Agenda of Finance and Monitoring Committee Meeting

Finance and Monitoring Committee

Fields of Activity

Oversight of all the Council’s financial management policy and operations (including assets, cash, investment and debt management) including (but not limited to):

· Monitoring compliance with the Long Term Plan/Annual Plan and budget implementation.

· Finance and Ownership

· Audit and other accountability requirements;

· Business units/CCO/CCTO ownership overview;

· Rating matters including rating sale proceedings;

· Taxation.

· Establishing the strategic direction of Council’s business units (if any), Council Controlled Organisations (CCOs) and Council Controlled Trading Organisations

· Other matters including:

- Performance Management

- Other matters not otherwise within the scope of other Committees

Monitoring compliance with the Long Term Plan/Annual Plan and budget implementation.

Membership

Chairman appointed by Council

Deputy Chairman appointed by Council

The Mayor

All Councillors

Quorum – 8 members

Delegated Powers

General Delegations

1. Authority to exercise all of Council powers, functions and authorities (except where prohibited by law or otherwise delegated to another committee in relation to all matters detailed in the Fields of Activity.

2. Authority to re-allocate funding already approved by the Council as part of the Long Term Plan/Annual Plan process, for matters within the Fields of Activity provided that the re-allocation of funds does not increase the overall amount of money committed to the Fields of Activity in the Long Term Plan/Annual Plan.

3. Responsibility to develop policies, and provide financial oversight, for matters within the Fields of Activity to provide assurance that funds are managed efficiently, effectively and with due regard to risk.

Fees and Charges

4. Except where otherwise provided by law, or where delegated to another Committee, the authority to fix fees and charges in respect of Council activities or services.

HASTINGS DISTRICT COUNCIL

Finance and Monitoring Committee MEETING

Tuesday, 28 November 2017

VENUE:

Council Chamber

Ground Floor

Civic Administration Building

Lyndon Road East

Hastings

TIME:

1.00pm

A G E N D A

1. Apologies

At the close of the agenda no apologies had been received.

At the close of the agenda no requests for leave of absence had been received.

2. Conflict of Interest

Members need to be vigilant to stand aside from decision-making when a conflict arises between their role as a Member of the Council and any private or other external interest they might have. This note is provided as a reminder to Members to scan the agenda and assess their own private interests and identify where they may have a pecuniary or other conflict of interest, or where there may be perceptions of conflict of interest.

If a Member feels they do have a conflict of interest, they should publicly declare that at the start of the relevant item of business and withdraw from participating in the meeting. If a Member thinks they may have a conflict of interest, they can seek advice from the Chief Executive or Executive Advisor/Manager: Office of the Chief Executive (preferably before the meeting).

It is noted that while Members can seek advice and discuss these matters, the final decision as to whether a conflict exists rests with the member.

3. Confirmation of Minutes

Minutes of the Finance and Monitoring Committee Meeting held Tuesday 12 September 2017, including minutes while the public were excluded.

(Previously circulated)

4. HB LASS Limited Annual Report for the year ended 30 June 2017 7

5. Hawke's Bay Regional Sports Park Trust Annual Report to 30 June 2017 11

6. Hawke's Bay Museums Trust Annual Report for the year ended 30 June 2017 13

7. New Zealand Local Government Funding Agency Limited - Annual Report for the year ended 30 June 2017 17

8. Financial Quarterly Report for the three months ended 30 September 2017 21

9. Additional Business Items

10. Extraordinary Business Items

11. Recommendation to Exclude the Public from Item 12 30

12. Hawke's Bay Museums Trust - Chairperson Appointment

File Ref: 17/1030

REPORT TO: Finance and Monitoring Committee

MEETING DATE: Tuesday 28 November 2017

FROM: Manager Strategic Finance

Brent Chamberlain

SUBJECT: HB LASS Limited Annual Report for the year ended 30 June 2017

1.0 SUMMARY

1.1 The purpose of this report is to present to the Committee the HB LASS Limited Annual Report for the year ended 30 June 2017.

1.2 This request arises from a requirement under the Local Government Act 2002 for Council Controlled Organisations (CCO) to submit an annual report to their shareholders within 90 days of year end.

1.3 The Chair Craig Waterhouse will be in attendance at the committee meeting.

1.4 The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

1.5 The objective of this decision relevant to the purpose of Local Government is to enable HB LASS to develop the most cost effective delivery of joint services for the five shareholding Councils

1.6 This report concludes by recommending that the HB LASS Limited Annual Report for the year ended 30 June 2017 be received.

2.0 BACKGROUND

2.1 HB LASS Limited is a Local Authority Shared Services company established by four Hawke’s Bay Territorial Local Authorities and the Hawke’s Bay Regional Council.

2.2 As at 30 June 2017 the Directors of HB Lass Limited were:

· Craig Waterhouse (Independent Chair)

· Monique Davidson (Central Hawke’s Bay District Council)

· Wayne Jack (Napier City Council)

· James Palmer (Hawke’s Bay Regional Council)

· Vacant (Wairoa District Council)

· Ross McLeod (Hastings District Council)

John Freeman (Acting CEO, Wairoa District Council) was appointed 31/07/2017

2.3 The Directors of HB LASS Limited are required to deliver to their shareholders an annual report within 90 days of the end of each financial year which will consist of:

· A Chairman’s report, containing a review of the Company operations with specific attention to the performance against the key performance indicators established in the respective Statement of Intent.

· A comparison of actual performance with targeted performance

· Annual audited financial accounts to be completed in accordance with generally accepted accounting standards and to include:

i. Statement of Financial Position

ii. Statement of Financial Performance

iii. Auditor’s Report

3.0 CURRENT SITUATION

3.1 Attachment 1 is the 2017 Annual Report including the report from the Chair.

3.2 HB LASS Limited was established to investigate, develop and deliver shared services, where and when it can be done more effectively for any combination of the Shareholding Councils. The annual report contains a comprehensive report from the Board Chairman which details the activities currently being undertaken by the participating Councils.

3.3 The annual result is a break even result which is consistent with the Statement of Intent and last year’s result. The intention of HB LASS Limited is to recover its costs of operations from shareholder membership fees and project evaluation fees.

3.4 Details of performance against its Statement of Intent performance targets are detailed in the annual report.

3.5 Officers consider that HB LASS Limited has performed well and achieved the majority of the performance targets set out in the Statement of Intent.

3.6 The two KPI’s that were not fully met include the decision to cease publishing the quarterly newsletter, and missing some shareholder reporting deadlines. Neither of these breaches are considered of serious concern by Officers.

3.7 During the year the board has shifted focus from achieving share services to delivering greater value to the respective councils through greater collaboration. Examples of this is Napier City Council (NCC) hosting web services for Hastings District Council (HDC); joint S17a reviews by NCC and HDC being undertaken for both roading and waste minimisation, and papers being developed for both Parks and Animal Control departments on how they could work more collaboratively across councils.

4.0 SIGNIFICANCE AND CONSULTATION

4.1 The issues for discussion are not significant in terms of the Council’s policy on significance and engagement and no consultation is required.

5.0 RECOMMENDATIONS AND REASONS

A) That the report of the Manager Strategic Finance titled “HB LASS Limited Annual Report for the year ended 30 June 2017” dated 28/11/2017 be received.

B) That the HB LASS Limited Annual Report for the year ended 30 June 2017 be received.

Attachments:

HBLASS Annual Report ADOPTED

ADM-02-7-17-431

Separate Document

File Ref: 17/1216

REPORT TO: Finance and Monitoring Committee

MEETING DATE: Tuesday 28 November 2017

FROM: Manager Strategic Finance

Brent Chamberlain

SUBJECT: Hawke's Bay Regional Sports Park Trust Annual Report to 30 June 2017

1.0 SUMMARY

1.1 The purpose of this report is to inform the Council about the Hawke’s Bay Regional Sports Park Trusts (the Trust) full year result to 30 June 2017.

1.2 This update arises from a requirement detailed in the Funding Agreement between Council and the Trust.

1.3 The Trust’s Chief Executive (Jock Mackintosh) will be in attendance at the meeting.

1.5 The Trust is responsible for the efficient and cost effective management of sporting facilities (good quality local infrastructure) located at the Hawkes Bay Regional Sports Park.

1.6 This report concludes by recommending the Hawke’s Bay Regional Sports Park Trust annual report to 30 June 2017 be received.

2.0 BACKGROUND

2.1 The presentation of a annual report by the Trust is a requirement of the Funding Agreement between Council and the Trust which was updated and executed in December 2013. The revised Funding Agreement states that the Trust shall provide to Council as part of its project reporting, annual and six monthly financial accounts for the Trust. The half year report of the Trust has been received in accordance with the requirements set down in the Funding Agreement.

2.2 Officers are working with the Trust to transition from the current funding agreement to a management agreement.

3.0 CURRENT SITUATION

3.1 The presentation of the Trust’s half year report is in accordance with the funding agreement. Attachment 1 includes the Hawke’s Bay Regional Sports Park Trusts annual report to 30 June 2017. These accounts show an operating deficit of $3,169 before depreciation for the year compared to a budgeted loss of $55,785 and a $146,101 surplus for the same period last year.

3.2 The Trust’s financial performance was impacted by additional maintenance incurred when compared to both the budget and the previous year. This was partly related to the increased use the park enjoyed this year, and partly due to one-off items such as burst water mains.

3.3 During the period the Trust received $403,355 in capital grants. These were mainly applied to the extension of the PAK’nSAVE Hastings Netball Centre (total cost $497,594).

4.0 OPTIONS

4.1 The Council can receive the Trust’s annual report to 30 June 2017.

5.0 SIGNIFICANCE AND ENGAGEMENT

5.1 No consultation is required and there is nothing in this report that triggers any threshold in the significance and engagement policy.

6.0 PREFERRED OPTION/S AND REASONS

6.1 That Council receive the Trust’s annual report to 30 June 2017.

7.0 RECOMMENDATIONS AND REASONS

A) That the report of the Manager Strategic Finance titled “Hawke's Bay Regional Sports Park Trust Annual Report to 30 June 2017” dated 28/11/2017 be received.

B) That the Hawke’s Bay Regional Sports Park Trust Annual Report to 30 June 2017 be received.

Attachments:

Signed Independent Auditors Report Hawkes Bay Regional Sports Park Trust Financial Statements Year Ended 30 June 2017

EXT-10-38-17-204

Separate Document

File Ref: 17/1031

REPORT TO: Finance and Monitoring Committee

MEETING DATE: Tuesday 28 November 2017

FROM: Manager Strategic Finance

Brent Chamberlain

SUBJECT: Hawke's Bay Museums Trust Annual Report for the year ended 30 June 2017

1.0 SUMMARY

1.1 The purpose of this report is to update the Committee on the performance of the Hawke’s Bay Museums Trust for the year ended 30 June 2017.

1.2 This request arises from the receipt of the Hawke’s Bay Museums Trust Annual Report for the year ended 30 June 2017.

1.3 Unfortunately Dr Grant (Chair of the Hawke’s Bay Museums Trust) is unable to attend this meeting.

1.5 The objective of this decision relevant to the purpose of Local Government is to meet the needs of current and future communities in providing good quality public services.

1.6 This report concludes by recommending that the Hawke’s Bay Museums Trust Annual Report for the year ended 30 June 2017 be received.

2.0 BACKGROUND

2.1 The Hawke’s Bay Museums Trust (HBMT) is a Council Controlled Organisation with 3 of the 5 Trustees appointed by Napier City Council (NCC) and Hastings District Council (HDC) and with the bulk of its funding provided jointly by those Councils. The HBMT Board is responsible for a management agreement between the HBMT and the NCC with the management agreement providing for the operations of the Museum, Art Gallery and associated activities which are operated by the NCC.

HBMT has 4 main goals:

1. To protect the regional collection

2. To maintain and enhance the quality of the collection

3. To maximise access to the collection

4. To further develop the collection

2.2 The HBMT (Incorporated) is registered as a charitable entity under the Charities Act 2005.

2.3 The Board is constituted to have five members appointed as follows:

§ One appointed by Napier City Council

§ One appointed by Hastings District Council

§ One appointed by the Hawke’s Bay Museums Foundation Charitable Trust

§ One appointed by Ngati Kahungunu Iwi (Incorporated)

§ The Chairperson who shall be appointed by Napier City Council and Hastings District Council jointly.

2.4 The current Trustees are as follows:

Director	Effective From
Dr Richard Grant	December 2014
Deputy Mayor Faye White (Napier)	September 2015
Councillor George Lyons (Hastings)	December 2013
Johanna Mouat	December 2013
Mike Paku	December 2013

2.5 Dr Grant was appointed as the Independent Chairman by the joint appointments committee in late 2014. Council’s Policy on Appointment and Remuneration of Directors for Council Organisations states that the Independent Chair be appointed jointly by NCC and HDC and that HDC’s member on this Appointments Panel be the Mayor Yule or their delegate.

3.0 CURRENT SITUATION

3.1 Attachment 1 is a copy of the Hawke’s Bay Museum Trust’s Annual Report including signed and audited accounts for the year ended 30 June 2017. Officers consider this is a very well presented and comprehensive Annual Report.

3.2 Hastings District Council’s representative on the Trust is Cr George Lyons.

3.3 The HBMT received grants of $900,850 in aggregate from the NCC and HDC compared to $897,260 received in the 2016 financial year. The grants cover the contracted costs to NCC to provide administrative and management services for the management of the collection. The costs of the regional collection are met equally by the HDC and NCC with HDC contributing $442,925 in 2017 compared to $441,130 in 2016. HDC also contributes $15,000 as a training grant to the Trust whereby the NCC training grant offsets expenditure incurred by NCC on behalf of the Trust.

3.4 The audited accounts show a net surplus from operating activities for the year ended 30 June 2017 of $198,689 ($39,384 in 2016). $171,301 of this surplus is due to the recognition of the value of assets gifted to the Trust, with the remaining $27,388 surplus coming from normal operations.

3.5 The Statement of Financial Position reports accumulated funds of $39,902,897 as at 30 June 2017 compared with $45,599,161 as at 30 June 2016. This large decrease in accumulated funds relates predominately to $5.9m write down in the carrying values of the collection due to a revaluation. Cash and cash equivalents were $571,377 compared to $564,873 in 2016.

3.6 The Annual Report also includes a comparison of the target performance measures included in the Statement of Intent for the year ended 30 June 2017 against the actual results.

3.7 Generally the targets set in the Statement of Intent have been met and officers believe that the Annual Report presented by the Trust details a good financial result.

3.8 The KPI’s that haven’t been met include the fading (damage) of 10 photo’s that have been on long term display, and the number of stakeholder meetings held. Where targets have not been achieved explanations have been provided and officers are satisfied with the response.

3.9 The HBMT owns, protects, and makes available the collection of art, local history, Maori and ethnographic objects. The primary place of display and storage of the collection is at the MTG Hawkes Bay, while overflow storage is housed at the Rothmans Building in Napier. This offsite storage has been a long standing issue as it is expensive and not ideal for storing historical artefacts (lack of climate control).

With NCC’s council and library buildings being recently deemed an earthquake risk, it is proposed that the library be relocated to part of the MTG building. This area of the MTG currently displays the HBMT’s archives, and as a result the archives will need to relocated to the Rothmans building.

HDC is awaiting a formal proposal from NCC for a long term solution for the physical storage of the collection, and what the cost of this solution might be.

4.0 SIGNIFICANCE AND CONSULTATION

4.1 The issues for discussion are not significant in terms of the Council's policy on significance and engagement and no consultation is required.

5.0 Recommendations and Reasons

A) That the report of the Manager Strategic Finance titled “Hawke's Bay Museums Trust Annual Report for the year ended 30 June 2017” dated 28/11/2017 be received.

B) That the Hawke's Bay Museums Trust Annual Report for the year ended 30 June 2017 be received.

Attachments:

HB Museums Trust Annual Report for the year ended 30 June 2017

EXT-10-11-3-17-155

Separate Document

File Ref: 17/1032

REPORT TO: Finance and Monitoring Committee

MEETING DATE: Tuesday 28 November 2017

FROM: Manager Strategic Finance

Brent Chamberlain

SUBJECT: New Zealand Local Government Funding Agency Limited - Annual Report for the year ended 30 June 2017

1.0 SUMMARY

1.1 The purpose of this report is to inform the Committee of the financial results of New Zealand Local Government Funding Agency Limited (LGFA) for the year ended 30 June 2017.

1.2 This issue arises from the receipt of the annual report for the 12 months ended 30 June 2017 from the LGFA.

1.3 The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

1.4 This report concludes by recommending New Zealand Local Government Funding Agency Limited Annual Report for the year ended 30 June 2017 be received.

2.0 BACKGROUND

2.1 The LGFA was established on 1 December 2011 with 18 Local Government shareholders and the Crown. Hastings District Council became a shareholder with a shareholding investment of $400,000 (1.8%). The LGFA is a Council Controlled Organisation.

2.2 During 2012 12 new shareholders joined the LGFA as part of the second opening with Council selling down some shares to the 12 new shareholders. This reduced HDC’s shareholding to $373,196 (1.77%).

3.0 CURRENT SITUATION

3.1 Attachment 1 is a copy of the 2016/17 Annual Report for the 12 months ended 30 June 2017.

3.2 The Annual Report is very comprehensive and the results reflect another strong year for LGFA and operations from 1 July 2016 to 30 June 2017. The annual report includes the following:

- Chairman’s Report

- Governance Structure

- Statement of Service Performance

- Financial Statements

- Directors’ Declaration

- Audit Report

- Other Disclosures

- Directory

3.3 The LGFA has continued to build on the solid base that has been established. They have highlighted the following developments over the past year:

· Strong financial and operational performance – 15.3% increase in interest income ($320.7m : 2017) and 15.7% increase in net operating profit ($11.05m : 2017)

· Issued $1.285b of bonds over the year

· LGFA added 3 new member Councils during the year (53 Councils in total)

3.4 During 2016/17 LGFA issued $1.285 billion with a weighted average on maturity of 8 years. As at 30 June 2017 the level of bonds on issue was $7.855 billion with $265 million outstanding in their longest dated maturity (April 2033). The LGFA continues to provide savings in borrowing costs for councils relative to other sources of borrowing (Auckland and Dunedin Councils are paying between 12 and 22 basis points more when borrowing externally than the LGFA equivalent offerings).

3.5 In April 2017, LGFA commenced issuance of a 16 year bond (April 2033). The previous longest dated bond was April 2027. This, along with the bespoke lending introduced last year, now allows Councils to borrow for periods anywhere from 30 days to 16 years in length.

3.6 LGFA bonds continue to be popular with investors with an average of 2.96 bids per bond being offered during 2016/17 (there were nine tenders during this year).

3.7 The Statement of Comprehensive Income reports a net operating profit of $11.05m compared to a profit of $9.55m in 2015/16. The 2016/17 profit of $11.05m was ahead of its 2016/17 Statement of Intent target primarily due to councils taking advantage of the unusually low interest rates and refinancing their December 2017 loan maturities early and investing the money on deposit until the repayment date.

3.8 The Statement of Service Performance sets out progress on the achievement of its primary objectives, additional objectives and actual performance against its performance targets. The commentary is very good and the majority of performance targets were achieved. Officers are of the opinion that the LGFA’s performance continues to be very successful; creating a more efficient and diversified funding market for Councils to participate in.

3.9 LGFA has achieved its key financial results for the year to 30 June 2017 and these are set out in the table below:

In $ million	30 June 2017 Actual	Statement of Intent Forecast
Total Net Income (net of borrower notes)	17.51	16.58
Issuance and operating expenses	(6.46)	(6.58)
Net Profit	$11.05	$10.00

3.10 The key performance targets are set out in the table below including an explanation of any material variances:

Current performance targets	Target	Result	Outcome
Average cost of funds relative to NZ Govt Stock	<0.50%	0.709%	No (i)
Average base on-lending margin above LGFA’s cost of funds	<0.10%	0.104%	No (i)
Annualised operating overheads (excluding AIL (ii))	<$4.80 million	$4.67 million	Yes
Lending to participating councils	>$7,341 million	$7,736 million	Yes

(i) The average cost of borrowings and margins are determined by the length of the borrowings the Councils choose to request. The longer dated debt comes at a higher cost of borrowing and higher margin due to higher level of risk (uncertainty) factored into the pricing by the investors on lending the money.

(ii) AIL – Approved Issuer Levy

3.11 LGFA have declared a $1.39 million dividend for the year ended 30 June 2017. This equates to a dividend payment to Council of $20,750.

4.0 SIGNIFICANCE AND CONSULTATION

4.1 The issues for discussion are not significant in terms of the Council's policy on significance and engagement and no consultation is required.

5.0 RECOMMENDATIONS AND REASONS

A) That the report of the Manager Strategic Finance titled “New Zealand Local Government Funding Agency Limited - Annual Report for the year ended 30 June 2017” dated 28/11/2017 be received.

B) That the New Zealand Local Government Funding Agency Limited Annual Report for the 12 months ended 30 June 2017 be received.

Attachments:

LGFA Annual Report for the year ended 30 June 2017

FIN-15-5-17-650

Separate Document

REPORT TO: Finance and Monitoring Committee

MEETING DATE: Tuesday 28 November 2017

FROM: Financial Controller

Aaron Wilson

SUBJECT: Financial Quarterly Report for the three months ended 30 September 2017

1.0 SUMMARY

1.1 The purpose of this report is to inform the Committee of the financial result for the three months ended 30 September 2017.

1.2 The Council is required to give effect to the purpose of local government as prescribed by Section 10 of the Local Government Act 2002. That purpose is to meet the current and future needs of communities for good quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost–effective for households and businesses. Good quality means infrastructure, services and performance that are efficient and effective and appropriate to present and anticipated future circumstances.

1.3 This report concludes by recommending that the report for the 3 Months ended 30 September 2017 be received.

2.0 BACKGROUND

2.1 The accounting operating financial result is reported on quarterly during the year and at year end a report is prepared on the financial as well as the rating result. The rating result differs from the accounting result in respect of non-cash items such as depreciation, vested assets and development contributions that are not included.

2.2 This financial report is governance focussed and allows significant variances to be highlighted with explanations provided in a way this is easy to read and understand through dashboard analytics and commentary.

2.3 If Councillors require clarification on any points, please contact the writer prior to the meeting to ensure complete answers can be given at the meeting on the detail in these reports.

3.0 CURRENT SITUATION

3.1 Set out below is a summary of the operating financial result year to date. The financial results detailed below represent the accounting view and does not reflect the potential rating result for 2017/18:

	$’000	$’000	$’000	Full Year Revised Budget*
2017/18	YTD Actual	YTD Revised Budget	YTD Variance	Full Year Revised Budget*
Operating Revenue	32,864	29,989	2,875	120,969
Operating Expenditure	28,390	28,802	412	115,707
Net Surplus/(Deficit)	4,474	1,187	3,287	5,262

* Revised budget includes the Annual budget, Brought Forwards and surplus allocations from 16/17 financial year

3.2 The result above is presented against the revised budget. The revised budget includes changes and decisions made during the year on Council budgets which for the first quarter relates to the inclusion of carry forwards and allocations of the 2016/17 rating surplus.

3.3 Council’s overall financial performance is $3.28m ahead of YTD budget for the quarter ended 30 September 2017. Financial performance for the quarter is positive. Revenue is above budget and expenditure is under budget. As it is early in the financial year and it is difficult to identify definitive trends.

3.4 Overall revenue is $2.87m ahead of YTD budget and expenditure is $412,000 under YTD budget.

Revenue

3.5 Subsidies, grants and donations are above YTD budget by $1.59m with the main driver being the 100% subsidies received for the Whakatu Arterial roundabout. This additional revenue is offsetting the capital cost for this part of the project.

3.6 Fees and charges revenue across Council are favourable by $827,000 with the main drivers being:

· Community Facilities & Programme fees and charges are $299,045 favourable and is mainly driven by an insurance payout to the Hastings Sports Centre of $228,249. In addition Crematorium & Cemetery revenue is up by $34,085, along with higher than budgeted swimming pool revenue of $33,825.

· Asset management fees and charges are favourable by $300,223. This is driven by higher than budgeted revenues at the Landfill and relates primarily to the final payment being received of $280,000 for the harvesting of the forestry block.

3.7 Development contributions are favourable to YTD budget by $458,000, largely driven by landowners in Irongate being invoiced.

3.8 Overall revenue has performed well in the first quarter with many of the revenue lines reflective of the increased activity within the region. There are no areas of concern across Council’s business activities.

Expenditure

3.9 Overall expenditure is tracking below budget to 30 September 2017 by $412,000 or 1.4% of total budgeted expenditure year to date.

3.10 Council continues to spend significant sums of money on water supply activity including both Capital and Operational expenditure. This activity is funded by way of a separate water account which is designed to either accumulate reserves or run in deficit depending on expenditure needs and Council decision making. This allows Council to spread the impact of “lumpy” expenditure in this activity.

3.11 Given the planned large scale expenditure on water supply, Council in the 2017/18 Annual Plan, provided for the water account to run in deficit for a number of years to come. This approach will be continued in the 2018 – 2028 Long Term Plan.

3.12 The current year’s budget was based on expenditure and activity levels forecast in February 2017. Operational requirements and the overall capital investment forecast have increased since that time as operational and project requirements have been planned in detail and become better understood. Greater public awareness of water leaks has led to increased demand on maintenance services, while water quality testing, monitoring and chlorination requirements have also been higher than initially forecast. This is leading to budgeted variances. It is not possible to defer most of the work driving these costs.

3.13 These variances will affect the yearend balance of the water account. However, work is being done through the Long Term Plan to ensure that the account comes back into a surplus position in an appropriate time frame.

3.14 Areas in Council that are favourable due to timing, include, capital grants not yet paid out, ($807,000, HB Community Fitness Centre Trust) along with lower spends in Transport due to lower expert advice and depreciation ($331,000).

3.15 Management are continuing to tightly manage all areas of expenditure within Council. There is a strong efficiency culture throughout Council.

Capital Spend

3.16 Council’s total capital budget (including carry forwards, renewals, new works, and growth projects) for 2017/18 is $94.8m. Capital spend year to date is ahead of budget at this early stage of the year, due to projects being already underway at the beginning of the year.

Treasury

3.17 Total net borrowing as at the end of September 2017 is $60.7m with committed borrowing facilities of $70.7m, providing headroom of $10m. The liquidity ratio is at 116% compared to the policy minimum of 110%.

3.18 The following table sets out Council’s overall compliance with the Treasury Management Policy as at 30 September 2017:

Measure	Compliance	Actual	Minimum	Maximum
Liquidity	ü	116%	110%	170%
Fixed debt	ü	95%	55%	95%
Funding profile: 0 – 3 years 3 – 5 years 5 years +	ü ü ü	42% 28% 29%	10% 20% 10%	50% 60% 60%

3.19 Council is currently compliant with Treasury Management Policy. The Risk and Audit subcommittee is responsible for setting the Council’s policy in conjunction with Price Waterhouse Coopers (PWC). Officers manage Council’s treasury policy and report to the subcommittee bi-monthly.

3.20 Current debt forecasts predict debt at 30 June 2018 to be between $80m and $85m with major capital projects well underway.

4.0 SIGNIFICANCE AND CONSULTATION

4.1 This report does not raise any issues that are significant in terms of the Councils Significance Policy that would require consultation.

5.0 RECOMMENDATIONS AND REASONS

A) That the report of the Financial Controller titled “Financial Quarterly Report for the three months ended 30 September 2017” dated 28/11/2017 be received.

Attachments:

Quarterly Report to 30 September 2017

CG-14-27-00029

Trim File No.: CG-14-2-00053

Agenda Item: 11

HASTINGS DISTRICT COUNCIL

Finance and Monitoring Committee MEETING

Tuesday, 28 November 2017

RECOMMENDATION TO EXCLUDE THE PUBLIC

SECTION 48, LOCAL GOVERNMENT OFFICIAL INFORMATION AND MEETINGS ACT 1987

THAT the public now be excluded from the following part of the meeting, namely:

12. Hawke's Bay Museums Trust - Chairperson Appointment

The general subject of the matter to be considered while the public is excluded, the reason for passing this Resolution in relation to the matter and the specific grounds under Section 48 (1) of the Local Government Official Information and Meetings Act 1987 for the passing of this Resolution is as follows:

GENERAL SUBJECT OF EACH MATTER TO BE CONSIDERED

REASON FOR PASSING THIS RESOLUTION IN RELATION TO EACH MATTER, AND

PARTICULAR INTERESTS PROTECTED

GROUND(S) UNDER SECTION 48(1) FOR THE PASSING OF EACH RESOLUTION

12. Hawke's Bay Museums Trust - Chairperson Appointment

Section 7 (2) (a)

The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

For individual's privacy protection.

Section 48(1)(a)(i)

Where the Local Authority is named or specified in the First Schedule to this Act under Section 6 or 7 (except Section 7(2)(f)(i)) of this Act.

Hastings District Council

Lyndon Road East, Hastings