12 December 2013 - Hamilton City Council

Notice of Meeting: I hereby give notice that an ordinary meeting of Finance Committee will be held on:

Date: Time: Meeting Room: Venue:

Thursday 12 December 2013 2:30pm Council Chamber Municipal Building, Garden Place, Hamilton Barry Harris Chief Executive

Finance Committee OPEN AGENDA Membership Chairperson Deputy Chairperson Members

Cr R Pascoe Cr G Mallett Her Worship the Mayor Ms J Hardaker Cr G Chesterman Cr M Forsyth Cr M Gallagher Cr K Green Cr A King Cr D Macpherson Cr A O’Leary Cr L Tooman Cr E Wilson Cr P Yeung

Quorum:

A majority of members (including vacancies)

Meeting Frequency:

6 Weekly

Mary Birch Democracy Team Leader 5 December 2013 Telephone: 07 838 6772 [email protected] www.hamilton.co.nz

Finance Committee Agenda 12 December 2013- OPEN

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Terms of Reference:    

  

To monitor the Council’s financial and non-financial performance against the Long Term Plan and Annual Plan. To monitor the delivery of key projects. To approve and monitor contracts. To approve acquisition or sale or lease of properties owned by the Council, or owned by the Municipal Endowment Fund and the Domain Endowment Fund with reference to the strategy developed by the Business and Investment Sub-committee, for any endowment properties. To consider and approve deferred capital expenditure. To approve changes to projects resulting from staff recommendations within the Key Projects monitoring report. To consider and approve business cases referred by the Senior Leadership Team.

Power to act:  

 

Write off outstanding accounts greater than $10,000 (in accordance with the Debtor Management Policy). To approve all contractual and other arrangements for supply and services and revenue generating contracts where the term of the contract (including renewal periods) and the total value of the contract is within limits set and delegated by Council. To approve contracts and other arrangements where the amount of work involved in a decision not to go to public tender exceeds $100,000 (GST excluded) or in accordance with Council’s Procurement Policy. To approve all other matters in accordance with the terms of reference of this committee.

Sub-committees: This Committee will be supported in its work by the:  Events Sponsorship Sub-committee.  External Funding Sub-committee.  Council Controlled Organisations (CCO) Sub-committee.


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ITEM TABLE OF CONTENTS

PAGE

1

Apologies

4

2

Confirmation of Agenda

4

3

Declarations of Interest

4

4

Public Forum

4

5

Chairperson’s Report

6

Recommended dates for reports to be presented to Finance Committee

5

7

10-Year Plan Monitoring Report

7

8

IS Programme of Work Update - December 2013

102

9

Procurement Report

110

10

Contract 13166 - All of Government Reticulated Gas Supply

123

11

Pukete 2 Quarterly Project Update

126

12

Hamilton Ring Road Update

131

13

Resolution to Exclude the Public

138


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1

Apologies

2

Confirmation of Agenda The Council to confirm the agenda.

3

Declaration of Interest Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as an elected representative and any private or other external interest they might have.

4

Public Forum As per Hamilton City Council’s Standing Orders, a period of up to 30 minutes has been set aside for a public forum. Each speaker during the public forum section of this meeting may speak for three minutes or longer at the discretion of The Chairperson. Please note that the public forum is to be confined to those items falling within the terms of the reference of this meeting. Should you wish to participate in the public forum, please contact Democracy by telephoning 8386772.


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Committee:

Finance Committee

Date:

12 December 2013

Report Name: Recommended

dates for Author: Kay Lindsay reports to be presented to Finance Committee

Recommendation That the report be received.

1.

Attachments

2.

Attachment 1 - Recommended dates for reports to be presented to Finance Committee -

3.

Purpose of the report

4.

This report provides detail of the regular reports that will be presented to this committee as well as estimated timing. Any new reports requested can be added to the attached list.

Signatory Authoriser

Richard Briggs, Chief Financial Officer


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Item 6

council report

Item 6 Attachment 1 Finance Committee Agenda 12 December 2013- OPEN

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Committee:

Date:

Finance Committee

Report Name: 10-Year Plan Monitoring

12 December 2013

Author: Sarah Ward

Report Report Status

Open

Strategy, Policy or Plan context

2012-22 10-Year Plan 2013/14 Annual Plan

Financial overview

Included in the report

1.

Purpose of the Report

2.

To provide Council with quarterly progress reporting on the financial and non-financial commitments contained in the 2012-22 10-Year Plan. Specifically, this report includes the following components: -

Finances: The finance section includes commentary on: 

Financial results for the first quarter being the period ended 30 September 2013.



A summary result for the four months to 31 October 2013.



A summary of the projected financial risks and opportunities for the year ended 30 June 2014.

-

Key Projects and Business Cases: A brief overview of business case reporting and monitoring; and an overview of the key projects for Hamilton City Council for the October 2013 reporting period.

-

Services: Results for the 10-Year Plan service performance measures for the period July – September 2013.

-

Other 10-Year Plan Commitments: A status update, as at November 2013, on the list of additional work streams agreed to as part of the 10-Year Plan process.

3.

Executive Summary

4.

The 10-Year Plan financial strategy introduced significant reductions in operating and capital expenditure, as well as a firm ceiling on debt, rates increases and financial performance targets.

5.

Council is reporting a favourable financial position for the quarter ended 30 September 2013. As at the 30 September 2013 Councils operating surplus was $12.2m surplus which is $13.2m ahead of budget. The result for 31 October 2013 was consistent and continued the favourable position.

6.

The Risks and Opportunities summary forecasts a surplus in operating activities of $0.9m and a deficit in Capital Activities of $2.9m. This result includes items that were identified, and


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Item 7

council report

Item 7

funded, from the 2013 period. Included is a surplus for Development Contributions of $2.5m, that Council is required to use to repay debt. 7.

Management continues to actively monitor and manage budgets to ensure a balanced result is achieved.

8.

The eight key projects currently included in this report are all on track for the October 2013 reporting period.

9.

There are 86 service performance measures contained in the 10-Year Plan: - 44 measures (51%) are reported as ‘on track to achieve this year’s target’. - 12 measures (14%) are reported as ‘corrective action needed to meet this year’s target, plan in place’. - 3 measures (4%) are reported as ‘off track to meet this year’s target’. - 27 measures (31%) do not have data available for the quarter.

10.

There are status updates for 34 “Other 10-Year Plan Commitments” and these show 41% (14) have been completed, with 44% (15) in progress, 12% (4) programmed for a start date and 3% (1) on hold.

11. Recommendation/s from Management 12.

That the report be received.

13. Attachments Attachment 1 - Dashboard Summary Attachment 2 - September 2013 Financial Monitoring Report Attachment 3 - Risk and Opportunities Attachment 4 - Key Project Monitoring Report - October 2013 Attachment 5 - Performance Measures Exceptions Attachment 6 - Other 10-Year Plan Commitments Attachment 7 - October 2013 Financial Monitoring Summary

14.

Finances

15.

As noted in the Executive Summary, Council is in a sound financial position for the period ended 30 September 2013 and is tracking positively against our full year operating surplus and our balanced budget targets.

16.

The key difference between these two results is that the balanced budget result excludes noncash items such as gains from valuation of financial instruments, vested assets and capital subsidies on the Ring Rd.

17.

Key drivers for this result include: Development Contributions are $1.1m favourable: this favourable result must be used to reduce Development Contribution related debt. Direct Expenditure is $2.1m favourable: this is substantially a timing variance Direct revenue is $1.0m favourable: the substantial contributors are Stadia/Claudelands (through events) and Building Consents (higher consent volumes).


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-

Financial Instruments are $6.0m favourable: this is a non cash unrealised gain and is generated from movements between actual interest rates and the forward interest rates Council secured. Depreciation is favourable $1.1m: timing of the capital expenditure is a small contributor but the main reason is lower asset values than expected due to not revaluing the infrastructure assets upward as planned in the Annual Plan. This is a non-cash item.

18.

Detailed variance commentaries are included within the Monitoring Report attached.

19.

Council is also tracking positively against both our External Debt and our Total Overall Debt targets (a key 10-Year Plan measure which adds Net External Debt to our cash backed reserves).

20.

The total overall debt for the year is budgeted at $432.8m, this is now projected to be $19.2m less due to the amount saved from last financial year ($6.0m), the estimated additional revenue from Development Contributions ($2.5m), the sale of the investment in the Riverside Hotel Limited ($11.8m) less an increase in the cover for cash backed Reserves ($1.1m). A debt impact summary is included within the Risks and Opportunities Report.

21.

At the end of the previous financial year Council approved a deferred capital expenditure programme. This programme included 39 projects with a total budget of $24.2m. As at 30 September all projects are in progress.

22.

Risk and Opportunities

23.

The attached Risks and Opportunities Schedule reports a surplus on operating activities of $0.9m, and a deficit on Capital Activities of $2.9m.

24.

The Operating surplus includes a $2.5m surplus from Development Contributions; Council is required to use any development contribution surplus to repay debt. If this item is eliminated then the result from Operating Activities becomes a deficit of $1.7m; with the majority of this deficit being funded from the 2013 period.

25.

The overall deficit within the Risk and Opportunities schedule reflects the outcome from Council’s every day operations by accommodating unplanned works and events. Certain surpluses, i.e. Development Contributions must be used to reduce debt.

26.

October Position

27.

For the period ended 31st October 2013 the operating position was favourable $17.4m, while the balance budget was favourable $6.9m. Based on the October results Council is still on track to deliver a balanced budget for the full year. Please refer to attachment 5.

28.

Rates

29. 30.

Rates Debtors: The collection of 2013/14 rates at 30 September 2013 is 98.3% of the total rates billed to 30 September 2013 (after deducting the accounts that are in credit i.e. paid in advance). The first instalment billing period is from 1 July to 30 September 2013 with due dates in August/September.

31. 32.

Rates Arrears: There have been good results in the collection of previous years’ rates arrears (i.e. from 2012/13 and earlier rating years). The outstanding figure carried forward from 1 July 2013 of $3,194,265 has been reduced to $1,599,565 as at 30 September 2013, which represents 50.1% collection rate for the first quarter of the new financial year.


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Item 7

-

Item 7

33.

Sundry Debtors:

34.

The outstanding amount for sundry debts, which are greater than 90 days overdue, is $399,483 as at 30 September 2013. For reasons of commercial sensitivity these are detailed in a separate confidential report. These debts are actively pursued by the Sundry Debtors staff and placed in the hands of the debt collection agent if unable to make satisfactory arrangements.

35. Key Projects and Business Cases 36.

The Senior Leadership Team have received and approved two ‘lite’ and one full business case since the August 2013 Finance and Monitoring Committee meeting.

37.

Business cases have come from: Organisational Development – IS – Finance Project Analysis and Design Phase (full business case); Community – City Parks – Staff and Plant for CWA Street Landscape Work and Bedding Displays; City Infrastructure – City Waters – Rototuna Closed Landfill

38.

It is planned the Waikato River Project, Growth Funding and Management Project and Finance Project will be added to the Key Projects Report from early 2014.

39.

Risks specific to projects are identified and highlighted in the attached reports.

40.

The Business Case Management Policy has been revised (October 2013). The eight recommendations arising from the PWC Review of the Business Case Process (September 2013), which were accepted by Management have been implemented.

41.

The PWC assurance review of the HCC Project Management processes is being finalised. This is expected to commence early December 2013.

42. Services 43.

The 10-Year Plan and 2013/14 Annual Plan contain 86 performance measures across Council’s 12 service groups. These are the service performance measures that will be reported in Council’s Annual Report.

44.

Performance results are collected on a quarterly basis.

45.

This report includes a high level graph of the results in the summary dashboard, and an exceptions report that provides more detail for the measures that are reported as ‘corrective action needed to meet this year’s target, plan in place’ and ‘off track to meet this year’s target’.

46.

For a full list of the performance measures, please see the 2013/14 Annual Plan, http://www.hamilton.co.nz/annualplan

47.

The results for quarter 1 show 27 measures (31%) do not have data available for the quarter. Some performance measures use data that is only produced annually. Additionally, a number of performance measures are collected through Council’s Residents Survey, which is currently on hold while staff carry out a review of the survey. Staff will ensure that this review does not affect the ability to meet annual reporting requirements.


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49.

From the 10-Year Plan process, a number of separate work streams were identified for further action.

50.

These are listed in an attached report along with their status and comments.

51.

A number of these work streams have been completed; however the full list has been included in this report as context for new Councillors. Completed items will not be included in future reports.

Signatory Authoriser

Richard Briggs, Chief Financial Officer


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Item 7

48. Other 10-Year Plan Commitments


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