Corporate Services Committee (30 January 2014)

The Corporate Services Committee meeting was held on Thursday 30 January 2014. All councillors were in attendance.

The agenda comprised a number of reports. However, the ones of particular interest to me were: (1) rates remission requests, (2) the Takaka service centre proposal, and (3) treasury policy changes.  Other activities were also reported on, including: (1) treasury activities, (2) corporate and finance activities, (3) property management activities, and (3) information services activities.

Rates remission

The first, rates remission, because it seemed peculiar that such a minor sum would come before council for consideration and approval. Especially when the amounts were no more than approximately $300 and $400 respectively. As Cr Sangster rightly pointed out, the authorisation process was not complicated and anything under $1,000 should automatically be authorised under delegated authority, without the need for council to rubber stamp the request. The cost of preparing the two reports for council’s consideration would have probably cost more than what was being allowed by way of the claimed rates reduction.

I also believe that trivial administrative matters should not be coming to council when staff are fully capable of showing some initiative. Thats why we have delegated authority. Hopefully, these will be dealt with in the future by way of a line in future management reports showing trends in rates remission requests and the amounts being approved.

For those wanting to know more about the process for remissions from natural disasters, a helpful decision flowchart is contained on page 11 of the agenda (see link below).

Takaka service centre

At present, due to the existing service centre being earth-quake prone, council staff are operating the service centre from a temporary leased premises.  Council have been presented with a number of options going forward. These include: (1) continuing to lease premises, (2) strengthen the service centre so it is earth-quake compliant, (3) demolish and rebuild the old service centre, or (4) build a new separate building for the service centre that could also be used for other purposes (ie a mixed civic-commercial use). For example, space could be leased to a Government Agency (ie DoC) or other businesses. Council staff support the later option as the better long term option.

Another option could be the expansion of the new Takaka library as a community “hub” for library and service centre functions (and perhaps tourism information too). Why can’t you pay for rates and make general enquiries from a shared library-service centre front desk? Whether it incorporates a mixed civic-commercial use would depend on available space. This option might require a second floor due to limited surrounding land. Unfortunately, it appears that when the new Takaka library was being planned, no one considered bringing all of council’s services together under one roof.

Another option (suggested by Cr Sangster) was to locate a new mixed use service centre building where the current tourism (i-site) building is located. This option had some merit, but might also require acquiring surrounding land or building a two storey building.

A complicating factor is the use of the old service centre building. If it were no longer used for council purposes, it might revert back to central government ownership. It was decided that a working party would be established to investigate all options to find the most cost effective solution.

At the end of the day, whatever option was decided would require some sizeable capital investment in Takaka. What concerns me is that other capital investments are also being considered for the Takaka-Golden Bay region. In particular, a new community centre. When both capital projects are considered together, it seems to me that council is over capitalising in a region that does not have a large population. Especially at a time when we need to be keeping debt and rates down.

In my opinion, council need to be recognising that they cannot do everything at once and may have to shelve a new community centre in Golden Bay until such time as the wider district can afford it. The Golden Bay community centre is a nice to have. It is not critical. Now is not the time to be building another community centre when more pressing capital investment is required. For example, water storage projects (ie Lee Valley Dam) and storm water projects to protect people’s homes.

Treasury policy changes and activities

As part of an overall review and improvement of council’s financial functions, treasury policy has been updated to minimise external borrowing. In effect, the policy changes are operational. Rather than operating a series of separate reserve bank accounts, a whole of balance sheet approach will be adopted (with designated funds and their movement, being recorded on the balance sheet, rather than in a separate bank account). This will allow greater flexibility with the application of funds (and the repayment of debt) as well as reduce the number of bank facilities that the council currently utilises.

TDC has cancelled $25 million of bank facilities (ie, available debt to draw on) due to greater use of the Local Government Funding Agency (LGFA) for borrowing. A further $10 million transfer of debt in bank facilities to the LGFA is expected February and March 2014.

In response to concerns over some loans appearing on ward reserve financial contribution (RFC) funds, a review of RFC’s are being undertaken to ensure loans are correctly recorded against the RFC fund.

It has been proposed that any work on the Mapua wharf be  funded from the Motueka harbour and coastal works account on a fully commercial basis.

As at 31 December 2013, cash investments totalled $5.48 million at an average interest rate of 3.89% and council debt totalled 153.13 million at a weighted average interest rate of 5.189%. As at 31 December 2013, TDC had $130.78 million  of interest rate swaps in place to protect against interest rate fluctuations and provide certainty over the cost of  debt.

It should be noted that council debt fluctuates depending on the time of reporting and should not be confused with the reported projected debt figure for the end of  the 2013-14 financial year (ie at 30 June 2014).

Finance activities

As at 30 November 2013, income was 3.9 million above budget and expenditure was $2.7 above budget –  a net surplus of approximately $1.2 million. While much of the savings may be related to timing, there are good signs that by the end of the financial year (ie 30 June 2014), TDC might be carrying a surplus to address debt (thus reducing the increasing costs of debt for subsequent years as interest rates continue to rise).

While TDC debtors (ie people who owe the TDC money) has reduced by almost $1 million from October 2013 to November 2013 (ie $5.737 million to $4.743 million). Allowing for timing issues (and the processing of invoices), it is still much higher than the same time last year (ie $3.66 million in November 2012).

Agenda and minutes

The agenda and minutes for this meeting can be found at: http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2014/2014-01-30.

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