Notice is hereby given that a Meeting of
the Activities Performance Audit Committee will be held on:
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Date:
Time:
Meeting Room:
Venue:
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Wednesday, 22
April 2015
10.30am
Council Chambers
15 Forth Street
Invercargill
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Activities Performance Audit Committee Agenda
OPEN
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MEMBERSHIP
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Chairperson
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Lyall Bailey
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Mayor Gary Tong
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Councillors
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Stuart Baird
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Brian Dillon
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Rodney Dobson
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John Douglas
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Paul Duffy
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Bruce Ford
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George Harpur
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Julie Keast
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Ebel Kremer
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Gavin Macpherson
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Neil Paterson
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IN ATTENDANCE
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Chief Executive
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Steve Ruru
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Committee Advisor
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Fiona Dunlop
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Terms of
Reference for the Activities Performance Audit Committee
This committee is a committee of Southland
District Council and has responsibility to:
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Monitor and review Council’s performance
against the 10 Year Plan
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Examine, review and recommend changes relating
to Council’s Levels of Services.
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Monitor and review Council’s financial
ability to deliver its plans,
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Monitor and review Council’s risk
management policy, systems and reporting measures
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Monitor the return on all Council’s
investments
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Monitor and track Council contracts and
compliance with contractual specifications
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Review and recommend policies on rating, loans,
funding and purchasing.
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Review and recommend policy on and to monitor
the performance of any Council Controlled Trading Organisations and Council
Controlled Organisations
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Review arrangements for the annual external
audit
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Review and recommend to Council the completed
financial statements be approved
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Approve contracts for work, services or supplies
in excess of $200,000.
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Activities Performance Audit Committee
22 April 2015
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TABLE OF
CONTENTS
ITEM PAGE
Procedural
1 Apologies 5
2 Leave of
absence 5
3 Conflict of
Interest 5
4 Public Forum 5
5 Extraordinary/Urgent
Items 5
6 Confirmation
of Minutes 5
Reports for Resolution
7.1 Financial
Report to 28 February 2015 13
7.2 Rural
Rating Unit - Rule 2.4.1.2(d) Rating Valuations Rule 2008 45
Public Excluded
Procedural motion
to exclude the public 49
C8.1 Public
Excluded Minutes of the Activities Performance Audit Committee Meeting dated 18
March 2015 49
At the close of
the agenda no apologies had been received.
2 Leave
of absence
At the close of
the agenda no requests for leave of absence had been received.
3 Conflict
of Interest
Councillors are
reminded of the need to be vigilant to stand aside from decision-making when a
conflict arises between their role as a councillor and any private or other
external interest they might have. It is also considered best practice for
those members in the Executive Team attending the meeting to also signal any
conflicts that they may have with an item before Council.
4 Public Forum
Notification to
speak is required by 5pm at least two days before the meeting. Further
information is available on www.southlanddc.govt.nz
or phoning 0800 732 732.
5 Extraordinary/Urgent
Items
To consider, and if
thought fit, to pass a resolution to permit the Council to consider any further
items which do not appear on the Agenda of this meeting and/or the meeting to
be held with the public excluded.
Such resolution is
required to be made pursuant to Section 46A(7) of the Local Government Official
Information and Meetings Act 1987, and the Chairperson must advise:
(i) The
reason why the item was not on the Agenda, and
(ii) The
reason why the discussion of this 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.”
6 Confirmation
of Minutes
6.1 Meeting minutes of Activities Performance
Audit Committee, 18 March 2015
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Activities Performance Audit Committee
OPEN MINUTES
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Minutes of
a meeting of Activities Performance Audit Committee held in the Council
Chambers, 15 Forth Street, Invercargill on Wednesday, 18 March 2015 at 1.03pm.
present
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Chairperson
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Lyall Bailey
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Members
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Mayor Gary Tong
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Brian Dillon
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Rodney Dobson
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John Douglas
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Paul Duffy
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Bruce Ford
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George Harpur
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Julie Keast
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Ebel Kremer
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Gavin Macpherson
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IN ATTENDANCE
Group Manager Environment and Community
Bruce Halligan, Group Manager Services and Assets Ian Marshall, Chief
Information Officer Damon Campbell, Chief Financial Officer Anne Robson,
Communications & Governance Manager Louise Pagan, Committee Advisor Fiona
Dunlop, Management Accountant Susan McNamara (Item 7.1 Financial Report to 31 January 2015), Roading Engineer James McCallum (Item 8.1
Contract Extension - Southland Streetlight Maintenance Contract 09/42), Strategic
Transport Manager Joe Bourque (Item C9.3 Road
Maintenance Contracts Extensions)
1 Apologies
Apologies were
received from Councillors Baird and Paterson.
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Moved by Cr
Dillon, seconded by Cr Keast and resolved that:
That the
Activities Performance Audit Committee accept the apologies.
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2 Leave
of absence
There were no
requests for leave of absence.
3 Conflict
of Interest
There were no
conflicts of interest declared.
4 Public
Forum
There was no
public forum.
5 Extraordinary/Urgent
Items
There were no
Extraordinary/Urgent items.
6 Confirmation
of Minutes
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Resolution
Moved by Cr
Macpherson, seconded by Cr Ford and resolved:
That the Activities Performance Audit
Committee confirm the minutes of the meeting held on 18 February 2015 as a
true and correct record of that meeting.
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Reports for Resolution
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7.1
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Financial Report to 31 January 2015
Record No: R/15/2/3932
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Management
Accountant Susan McNamara was in attendance for this report. She
advised that the report outlined the financial results to 31 January 2015
with 58% of the financial year complete.
There were no
significant issues contained in the report identified that raised any
concerns for Council relating to the end of year financial position.
As in prior years, all budget managers have been
instructed to have a strong focus on their budget and expenditure items that
they can control in the current economic climate. This report shows no
significant issues.
The financial commentary centres on the summary sheet
which draws the totals from each of the key sections together. Although
you are able to obtain more detailed key variance explanations from senior
managers in these sections, these will be summarised below, concentrating on
the year-to-date results.
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Resolution
Moved by Cr Dillon, seconded by Cr
Keast and resolved recommendation a.
That the Activities Performance Audit Committee:
a) Receives
the report titled “Financial Report to 31 January 2015”, dated 18 March 2015.
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(Councillor Douglas joined the
meeting at 1.15pm.)
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Resolution
Moved by Cr
Keast, seconded by Cr Harpur and resolved
recommendations
b and c.
That the Activities Performance Audit Committee:
b) Determines that this
matter or decision be recognised as not significant in terms of Section 76 of
the Local Government Act 2002.
c) Determines
that it has complied with the decision making provisions of the Local
Government Act 2002 to the extent necessary in relation to this decision; and
in accordance with Section 79 of the Act determines that it does not require
further information, further assessment of options or further analysis of
costs and benefits or advantages and disadvantages prior to making a decision
on this matter.
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Reports for Recommendation
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8.1
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Contract Extension - Southland Streetlight Maintenance Contract
09/42
Record No: R/15/2/3763
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Group
Manager Services and Assets Ian Marshall and Roading Engineer James McCallum
were in attendance for this item.
They advised that Otago Power Services
was awarded the Southland Streetlight Maintenance contract (09/42) on 28
January 2010 with a commencement date of 1 March 2010. The contract was
for an initial period of three years (expiring at midnight, 28 February
2013). The contract made provision for a two year rollover, which was
adopted in March 2013.
The two year rollover expired at midnight
28 February 2015. As a result, the Strategic Transport Department proposes
an extension of a further 12 months.
Throughout the five year period to date,
communication between Southland District Council and Otago Power Service has
been excellent. Where service delays were inevitable or on the rare
occasion timeframes could not be met, Council was notified accompanied by a
valid explanation.
Otago Power Services has adequately
delivered on the requirements as set out in the contract and on this basis
the Strategic Transport Department recommend the implementation of a 12-month
extension.
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Resolution
Moved by Cr Duffy, seconded by Cr
Macpherson and resolved recommendation a
That the Activities Performance Audit Committee:
a) Receives
the report titled “Contract Extension - Southland Streetlight
Maintenance Contract 09/42”, dated 10 March 2015.
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Resolution
Moved by Cr Dobson, seconded by Cr
Kremer and resolved recommendations b, c and d.
That the Activities Performance Audit Committee:
b) Determines
that this matter or decision be recognised as
not significant in terms of Section 76 of the Local
Government Act 2002.
c) Determines
that it has complied with the decision making provisions of the Local
Government Act 2002 to the extent necessary in relation to this decision; and
in accordance with Section 79 of the Act determines that it does not require
further information, further assessment of options or further analysis of
costs and benefits or advantages and disadvantages prior to making a decision
on this matter.
d) Approves
the extension of the Southland Streetlight Maintenance Contract 09/42
contract to 28th February 2016.
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Public Excluded
Exclusion of the Public: Local Government Official Information and
Meetings Act 1987
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Resolution
Moved by Cr Harpur, seconded by Cr Douglas and
resolved:
That the Activities Performance Audit Committee exclude the public
from the following part(s) of the proceedings of this meeting.
C9.1 Public Excluded Minutes of the Activities Performance Audit
Committee Meeting dated 18 February 2015
C9.2
Rating Sale 32A Redan Street, Wyndham
C9.3
Road Maintenance Contracts Extensions
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 and Meetings Act 1987 for the passing of this resolution are as
follows:
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General subject of each
matter to be considered
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Reason for passing this
resolution in relation to each matter
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Ground(s) under section
48(1) for the passing of this resolution
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Public Excluded Minutes of the Activities Performance
Audit Committee Meeting dated 18 February 2015
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s7(2)(a) - The withholding of the information is
necessary to protect the privacy of natural persons, including that of a
deceased person.
s7(2)(b)(ii) - The withholding of the information is
necessary to protect information where the making available of the
information would be likely unreasonably to prejudice the commercial position
of the person who supplied or who is the subject of the information.
s7(2)(f)(ii) - The withholding of the information is
necessary to maintain the effective conduct of public affairs through the
protection of such members, officers, employees and persons from improper
pressure or harassment.
s7(2)(h) - The withholding of the information is
necessary to enable the local authority to carry out, without prejudice or
disadvantage, commercial activities.
s7(2)(i) - The withholding of the information is
necessary to enable the local authority to carry on, without prejudice or
disadvantage, negotiations (including commercial and industrial
negotiations).
s7(2)(j) - The withholding of the information is
necessary to prevent the disclosure or use of official information for
improper gain or improper advantage.
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That the public conduct of the whole or 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 exists.
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Rating Sale 32A Redan Street, Wyndham
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s7(2)(a) - The withholding of the information is
necessary to protect the privacy of natural persons, including that of a
deceased person.
s7(2)(i) - The withholding of the information is
necessary to enable the local authority to carry on, without prejudice or
disadvantage, negotiations (including commercial and industrial
negotiations).
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That the public conduct of the whole or 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 exists.
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Road Maintenance Contracts Extensions
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s7(2)(b)(ii) - The withholding of the information is
necessary to protect information where the making available of the
information would be likely unreasonably to prejudice the commercial position
of the person who supplied or who is the subject of the information.
s7(2)(h) - The withholding of the information is
necessary to enable the local authority to carry out, without prejudice or
disadvantage, commercial activities.
s7(2)(i) - The withholding of the information is
necessary to enable the local authority to carry on, without prejudice or
disadvantage, negotiations (including commercial and industrial
negotiations).
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That the public conduct of the whole or 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 exists.
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Permit the Group Manager Environment and
Community, Group Manager Services and Assets, Chief Information Officer, Chief
Financial Officer, Communications & Governance Manager, Committee Advisor
and Strategic Manager Transport to remain at this meeting, after the public has
been excluded, because of their knowledge of C9.1 Public Excluded Minutes of
the Activities Performance Audit Committee Meeting dated 18 February 2015, C9.2
Rating Sale 32A Redan Street, Wyndham and C9.3 Road Maintenance Contracts
Extensions. This
knowledge, which will be of assistance in relation to the matters to be
discussed, is relevant to that matter because of their specialist knowledge.
The public were
excluded at 1.19pm.
Resolutions in
relation to the confidential items are recorded in the confidential section of
these minutes and are not publicly available unless released here.
The meeting returned to open session at
1.49pm.
The meeting closed at 1.49pm. CONFIRMED
AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Activities Performance Audit Committee HELD ON WEDNESDAY 18
MARCH 2015.
DATE:...................................................................
CHAIRPERSON:...................................................
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Activities
Performance Audit Committee
22 April 2015
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Financial
Report to 28 February 2015
Record No: R/15/4/6119
Author: Susan McNamara, Management Accountant
Approved by: Anne Robson, Chief Financial Officer
☐
Decision ☐ Recommendation ☒ Information
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Recommendation
That the Activities Performance Audit Committee:
a) Receives
the report titled “Financial Report to 28 February 2015” dated 13
April 2015.
b) Determines
that this matter or decision be recognised as
not significant in terms of Section 76 of the Local
Government Act 2002.
c) Determines
that it has complied with the decision-making provisions of the Local
Government Act 2002 to the extent necessary in relation to this decision; and
in accordance with Section 79 of the Act determines that it does not require
further information, further assessment of options or further analysis of
costs and benefits or advantages and disadvantages prior to making a decision
on this matter.
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Attachments
a Report to Activities
Performance Audit Committee (APAC) - 22 April 2015 - Report to 28 February 2015
View
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Activities
Performance Audit Committee
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22 April 2015
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Background
This report outlines the financial results to 28 February 2015.
Within this report, no significant issues have been identified that raise any
concerns for Council relating to the end of year financial position.
Percentage of year gone: 67%.
OVERVIEW
Management Accountant February Finance Overview
As in prior years, all budget managers have been instructed
to have a strong focus on their budget and expenditure items. In the commentary
received from managers no significant issues have been identified.
The financial commentary centres on the summary sheet which
draws the totals from each of the key sections together. Although you are
able to obtain more detailed key variance explanations from senior managers in
these sections, these will be summarised below, concentrating on the YTD
results.
Roading has updated its projected year-end figures, these
are shown on page 23 of this report.
Income
Overall for the YTD, income is 2% ($969K) under
budget. This is primarily due to NZTA funding being $1.1M under budget at
the end of February, it is forecast to be $221K over budget at year end (as
shown on page 22).
Key variances are as follows:
The Council and Councillors’ activity is 1% ($19K)
over budget for the year-to-date.
Other activities income is 11% ($139K) over budget for the
year-to-date.
This is predominantly due to the timing of income received from interest on
investments.
Within the Chief Executive section, income received is $228K
(9%) under budget due to:
• Chief
Executive - $45K (13%) under budget due to the quarterly application of rates
penalties.
• Stewart
Island Visitors Levy - Income is $32K (29%) under budget. With the cruise
ship period completed, income is expected to be well under budget at year end.
• Around
the Mountains Cycle Trail - $217K (16%) under budget due to final invoicing to
the Ministry being completed last financial year.
Within the Environmental and Community Group, year-to-date
income is $68K (1%) over budget, this is principally due to increased revenue
in Dog and Animal Control from increased numbers of dog registrations $15K and
infringement notices $51K.
Within the Financial Services Group, income is $290K (20%)
under budget. As this activity is internally funded this is a result of
reduced expenditure.
Within the Information Management Group, year-to-date income
is $98K (6%) over budget, predominantly due to internal photocopying charges
$32K and internal computer hire $27K.
Within the Policy and Community Group, year-to-date income
is $54K (5%) under budget. As this activity is internally funded this is a
result of reduced expenditure.
Within the Roading and Transport section, income is 4%
($782K) under budget, which is predominantly due to the timing of planned works
and associated New Zealand Transport Agency (NZTA) funding.
Overall Services and Assets income
(excluding roading) is tracking $61K (1%) above
year-to-date budget. This is due to:
• Overall
Forestry income received is $108K (6%) over budget. This is expected to
be the position at year end.
• District Reserves is $12K under budget as some reserve
transfers for Curio Bay have yet to be actioned.
• Engineering Consultants is $42K (7%) under budget. As
income is fully recovered and driven by
expenditure levels the reduced expenditure impacts directly on
income.
Expenditure
Overall for the year-to-date, expenditure is 7% ($2.2M)
under budget.
The key variances are as follows:
The Council and Councillors’ activity is 1% ($25K)
under budget primarily due to Grant Payments yet to be requested and lower
Councillor Salary costs due principally to the short-term vacancy in the
Mararoa-Waimea Ward.
Other Activities expenditure is 44% ($455K) under budget as
the calculation of interest on reserves is calculated as a year-end
entry.
The Chief Executive activity is 1% ($7K) over budget with
funding rounds for Stewart Island Visitor Levy yet to occur.
The Environment and Community Group is 6% ($254K) under
budget. This is predominantly due to expenditure on the District Plan
being lower than anticipated at this stage of the year, with costs being
incurred during April in relation to mediation.
Within Financial Services, expenditure is $329K (22%) under
budget, primarily due to the timing of audit services $120K and staff vacancies
of $168K.
Within the Information Management Group, overall expenditure
is on budget.
Within the Policy and Community Group, expenditure is $88K
(8%) under budget due to no expenditure to date for Community Outcomes ($30K)
and lower than expected staff costs due to maternity leave.
Roading expenditure is currently 8% ($579K) over
budget. This is due to Network and Maintenance costs which are over
budget. These are to be monitored closely throughout the year but please note that it is forecast that the Repairs,
Maintenance and Capital Expenditure will be over budget at year end. This
is primarily driven by underspends in previous years and Council’s key
objective of maximising New Zealand Transport Agency approved funding.
The Services and Assets Group is 13% ($1.64M) under
budget. Key variances are as follows:
• District Water is $508K (24%) under budget as there has been minimal capital expenditure year-to-date
(169K actual v $697K budget).
• District Sewerage is $920K (28%) under budget. Year to date $2.3M actual versus $3.2M budget has been
completed.
• Water Services is $113K (12%) under budget predominately
due to less services of project consultant costs being required than budgeted.
• Currently
the Engineering Consultants business unit is $42K
(7%) under budget.
Capital Expenditure
Overall for the year-to-date, capital expenditure is 12% ($1.59M)
under budget.
The key variances are as follows:
• Capital
Expenditure in the Chief Executive activity is over budget by $994K (73%)
due to the beginning of work for stage 2 of the Around the Mountains Cycle
Trail.
• Environment
and Community is over budget by 70% ($88K) for the
year-to-date primarily due to an additional vehicle purchase for animal control
and the timing of the replacement of a vehicle for environmental health.
• Information
Management capital expenditure is under budget by 62% ($124K) due to minimal
costs to date being incurred in the records improvement plan.
• Roading
capital expenditure is under budget by 17% ($1.85M) due to timing on planned
road renewal and pavement renewal. However projections by the roading team indicate
a reduced capital budget at year end.
• Services
and Assets are under budget by 74% ($700K) with minimal capital expenditure to
date on projects planned in public conveniences, district reserves and
forestry.
Funding Adjustments
Funding adjustments are significantly under budget as
typically ‘balancing’ of business units is not undertaken until the
end of the financial year.
Journals are being processed for reserve transfers,
predominantly in relation to vehicle movements, and loan draw-downs (ie for
project funding), throughout the year at the request of budget managers.
Key Financial Indicators
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Indicator
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Target*
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Actual
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Variance
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Compliance
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External Funding:
Non rateable income/Total income
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> 39%
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37%
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-2%
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x
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Working Capital:
Current Assets/Current Liabilities
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>1.09
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2.22
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1.13
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a
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Debt Ratio:**
Total Liabilities/Total Assets
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<0.73%
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0.84%
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0.11%
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x
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Debt To Equity Ratio:
Total Debt/Total Equity
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<0.01%
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0.00%
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0.01
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a
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* All
target indicators have been calculated using the 2014/15 Annual Plan
figures.
** Excludes
internal loans.
Financial
Ratios Calculations:
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Non
Rateable Income
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Total
Income
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External
Funding:
This ratio indicates the
percentage of revenue received outside of rates. The higher the
proportion of revenue that the Council has from these sources the less reliance
it has on rates income to fund its costs.
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Current
Assets
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Current
Liabilities
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Working
Capital:
This ratio indicates the amount
by which short-term assets exceed short term obligations. The higher the
ratio the more comfortable the Council can fund its short term liabilities.
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Total
Liabilities
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Total
Assets
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Debt
Ratio:
This ratio indicates the capacity
of which the Council can borrow funds. This ratio is generally used by
lending institutions to assess entities financial leverage. Generally the
lower the ratio the more capacity to borrow.
Debt
to Equity Ratio:
It indicates what proportion of
equity and debt the Council is using to finance its assets.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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CHIEF EXECUTIVE COMMENTARY
For the year-to-date, income is under budget by $228K
(9%). Expenditure is over budget by $7K (1%), therefore resulting in a
net year-to-date position of $235K under budget.
Chief Executive
Income in this business unit is $45K (13%) under budget this
is due to the quarterly application of rates penalties which corrects during
the month of March. Expenditure is $24K (7%) under budget, primarily due
to staff costs $64K under budget. This is offset by project consultant
fees $31K.
Civil Defence
Income is on budget. Expenditure is $8K (4%) over budget due
to the
Emergency Management Southland grant being slightly higher than was
budgeted. It is anticipated to be $10K over budget at year end.
Human Resources
Income is $47K (13%) over budget. Expenditure
year-to-date is $32K (9%) over budget, due to training costs $52K offset by
consultant costs $10K. As this activity is internally funded, the
increased expenditure impacts directly on income.
Around the Mountain Cycle Trail
Income is $217K (16%) under budget due to final invoicing to
the Ministry being completed last financial year. Expenditure is $20K
over budget and capital expenditure over budget by $969K with work being
undertaken on Stage 2.
Rural Fire Control
Income and Expenditure is on budget for the year.
Shared Services Forum
Income is $19K (50%) over budget due to the timing on
contributions. Expenditure for
year-to-date is under budget by $26K (72%), with low activity for the
year.
Stewart Island Visitor Levy
Income is $32K (29%) under budget. With the cruise
ship period completed, income is expected to be will under budget at year
end. Expenditure is $3K under budget as the allocation meeting is set to
occur in early May.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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Council and Councillors’ Commentary
For the year-to-date, income is $19K (1%) over budget.
Expenditure is under budget by
$25K (1%), therefore resulting in a net year-to-date position of $44K over
budget.
Council and Councillors
Income is $13K (3%) over budget as a result of unbudgeted
income from internal catering. Expenditure is under budget by $23K (5%)
primarily due to Councillors’ salaries of $8K, Councillor Mileage $4K and
Youth Council costs $5K.
Council Contributions/Grants
Income is on budget for the year-to-date. Expenditure
is under budget by $17K (6%) due to grant payments yet to be requested.
Council Elections
Income is on budget. Expenditure is $7K over budget
due to the Mararoa-Waimea Ward Councillor election. There will be additional
expenses during March.
Council Water and Sewerage Loans
Income and expenditure is on budget for the year-to-date.
International Relations Committee
Income is on budget for the year-to-date. Expenditure
is $3K (41%) under budget due to the timing of committee activities. Additional
expenditure will be incurred in March with attendance at the Sister Cities
Conference.
Museum
Income is on budget. Expenditure is over budget $30K
(10%) due to timing on the Museum Trust Board Levy, it is expected to be
on budget at the end of the year.
Regulatory - Non-Recoverable
Income is $8K (12%) over budget for the year-to-date.
Expenditure is under budget by
$20K (41%) as a result of minimal expenditure to date.
Venture Southland
Income and Expenditure is on budget for the year-to-date.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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OTHER ACTIVITIES
COMMENTARY
Allocations Committee
Income is $12K (8%) over budget due to timing of grants
received. Expenditure is under budget by $45K (23%) due to the timing of
grant payments.
Operating Investments
Currently, the majority of
Council’s reserves are internally loaned by Council or its local
communities for major projects. Council has set the interest rate to be
charged on these loans as part of its Long Term Plan process and interest is
being charged on a monthly basis on all internal loans drawn down at 30 June
2014.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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ENVIRONMENT AND
COMMUNITY COMMENTARY
Overall February monthly income for the Environment and
Community Group was 5% ($27K) below budget ($522K actual v $548K budget).
Key features of this month’s income were that Building
Consent and Resource Consent income were below budget by $20K (15%) and $14K
(21%) respectively, reflecting reduced levels of activity and values.
Animal Control income was well ahead $5K (91%) ahead of
budget due to income from infringements.
Overall February 2015 monthly expenditure for the
Environment and Community Group was $50K (9%) below budget ($508K actual v
$557K budget).
Most departments were significantly below budgeted
expenditure reflecting a close focus on spending. The Resource
Planning/Policy area was significantly underspent by $41K (71%) with less
expenditure than anticipated. Conversely, the Animal Control area was
$13K (41%) overspent, due to additional on call and other staff response costs.
Overall YTD Summary
Overall YTD Income is $68K (1%) ahead of budget, at
$4.92M actual versus $4.85M budget.
Overall YTD Expenditure is $254K (6%) below budget at
$4.20M actual versus $4.46M budget.
It is noted that within the Group there are several large
debtors where costs have been invoiced but these are yet to be paid and also
two large consents where processing costs are yet to be invoiced. This
could impact on budgetary position in the group in the final quarter of the 14/15
year.
Month by month development activity in the District is still
quite up and down, rather than there being any sustained trend. February
2015 was a less positive month income wise than.
The Resource Planning/Policy area is significantly under
budget year to date, but it is likely that further costs will be incurred in
the Environment Court appeal/mediation process in April 2015 as the appeals
enter the mediation stage.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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FINANCIAL
SERVICES COMMENTARY
Income is $290K (20%) under budget. As this activity is
internally funded the reduced expenditure impacts directly on income.
Expenditure is $329K (22%) under budget. This is primarily
due to the following:
• The
timing of audit services ($120K).
• Vacancies
in the finance team ($168K) offset by an increase in consultants costs to
assist with workload ($25K).
• Visa/MasterCard
charges being incurred quarterly at rate payment time, which will show in next months report ($25K).
• As
a result of the material damage insurance review costs related to insuring
water and wastewater above ground assets have now been correctly coded to the
water and waste business units. This has resulted in actual costs being less
than budgeted by $44K.
At year end it is expected that
the business unit will remain under budget by approximately $200K due to the
above.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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INFORMATION
MANAGEMENT COMMENTARY
For the year-to-date, income is $98K (6%) over budget.
Overall expenditure is on budget, resulting in a positive variance of $97K.
Information Management
Income is $63K (7%) over budget, predominantly due to
internal photocopying charges $32K and internal computer hire relating to
additional hardware $27K. Expenditure is $7K (1%) over budget. This
related mainly to software licences and will come back in line with budget.
Knowledge Management
Income is $30K (7%) over budget. Expenditure is $26K
(6%) over budget, this is due to postage costs $23K and software licence fees
$13K. This is offset by internal computer hire costs $9K under
budget. As this activity is internally funded the increased expenditure
impacts directly on income.
Property and Spatial Services
Income is $4K (2%) over budget. Expenditure is $33K
under budget due to timing on aerial photography costs $45K, this is offset by
consultant costs $14K. As this activity is internally funded the
increased expenditure impacts directly on income.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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POLICY AND
COMMUNITY COMMENTARY
Income for the year-to-date is $54K (5%) under budget.
Expenditure for the year-to-date is $88K (8%) under budget. The net result for
the year-to-date is a surplus of $37K against a forecasted surplus of $3K, a
positive variance of $34K.
Community Outcomes
Income is on budget. Expenditure is under budget $30K as no
projects relating to the Our Way Southland Outcomes have been identified in the
current period.
Corporate Planning
Income is $8K (2%) under budget. Expenditure is $2K (1%)
over budget due to Long Term Plan (LTP) costs $30K over budget this is offset
by employee costs $34K. All costs relating to the LTP are being captured
in one place and it will exceed budget. As this activity is internally
funded the reduced expenditure impacts directly on income.
Secretarial Services
Income is $7K (2%) under budget. Expenditure is $7K
(2%) under budget predominately due to advertising costs $3K and training costs
$3K. As this activity is internally funded, the reduced expenditure
impacts directly on income.
Strategy/Communication
Income is $39K (9%) under budget. Expenditure is
underspent by $53K (12%) predominately due to staff costs $39K and
communication costs $10K below budget. As this activity is internally funded
the reduced expenditure impacts directly on income.
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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STRATEGIC TRANSPORT
Overall Financial Performance
A continued strong focus on making sure we fully utilise
NZTA approved funding along with optimising "value for money" remains
a challenge.
- Council
Transport overheads are generally tracking in line with budgets or slightly
under with the exception of Professional Services (roading rate review).
- It
is forecasted that our Operations and Maintenance costs will be over budget at
year end. This will be partially offset by underspends in capital
expenditure and underspends in the previous two years. The forecasted overspend
can be also be contributed to unbudgeted emergency works projects Stewart
Island Slips and the Ohai Clifden Slip.
- Council
Transport Capital Expenditure is under budget primarily due to timing.
Physical works expenditure is expected to increase as there has been a
significant amount of resealing completed March to date. It is also
expected that the majority of bridging expenditure will be completed this
year. The fluctuating bitumen index is causing some frustrations in
forecasting.
Please
note that we are forecasting that our Repairs, Maintenance and Capital
Expenditure will be over budget at year end. This is primarily driven by
underspends in previous years and our key objective of maximising New Zealand
Transport Agency approved funding.
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Key
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Largely on
Track
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Monitoring
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Action
Required
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Maintenance and Operations:
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Financial Tracking vs Plans
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YTD
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Forecast
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Annual Plan
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NZTA Approved
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67%
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66%
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68%
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72%
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Maintenance and Operation costs are currently over budget
this is due to:
- Unbudgeted
Emergency Works costs due to slip repairs (Ohai Clifden and
Stewart Island Slips).
- A
holistic approach to Maintenance Management has seen Sealed Pavement and Unsealed
Pavement Maintenance being over budget but offset with underspends in other
activities. Plus we are bringing forward from 2015/2016 our bi-annual
data collection into 2014/2015.
*
Note that Council can only claim 30% of urban
drainage. Unsubsidised work has being excluded from this forecast.
Actions required:
Council intends to shift NZTA funding from our renewal
programme to help fund the gap between our 2014/2015 forecast and NZTA approved
funding. We have applied for a cost scope with NZTA, we see no
foreseeable issues in this been approved.
Renewals and Minor
Improvements:
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Financial Tracking vs Plans
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YTD
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Forecast
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Annual Plan
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NZTA Approved
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67%
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55%
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54%
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52%
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Renewals and Minor Improvement Commentary:
The above is highlighted in orange
as Transport is monitoring these costs closely driven by the current volatility
in the bitumen index.
The forecast is lower than actuals
primarily due to the timing of projects. Council expects that expenditure
will increase in the next few months as work is completed. Some unsealed
metalling, drainage work and some rehabilitation work is underway.
Actions required:
No funding action required at this
stage. The forecasted shortfall in NZTA Approved expenditure will help
fund the forecasted overspend in maintenance and renewals.
Three Year Programme:
We have had formal approval from NZTA for more funding for
the Lower Hollyford Road this will not impact Local
share as it is 100% funded by NZTA.
Other Key Projects:
Local
share has been partially funded by previous year underspends in our bridge
renewal budgets and other renewal underspends. There are some slight
reconciliation issues which will be rectified if required before the next APAC
report.
Of note Transport will be working
closely with NZTA to seek additional funding for each of the projects below:
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Activities
Performance Audit Committee
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22 April 2015
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Activities
Performance Audit Committee
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22 April 2015
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SERVICES AND
ASSETS (Excluding Roading)
COMMENTARY
Income
Overall Services and Assets
(Excluding Roading) actual income is $61K (1%) over year to date budget
($11.7M). This is primarily driven by Forestry income $108K over budget.
Key highlights are:
• District Reserves is $12K under budget as some reserve
transfers for Curio Bay have yet to be actioned.
• Engineering Consultants is $42K (7%) under budget. As
income is fully recovered and driven by
expenditure levels the reduced expenditure impacts directly on
income.
• Overall
Forestry income received is $108K (6%) over budget, this is expected to be the
position at the end of the year. This is predominantly due to harvesting in
Waikaia $935K over budget. This is offset by Dipton Forest $460K and Ohai
Forest $366K under budget.
Operating Expenditure
Actual operational expenditure for
Services and Assets year-to-date is $1.64M (13%) under budget.
Key highlights are:
• District Water is $508K (24%) under budget as there has been minimal capital expenditure year-to-date
(169K actual v $697K budget).
• District Sewerage is $920K (28%) under budget. Year to date $2.3M actual versus $3.2M budget has been
completed.
• Water Services is $113K (12%) under budget predominately
due to less services of project consultant costs being required than budgeted.
• Currently
the Engineering Consultants business unit is $42K
(7%) under budget.
Statement of Financial Position
COMMENTARY
The balance sheet as at 30 June
2014 represents the audited balance sheet for activities of Council (ie
excludes SIESA and Venture Southland). The financial position at
28 February 2015 is before year-end adjustments and only for the activities of
Council.
External borrowings have still not
been required, with internal funds being used to meet obligations for the
year-to-date.
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Susan McNamara
MANAGEMENT
ACCOUNTANT
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Activities
Performance Audit Committee
22 April 2015
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Rural Rating Unit - Rule 2.4.1.2(d) Rating Valuations
Rule 2008
Record No: R/15/4/6419
Author: Anne Robson, Chief Financial Officer
Approved by: Steve Ruru, Chief Executive
☐
Decision ☐ Recommendation ☒ Information
1 Council
has received correspondence from the Valuer-General in regards to the
application of the rating valuations Rule 2.4.1.2(d) and in relation to land
owned by the Crown,
2.4.2.2 (d). Both sections relate to the treatment of farming properties
owned either by the public or the Crown. The following discussion is
centred on the impact to the public as property owners. However, changes
required will be applied to all properties when completed.
Section 2.4.1.2(d) Two or
more certificates of title
Two or more certificates of
title constitute a single rating unit where the land is owned by the same
person or persons, is used jointly as a single unit, and is contiguous or
separated only by a road, railway, drain, water race, river or stream and:
(a) A
substantial improvement straddles certificate of title boundaries, or
(b) Certificates
of title are legally required to be alienated together, or
(c) In
the case of a large holding such as a reserve, airport, port, or rail yard, it
is unreasonable to treat each separate certificate of title as a rating unit,
or
(d) The
land is used as one farming operation and it is likely that the certificates of
title will be alienated as only one farming operation.
2 In
summary the application of 2.4.1.2(d) means farm land that is in two or more
certificates of title and that is owned by the same person or persons and used
as one farming operation and is contiguous (ie: side by side or separated only
by a road, railway, drain, water race, river or stream) needs to be amalgamated
into one rating unit. The Valuer-General noted in its correspondence,
that across the country compliance with this rule is not at an acceptable level
and asked councils to work with their valuers to ensure compliance by
30 June 2015.
3 It
is important to note that properties amalgamated under this section will still
retain separate certificates of title, it is only for the purposes of the
District Valuation Roll (DVR) and the Rating Information Database (RID) that
they are amalgamated.
4 The
implications of this change to property owners are
a) Whereby
previously property owners received one valuation notice for each certificate
of title, they will now only receive a one combined valuation notice.
The Valuer-General has noted that he expects that this will not change the
overall value of the property as in most cases it will simply be the addition
of the separate values, but there may be instances where it results in a minor
change.
b) Property
owners will be unable to obtain a separate valuation for each title.
Previously this information may have been used when selling a property, now
that valuations will be undertaken as a whole, this information will be
un-available.
c) As
part of this process, amalgamated properties will have a single land use
classification. Currently these separate titles may have different land
use classifications. QV has confirmed with Council that where a landowner
can prove the property is not used as “one farming operation” ie:
it has a separate distinct land use, then that property will only be
amalgamated with any other contiguous property of the same land use that
complies with the above section of the Rating Valuations Act 2008. The
effect of any change in classification could be an increase or decrease to the roading
rate payable.
d) Property
owners will only receive one rating notice covering all properties that have
been amalgamated.
5 In
receiving the letter from the Valuer-General, Council staff approached its
valuer, QV, to ask what process it was going to undertake to identify the
extent of the issue and what it is doing to address the issue. QV
responded by advising that it was in the process of identifying the number of
properties involved, but believed that Southland would have the highest number
of properties to which this rule would apply, due mainly to the increase in
property size as a result of dairying. QV advised that it was planning to
start the amalgamation process by reviewing the sales of properties in the last
three years but it would take time and suggested that the 30 June deadline
would be hard to meet. QV noted that Dunedin City Council had asked and
been granted an extension to the timeline and suggested Southland District
Council do the same. The extension suggested was to have the process
completed for the general revaluation of all properties being undertaken at the
end of this year.
6 To
fully understand the quantum involved in any potential amalgamations, Council
staff undertook its own process. This identified approximately 3,100
farming properties that appear to be in the common ownership of around 1,500
ratepayers of which 275 have mixed land use classifications. With this
information Council staff wrote back to the Valuer-General asking for an
extension on the basis of the number and time to correct the properties
affected and the potential financial impact it may have on ratepayers whose
properties currently have different land use classifications.
7 In
response to this correspondence and that of other councils on the same matter,
the Acting Valuer-General has replied and expanded on the reasoning for
tightening up on this part of the rules now. It states that compliance
should already be occurring due to a similar rule within the Rating Act and the
fact that farms are getting bigger, with increasing numbers of adjoining owner
purchases along with diminishing markets for rural subdivisions and lifestyle
blocks. It also noted that if it had been a new rule it would accept a
transition period but since this rule has been in place for a long time it was
up to councils and their valuers to comply. This is softened slightly by
going on to say that although Council and its valuer should try and achieve
compliance as much as possible before 30 June 2015, should Council not do
so it needs to demonstrate “proactive measures” and a robust
process going into the general revaluation as it may impact on
certification.
8 Taking
the comments of the Acting Valuer-General on board, QV is proposing the
following programme of works to ensure timely compliance:
1) Continuation
of analysing the last three years of property sales. Also, before 30
June, where a site visit is required for a building consent, the property will
also be assessed for any possible amalgamation at the same time. Any properties
identified will be updated before 30 June 2015.
2) Analysis
and identification of all other properties that require amalgamation.
This will involve desktop review with information from sources such as
Environment Southland on water consents, property visits, comparison with
Council’s analysis of identified properties etc with changes made in the
new financial year, allowing the opportunity for any consultation/notification
with property owners if required.
9 Council
staff asked council’s contact at QV, Tim Gibson, to confirm this proposed
programme of work with the appropriate representative of the Valuer-General to
ensure that no certification issues would result from this. We will
provide an update on this at the APAC meeting.
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Recommendation
That the Activities
Performance Audit Committee:
a) Receives
the report titled “Rural Rating Unit - Rule 2.4.1.2(d) Rating
Valuations Rule 2008” dated 14 April 2015.
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Attachments
There are no
attachments for this report.
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Activities Performance Audit Committee
22 April 2015
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Exclusion of the Public: Local Government Official Information and
Meetings Act 1987
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Recommendation
That the
public be excluded from the following part(s) of the proceedings of this
meeting.
C8.1 Public
Excluded Minutes of the Activities Performance Audit Committee Meeting dated
18 March 2015
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
and Meetings Act 1987 for the passing of this resolution are as follows:
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General
subject of each matter to be considered
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Reason for passing this resolution in relation to
each matter
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Ground(s) under section 48(1) for the passing of this
resolution
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Public Excluded Minutes of the Activities Performance
Audit Committee Meeting dated 18 March 2015
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s7(2)(a) - The withholding of the information is
necessary to protect the privacy of natural persons, including that of a
deceased person.
s7(2)(b)(ii) - The withholding of the information is
necessary to protect information where the making available of the
information would be likely unreasonably to prejudice the commercial position
of the person who supplied or who is the subject of the information.
s7(2)(f)(ii) - The withholding of the information is
necessary to maintain the effective conduct of public affairs through the
protection of such members, officers, employees and persons from improper
pressure or harassment.
s7(2)(h) - The withholding of the information is
necessary to enable the local authority to carry out, without prejudice or
disadvantage, commercial activities.
s7(2)(i) - The withholding of the information is
necessary to enable the local authority to carry on, without prejudice or
disadvantage, negotiations (including commercial and industrial
negotiations).
s7(2)(j) - The withholding of the information is
necessary to prevent the disclosure or use of official information for
improper gain or improper advantage.
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That the public conduct of the whole or 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 exists.
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