Notice is hereby given that an Ordinary Meeting of Southland District Council will be held on:
Wednesday, 1 February 2017
Council Agenda - Late Items
01 February 2017
Reports - Policy and Strategy
7.3 Adoption of the Annual Plan consultation document and supporting documents 3
1 February 2017
Record No: R/17/1/651
Author: Shannon Oliver, Planning and Reporting Analyst
Approved by: Anne Robson, Chief Financial Officer
☒ Decision ☐ Recommendation ☐ Information
1 This report recommends that Council adopt the Consultation document and associated Supporting Information for the Annual Plan 2017/2018 for public consultation.
2 All Councils are required by legislation to prepare and adopt an Annual Plan for each financial year.
3 Year Three of the Council’s Long Term Plan 2015-2025 (LTP or 10 Year Plan) serves as the base for the Annual Plan 2017/2018 and activity managers have proposed changes that are considered necessary.
4 In developing the Annual Plan it has become apparent that it is broadly consistent with the LTP. There are no significant changes to the levels of service proposed to be provided by Council and the overall budgeted expenditure is projected to be slightly more than proposed in the LTP. There have been some changes to the timing of some scheduled LTP capital works projects, particularly water and sewerage projects and the Catlins Road seal extension.
5 Total rates overall are proposed to increase by 3.64%, compared to 3.36% proposed in the LTP. 25.6% (2016: 25.63%) of rates are proposed to be collected from uniform annual charges and targeted rates set on a uniform basis.
6 Local authorities which have significant and material changes to their Annual Plan from what was forecasted in the LTP for that year are required to develop a consultation document as well as making publicly available the information that provides the basis for the preparation of the consultation document (the supporting information). There is no longer a requirement to use the special consultation procedure to consult with the public.
7 The consultation document primarily sets out any significant or material differences to Year three of the LTP. It will be released to the public for feedback on 8 February 2017. Feedback closes at 5pm on 8 March 2017
8 The consultation document and supporting information is attached for Council’s review and adoption.
That the Council:
a) Receives the report titled “Adoption of the Annual Plan consultation document and supporting documents” dated 27 January 2017.
b) Determines that this matter or decision be recognised as 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) Confirms the key changes to the Annual Plan budgets/programme:
of Te Anau Wastewater Disposal Project Capital Costs
ii) Addition of expenditure for alternative site/option investigations related to the Te Anau Wastewater Disposal project ($500,000).
iii) Addition of expenditure (moved from 2016/2017) to complete the Catlins Road seal extension ($4.15 million).
iv) Addition of a one-off grant to the Loss and Grief centre ($10,000) and a one-year grant to Swim Safe Southland ($20,000).
v) Addition of expenditure for the Southland District story project to be funded from the District Operations Reserve ($150,000)
vi) Removal of expenditure related to Southern Rural Fire Authority leaving a balance of $10,000 for transition costs ($293,814)
vii) Recovery of additional Emissions Trading Scheme charges ($105,000) via an increase in the wheelie bin collection rate ($70,000) and transfer station fees and charges ($35,000)
viii) Removal of the proposed transfer to the roading reserve ($500,000)
ix) Setting the regional heritage rate at $35.40 including GST
x) Updated Fees and Charges (as outlined in the supporting information attached).
e) Adopts the Draft Prospective Financial Statements as information that is relied on by the content of the consultation document in accordance with Section 95A(4) of the Local Government Act 2002.
f) Adopts the Draft Funding Impact Statements (All Activities and Rates) as information that is relied on by the content of the consultation document in accordance with Section 95A(4) of the Local Government Act 2002.
g) Adopts the key assumption changes as information that is relied on by the content of the consultation document in accordance with Section 95A(4) of the Local Government Act 2002.
h) Adopts the Draft Roading Rate Model as information that is relied on by the content of the consultation document in accordance with Section 95A(4) of the Local Government Act 2002.
i) Adopts the Draft Schedule of Financial Reserves as information that is relied on by the content of the consultation document in accordance with Section 95A(4) of the Local Government Act 2002.
j) Adopts the Draft Schedule of Projects as information that is relied on by the content of the consultation document in accordance with Section 95A(4) of the Local Government Act 2002.
k) Adopts the Draft Schedule of Variations to Fees and Charges as information that is relied on by the content of the consultation document in accordance with Section 95A(4) of the Local Government Act 2002.
l) Adopts the consultation document for the Annual Plan 2016-2017 to support the consultation process giving due consideration to Council’s balanced budget requirements of the Local Government Act 2002.
m) Delegates’ authority to the Chief Executive to approve any final edits required to the consultation document in order to finalise the document for printing and distribution.
9 All councils are required by legislation to prepare and adopt an Annual Plan for each financial year.
10 The purpose of an Annual Plan is to:
· Contain the proposed annual budgets and Funding Impact Statement
· Identify any variation from the financial statements and Funding Impact Statement included in the Long Term Plan (LTP) in respect of the year
· Provide integrated decision-making and co-ordination of the resources of the local authority
· Contribute to the accountability of the local authority to the community.
11 The Annual Plan is not audited.
12 As part of developing the Annual Plan, Council’s Community Boards, Community Development Area Subcommittees and Water Supply Subcommittees were provided with the opportunity at their recent meetings to make any changes to their 2017/2018 budgets.
13 The budgets for the Annual Plan were based on year three of the 2015-2025 Long Term Plan and were reviewed and updated as necessary by the activity managers. Finance staff as well as the Executive Leadership Team undertook a high level review of updated budgets. Council reviewed District estimates and various inputs into its plan at a workshop on 15 December 2016 and provided guidance to staff.
14 Staff also developed a set of supporting information to provide more information to the community about the proposed 2017/2018 plan/budgets for those people seeking more detail than what is contained in the consultation document. The supporting information which reflects the guidance that has been provided by elected members at the 15 December 2016 workshop (the supporting information) and includes:
· Draft Prospective Financial Statements
· Draft Rating Funding Impact Statement (All Activities and Rates)
· Key Assumption Changes
· Draft Roading Rate Model
· Draft Schedule of Financial Reserves
· Draft Schedule of Projects
· Draft Schedule of variations to Fees and Charges
In preparing the supporting documentation, staff have made minor amendments to the format to include an introductory section which explains what the Supporting Information is about, outlines any key changes from what was forecasted in the LTP for the year and the reasons for these changes. The purpose of the introductory section is to provide some context to the reader about how the supporting information relates to the information contained in the consultation document and the proposed Annual Plan.
15 Draft Prospective Financial Statements
· The prospective financial statements outline the budgets for the 2017/2018 year as compared with what was forecast for this year in the 2015-2025 LTP. Each financial statement shows the proposed changes from the LTP. Please note:
· These statements have not been previously reviewed by Council
· Please refer to Attachment B. Draft Prospective Financial Statements.
· Total rates are proposed to increase 3.64% from 2016/2017. This is slightly higher ($177k more) than the increase proposed for Year Three (2017/2018) in the LTP of 3.36%.
· The draft prospective financial statements reflect the position forecast following review of the budgets for 2016/2017. The budgets and associated financial statements will be amended prior to adoption to reflect any further forecast changes from 2016/2017, including projects to be carried forward.
· A summary of the draft forecast key financial statements are outlined below
Council’s overall forecast operating surplus for 2017/2018 has increased from $1.0M as proposed in the LTP to $1.6M. This has arisen primarily as a result of increased other revenue, partially offset by increased expenditure.
Other revenue has increased by $4.0M as a result of:
· Council is recognising gross forestry income compared to the LTP where net forestry revenue was disclosed (total income less associated direct costs) ($2.5M).
· increased NZTA funding predominantly for the Catlins road sealing project ($2.3M).
· reduced interest received from external investments ($215K) as a result of less cash being available for investment due to variations in projects
· reduced use of development and financial contributions ($337K) mainly due to the Te Anau Waste Water project being deferred.
Expenditure has increased by $3.6M as a result of:
· Council recognising gross forestry expenditure ($2.2M), discussed above.
· Expenditure for alternative site/option investigations related to the Te Anau wastewater disposal project ($500K)
· proposed Southland District story project, to be funded from the District Operations Reserve ($150K)
· additional employee associated costs ($408K) predominantly as a result of the organisational review.
Council’s overall forecast net assets as at 30 June 2018 has reduced from $1.5B as proposed in the LTP to $1.4B. This has arisen primarily as a result of the opening value of Council’s assets at 1 July 2017, being significantly ($66.5M) less than anticipated in the LTP. Additionally Council has also deferred some capital projects further reducing the value of non-current assets. Council’s forecast cash balance has decreased by $8.5M from what was proposed in the LTP. Council is also forecasting to have no long term debt at 30 June 2018. (LTP forecast was $5.3M).
16 Draft Funding Impact Statements (All Activities and Rates)
· These statements have not been previously reviewed by Council
· Please refer to Attachment B. Funding Impact Statements (All Activities and Rates)
· The Funding Impact Statement (All Activities) sets out the sources of both operating and capital funding for all council activities.
· This Rates Funding Impact Statement sets out the rates mechanisms that Council will use, including information about how the different rates will be set and assessed for 2017/2018
· Council's revenue from the uniform annual general charge and certain targeted rates set on a uniform basis is proposed at 25.6% (LTP 25.63%). The maximum allowed under Section 21 of the Local Government (Rating) Act 2002 is 30%.
17 Key Assumption Changes
In preparing the financial forecasts for the 2017/2018 Annual Plan, Council staff were required to make a number of assumptions. The majority of these assumptions are consistent with the 2015-25 Long Term Plan (LTP), although a change has been made to the level of interest rates applied to Council loans to better reflect the current market conditions. The proposed rates have been based on the BNZ three year fixed/floating interest rate as at November 2016 and are as follows:
· Interest on internal loans 5.15% (LTP: 6.25%)
· Interest on external loans 5.15% (LTP: 6.25%)
18 Draft Roading Rate Model
· The structure of the model is the same as in the LTP; however, the inputs have been recalculated.
· The tonnage information was updated in December 2016 and the rating information and financial information was updated in January 2017.
· Please refer to Attachment E. Draft Roading Rate Model
· The roading rate model will be further updated prior to adoption to reflect changes in the rating information database.
19 Draft Schedule of Financial Reserves
· The Schedule has not previously been reviewed by Council.
· Please refer to Attachment F. Draft Schedule of Financial Reserves
20 Draft Schedule of Projects
· The Schedule has not previously been reviewed by Council.
· The main changes to the projects relate to changes in timing. The most significant of these was the deletion of the Te Anau Wastewater Disposal project and the inclusion of the Catlins Road seal project. The reason for each change is included in the Schedule.
· Please refer to Attachment G. Draft Schedule of Projects
21 Draft Schedule of Variations to Fees and Charges
· Council reviewed the proposed fees and charges at its 15 December 2016 workshop.
· Since this date, outstanding fees and charges have been updated, including increases in Airport ground handling and refuelling fees, dog control substance fee, Manapouri Hall bond, Winton Memorial Hall increases and removal of fees, Nightcaps Hall bond and the Wyndham Hall day and night hire rate.
· Please refer to Attachment H. Draft Schedule of Variations to Fees and Charges
Public consultation requirements
22 There is no longer a requirement to use the special consultative procedure for public consultation and, if the Annual Plan does not include significant or material differences from the content of the LTP, then there is no requirement to consult.
23 Where a Council decides to undertake public consultation, it is required to develop a Consultation document. It also must make publicly available the information that is relied on by the content of the Consultation document.
24 In developing the Annual Plan it has become apparent that it is broadly consistent with the LTP. There are no intended changes to the levels of service proposed to be provided by Council and the overall budgeted expenditure is projected to be slightly more than proposed in the LTP. The main changes and issues considered by Council are noted below.
25 There have been changes to the timing of some scheduled capital works projects, particularly water and sewerage projects (see the Schedule of Projects Attachment G). The major changes is the removal of capital costs ($5.6M) in 17/18 related to the construction of the Te Anau Wastewater Scheme and the addition of expenditure to investigate alternative options for this scheme ($500k) and the seal of the Catlins Road project. Council is anticipating the preferred option(s) and funding for this will be included in a future Long Term Plan or Annual Plan once investigations, consenting and consultation has confirmed a preferred option.
26 The proposed variations to the LTP are sufficient to require a consultation document be prepared.
27 There are also a number of other changes which the Council has considered as part of developing the draft Annual Plan. While these changes are not considered to contain material or significant differences from the LTP (and therefore do not meet the requirement for public consultation), they have been noted below to confirm the approach that the Council has taken in preparing the budgets.
Amalgamation of Southern Rural Fire Authority into Fire and Emergency NZ
28 The Southern Rural Fire Authority is being merged into Fire and Emergency New Zealand (FENZ) from 1 July 2017 removing any requirement for Council to fund its activities. The LTP budgeted contribution of $293,814 has been removed from the 2017/18 budget leaving a balance of $10,000 per annum through to 2019/2020 to assist with transition costs.
Catlins Road Seal Extension
29 $4.15M of expenditure related to sealing the Catlins Road has been added to the 2017/2018 budget to complete construction. The total budget for the project is expected to be $7.15 million plus contingencies.
30 Fees and Charges
The plan also includes changes to a number of fees and charges (see the Schedule of Variations to Fees and Charges Attachment H).
One of the changes is an increase in transfer station fees and charges (as well as a related increase in wheelie bin rates) due to an increase in the fixed price for Emissions Trading Scheme (ETS) unit charges for landfill gas emissions. This forms part of the WasteNet’s new contract with ABL Lime to purchase a bulk number of ETS units. The price of ETS units have doubled in the new contract (estimated to cost Council an additional $105K in 2017/2018) and as a result the transfer station charges and wheelie bin rates are increasing to recover this additional cost ($70K from rates; $35K from transfer station fees charges) The transfer station charge increases range from $2.00 to $8.00 depending on the type of user.
Other notable changes to fees and charges (GST incl) include:
· Te Anau-Manapouri Airport – refuelling fees $57.50 - $80.50
· Food businesses – printing of specialist section $10.00
· Food businesses – establishment of a template food control plan $365.00
· Food businesses – annual fees (various)
· Keeping of animals – Application for dispensation $292.00
· Building control – Scanning of hardcopy of building consent documents $70.00
· Manapouri Hall – establishment of a bond $200.00.
· Cemeteries – Probes $150.00.
· Cemeteries – Out of standard hours burial $350.00.
· Winton Memorial Hall new fees and charges have been included as a result of the
· Oreti Plains Hall fees and charges have been added this year (these are not new, but have never been included historically).
The key reasons for the charges are:
· Cemetery - Increased costs associated with burials.
· Transfer Stations - Increased ETS costs (see above).
· Animal Control - Legislation and bylaw amendments.
· Environmental Health - Legislation and bylaw amendments and staff time costs.
· In general, increased costs and inflationary increases to council contributed to increased fees.
Grants and Donations
Council received three additional funding requests from the Loss and Grief Centre ($10K), Invercargill St John Ambulance Hub ($70K) and Gore St John Ambulance Hub (no amount was specified). The Council has decided to include a one-off $10K grant for the Loss and Grief Centre for the work they do to support Southlanders struggling with loss and grief, and ensure that the organisation remains viable and can develop its services. Swim Safe will also get a one-year continuation of its $20K grant to bring it in line with the Long Term Plan.
Regional Heritage rate
31 Following the one-off increase in the Regional Heritage Rate in 2016/2017 to assist with the completion of a cataloguing project, Council is reverting the rate to the original level with an inflation adjustment to bring the charge into line with the other partner Councils ($35.40 incl GST).
Roading rate model
32 Council endorses the principles of the current model and allow staff to update data as it becomes available. The Roading Rate Model has been updated for rating, financial information and tonnage information with any updated input data to be considered as part of the final Annual Plan 2017/2018.
33 The LGA requires a consultation document to be prepared and adopted in accordance with Section 95A. A draft Annual Plan must not be used as an alternative of the Consultation document.
34 The purpose of the consultation document is to provide a basis for effective public participation in decision-making processes relating to the activities to be undertaken by the local authority in the coming year, and the effects of those activities on costs and funding.
this end, the Annual Plan must identify the significant or material differences
between the proposed Annual Plan and the content of the LTP for the financial
year to which the
Annual Plan relates. This includes:
· An explanation of any significant or material variations or departures from the financial statements or the Funding Impact Statement.
· A description of significant new spending proposals, the costs associated with those proposals, and how these costs will be met.
· An explanation of any proposal to substantially delay, or not proceed with, a significant project, and the financial and service delivery implications of the proposal; and
· Any expected consequences of the differences, including the implications for the local authority’s financial strategy.
36 The content of the consultation document has been prepared for Council’s review and is included as a separate attachment to this report.
37 There is no legislative requirement for staff to develop a draft Annual Plan and therefore one has not been developed for the purposes of consultation. The supporting information, which has informed the development of the consultation document, will be made available on the Council’s website during the consultation period.
38 The Council has not identified any specific proposals it is seeking community feedback on at this stage. As such, given that the proposed budgets/programme is largely in line with what was forecasted for the year in the LTP (excluding the removal of the Te Anau Wastewater disposal project), the consultation document has been prepared on the basis of “informing and updating” the community about the changes and what Council is proposing to do in the 2017/2108 year.
39 The consultation document sets out the key changes to year three of the LTP as follows:
· A rates increase of 3.64%, which means an extra $177K in rates is being collected, from what was proposed in the LTP (3.36%)
· The removal of capital costs for the construction of the Te Anau Wastewater Discharge Project ($5.6M) and inclusion operational expenditure to investigate alternative options for this scheme ($500K)
· The addition of $4.15M for the sealing of the Catlins Road.
40 The consultation document also includes:
· An update on major projects e.g. Around the Mountains Cycle Trail
· An outline of selected projects/activities to highlight what work will be completed in 2017/2018 (in addition to any key changes from the LTP)
· Overview of the numbers compared to the LTP
· Explanation of where the rates are spent
· Reference to supporting information available online.
41 The consultation document has been prepared to meet all legislative requirements.
42 The consultation document will be released to the public for comment on 8 February 2017. Feedback will close at 5pm on Wednesday 8 March 2017.
43 Taking into account the relatively minor nature of the changes to the plan and the fact that there has already been (and continues to be) consultation with the community and information provided to the community on these and other projects, the degree of consultation will be adjusted to suit. The consultation document will be made available on the Council’s website and sent to a list of key stakeholders (currently being developed).
44 The consultation documents invites the public to provide feedback in writing or via the Council’s website. Feedback can also be given via social media on Council’s Facebook page.
45 The consultation document also asks members of the public to indicate if they would like to speak to Council about their feedback at its meeting on 26 April 2017.
Factors to Consider
Legal and Statutory Requirements
46 The Local Government Act 2002 sets out the requirements for the consultation document to be prepared and adopted by Council.
47 Before adopting a consultation document, the local authority must adopt the information that is relied on by the content of the consultation document.
48 As part of preparing the Annual Plan and compiling the supporting information, consideration of the communities’ views were included. This was facilitated by the local estimates and ward estimates processes. The supporting information will be publicly available on the Council’s website during the Annual Plan public consultation period. As a result of submissions received, Council may decide to amend any of the supporting information documents prior to adopting the Annual Plan on 21 June 2017.
Costs and Funding
49 There are various costs incurred in compiling the Annual Plan including staff costs and budgets. These are included in Council’s annual budgets and funded accordingly.
50 The changes set out in the Annual Plan are consistent with Council’s current Financial Strategy, Infrastructure Strategy and policies, including the Revenue and Financing Policy
51 No policies have been amended as part of the Annual Plan development process
52 Adopt the supporting information and consultation document, with amendments as required.
53 Do not adopt the supporting information and consultation document.
Analysis of Options
54 Option 1 – Adopt the supporting information and consultation document with amendments as required.
· Comply with statutory requirements.
· There are no disadvantages
55 Option 2 – Do not adopt the supporting information and consultation document, with amendments as required.
· There are no advantages to this option.
· Not comply with statutory requirements.
Assessment of Significance
56 Adoption of the Annual Plan consultation document is a significant decision as it is the primary way that Council is held publicly accountable for its expenditure proposals for the financial year, as well as communicating its planned levels of service and projects. Taking into account the significance of the changes to the LTP and the associated issues, the Council will be preparing a Consultation document and distributing this as outline to enable to the community to provide feedback.
57 That Council adopt Option 1 - Adopt the supporting information and consultation document with amendments as required.
58 The online version of the consultation document will be available by 8 February 2017
59 Feedback will close at 5pm on 8 March 2017.
60 Copies will available at libraries and Area Offices and sent to the corporate planning stakeholder list. The supporting information will be available on the Council website. Feedback will be encouraged.
a Draft Annual Plan 2017/2018 Consultation Document ⇩
b Draft Prospective Financial Statements ⇩
c Draft Funding Impact Statement (all Activities and Rates) ⇩
d Draft Key Assumptions ⇩
e Draft Roading Rate Model ⇩
f Draft Schedule of Financial Reserves ⇩
g Draft Schedule of Projects 2017/2018 ⇩
h Draft Schedule of Variations to Fees and Charges ⇩