The corporate services committee meeting was held on 24 July 2014.
The meeting agenda received several reports including: (1) Port Golden Bay Ltd, (2) Nelson and Motueka airports, (3) Mayoral relief fund, and (4) various financial updates.
Port Golden Bay Ltd
Port Golden Bay Ltd was incorporated on 10 April 2008. It currently has one Director being the Chief Executive Officer, Lindsay McKenzie. It does not trade, and was set up for name protection purposes only. Accordingly, council resolved to exempt this effective paper company from any reporting obligations under the Local Government Act 2002 for the next three years.
Nelson and Motueka airports
The final 2014-15 statement of intent (SOI) from Nelson Airport Ltd was received by council as required under the Local Government Act 2002. The draft SOI from Nelson Airport Ltd was considered by the Joint Shareholders Committee on 4 April 2014. The Committee recommended that the SOI be approved subject to changes to the accounting policy on asset valuations being revised (ie, the depreciation treatment of assets). Council agreed to receive the SOI and authorised the mayor to approve it.
Ian Orange was elected Chair of the Takaka Aerodrome Management Committee at the 6 May 2014 triennial meeting. Richard Molloy from Golden Bay Air was elected to the committee, along with existing members. At the request of the Ombudsman a meeting was held with aerodrome operators and some residents of Upper Moutere to review the Memorandum of Understanding (MOU) between the aerodrome operators and Council. Some amendments have been agreed and are being incorporated into the MOU. An additional section on “neighbourly flying” is also being added to the MOU. The Motueka Aerodrome Operations and Safety Committee and the Motueka Aerodrome Advisory Committee have both met.
Mayoral relief fund
Similar to Port Golden Bay Ltd, the Mayoral Relief Fund (Tasman/Nelson) is a council controlled organisation (CCO) and therefore has reporting and disclosure requirements under the Local Government Act 2002. The current trustees are Chris Clenshaw, Judene Edgar, John Hurley, and Richard Kempthorne.
The Mayoral Relief Fund Tasman/Nelson was formerly the Richmond Pool Charitable Trust. This Trust was dormant for a number of years while council considered whether to wind up the Trust, or change the purposes of the trust. Following the flooding and rain event in December 2011 the former Richmond Pool Charitable Trust’s name and purpose were changed, as this was the most expedient way to setup a Mayoral Relief Fund. The Mayoral Relief Fund was set up to cover the Tasman District and Nelson City regions.
The financial implication of not exempting the Mayoral Relief Fund from the Local Government Act 2002 would required an audit that is likely to cost at least $1,500 per annum. Given the cost of the audit outweighed the financial holdings of the trust, council resolved to exempt the trust from any reporting obligations under the Local Government Act 2002 for the next three years.
At 31 May 2014, the YTD accounting income was $2.75 million ahead of budget, and expenditure was $0.29 million below budget. The net YTD position is an accounting surplus of $8.21 million, against a YTD budgeted surplus of $5.17 million. The underlying operational result was a surplus of $2.224 million once vested assets, development contributions, and the fair value gain on interest rates swaps, have been removed.
Capital expenditure for the year is $18.7 million which is considerably under the budget. The majority of the under spend will be carried over into the 2014/2015 year. Total Debt is expected to be $148.0 million. This is in line with the projected year-end balance of $148.0 million.
Council’s working capital position at 31 May 2014 was $3.99 million compared to the year- end projection of $4.4 million. The major reason for this is a lower trade payable balance at the end of May 2014.
This is a pleasing result. Although, one could also suggest that budgets for the 2013-14 year were overly inflated. However, expenditure incurred in earlier years, that will crystallise at the end of the 2014-15 year, will take councils debt from $148 million to $177 million. The Golden Bay Community sports facility will also see an additional $2 million crystalise in the 2015-16 year. With $1.2 million committed in the 2014-15 year. This type of expenditure will place increasing pressure on rates during the 2015-16 year, unless further cuts can be found before that year begins.
In my opinion, the pressure on finding operational savings must continue. And it must be more vigerous. This will inevitably mean that many of the nice to have services (many of them community publications) will need to be shaved back or retired. These types of savings are the low lying fruit of council expenditure. The harder work will involve a good long look at some of our larger budgets – including staffing. For example, community development initiatives and infrastructural maintenance.
It also means investment in commercial activities will need to be curbed back dramatically, or disposed of, if we are to make any headway in turning this substantial debt ship around. Unfortunately the reality is that past councils have spent the family silver. We currently service over $8 million in interest alone per year. That is equivalent to three community facility buildings a year. At present, the debt continues to grow (albeit slower). This is a good first step. However, the aspiration of this council must be to reduce debt, not just slow it down. I think some councilors are finding such a journey a hard one to come to grips with given their history of increasing revenue (ie rates) rather than making cuts – but one we have to take.
The Department of Internal Affairs (DIA) Rates Rebate scheme continues to provide a strong level of financial assistance to Tasman ratepayers, with 1,622 applications processed for the 2013/2014 year, resulting in $920,200 in rebates.
ASB Aquatic centre
Sponsorship is due for renewal in August 2014. Informal interest has been received from some parties. The opportunity to obtain naming rights will also be considered as part of any sponsorship.
Agenda and minutes
The agenda and minutes for this meeting are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2014/2014-07-24.