audit, finance, risk & monitoring 23 april...

AGENDAAUDIT, FINANCE, RISK & MONITORING

Monday, 23 April 2018Commencing at 1:00 pm

Tauranga City CouncilCouncil Chambers, 91 Willow Street, Tauranga

Please note that this meeting will be audio recorded. The recording will be publicly available on Tauranga CityCouncil's website: www.tauranga.govt.nz.

NOTICE OF MEETING

_____________________________

I hereby give notice that a meeting of Council will be held in the Council Chambers, 91 Willow Street,Tauranga (access off the Library Arcade), Tauranga to consider the business as set out herein.

G PooleChief Executive

www.tauranga.govt.nz

Common Responsibilities and Delegations

The following common responsibilities and delegations apply to all standing committees.

Responsibilities of Standing Committees

Establish priorities and guidance on programmes relevant to the Role and Scope of thecommittee.Provide guidance to staff on the development of investment options to inform the LongTerm Plan and Annual Plans.Report to Council on matters of strategic importance.Recommend to Council investment priorities and lead Council considerations of relevantstrategic and high significance decisions.Provide guidance to staff on levels of service relevant to the role and scope of thecommittee.Establish and participate in relevant task forces and working groups.Engage in dialogue with strategic partners, such as Smart Growth partners, to ensurealignment of objectives and implementation of agreed actions.Confirmation Committee minutes.

Delegations to Standing Committees

To make recommendations to Council relevant to the Role and Scope of the Committee.To develop and consider, receive submissions on and adopt strategies, policies and plansrelevant to the role and scope of the committee, except where these may only be legallyadopted by Council.To consider, consult on, hear and make determinations on relevant strategies, policiesand bylaws (including adoption of drafts), making recommendations to Council on adoption,rescinding and modification, where these must be legally adopted by Council.To approve relevant submissions to central government, its agencies and other bodies.To develop expectation documents and comment on Statement of Intents for CCOs (andalternative delivery models), where the activity that the CCO undertakes is relevant to therole and scope of the committee.Engage external parties as required.

Monday, 23 April 2018Tauranga City Council

Audit, Finance, Risk and Monitoring Committee - AGENDA

Audit, Finance, Risk and Monitoring Committee Terms of Reference

Membership

Cr Kelvin CloutCHAIRPERSON

Cr Max MasonDEPUTY CHAIRPERSON

Mayor Greg BrownlessCr Larry BaldockCr Leanne BrownCr Rick CurachCr Bill GraingerCr Terry MolloyCr Steve MorrisCr Catherine Stewart

MEMBERS

One Vacancy

Half of the members physically present, where thenumber of members (including vacancies) is even;and a majority of the members physically present,where the number of members (including vacancies)is odd.

QUORUM

MonthlyMEETING FREQUENCY

Role

To ensure that the Council is delivering on agreed outcomes.To ensure that the Council is managing risk in an appropriate manner.

Scope

Monitoring performance against the approved Long Term Plan and Annual Plan.Overseeing the development of the Council’s Annual Report.Overseeing the development of financial and treasury management strategies and policies.Considering and approving external audit arrangements and receiving Audit reports.Consider the outcome of internal and external audit reviews.Advise Council on matters of finance and risk and provide objective advice andrecommendations for its consideration.Consider matters which are related to the quality assurance and internal controls in Counciland ensure the financial management practices and processes comply with the LocalGovernment Act 2002, other relevant legislation and Council’s own policies.Consider, monitor and recommend (where appropriate) in respect to Council’s interest inCCOs.



Consider all matters regarding the Local Government Funding Agency (LGFA).Monitor key activities, projects and services (without operational interference in the services)in order to better inform the members and the community about key Council activities andissues that arise in the operational arm of the Council.

Power to Act

To make all decisions necessary to fulfil the role and scope of the Committee subject tothe limitations imposed.To co-opt non-voting members, including Tangata Whenua or other representatives, tothe Committee.For the avoidance of doubt, this Committee has not been delegated the power to:

make a rate;◦

borrow money, or purchase or dispose of assets, other than in accordance with theLong Term Plan;

◦

adopt a Long Term Plan, Annual Plan, or Annual Report;◦

adopt policies required to be adopted and consulted on in association with the LongTerm Plan.

◦

Power to Recommend

To Council and/or any standing committee as it deems appropriate.



Table of Contents

PAGE NOSUBJECTITEM

1. Apologies ............................................................................................ 6

2. Public Forum ....................................................................................... 6

3. Chairperson’s Report ......................................................................... 6

4. Lead Officer’s Report ......................................................................... 6

5. Acceptance of Late Items .................................................................. 6

6. Change to the Order of Business ..................................................... 6

7. Confirmation of Minutes, Matters Arising and Adoption ofRecommendations ............................................................................. 6

7.1 Minutes - Audit Finance Risk and Monitoring Committee - 26 March 2018(M18/24) (Open) ....................................................................................................... 7

8. Declaration of Conflicts of Interest ................................................. 17

9. Business ............................................................................................ 17

9.1 DC 109 - Monthly Financial Report for the Nine Months ended 31 March2018 ........................................................................................................................ 17

9.1.1 Attachment A to DC109_Finance Risk Committee 2018 MarchFinancial Report ........................................................................................ 22

9.1.2 Attachment B to DC 109_Capital Project Summary .................................. 25

9.1.3 Attachment D to DC109_Capital Overspends to 31 March 2018 .............. 27

9.1.4 Attachment E to DC109_Cameron Devonport comparison - UpdateApril 2018 .................................................................................................. 29

10. Discussion of Late Items ................................................................. 30

11. Public Excluded Session ................................................................. 30

12. Workshop Session ........................................................................... 30

12.1 Workshop - Discussion regarding appointment of an IndependentMemberto the Audit, Finance, Risk and Monitoring Committee .................................... 30



1. Apologies

2. Public Forum

3. Chairperson’s Report

4. Lead Officer’s Report

The Lead Officer to provide a verbal update.

5. Acceptance of Late Items

6. Change to the Order of Business

7. Confirmation of Minutes, Matters Arising and Adoption ofRecommendations

Suggested Recommendation

That it be Resolved

That the Audit, Finance, Risk and Monitoring Committee:

Confirms theminutes of the Audit, Finance, Risk andMonitoring Committee (M18/24)dated 26 March 2018 as a true and correct record (and the recommendationscontained therein be adopted [if relevant]) (includes the confidential section of theminutes which pertains to receipt of minutes only).



7.1 Minutes - Audit Finance Risk andMonitoring Committee - 26 March2018 (M18/24) (Open)



THESE MINUTES ARE YET TO BE CONFIRMED

Open Section To be confirmed by Audit, Finance, Risk & Monitoring Committee on 23 April 2018

M18/24

TAURANGA CITY COUNCIL

MINUTES OF THE AUDIT, FINANCE, RISK & MONITORING COMMITTEE

DATE/TIME: 26 MARCH 2018: 1:00 P.M. VENUE: TAURANGA CITY COUNCIL CHAMBERS

OPEN SECTION

Members Present: Cr Max Mason (Deputy Chairperson)

Mayor Greg Brownless Cr Larry Baldock Cr Leanne Brown Cr Rick Curach Cr Bill Grainger Cr Terry Molloy Cr Steve Morris Cr Catherine Stewart One Vacancy

Apologies: Cr Kelvin Clout

Also Present: As listed in the minutes

In Attendance: Garry Poole, Chief Executive Paul Davidson, Chief Financial Officer

Christine Jones, General Manager Growth and Infrastructure Kirsty Downey, General Manager Chief Executive Group Jaine Lovell Gadd, General Manager City Transformation Paul Baunton, Manager: Emergency Management and Safety Philip King, Group Manager Community Services Alan Lightbourne, Chief Digital Officer David Jensen, Management Accountant Growth Mohan de Mel, Treasurer Kathryn Sharplin, Financial Controller Chris Quest, Risk Specialist David Campbell, CCO Specialist Ross Hudson, Team Leader Strategy Development Merinda Pansegrouw, Committee Advisor

M18/24.1 APOLOGIES

Moved Brown/Seconded Morris

That it be Resolved

8

TAURANGA CITY COUNCIL - MONDAY, 23 APRIL 2018 - AUDIT, FINANCE, RISK AND MONITORING COMMITTEE - AGENDA

- 2 -

Audit, Finance, Risk & Monitoring Committee 26.3.18


Open Section To be confirmed by the Audit, Finance, Risk and Monitoring Committee on 23 April 2018:

That the Audit, Finance, Risk & Monitoring Committee: Receives an apology for absence from Cr Clout.

CARRIED unanimously

M18/24.2 PUBLIC FORUM

(a) Jon Jenner - Bayfair Bus Interchange Assessment - Updated

Scope of Works Jon Jenner, a Farm Street Resident, addressed the Committee on the proposed Arataki Bus Interchange Relocation. He provided PowerPoint Presentation (A) and tabled items (1) and (2) outlining the following: Key Points

Supported by more than 50 concerned residents from the Farm Street area

Background to the project: o Current Arataki Bus Interchange – in front of Bayfair o April/May closure due to Bayfair development o New Interchange location required (to take 20 buses per hour) o Tauranga City Council (TCC) proposal was a Temporary Bus

Interchange on Farm Street, at back of Bayfair and a Permanent Bus Interchange in middle of Farm Street

Local residents supported a local bus route on Farm Street but opposed a bus interchange

Lack of consultation / urgent intervention required

Main reasons for opposing Farm Street location: o Local road built for residents and limited traffic volumes only o Safety / accessibility o Inadequate street design (width, cycle ways, vehicle access) o No evidence that a safety audit had been conducted o Operational efficiency o Waste of money, time and effort o Needed to do it once and do it right. Needed a win-win situation

Best location for a Bus Interchange would be a location that provided efficient service, happy passengers and ratepayers, offering the following: o Intersection of arterial routes o Safe entry and exit o Facilities / amenities o Safe for all road users to interact

Only one sensible location: Baypark – this proposal was supported by Bay Venues Limited, Chief Executive Officer, Gary Dawson

Why Baypark was the best solution: o Owned by TCC o Point where three highways joined - intersection of arterial

routes from around and outside the city o Plenty of space for interchange o Existing facilities (toilets, seating, shelter, food, etc.)

9


- 3 -




o Safety o Efficiency and future proofing (incl. Welcome Bay area) o Connectivity to Bayfair (many routes could stop there) o Other transport modes o Poorly served at present by public transport o Added value to asset o Existing alternative route if B2B congested

(Truman/Sandhurst/Grenada)

Requested Council to support a motion to stop the planned bus interchange on Farm Street and requested serious consideration of locating it to Baypark.

Points Raised by Elected Members

Impact on Baypark as events centre when peak/full activity events were taking place needed to be considered

Response from the Bay of Plenty Regional Council required.

Items for Staff Follow-up

Staff to attend to the submission by Jon Jenner as Farm Street residents on the proposed Arataki Bus Interchange Relocation and respond accordingly.

M18/24.3 LEAD OFFICER'S REPORT

Key Points

2018 Work Programme for the Audit, Finance, Risk and Monitoring Committee to be developed.

CONFIRMATION OF MINUTES, MATTERS ARISING AND ADOPTION OF RECOMMENDATIONS

M18/24.4 CONFIRMATION OF MINUTES

Moved Cr Baldock /Seconded Cr Curach

That it be Resolved That the Audit, Finance, Risk & Monitoring Committee: (a) Confirms the minutes of the Audit, Finance, Risk &

Monitoring Committee (M18/10) dated 26 February 2018 as a true and correct record (and the recommendations contained therein be adopted [if relevant]).

CARRIED unanimously

Matters arising

10


- 4 -





Staff members to provide further information to the Audit, Finance, Risk & Monitoring Committee at a future meeting as per page 11 of the minutes of the Committee meeting held on 26 February 2018 relating to the following: o Costs/financial implications following the recent move to Cameron

Road o Contractors used by Tauranga City Council.

BUSINESS

M18/24.5 DC 65 - CCO Half Yearly Reports to 31 December 2017

David Campbell, CCO Specialist, presented the report and responded to questions on the report. He was supported by the following presenters: Gary Dawson, Chief Executive Officer of Bay Venues Ltd, Steven Boyle, Chief Executive Officer of BOPLASS, Karl Chitham, Director, Tauranga Art Gallery Trust, Kristin Dunne Chief Executive Officer, Tourism Bay of Plenty, who provided PowerPoint Presentation (B) and Mohan de Mel, Treasurer, who presented on behalf of the Local Government Funding Agency (LGFA).

2:15 p.m. Mayor Brownless withdrew from the meeting. Items for Staff Follow-up

Omanawa Falls to be marketed/advertised most effectively in close liaison with Tourism Bay of Plenty to maximize the opportunity.

Moved Baldock/Seconded Cr Brown

That it be Resolved That the Audit, Finance, Risk & Monitoring Committee: (a) Receives Report (DC 65) – Council Controlled Organisations –

half yearly reports for period ending 31 December 2017.

(b) Receives Bay Venues Limited’s (BVL) report on its performance for the six months to 31 December 2017 as required by the 2017/18 Statement of Intent.

(c) Receives Bay of Plenty Local Authority Shared Services

Limited’s (BOPLASS) report on its performance for the six months to 31 December 2017 as required by the 2017/18 Statement of Intent.

(d) Receives Tauranga Art Gallery Trust’s (TAGT) report on its

performance for the six months to 31 December 2017 as required by the 2017/18 Statement of Intent.

11


- 5 -




(e) Receives Tourism Bay of Plenty’s (TBOP) report on its performance for the six months to 31 December 2017 as required by the 2017/18 Statement of Intent.

(f) Receives the Local Government Funding Agency’s (LGFA) report on its performance for the six months to 31 December 2017 as required by the 2017/18 Statement of Intent.

(g) Receives the Local Government Funding Agency’s summary

of financial covenants as at 30 June 2017. CARRIED unanimously

M18/24.6 DC 74 - Waiari Water Supply Scheme - Project Update

Howard Severinsen, Manager: Infrastructure Delivery, presented the report and responded to questions. Points Raised by Elected Members

Commended iwi support and commitment to the Waiari Water Supply Scheme project


Staff members to provide a six monthly progress report to the Audit, Finance, Risk and Monitoring Committee

Elected Members on the Waiari Kaitiaki Advisory Group to report to the Elected Members on progress made during the Elected Members’ monthly briefing sessions

Should any challenges arise, these are to be report to the Audit, Finance, Risk and Monitoring Committee.

Moved Cr Brown/Seconded Stewart

That it be Resolved That the Audit, Finance, Risk & Monitoring Committee: Receives Report DC 74 – Waiari water supply scheme – project update.

CARRIED unanimously

M18/24.7 DC 76 - Local Government Funding Agency Draft 2018/19 Statement of Intent

Mohan de Mel, Treasurer, presented the report and responded to questions. Moved Cr Baldock/Seconded Cr Molloy

That it be Resolved

12


- 6 -




That the Audit, Finance, Risk & Monitoring Committee: (a) Receive Report (DC 76) – Local Government Funding Agency

Report – Draft 2018/19 Statement of Intent.

(b) Provide feedback to LGFA Board noting the support for the draft 2018/19 Statement of Intent.

CARRIED unanimously

M18/24.8 DC84 Growth Projects March 2018 – Monitoring Report

Christine Jones, General Manager: Growth & Infrastructure, presented the report and responded to questions. Items for Staff Follow-up

Concerns raised by Elected members regarding compliance to the City Plan requirements relating to street trees (number of street trees - one per lot/appropriateness of tree species) to be verified with the Arborist, particularly pertaining to developments in Papamoa and The Lakes - feedback to be provided to elected members by means of electronic mail

Clarity to be provided on the safety/gradients in terms of compliance to allow for mobility scooters - feedback to be provided to elected members by means of electronic mail

A report to be submitted to the City Transformation Committee on the Workstream 2 Project, taking into consideration approaches that had been followed by Auckland Transport.

Moved Baldock / Seconded Curach

That it be Resolved That the Audit, Finance, Risk & Monitoring Committee: (a) Receive the Growth Projects March 2018 Monitoring Report

CARRIED unanimously

M18/24.9 DC 85 - Monthly Financial Report for the Eight Months ended 28 February 2018

Kathryn Sharplin, Financial Controller, presented the report and responded to questions.

3:15 p.m. Mayor Brownless entered the meeting.

13


- 7 -




Moved Cr Mason/Seconded Cr Baldock

That it be Resolved That the Audit, Finance, Risk & Monitoring Committee: (a) Receives Report (DC 85) - Monthly Financial Report for the

Eight Months ended 28 February 2018.

(b) Agrees that attachment (c) remains in confidential CARRIED unanimously

M18/24.10 EXCLUSION OF THE PUBLIC (CONFIDENTIAL ITEMS)

Moved Cr Brown/Seconded Cr Morris

That it be Resolved That the Audit, Finance, Risk & Monitoring Committee: (a) Exclude the public from the following parts of the

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

General Subject of Each Matter to be Considered

Reason for Passing this Resolution in Relation

to Each Matter

Ground(s) Under Section 48(1) for the Passing of this

Resolution

Confirmation of Minutes

As noted in the relevant minutes

That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist.

14


- 8 -




General Subject of Each Matter to be Considered

Reason for Passing this Resolution in Relation

to Each Matter

Ground(s) Under Section 48(1) for the Passing of this

Resolution

DC 85 Attachment C - Capital Project Summary

To protect information where the making available of the information:

(i) Would disclose a trade secret.

(ii)Would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information,

That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist.

CARRIED unanimously

______________________________________

Business as conducted by the Audit, Finance, Risk & Monitoring Committee after excluding the public in terms of Section 48 Local Government Official Information & Meetings Act 1987 is continued on the next page.

______________________________________

Confirmed by resolution of Audit, Finance, Risk & Monitoring Committee passed the day of 2018

___________________________________ CHAIRPERSON

15


16


8. Declaration of Conflicts of Interest

9. Business

9.1 DC 109 - Monthly Financial Report for the Nine Months ended 31March 2018



Monthly Financial Report for the Nine Months ended 31 March 2018 (DC 109)

- 1 -


Audit, Finance, Risk & Monitoring Committee

23 April 2018

Objective ID No: A8651694

CONFIDENTIAL ATTACHMENT C to DC 85

Reason for Confidentiality

To protect information where the making available of the information –

(i) Would disclose a trade secret.

(ii) Would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information,

Transfer to Open Attachment C is to remain in the Confidential section due to the commercial nature of the information.

Executive summary

Recommendation That the Audit, Finance, Risk & Monitoring Committee:

(a) Receives Report (DC 109) - Monthly Financial Report for the Nine Months ended 31 March 2018.

(b) Agrees that attachment (c) remains in confidential

Summary of issue 1. The Summary Statement of Comprehensive Revenue and Expense for the nine months ended 31 March shows the surplus tracking close to budgeted levels. Operating revenue overall is projected to be slightly above budget. Expenditure is overall tracking above budget with additional use of contractors and consultants partially offset by lower expenditure on personnel.

2. The Treasury Report shows total net debt to the 31 March 2018 of $325m, with a full year forecast revised downward to $380m.

3. TCC Capital expenditure table identifies capital project budgets for the year along with year to date expenditure. Significant projects are identified that will be monitored and reported separately. Forecasts indicate that budget is expected to be underspent by $45m overall by year-end, with significant budget carry forward to the next financial year.

4. Capital Overspends table identifies overspends above $50,000 on capital projects that have occurred this year. No new overspends were included for March.

18



- 2 -

Broader benefit / impact

This report is for monitoring purposes showing Council’s financial performance in delivering services to the community

Alignment to strategic direction

Maintaining expenditure within budget ensures delivery of services in a financially sustainable way.

Discussion

5. Attachments to this report provide a summary of Council’s financial performance for the first nine months of the financial year to 31 March 2018. The content of this report includes:

i. Statement of Comprehensive Revenue and Expenditure, which shows the operating and capital revenue and expenses in a format consistent with the Annual Report. There continue to be variances to budget for vested assets and development contributions. The significant development contributions relate to Pyes Pa West, Tauriko and Wairakei. The full year projection for development contributions has been increased to $7.5m above budget. The projected revenue from vested assets in contrast is below budget, due to the revised timing of delivery of assets related to Hairini roading works and Wairakei stormwater works, which are now expected to be delivered in 2019. Further review of estimated timing of vested assets will be undertaken during April.

ii. Overall revenue is projected to be close to budget for the year. Water by meter revenue is tracking slightly ahead of budget. User fee revenue is tracking behind budget, with below budget revenue now projected in several activities. Building services revenue is projected to be slightly down, due to lower consent volumes year to date. Variances in historic village lease revenue are due to less availability of venues as a result of building renewal work. Water catchment forestry harvesting revenue is below budget due to accessibility issues.

iii. Overall operational expenditure is projected to be below budget. Consultant costs are ahead of budget, partially offset by below budget expenditure on staff. Significant variances are across property management, building and digital services. Interest costs are projected to be below budget due to the slower delivery of the capital programme. Depreciation is under budget year to date, but this trend is expected to reverse before year end as new assets are capitalised and revaluations are processed. The costs of the relocation to Cameron Road are offset by savings in budgeted expenditure at Devonport Road (Attachment E).

iv. The Treasury Report shows total net debt to the end of March of $325m. The full year forecast for net debt has been revised downward to $380m.

v. TCC Capital Expenditure to 31 March 2018 summarises expenditure to date on the capital programme, identifying significant capital projects. Revised project manager estimates aggregate to a net underspend of the capital programme of $45m by year end. This would represent capital delivery of 76% of the full year budget. Included in this underspend are revisions to timing of a number of the key projects identified in Attachment B. Additional expenditure has been forecast for the Kennedy Road Bridge.

vi. Forecast expenditure in Digital Services is below budget with expenditure related to our major systems (ERP) deferred. Adjustment to the categorisation of ICT expenditure on the information management review from capital to operating

19



- 3 -

expenditure will also result in under-expenditure on the capital programme, offset by additional spend as operating expenditure for this project.

vii. Capital Overspends to Budget to 31 March total $1.1m year to date, with a full year projected overspend of $2.8m. Some of this overspend is a result of projects brought forward, while others are due to the budget being in the previous year and not carried forward to cover final payments on the project. The overspends are expected to be managed within the limits of the overall capital budget

Options

6. There are no specific options for the Committee to consider in respect to this report, as it is presented to the Committee for monitoring purposes only.

Significance and engagement

7. Under the Significance and Engagement Policy 2014, this report is of low significance as it is for Council monitoring purposes.

Next steps

8. This report ensures monitoring of Council performance to ensure compliance with Council’s budgets, policies and delegations.

Appendices

No. Title

A Council Monthly Financial Summary

Objective ID: A8650385

B TCC Capital Expenditure Year to Date Objective ID: A8651518

C CONFIDENTIAL - TCC Capital Expenditure Year to Date Objective ID: A851527

D Capital Overspends Year to Date Objective ID: A8651533

E Cost of Relocation of Offices to Cameron Road Objective ID: A8651705

Signatories

Authors Kathryn Sharplin, Financial Controller

Committee Lead Ross Hudson, Team leader, Strategy Development

20


https://objlive.tauranga.govt.nz/id:A5984433


- 4 -

Authorisers Paul Davidson, Chief Financial Officer

21


9.1.1 Attachment A to DC109_Finance Risk Committee 2018 March Financial Report



Financial Statements As at 31 March 2018

STATEMENT OF COMPREHENSIVE REVENUE AND EXPENSEFULL YEAR

$000 Actual YTD Budget YTD Variance Variance % Forecast Total Budget Variance

OPERATING REVENUE

Rates 117,485 115,667 1,817 2% 154,126 153,926 200

Subsidies & Grants 4,297 3,739 559 15% 5,058 5,058 0

Other Revenue 33,556 34,714 1,159 -3% 46,340 46,840 500

Finance Revenue 1,849 1,516 334 22% 2,290 1,890 400

Total Operating Revenue 157,187 155,636 1,551 1% 207,814 207,714 100

ASSET DEVELOPMENT REVENUE & OTHER GAINS

Development Contributions 26,389 18,251 8,138 45% 31,834 24,334 7,500

Other Gains/(Losses) 728 454 275 61% 605 605 0

Subsidies & Grants Capital Expenditure Contributions 5,242 8,256 3,014 -37% 13,477 15,477 2,000

Assets vested to Tauranga City Council 11,695 29,717 18,022 -61% 30,929 37,929 7,000

Total Asset Development Revenue & Other Gains 44,054 56,678 12,623 -22% 76,846 78,346 1,500

TOTAL REVENUE 201,241 212,314 11,072 -5% 284,660 286,060 1,400

OPERATING EXPENDITURE

Personnel Expense 36,050 39,039 2,989 -8% 50,193 52,193 2,000

Depreciation & Amortisation Expense 36,698 39,123 2,425 -6% 51,281 52,281 1,000

Finance Expense 14,263 15,538 1,275 -8% 19,631 21,331 1,700

Consultants & Contractors 6,576 4,751 1,825 38% 9,018 6,318 2,700

Other Expense 61,296 65,483 4,187 -6% 87,308 87,308 0

Total Operating Expenditure 154,884 163,934 9,049 -6% 217,430 219,430 2,000

Total Other Expenses

TOTAL EXPENDITURE 154,884 163,934 9,050 -6% 217,430 219,430 2,000

SURPLUS/(DEFICIT) BEFORE TAXATION 46,358 48,380 2,022 4% 67,230 66,630 600

OPERATING SURPLUS/(DEFICIT) 2,303 (8,298) 10,601 (9,616) (11,716) 2,100

Overall Comments on Year to Date Balances

Rates revenue is above budget year-to-date primarily due to the timing of water volumetric charge and rates receipts.

Subsidies & Grants are ahead of budget year-to-date due to the timing of expenditure claim from NZTA. The result is expected to be on budget at year end.

Other Revenue is behind budget largely due to building services revenue recorded as $0.7m behind budget year to date. While there is work not yet invoiced for large commercial and other consents, building revenue is expected

to be less than budget at year end. Further work is being done to refine the full year forecast. Forestry income is down $0.4m year to date due to accessibility issues, resulting in harvest delays. These are partially offset by the

receipt of unbudgeted BVL depreciation revenue and strong airport revenue.

Finance Revenue from interest on deposits is tracking ahead of budget. Deposit levels are higher due to payments for capital projects being later than budgeted.

Development contributions are significantly ahead of budget year-to-date due to $8.4m received in July from Wairakei, Tauriko and Pyes Pa developments. Since then receipts have slowed, but revenue is still

expected to be well over budget for the full year.

Subsidies & Grants Capital Expenditure Contributions are behind budget due to slippage in the transport works programme, which translates into a delay in receipt of NZTA subsidies. This is not expected to fully reverse before

the end of the year.

Assets Vested to Tauranga City Council are significantly below budget year to date due to the timing of completion of projects to be vested, particularly Hairini transport works and Wairakei stormwater works. Discussions

are being held with developers to provide more clarity on the timing of vesting.

Personnel costs are below budget year-to-date, however the variance is expected to reduce in later periods, as vacancies are filled. The forecast end of year underspend is offset by an overspend in consultancy cost.

Depreciation is tracking below budget year-to-date, with the result expected to partially reverse in later periods as new assets are capitalised and the building revaluation process is completed.

Finance Expense full year interest costs are projected to be $1.7m below budget due to slower capital delivery.

The overspend is partly offset by the underspend in Personnel costs, as contractors have been used in the short-term to fill vacancies.

Other Expenditure is currently tracking under budget particularly on repairs and maintenance and operating costs across key infrastructure areas. This is expected to reverse by year end, with some unbudgeted expenditure

offsetting savings elsewhere.

Full Year Forecast Total revenue is expected to be under budget, mainly attributable to slippage in vested assets, partly offset by elevated development contributions. Total expenditure is forecast to be slightly below budget.

YEAR TO DATE

Favourable

Unfavourable

Consultants and Contractors costs are tracking above budget year-to-date, primarily due to work in Building Services and Property being covered by consultants, and one-off project related consulting costs in other activities.

Treasury Report As at 31 March 2018

POLICY COMPLIANCE

Gross and Net External Debt ($ Millions) Money Market Investments ($ Millions)

Comments

163.7

84

24.6

28

Gross debt as at 31 March 2018 is $365m and net debt at $325m.Money

market investments are at $40m (February 2018 at $40m). Both interest rate and debt maturity levels are within recommended levels. $329m of total debt (90%) is at fixed interest rates on 31 March 2018.

The overall gross debt forecast has been revised to $390m by 30 June 2018 and net debt at $380m based on expected capital expenditure cash flows.

Gross External Debt Actual

Net External Debt Actual

Gross External Debt

Net External Debt Forecast

Average Interest

5.0%

5.2%

5.4%

5.6%

5.8%

6.0%

6.2%

6.4%

6.6%

6.8%

7.0%

0

50

100

150

200

250

300

350

400

450

Dec-17 Jan-18 Feb-18 Mar-18 Jun-18Forecast

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0

10

20

30

40

50

60

70

80

90

Dec-17 Jan-18 Feb-18 Mar-18 Jun-18Forecast

Average Money Market Investments Actual

Money Market Average Interest Rate Actual

Money Market Average Interest Rate Benchmark

Reserve Bank (“RB”) kept the Official Cash Rate (“OCR”) unchanged at 1.75% on 22 March 2018 and monetary policy is expected to remain accommodative for a considerable period.

Currently the market is pricing gradual OCR increases from May 2019 onwards. Price inflation is forecast to trend upwards towards the midpoint of the target range of 2.0%.

9.1.2 Attachment B to DC 109_Capital Project Summary



Expenditure Year to

DateBudget Year to Date

Full year Budget

2017/18

Forecast Full Year

Spend Variance to Original

Budget 17/18

(Overspend to Budget)

Expenditure Year to Date compared to

Budget Year to Date

Full year Expenditure Forecast against

BudgetComments

Key Projects 42,911,769 70,984,776 113,322,906 89,995,122 23,327,784

Airport Upgrade: Terminal Extension 2,433,172 2,885,000 4,800,000 4,800,000 -

Project is progressing to plan, with $2.4mil expected to be spent in the last quarter. Expected completion

date is mid-December 2018.

Digital Services: Software System Investment 790,952 3,239,991 4,320,000 2,498,000 1,822,000

Expenditure on major system changes has been deferred to allow for additional planning to occur. In

addition, Capex budgeted for the information management system project is being recategorised as Opex.

Some of the key change initiatives like ERP and Digital Strategy will be postponed to FY19 that will allow us

time to plan ahead for the replacement of core HR and Financial systems. This is a strategic decision in

alignment with the LTP. Some of the digital workplace initiatives are also being moved to next year to keep

them in sync with the overall ABW programme plan. Key investments are underway in the areas of IT

operations and security in order to address some regulatory risks.

Eastern Corridor 5,398,816 10,000,517 27,530,413 24,467,902 3,062,511

Land purchases are expected to reach settlement by April 2018 . A $3mil carry forward has been signalled

for the Wairakei Boundary to Main Street section of Te Okuroa Drive relating to a contract award delay. Due

to overall project alignment, work on the Te Okuroa Drive intersections will now be completed in FY19

resulting in a $370k carryforward.

Harington Street Carpark 756,248 849,502 6,000,000 1,500,000 4,500,000

Delays associated with the desire to ensure alignment with the Heart of the City project have caused the

project to be behind schedule, resulting in the rebudgeting of $4.5mil into the 2018/19 financial year. The

contract for the Main Contractor closed on Febuary 19 2018, clarifications have been made and value-

engineering discussions are under way with the preferred contractor to bring the price closer or below the

available budget.

Heart of the City 3,116,190 2,625,959 6,572,599 4,984,950 1,587,649

The year to date expenditure is overspent compared to the year to date budget due to the timing of the

delivery of components of the programme. The full year forecast for 2018 is within budget. The tender

period for Durham St/Durham Lane has been extended to allow the tenderers more time to prepare their

response. Delays to Aspen Reserve due to current discussions with stakeholders have caused an increase in

overall programme carryforward of $500k. The balance of the carryforward is due to delay in the ABW

project and a possible carry forward that may be required as a result of the completion of the library and

museum business cases currently being paused.

Kennedy Road Infrastructure - Roading & Three Waters 6,071,915 7,971,962 9,229,402 10,403,738 (1,174,336)

Completion of the Kennedy Road upgrade has been delayed due to construction delays, causing a $400k

increase on last month's reporting in the overall carryforward for this programme.

LED Streetlighting Upgrade 435,594 3,725,991 5,751,988 4,151,988 1,600,000

Both the LED supply and CMS hardware contracts have been signed. The timing of the invoicing is

dependent on the delivery of the components. A revised cashflow completed this month has increased the

projected carryforward by $600k.

Marine Precinct 3,914,611 5,735,191 5,735,191 5,364,692 370,499

A carryforward has been signalled based on the contractors project forecast and the timing of the last

payment for Waste Water Treatment plant and other smaller completion works.

Mount Visitor Information Centre 1,180 250,000 500,000 1,180 498,820

An application for funding of $1.242mil has been made to the Provincial Growth Fund. The Capex

programme has been delayed and it is likely the project will now be carried out in 2019/20 & 2020/21. The

design work will commence once the final budget for the project is confirmed.

Pedestrian Underpasses/Overbridges 1,734,112 3,675,423 6,514,042 4,055,088 2,458,954

The increase in carryforward of $545k from February's forecast is due to the completion of a peer review of

the design which indicated that there are geotecnical elements that may require a partial re-design.

Reservoir Development: Water Supply Joyce Rd, eastern, Pyes Pa & Welcome Bay 4,602,347 6,067,739 6,459,541 7,045,091 (585,550)

The primary reason for the year-end expenditure totalling $586k over budget is that the accepted tender

price for the Pyes Pa reservoir construction contract was higher than budget. Other more minor variances to

budget are forecasted making up the sum.

Southern Pipeline Watewater Trunk Main 8,736,771 13,072,772 13,072,772

Commissioning of the overall Southern Pipeline is now expected to commence in early September 2018.

Actual year to date spend is trailing the budget due to the milestone payment method used for the Harbour

Crossing stage.

Te Maunga WWTP upgrade & outfall pipeline 2,605,128 8,376,261 10,130,077 7,200,000 2,930,077

A revised programme received from the contractor has resulted in a further $500k carryforward for the

thickening and dewatering project on top of the $2mil forecast in February's report. There is also a $300K

carryforward signalled by ongoing land negotiations.

Waiari New Water Supply 2,314,734 2,508,468 6,706,881 4,327,881 2,379,000

Construction of the access road and intake facilities is expected to start in March 2018, with a forecasted

cashflow for FY 17/18 of $3.12mil against the $6mil budget. This is offset slightly by the fast-tracking of the

Waiari to Poplar Lane trunk main and the SH2/Welcome Bay Road mains projects for overall project

alignment. A $170k bring-forward was approved by CEO in February 2018.

Other Growth, Level of Service & Renewal Projects 38,068,355 57,340,744 78,642,224 56,635,091 22,007,133

Other Growth Projects 11,166,722 18,569,451 25,595,404 11,722,025 13,873,379 Expenditure has commenced slowly compared to budget, with significant carry forwards now projected.

Other Level of Service Projects 16,016,288 23,145,141 30,207,419 25,316,294 4,891,125

Expenditure has commenced slowly compared to budget, but overall projections are to be substantially

completed to budget.

Renewal Projects 10,885,345 15,626,152 22,839,401 19,596,772 3,242,629

Expenditure has commenced slowly compared to budget, but overall projections are to be substantially

completed to budget.

Grand Total 80,980,124 128,325,520 191,965,130 146,630,213 45,334,917

Percentage of budget for year spent based on forecast 76%Spend is greater than 100% of budgetSpend is under 70% of budget

Spend is 70-100% of budget

Forecast is greater than 100% of budget

Forecast is under 70% of budget

Forecast is 70-100% of budget

Obj Ref

TCC Capital Expenditure to 31 March 2018

Key - Expenditure Year to Date compared to Budget Year to Date

Key - Full year Expenditure Forecast against Budget

Refer Confidential section

26


9.1.3 Attachment D to DC109_Capital Overspends to 31 March 2018



Attachment D to DC85

Capital Project Variations to Budget As at 31 March 2018

Chief Executive Approved Expenditure Overspends to Budget

Activity Project ID Job Code Project Name Actual YTD Full Year Budget Full Year Forecast Full Year

Variance

Offset to

Variance

Comments on Variation to Budget

WATER SUPPLY 331 290088 Pyes Pa Booster P/S 60,851 - 250,000 250,000 Project was budgeted for FY19 but now needs to be completed to coincide with the commissioning of the Pyes Pa

Reservoir in Jul/Aug 2018. Budget is being brought forward for design.

DIGITAL SERVICES 2876 130037 TMN Redundancy 89,155 - 90,000 90,000 Final payment on new production Data Centre at Barkes Corner that was budgeted and completed last year.

PARKS and RECREATION 592505 Baywave Carpark drainage 56,005 - 60,000 60,000 Ongoing issues with stormwater drainage in this carpark has meant an amount has been brought forward from

2018/2019 to resolve it.

STORMWATER 1565 260186 Pyes Pa West Pond 25 Roading Associated Works 80,000 - 80,000 80,000 Budget was provided in 2016/17 year but work not undertaken until early 2018. The budget was not formally carried

forward.

STORMWATER 1542 260124 Pyes Pa West Pond 7 - Construction 177,840 - 180,000 180,000 Budget in 2019 but some costs are being incurred in the preparation of consent applications.

TRANSPORTATION 246 380103 Tara Rd Planning & Reconstruction 140,201 - 140,000 140,000 Reimbursements by WBOPDC and NZTA are being calculated which will partially offset overspend. Significant additional

costs have been incurred through extensions of time, additional materials and geotechnical requirements.

WASTEWATER 2271 270083 Hastings Road - Pump Station 333,062 - 400,000 400,000 Payment of electrical supply and switchboard for completed pump station. This pump station was budgeted for and

completed last financial year and the budget for this payment was not carried forward.

WATER SUPPLY 2380 290142 Kennedy Road water Supply - Pyes Pa West 95,467 - 96,000 96,000 Budget was provided in 2016/17 year but work not undertaken until early 2018. The budget was not formally carried

forward.

CIVIC COMPLEX 3147 150025 306 Cameron Road - Fit Out 1,447,603 350,000 1,887,775 1,537,775 Amount will be off-set by savings in lease and maintenance of Devonport Rd. Summary report to be prepared for Council

confirming net budget effect.

Total CE approved 2,480,183 350,000 3,183,775 2,833,775 -

28


9.1.4 Attachment E to DC109_Cameron Devonport comparison - Update April 2018



DC109 - Attachment E: Cost of Relocation of offices to Cameron Road

Relocation to Cameron Road - Cost Summary

Devonport RoadAnnual Cost

$,000

Cameron RoadAnnual Cost

$,000

Annual Operating Costs - Lease 1,312 1,529 - Other operating (savings in carparks off-site, R&M, electricity) 469 233Total Annual Operating Costs (exc Finance & Depreciation) 1,781 1,762Net Annual (Savings) (19)

One off costs related to relocationNet operational savings of move after adjustment for lease savings (227)Fit OutAnnual Cost of fitout of new building (interest and depreciation) 127FurnitureFurniture cost 340Budget brought forward Civic Admin (reduced capex budget 2021) (340)Net cost Furniture 0

10. Discussion of Late Items

11. Public Excluded Session

Suggested Resolution

That it be Resolved

That the Audit, Finance, Risk & Monitoring Committee:

(a) Exclude the public from the following parts of the proceedings of this meetingas setout below.

The general subject of each matter to be considered while the public isexcluded, the reason for passing this resolution in relation to each matter,and the specific grounds under Section 48(1) of the Local Government OfficialInformation & Meetings Act 1987 for the passing of this resolution are asfollows:

Ground(s) Under Section48(1) for the Passing of this

Resolution

Reason for Passing thisResolution in Relation to

Each Matter

General Subject of EachMatter to be Considered

That the public conduct of therelevant part of theproceedings of the meeting

As noted in the relevantminutes.

Confirmation of Minutes●

would be likely to result in thedisclosure of information forwhich good reason forwithholding would exist.

That the public conduct of therelevant part of theproceedings of the meeting

To protect informationwhere the making availableof the information –(i) Would disclose a tradesecret.(ii) Would be likelyunreasonably to prejudicethe commercial position of

DC109_Attachment C:Capital Project SummaryMarch - CONFIDENTIAL

●

would be likely to result in thedisclosure of information forwhich good reason forwithholding would exist.

the person who supplied orwho is the subject of theinformation,

12. Workshop Session12.1 Workshop - Discussion regarding appointment of an Independent

Member to the Audit, Finance, Risk and Monitoring Committee

Page 30



Audit Finance Risk and Monitoring Committee

Workshop Brief (DCW113) Objective ID No: A8652230

Topic: Discussion regarding an independent on AFRM committee

Date: 23 April 2018

Presenter: Paul Davidson

Summary: 1. To consider whether an independent person on the AFRM committee would bring expertise and independent advice to elected members regarding matters considered by the committee including risk, financial and non financial performance of Council.

Desired Outcome: 2. To discuss any issues, challenges or risks to Council in performing its responsibilities in audit, financial and risk management and monitoring of council activities.

Considerations: 3. The workshop will cover the skills and experience that can be brought to the committee through the use of an independent, and

4. The way in which independent perspectives can strengthen committee decision-making and performance of the committee in carrying out its responsibilities.

Appendices: N/A

31


audit, finance, risk & monitoring 23 april...

Documents