilities)
(b) where the committee’s
responsibility is limited to making a recommendation only
(ii) Approval of a
submission to an external body
(iii) Powers belonging to another
committee, where it is necessary to make a decision prior to the next meeting
of that other committee.
(iv) Power to establish subcommittees
EXCLUSION OF THE PUBLIC – WHO NEEDS TO LEAVE THE MEETING
Members of the public
All members of the public must leave the meeting when the
public are excluded unless a resolution is passed permitting a person to remain
because their knowledge will assist the meeting.
Those who are not members of the public
General principles
·
Access to confidential information is managed on a “need to know”
basis where access to the information is required in order for a person to
perform their role.
·
Those who are not members of the meeting (see list below) must
leave unless it is necessary for them to remain and hear the debate in order to
perform their role.
·
Those who need to be present for one confidential item can remain
only for that item and must leave the room for any other confidential items.
·
In any case of doubt, the ruling of the chairperson is final.
Members of the meeting
·
The members of the meeting remain (all Governing Body members if
the meeting is a Governing Body meeting; all members of the committee if the
meeting is a committee meeting).
·
However, standing orders require that a councillor who has a
pecuniary conflict of interest leave the room.
·
All councillors have the right to attend any meeting of a
committee and councillors who are not members of a committee may remain,
subject to any limitations in standing orders.
Staff
·
All staff supporting the meeting (administrative, senior
management) remain.
·
Only staff who need to because of their role may remain.
Local Board members
·
Local Board members who need to hear the matter being discussed
in order to perform their role may remain. This will usually be if the matter
affects, or is relevant to, a particular Local Board area.
IMSB
·
Members of the IMSB who are appointed members of the meeting
remain.
·
Other IMSB members and IMSB staff remain if this is necessary in
order for them to perform their role.
CCOs
Representatives of a CCO can remain only if
required to for discussion of a matter relevant to the CCO.
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Finance and
Performance Committee
11 December
2014
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ITEM TABLE OF
CONTENTS PAGE
1 Apologies 7
2 Declaration of Interest 7
3 Confirmation of Minutes 7
4 Petitions 7
5 Public Input 7
6 Local Board Input 7
7 Extraordinary Business 7
8 Notices of Motion 8
9 Disposal Recommendation report 9
10 Value of properties presented by Auckland Council Property
Ltd (ACPL) 2014 21
11 Monthly Budget Update 25
12 Consideration of Extraordinary Items
At the close of
the agenda no apologies had been received.
2 Declaration of Interest
Members are
reminded of the need to be vigilant to stand aside from decision making when a
conflict arises between their role as a member and any private or other
external interest they might have.
3 Confirmation of Minutes
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That the Finance and Performance Committee:
a)
confirm the ordinary minutes of its meeting,
held on Thursday, 20 November 2014, including the
confidential section, as a true and correct record.
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4 Petitions
At the close of
the agenda no requests to present petitions had been received.
5 Public Input
Standing Order
3.21 provides for Public Input. Applications to speak must be made to the
Committee Secretary, in writing, no later than two (2) working days
prior to the meeting and must include the subject matter. The meeting
Chairperson has the discretion to decline any application that does not meet
the requirements of Standing Orders. A maximum of thirty (30) minutes
is allocated to the period for public input with five (5) minutes
speaking time for each speaker.
At the close of
the agenda no requests for public input had been received.
6 Local Board Input
Standing Order
3.22 provides for Local Board Input. The Chairperson (or nominee of that
Chairperson) is entitled to speak for up to five (5) minutes during this
time. The Chairperson of the Local Board (or nominee of that Chairperson)
shall wherever practical, give two (2) days notice of their wish to
speak. The meeting Chairperson has the discretion to decline any application
that does not meet the requirements of Standing Orders.
This right is
in addition to the right under Standing Order 3.9.14 to speak to matters on the
agenda.
At the close of
the agenda no requests for local board input had been received.
7 Extraordinary Business
Section 46A(7)
of the Local Government Official Information and Meetings Act 1987 (as amended)
states:
“An item that is
not on the agenda for a meeting may be dealt with at that meeting if-
(a) The local authority by resolution so decides; and
(b) The presiding member explains at the meeting, at a time
when it is open to the public,-
(i) The
reason why the item is not on the agenda; and
(ii) The reason why the discussion of the item cannot be
delayed until a subsequent meeting.”
Section 46A(7A)
of the Local Government Official Information and Meetings Act 1987 (as amended)
states:
“Where an item
is not on the agenda for a meeting,-
(a) That item may be discussed at that meeting if-
(i) That item is a minor matter relating to the general
business of the local authority; and
(ii) the presiding member explains at the beginning of the
meeting, at a time when it is open to the public, that the item will be
discussed at the meeting; but
(b) no resolution, decision or recommendation may be made in
respect of that item except to refer that item to a subsequent meeting of the
local authority for further discussion.”
8 Notices of Motion
At the close of
the agenda no requests for notices of motion had been received.
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Finance and
Performance Committee
11 December
2014
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Disposal
Recommendation report
File No.: CP2014/28354
Purpose
1. This
report seeks approval to sell one non-service council owned site that Auckland
Council Property Limited (ACPL) considers suitable for sale. This report also
presents two non-service council owned sites for disposal that are subject to
compulsory acquisition.
Executive
Summary
2. ACPL is required to identify
properties from within council’s portfolio that may be suitable for potential
sale to a combined value of $30 million by 30 June 2015. ACPL and Auckland
Council Property Department (ACPD) work collaboratively on a comprehensive
review process to identify such properties. Capital receipts from the sale of
surplus properties will contribute to all Auckland Plan outcomes by providing
the council with an efficient use of capital and prioritisation of funds to
achieve its activities and projects.
3. The first property presented for
disposal in this report, 10-22 Totara Avenue, New Lynn, has been through the
agreed consultative process including organisation wide internal officer
consultation, local board and Iwi engagement. The feedback
has been supportive of the proposed disposal of this site. A detailed overview
of the rationalisation process undertaken for this site is outlined in the
Comments, Local Board Views and Implications, and Maori Impact Statement
sections of this report. Site specific detail, including information and
feedback gathered through the rationalisation process is contained in Attachment A to this report.
4. The other two sites presented
for disposal in this report, being 2/187 Flat Bush School Road, Flat Bush and
17 Galway Street, Onehunga, are being acquired for public works by the Ministry
of Education and Watercare Services Limited respectively. Due to this, they
have not gone through the rationalisation process. Site specific information
is contained in Attachments B and C of this report.
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Recommendation/s
That the Finance and
Performance Committee:
a) approve
the disposal of the land, subject to the satisfactory conclusion of any
required statutory processes, as follows:
i. 10-22
Totara Avenue, New Lynn comprised of an estate in fee simple, containing
approximately 944m2 more or less being part lot 3 deposited plan
8593 and part allotment 257, Parish of Waikomiti contained in certificates of title NA678/300,
NA599/156 and NA599/287;
ii. 2/187
Flat Bush School Road, Flat Bush comprised of an estate in fee simple,
containing approximately 37,329m2 more or less being part of lot 2 deposited plan 48950 part contained in
certificate of title NA69A/619;
iii. approximately
3,052m2 from 17 Galway Street, Onehunga comprised of an estate in
fee simple, more or less
being lot 2, deposited plan 92800 contained in certificate of title NA49B/790;
b) approve
the final terms and conditions under the appropriate delegations.
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Discussion
5. ACPL and ACPD
work collaboratively on a comprehensive review process to identify properties
in the council portfolio that may be suitable to sell. Once identified as a
potential sale candidate ACPL takes the property through a multi stage
engagement process.
6. The first
phase of the process involves engagement with all council departments and
relevant CCOs. The engagement establishes whether a property is needed for a
future funded project or whether it must be retained for some clear strategic
purpose. This is determined by an Expression of Interest (EOI) process whereby
officers can request that all or part of a property is retained. Alternatively
officers may request that the property be encumbered or covenanted as part of
the disposal process. If the EOI sets out a robust financial analysis and evidence based rationale
to retain the properties, then the EOI is endorsed.
7. If however
the reasoning is more subjective a thorough business case is required. An
inter-disciplinary council and ACPL steering group comprised of senior
managers, called the Property Review Steering Group (PRSG) meets on a monthly
basis to assess the business cases. The PRSG provides an opportunity for
properties to be considered in a cohesive and integrated manner by relevant
council departments and CCOs.
8. The Heritage
Unit is invited prior to the EOI process to flag any sites of particular
archaeological merit that need to be assessed further. ACPL also engages with
the Closed Landfills and Contaminated Land Response team prior to the EOI
process commencing to ensure any possible contamination issues that may be
associated with a property are identified. The EOI process also provides the
Maori and Strategy Relations team the opportunity to flag any issue that is of
particular relevance to Maori in connection with the potential disposal of a
site.
9. Once a
property has been internally cleared of any service requirements, ACPL then
consults with Local Boards, Ward Councillors, Mana Whenua and the Independent
Maori Statutory Board.
10. All sale recommendations must be
approved by the ACPL Board before it makes the final recommendation to the
Finance and Performance Committee.
Consideration
Local
Board Views and Implications
11. Local
Boards are informed of the commencement of the rationalisation process for
specific properties. Following the close of the EOI period, relevant Local
Boards are engaged with. ACPL attend a workshop with the relevant Local Board
and provide information about properties being rationalised in their local
board area. Local Boards may then request that ACPL prepare a report for their
business meeting so that their views can be formalised.
12. If
a Local Board wishes to retain a site, its’ views are considered by ACPL and if
necessary referred to relevant council departments for consideration. The
local board may be asked to prepare a business case which sets out the clear
service need that will be met by retaining the site, along with how the use
will be funded.
13. ACPL
and relevant council departments or CCOs work with local boards in preparing
the business case. The business case is then considered by the PRSG. If the PRSG accepts the business case and funding is identified, the
property is transferred back to the service portfolio. If the PRSG does not
accept the business case, the business case is included in the report to the
Finance & Performance Committee for a political decision.
14. The
views of the relevant local board are contained in the respective property attachments.
Maori
Impact Statement
15. The importance
of effective communication and engagement with Maori on the subject of land is
understood. ACPL has accordingly developed a robust form of engagement with
Mana Whenua groups across the region. Each relevant mana whenua group is
contacted independently by email based on a contact list which is regularly
updated. Each group is provided general property details, including a property
map, and requested to give feedback within 15 working days. Contacts are sent
reminder notices a week out from the due date, and alerted of the passing of the
due date in the week following if no feedback has been submitted. Confirmation
of any interest expressed is sent in writing and recorded for inclusion in the
disposal recommendation report. A feedback spreadsheet is provided to
facilitate responses. Any requests for extensions of a due date are handled on
a case by case basis.
16. ACPL’s
engagement directs mana whenua to respond with any issues of particular
cultural significance the group would like to formally express in relation to
the subject properties. We also request express notes regarding any preferred
outcomes that the group would like us to consider as part of any disposal
process.
17. From discussions
with our Maori and Strategy Relations team we are developing an understanding
of what could amount to a ‘matter of significant cultural relevance’ to Iwi.
We are also developing a range of reasonable outcomes that could be employed
when such a matter of cultural significance is raised in relation to a
potential disposal property. Possible outcomes could include commemoration or
physical acknowledgment in the form of plaques or other mutually agreed means
of recognition. In the event of any issues of particular cultural significance
being raised, ACPL will work with the relevant council departments to assess
the merits of any such requests and keeps the interested parties informed along
the way.
18. Mana whenua
groups are also invited to express potential commercial interest in any sites
and are put in contact with ACPL’s Development team for preliminary discussions
if appropriate to the property. This facilitates the groups’ early assessment
of the merits of a development opportunity to their Iwi. In the event a
property is approved for sale all groups are alerted of the decision, and all groups
are alerted once a property comes on the market.
19. Lastly a
report is presented to the Independent Maori Statutory Board ahead of
presenting any recommendations to sell to the Finance and Performance Committee
detailing how Maori have been engaged throughout the process.
General
20. N/a
Implementation
Issues
21. As part of the overall review
process each property is also legally assessed to see if there are any
impediments to sell or if there is a prescribed legal way in which it must be
sold. The last stage of the process is triggered once a resolution to sell is
obtained. This involves a robust ‘add value’ assessment as part of the
development of the final sales strategy. There is specific attention applied
to the possible suitability of the site for housing purposes.
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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Property information for 10-22 Totara Avenue, New Lynn
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13
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bView
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Property information for 2/187 Flat Bush School Road,
Flat Bush
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17
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cView
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Property information for 17 Galway Street, Onehunga
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19
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Signatories
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Authors
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Letitia McColl,
Senior Engagement Advisor, Portfolio Review, Auckland Council Property
Limited
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Authorisers
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David Rankin,
Chief Executive, Auckland Council Property Limited
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Authorisers
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Ian Wheeler,
Manager Property, Auckland Council Property Department
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Authorisers
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Kevin Ramsay,
Chief Financial Officer, Auckland Council
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Finance and
Performance Committee
11 December
2014
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10-22
Totara Avenue, New Lynn
Property
summary
1. The subject
site was acquired for commercial and residential redevelopment purposes. The
site forms part of ‘Area C’ of the New Lynn Transformation Project (NLTP), and
has been rationalised to progress the NLTP. No alternative uses for this site
were identified during the rationalisation process. The Whau Local Board and
relevant Iwi have been consulted and do not oppose the proposed disposal of
this site. As this property is not required for current or future service
requirements, we recommend that this site be disposed of and used for
commercial and residential redevelopment purposes, as set out in the NLTP.
Property information
2. This property
is a 944m2 site with seven retail shops and two residential
accommodations on it. A recent seismic assessment for this building was
extremely low and parts of the building are currently vacant as they are not
safe to be tenanted. The site has a 2014 capital value of $2,500,000. The
site is currently zoned Community Periphery under the Human Environment rules
of the Auckland Council District Plan – Waitakere Section 2003.
3. The subject
site was acquired by Waitakere City Council in 2006 for commercial and
residential development purposes, and to provide a financial return through
income and capital gain.
4. The site is
included in the NLTP plans. This site forms part of ‘Area C’ of the NLTP.
Proposed plans for the NLTP indicate that Area C will contain a public square,
a new public ROW and a large brownfields development site. The proposed
redevelopment of this site includes the facade of the building on the subject
site being retained. The site has been rationalised to allow the proposed NLTP
plans to be progressed.
Consideration
Internal consultation
5. The
rationalisation process commenced in June 2014. No alternative uses for this
site identified during this process.
6. The Heritage
Unit was invited prior to the EOI process to raise any particular
archaeological issues. The Closed Landfills and Contaminated Land Response team
were also asked to assess these sites prior to the EOI process commencing to
ensure any possible contamination issues were identified. Neither party has
flagged any relevant issues.
7. The EOI
process provided the Maori Strategy Relations team the opportunity to flag any
issue that is of particular relevance to Maori. No issues have been raised.
Local board views and implications
8. The Whau
Local Board supports the proposed disposal and development of this site,
conditional upon the facade of the building being retained and that the
development is progressed in line with the NLTP.
Iwi feedback
9. Six iwi
authorities were contacted regarding the potential sale of 10-22 Totara Avenue
– Area C, New Lynn. The following feedback was received.
a) Te
Rūnanga o Ngāti Whātua
No site specific feedback was received.
b) Ngāti
Whātua o Kaipara
No site specific
feedback was received.
c) Ngāti
Whātua o Ōrakei
No site specific
feedback was received.
d) Te
Kawerau-ā-Maki
Te Kawerau-ā-Maki has expressed
potential commercial interest in any council owned properties that may become
available for sale.
e) Te Akitai
Waiohua
Te Akitai Waiohua has expressed potential
commercial interest in any council owned properties that may become available
for sale.
f) Ngāti
Te Ata Waiohua
No site specific
feedback was received.
Technical Considerations
10. This site was
not acquired for the purpose of a public work within the meaning of the Public
Works Act 1981. Therefore it is not subject to the offer back requirement
under section 40 of the Act.
11. This site is
not one of council’s strategic assets to which the Significance Policy applies.
ACPL’s independent commercial advice
12. Given there
were no requests to retain this site for a service need, it appears to be
surplus to council requirements and as such we recommend that the site be
sold. Should a resolution to dispose of this site be obtained, ACPL will
continue to progress the proposed commercial and residential development of
this site in line with the NLTP.
Images of 10-22 Totara Avenue, New Lynn
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Finance and
Performance Committee
11 December
2014
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2/187 Flat
Bush School Road, Flat Bush
Property summary
1. The subject
property is a vacant site that forms part of a larger council-owned site which
will be used for Special Housing Areas, public open space and stormwater
management. The subject site has not been through the
rationalisation process as it is being acquired by the Ministry of Education
(MOE) for a school, which is scheduled to be built in 2017. ACPL
support disposing of this site to the MOE for use as a school
site.
Property information
2. The
subject site is a vacant, 3.1 hectare site. It has a registered valuation of
$11 million. The MOE seek to use this site for school, with
construction due to commence in 2017. If this site is not made available to
the MOE, it can be acquired under the Public Works Act 1981.
3. The
subject site forms part of a larger site that was acquired by the Manukau City
Council in 2000 for public open space, stormwater management and the ability to
sell the residual land for residential development in the future. Sections 1,
3, 4 and 5, 187 Flat Bush School Road went through the rationalisation process
and were approved for disposal by the Finance and Performance Committee on 23
October 2014. Sections 1, 3, 4 and 5, 187 Flat Bush School Road sites sit
within a Special Housing Area and ACPL’s Development team have been
working on the proposed development of these sections.
Consideration
Internal consultation
4. This site has not been through the rationalisation process as it is
being acquired by the MOE for a school. The building of this school is
scheduled to commence in 2017. Should this site not be made available to the
MOE, it could take the site under the Public Works Act 1981 if necessary.
Local board views and implications
5. Local
board engagement was not undertaken for this site given it is being acquired by
the Ministry of Education, who can designate and acquire the site under the
Public Works Act.
Iwi feedback
6. Iwi
engagement was not undertaken for this site given it is being acquired by the
Ministry of Education, who can designate and acquire the site under the Public
Works Act.
Technical Considerations
7. Given this
site is to be used for another public work, s40 Public Works Act 1981 offer back
requirements do not apply.
8. This property
is not one of the council’s strategic assets to which the significance policy
would apply.
ACPL’s independent commercial advice
9. Given this
site is required for another public work, ACPL support disposing of this site
to the MOE for use as a school site.
Images of 2/187
Flat Bush School Road, Flat Bush
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Finance and
Performance Committee
11 December
2014
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17 Galway
Street, Onehunga
Property summary
1. Watercare
Services Limited (Watercare) is acquiring 3,052m2
from a 1.0251 hectare council-owned site under the Public Works Act 1981, for
the construction and installation of a new bulk water supply pipeline. The
property is currently subject to a commercial lease that is over part of the
land that is not subject to acquisition. Given Watercare is
acquiring this site subject to the Public Works Act 1981, the standard internal
consultation, local board engagement and iwi engagement has not been undertaken
for this property.
Property information
2. The
subject site is a 1.0251 hectare site that has a 2014 capital value of
$2,900,000. This site is currently leased to Hauraki Piling on a monthly
tenancy for storage of industrial equipment associated with the piling
process. A right of way is registered against the title in favour of the
adjoining land owners. This right of way runs the length of the northside
boundary of the site, extending six metres into the subject parcel of land.
3. Watercare
are compulsorily acquiring 3,052m2 from along the length of the
southern boundary of this site for the construction and installation of a new
bulk water supply pipeline known as Hunua No. 4 Pipeline. The area Watercare
are acquiring will not impact upon the section currently leased to Hauraki
Piling.
Consideration
Internal consultation
4. This site has not been through the internal consultation process as
it is being acquired by Watercare for a bulk water pipeline.
Local board views and implications
5. Local
board engagement was not undertaken for this site given Watercare are acquiring
for a public work.
Iwi feedback
6. Iwi
engagement was not undertaken for this site given Watercare are acquiring it
for a public work.
Technical Considerations
7. Given this
site is to be used for another public work, s40 Public Works Act 1981 offer
back requirements do not apply.
8. This property
is not one of the council’s strategic assets to which the significance policy
would apply.
ACPL’s independent commercial advice
9. Given this
site is required for another public work, ACPL support Watercare acquiring
3,052m2 from this site. An independent joint
valuation has been prepared to assess the compensation payable to Auckland
Council under the Public Works Act 1981.
10. ACPL also will
investigate the possibility of using the balance of the land at 17 Galway
Street for a Community Recycling Centre with the Solid Waste team.
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Finance and
Performance Committee
11 December
2014
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Image of 17 Galway Street, Onehunga
*Area outlined in red indicates the entire site. Area
outlined in yellow indicates the section of this site being acquired by
Watercare.
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Finance and
Performance Committee
11 December
2014
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Value of properties presented by Auckland Council
Property Ltd (ACPL) 2014
File No.: CP2014/28466
Purpose
1. The
purpose of this report is to provide information requested by the Finance and
Performance Committee regarding the value of properties presented to the
committee by ACPL this year, and the sales prices achieved for these
properties.
Executive
Summary
2. This report provides the Finance and Performance Committee with
information it requested regarding the value of the properties that have been
presented by ACPL to the committee this year. It also provides the sales
prices achieved for the properties that have subsequently been sold.
3. The table set out in Attachment A shows that in the January to June
2014 period, ACPL presented $14 million worth of property to the Finance and
Performance Committee, against an SOI target of $12 million. Of this, $1.4
million worth of properties were deferred by the committee.
4. A further nine properties with a cumulative value of $16.5 million
that had previously been presented to the Strategy and Finance Committee and
were deferred were re-presented to the Finance and Performance Committee in the
January to June 2014 period. Seven of these properties were approved for
disposal. They had a cumulative value of $2.5 million. Two properties, being
34 Moore Street, Howick and 27 Normanby Road, Mt Eden, were further deferred.
These two properties have a cumulative value of $14 million.
5. The table in Attachment A also shows that in the 2014/15 financial
year, ACPL has presented $23 million worth of property against a $30 million
SOI target. ACPL are on track to achieve its 2014/15 SOI target.
6. Finally, the table in Attachment A sets out the sales prices of the
properties that have already been sold. The actual sales prices achieved for
the properties that have been cleared for sale in 2014 are above the valuations
presented to the committee. The table also sets out the net sales price for
these properties. The net sales price differs
from the actual sales price due to the deduction of the costs incurred with the
sale of each property. Such costs include valuations, remedial works, building
reports, building repairs and works, surveying charges, marketing, commission,
GST, legal fees, ACPL time and any other costs incurred with the sale of each
property. Net sales prices are subject to change following the deduction of
additional costs.
7. The
table in Attachment A will in future be presented as part of the Auckland
Council performance report that is submitted to the Finance and Performance
Committee quarterly.
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Recommendation/s
That the Finance and
Performance Committee:
a) receive the report.
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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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Properties presented to the Finance & Performance
Committee
January 2014 - November 2014
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23
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Signatories
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Authors
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Crispian Franklin - Democracy Advisor
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Authorisers
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Ian Wheeler - Manager Property
Kevin Ramsay - Chief Financial Officer
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|
Finance and
Performance Committee
11 December
2014
|
|
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Finance and
Performance Committee
11 December
2014
|
|
Monthly Budget Update
File No.: CP2014/27717
Purpose
1. This report is provided on a
monthly basis as required. It collates decisions required of the Finance and
Performance Committee on changes to the budgets, and provides a financial
context within which the decisions can be made.
Executive
Summary
2. The table below shows the
financial impacts of budget changes considered in this committee meeting. The
impacts include:
· $108,000
increase in net borrowing for 2014/2015
· $2000
negative impact on the council’s operating result for 2014/2015
· $8000
increase in general rates requirement for 2015/2016. The projected average
general rates increase would remain at 3.5 per cent.
Table:
Estimated financial impacts on Auckland Council Group
|
$000
|
Closing Group Net Borrowing
|
Group Net Surplus/(Deficit) After Tax
|
General Rates
|
Cumulative % rates increase
|
|
|
2014/2015
|
2014/2015
|
2015/2016
|
% increase
|
|
Long-term Plan 2015-2025
draft budget
|
7,278,517
|
-10,798
|
1,452,508
|
|
3.5%
|
|
|
|
|
|
|
|
|
December proposal
|
|
|
|
|
|
|
Stillwater Hall
|
108
|
-2
|
8
|
0.0006%
|
|
|
|
|
|
|
|
|
|
Potential Position
|
7,278,625
|
-10,800
|
1,452,516
|
|
3.5%
|
3. Rates for 2014/2015 have been
set with no provision made for accommodating new or additional expenditure
items. Any new expenditure committed to will either require reprioritisation of
existing budgets or increased borrowing. When considering funding requests, the
impact on 2015/2016 operating expenditure also needs to be taken into account.
4. The Budget Committee will have
the opportunity to address these impacts alongside other budget issues through
the Long-term Plan (LTP) 2015-2025 process.
Stillwater Hall
5. The development of a community
hall in Stillwater was initiated by the legacy Rodney District Council and is
now being progressed by the Hibiscus and Bays Local Board. The construction
started in September 2014, with a total budget of $998,215.
6. Despite undertaking geotechnical
investigations as part of the design and consenting process, challenges in
installing the foundation of the hall have been experienced, which meant that
the planned system for the foundation could not be implemented. The revised
approach to installing the foundation requires an additional capital funding of
$108,000. No consequential operational expenditure would result, apart from a
small increase in depreciation and interest costs (approximately $2000 and
$8000 for 2014/2015 and 2015/2016 respectively).
7. The Hibiscus and Bays Local
Board has committed $265,000 from its discretionary budget to progress this
project to the construction stage. A contingency provision of $40,000 or 5 per
cent was allowed, but will be insufficient to cover the additional cost. As
this is an unforeseen but necessary expense, it is recommended that this
committee approve $108,000 of additional capital funding to enable the
completion of this facility.
|
Recommendation/s
That the Finance and
Performance Committee:
a) agree that additional capital
expenditure funding of $108,000 be provided to enable the completion of the
Stillwater Hall, and
b) agree that the council’s
budgets be updated to reflect the financial implications of the above
decision.
|
Discussion
Background
8. The Finance and Performance
Committee has delegated authority to approve changes to budgets during a
financial year. Occasionally, it may be necessary for this committee of the
whole to make urgent decisions on the budgets for future years, which would
ordinarily be made by the Budget Committee as part of the annual/long-term
planning processes.
9. Rates for 2014/2015 have been
set with no provision made for accommodating new or additional expenditure
items. Any new expenditure committed to will either require reprioritisation of
existing budgets or increased borrowing. When considering requests, the impact
on 2014/2015 and 2015/2016 operating expenditure also needs to be considered.
Stillwater Hall
10. The development of a community
hall in Stillwater was initiated by the legacy Rodney District Council and is
now being progressed by the Hibiscus and Bays Local Board. The Stillwater
community has waited a long time for a community facility in its area and
construction for this project finally started in September 2014, with a total
budget of $998,215.
11. Despite undertaking geotechnical
investigations as part of the design and consenting process, challenges in
installing the foundation of the hall have been experienced, which meant that
the planned system for the foundation could not be implemented. The original
design called for the foundation holes to be drilled. However, the water table
was found to be higher than originally identified and caused any foundation
holes drilled to fill up with water and the walls to collapse before any depth
could be achieved.
12. The only solution identified is
to ram the piles into the ground. These piles have to be of a significant
length to achieve the stability required. Along with the installation method,
this has resulted in an additional capital funding requirement of $108,000. No
consequential operational funding requirement is identified, other than a small
increase in depreciation and interest costs (approximately $2000 and $8000 for
2014/2015 and 2015/2016 respectively).
13. The Hibiscus and Bays Local Board
has committed $265,000 from its discretionary budget to progress this project
to the construction stage. A contingency amount of $40,000 or 5 per cent was
allowed, but will be insufficient to cover the additional cost. As this is an
unforeseen but necessary expense, it is recommended that this committee approve
$108,000 of additional capital funding to enable the completion of this
facility.
Overall budget impact
14. The table below shows the
financial impacts of budget changes considered in this committee meeting. The
impacts include:
· $108,000
increase in net borrowing for 2014/2015
· $2000
negative impact on the council’s operating result for 2014/2015
· $8000
increase in general rates requirement for 2015/2016. The projected average
general rates increase would remain at 3.5 per cent.
Table:
Estimated financial impacts on Auckland Council Group
|
$000
|
Closing Group Net Borrowing
|
Group Net Surplus/(Deficit) After Tax
|
General Rates
|
Cumulative % rates increase
|
|
|
2014/2015
|
2014/2015
|
2015/2016
|
% increase
|
|
Long-term Plan 2015-2025
draft budget
|
7,278,517
|
-10,798
|
1,452,508
|
|
3.5%
|
|
|
|
|
|
|
|
|
December proposal
|
|
|
|
|
|
|
Stillwater Hall
|
108
|
-2
|
8
|
0.0006%
|
|
|
|
|
|
|
|
|
|
Potential Position
|
7,278,625
|
-10,800
|
1,452,516
|
|
3.5%
|
15. The Budget Committee will have
the opportunity to address these impacts alongside other budget issues through
the 2015-2025 LTP process.
Consideration
Local
Board Views and Implications
Stillwater Hall
16. The Hibiscus and Bays Local Board
has committed $265,000 from its discretionary budget to progress this project
to the construction stage. It is unable to contribute further funding from its
existing budget to absorb the cost pressure.
Maori
Impact Statement
17. Staff do not consider that
decisions or budget adjustments set out in this report have a specific impact
on Māori.
General
18. Staff do not consider that
decisions or budget adjustments set out in this report trigger the Significance
and Engagement Policy.
Implementation
Issues
19. Budgets will be amended in core
financial systems and used for internal management reporting, regular reporting
to councillors and financial control for the 2014/2015 financial year.
Attachments
There are no attachments for
this report.
Signatories
|
Authors
|
Neil Huang - Senior Analyst - Evaluation
|
|
Authorisers
|
Ross Tucker - Manager Financial Policy & Strategy
Matthew Walker - Manager Financial Planning, Policy
and Budgeting
Kevin Ramsay - Chief Financial Officer
|
