Community development meeting (17 September)

The community development committee meeting was held on 17 September 2015. A number of councillors were absent, including: the mayor, Crs King, Ensor, Mirfin, and Dowler.

The agenda included: (1) reserve financial contributions capital carry-over, (2) hall’s report, (3) Manager’s report, (4) reserves manager’s report, (5) chair’s report, and (6) Rainbow sports club remission of loan repayments. The last item was confidential, but was subsequently made public at the conclusion of the debate. The public forum received two presentations.

Due to the chair having a major engagement at 12 pm (the PM’s speech at the Nelson Tasman Chamber of Commerce lunch at Siefrieds), a number of questions were taken off-line for staff to follow-up.

Outstanding Community Service Awards

Before I discuss the community development services meeting, I first want to take the opportunity to recognise the recipients of Tasman District Council’s Outstanding Community Service Awards. The awards event was held at the council chamber on 2 September 2015 with the mayor, Cr Edgar, and myself (and staff) in attendance.

The award winners for 2015 were:

  • Hazel Bartlett (Richmond) was honoured for her work in guiding visitors and residents alike through her work with Richmond Information Centre, organising the Lions Club bus trips and raising money to open the Richmond kindergarten.
  • Henk and Willa Visker (Golden Bay) for their work with Takaka Citizens Band, Golden Bay Orchestra, Kotinga Bowling Club, St John and the Wrinklies Bus.
  • Crowther Reynish (Golden Bay) for his involvement with the Takaka Citizens Band, Golden Bay RSA and Takaka rugby.
  • Dick Wenzel (Golden Bay) local veterinarian for his involvement with Golden Bay Orchestra, the Golden Bay High School Board, Wrinklies Express and numerous other clubs and committees.
  • Graeme Miller (Golden Bay) volunteer firefighter for his 26 years with Collingwood Volunteer Fire Service as well as his work with the Collingwood Area School Board of Trustees, Collingwood Health Centre committee and rugby.
  • Sue Netto (Golden Bay) for her long involvement as a volunteer for St John and fundraising for the rescue helicopter.
  • Valerie Stuart (Motueka) former nurse, acknowledged for her work as volunteer supervisor with Playcentre, Soroptimists, Motueka Hospice Shop and the Motueka Hospital Trust.
  • Mark Heine (Motueka) for his work with Motueka Idea Services and the Laura Ingram Kindergarten.

Two highly successful local businesspeople were also acknowledged for the contribution that they have made to their communities – not just in the business arena, but also through their leadership and philanthropy – Peter Goodman and Peter Talley.

I would like to congratulate all award recipients for their time, energy, and passion, in making the Tasman district a better place to work, play, and live. Thank you.

Public forum

Penny Griffiths (Golden Bay\Takaka Museum) gave a brief update on Takaka museum activities. This included: (1) a long term tenant had been found providing much needed financial security, (2) the whale project was getting good exposure although funds were still needed to complete the project, and (3) retired IT equipment had been provided to the museum by council.

Penny also raised concerns about the need to use council accredited builders for work on the museum building and the impact this had on getting competitive quotes for work. Apparently there was only one accredited builder in Takaka at present. Staff advised that the museum could get quotes from as many builders as they wanted. Although they could only use an accredited builder (someone who has shown council they have health and safety certification).

Andrew Smith emphasised to council that the ski club operating at Rainbow ski field was “asset rich but cash poor” and that “working capital was tight”. Although he also acknowledged a reserve cash fund (roughly $40,000) had been built up.

Reserve financial contributions capital carry-over

This is the second capital carry-over request council has considered in the last week. The last one was in relation to engineering projects (discussed in an earlier post).

By way of background, reserve financial contributions (RFCs) are charges that are generally imposed on property developers when they create subdivisions. These charges are then used to purchase land for public reserves (usually within the development), capital improvements and maintenance of assets on public reserves, or any other growth related projects. For more detail see www.tasman.govt.nz/policy/plans/annual-plans/annual-plan-2013-2014/draft-annual-plan-2013-2014/part-3-accounting-information/reserve-financial-contributions/.

Similar to engineering, a number of planned projects did not occur in the 2014-15 year, were only partially completed, or were deferred until the 2015-16 year.

Council approved the proposed carrry-overs. The totals for the respective wards were: (1) $21,695 Moueka, (2) $580,466 Golden Bay, (3) $310,288 Moutere, (4) $100,124 Murchison, and (5) $349,513 Richmond.

I raised a number of questions (both during the meeting and afterwards) in relation to the reporting of the deferred projects for Richmond (listed in this report), as they appear to be different to what was agreed to be carried forward in an earlier May 2014 memo. These issues were raised with staff and they have since responded. I have enclosed my email, and their response (shown in italics) below:

Hi Beryl,

I am just following up from my questioning of your report at the last community development meeting.

I restricted my questions for brevity, but thought I would also question some other changes from the 20 May 2014 memo.

In the May 2014 memo it was agreed what specified projects and amounts (see extract below), would be deferred and carried forward.

This only totalled $226,916, yet the September report asked to carry forward $349,513? This seems a large difference? The $226,916 was funding from 2013/2014 financial year to be carried forward to the 2014/2015 financial year. The $349,531 is the funding from 2014/2015 carried forward to this financial year. It does contain some funds from previous years.

The list contained in your September report had several differences from the May 2014 memo. These included: (1) reduced Dellside to $26,933, This was reduced as most of the work was carried out by volunteers so we didn’t require the full amount.
(2) added two new items (inlet walks $16,251 and General 16,251), These two amounts are for left over from the 2014/2015 walkway budgets original amounts of $25,000 each.

(3) inflated training lights to $87,000, this is a typo as you mentioned the original amount is $86,113 which we will round down to $86,000

(4) added waimea river park $15,885, this is a carried forward from the 2014/1015 financial year from a budget of $22,239

(5) reduced security camera’s to 30,000, this I rounded down to $30,000 to take off the inflation

and (6) increased Ben Cooper toilet to $111,193. This is the amount was in the 2014/2015 budget to be deferred to 2015/2016 we need to keep it on the books so it isn’t lost.

I mentioned training lights at the meeting. This was a typing error and we will make that change

I am happy to agree with any changes that have reduced carry forward amounts, but can you please explain the increases (and the new items).

I am also worried that other wards may have also carried forward more than they originally agreed too. I will check the other wards for similar issues.

Kind regards
Mark

I included this email in full (with staff comments in italics), because it not only answered my questions very succinctly (as well as making council more transparent), but it shows that while the odd mistake is made in reports to council (which is all very human), generally staff are quick to acknowledge any error and fix it. In my opinion, it’s the putting right that counts!

This draws me to another point. I consider that an important element of my role as a councillor is to help foster and develop the culture (and attitude) of this council. As a member of the public, you can also influence an organisations culture, by making sure that council actions that you like, are acknowledged (ideally to senior management or councillors). Only speaking up about the bad stuff, will only make an organisation fearful of making mistakes. If we want council to be innovative, we need to be prepared to experience the odd glitch. But at the same time, the organisation needs to have the confidence to acknowledge that it has made a mistake and will put it right.

My aspiration, is to have a council that is: transparent, honest, trustworthy, and open (its why I do this blog), provide enabling advice (rather than just restating the rules, and why you cannot do stuff), leading edge, innovative and embracing of change, acknowledge mistakes and put things right (or explain promptly why they cannot), and put the public (as a customer) at the centre of everything it does. A customer centric business is always a happy and successful one.

Hall’s report

Various unbudgeted repairs and maintenance work has been identified by staff. These included: (1) Hall fire alarm upgrades (price between $1,500 and $6,000 per hall), (2) Motueka memorial hall stage repair and handrails ($15,000), (3) Collingwood roof repair ($10,000), Pakawau roof repair (no estimate yet), and Golden Bay community centre flood protection ($10,000).

Councillors were somewhat surprised that these issues were not identified for inclusion in the long term plan (LTP). Staff advised that there was a surplus of $54,000 in a special purpose capital account that was agreed to be carried forward at the 10 September full council meeting. Although use of these funds would mean that they could not be used for other purposes or retiring debt. Council agreed with the staff recommendation to fund the identified repairs from the special purpose fund.

Council agreed that a pragmatic approach should be taken with the roll out of upgraded fire alarms. The problem being that some alarms were not appropriate for the hall size and their maximum capacity. Staff suggested that an assessment of a hall’s historical usage should help direct whether upgrades were necessary (or not).

However, in my opinion, numbers using the affected halls should have been limited to the constraints of the fire alarms, until planned maintenance occurred. I saw no reason to accelerate upgrades from new sources of funding. If we are to get council finances back on track, we need to be prepared (at least in the short-term) to be a little more reactionary.  I also raised questions of upgrading halls that might subsequently be disposed of. For example, council is considering disposal of some halls in the Golden Bay area, as part of funding the new community recreation facility building.

I consider Motueka hall stage should be repaired (as it was an unexpected discovery that would impact on immediate future use, as well as raising health and safety issues), but questioned the need for any new hand rails. Expenditure should only be for repairs or maintenance of existing assets.

Manager’s report

Highlights include:

  • Rifle club. The small bore rifle club currently resides in Nelson and is proposing to move to Saxton field. They have made an application for funding assistance through the contestable community grants scheme after making a public forum request for funding assistance.
  • Aquatic centre. The June period experienced a drop in casual swimming numbers. Total patronage visits in June (including the fitness centre) was 20,133 visits.
  • Golden Bay museum. The 6 monthly report for the period ended June 2015 was submitted. The board are currently seeking a new treasurer who recently resigned. Casual staff (termed “volunteers” in the report) over the holiday season accounted for $7,670. The board are again seeking 20 casual staff for the forthcoming holiday season. The 5 year strategic plan was reviewed in May 2015. The annual accounts showed an operating surplus of $14,337 and a net surplus of $9,294 after depreciation. Total income was $75,137 that comprised: a TDC grant of $47,000, fundraising of $9,000, donations and rental income of $5,000. Staffing costs are $37,348 and power $5,081.
  • Charges and fees. Moutere hills community centre (see www.mouterehills.org.nz) has increased some of their hire charges for the NBS sports hall by adding a “plus GST” component.
  • Libraries. Richmond library has partnered with Nelson Bays Community laws service to present “law for lunch”. This has proved very popular with topics including: powers of attorney, wills, estates, and relationship property. Richmond library has also been running a “stepping up” computer course.
  • Grants. 170 grant applications (totaling $423,610) were received by the grants committee, with $218,000 available in this round. Minor glitches with the online forma are being addressed.
  • Publications. The summer events guide (“Hummin”) has been reviewed by staff and will now be published in a joint venture with Nelson council. This change sees a $21,000 saving (formerly cost council $30,000 per annum and will now cost $9,000).
  • Health and safety. A number of recommendations have been made in relation to a recent incident at Richmond library. Recommendations included: reinforcing existing protocols, improved training (including customer vs customer conflict training), examining use of panic alarms and security camera systems.

Reserves manager’s report

Key project activity in the last 6 weeks included:

  • Richmond. Velodrome construction has begun with completion of drainage work. Avery Oval (Saxton field) toilet construction has begun. Washbourn gardens roses have been replaced with old fashioned roses donated by the Rose Society. Recent planting locations include: Sanderman road reserve, Hope hall, and the Inlet walkway.
  • Moutere. Richmond rotary club has constructed shelters over 2 BBQs on Rabbit Island reserve. Faulkner bush walkway was completed. Dovedale reserve has had new playground equipment ordered. Recent planting include: Dominion flats and Hoddy estuary park.
  • Motueka. Keep Motueka beautiful has revamped the shrubs near the public toilets at Motueka beach reserve, completion of a concept plan for a reserve in Stephens bay, paths completed at Sportspark Motueka, and training lights installed at Goodman park. Recent planting include sanctuary ponds.
  • Golden Bay. Lanscaping continues at Ligar bay, and new paths created at Takaka memorial reserve.
  • Murchison. Recent plantings include Hotham St walkway.

Chair’s report

Highlights from the chairs report include confirmation that the working party would complete the digital enablement plan (by the deadline of 18 September) that was bidding for government funding to extend broadband internet and mobil access across the Tasman district. The government has committed $210 million for the extension of the UFB programme.

In my opinion, these future information highways (are like roads), and will be important to the future potential development of this region’s economy, if it is to become less dependent on agricultural commodities (and the low wages associated with agriculture).

Another highlight was Tasman council being selected as one of eight finalists short listed (from 44 entries) for its new look long term plan consultation document. A big achievement considering the resources of other councils.

Rainbow sports club remission of loan repayments

This item was held in confidence. However, at the conclusion of the debate it was resolved to make the matter open to the public. This was a great move and councillors should be congratulated. Perhaps council is slowly coming around to greater transparency in its decision making?

By way of background, the Rainbow ski field is located outside the Tasman district. Some years ago the club got into financial troubles and sought financial assistance from 3 councils (Nelson council, Marlborough council, and Tasman council). The 3 councils have each provided an interest free loan of $90,000 to the club (totaling $270,000) to be repaid over 7 years in annual installments of $12,857 per year from 1 February 2010. Each year the ski club asks the councils to forgive that years debt obligation. In some years councils have declined that request. The relevant financial position for each year is outlined in the table below.

Year Due Paid Remitted  Position
Year 1 (2010)

$12,857.00

$0.00

$12,857.00

 Loss ($215,107)
Year 2 (2011)

$12,857.00

$12,857.00

$0.00

 Profit ($268,650)
Year 3 (2012)

$12,857.00

$0.00

$12,857.00

 Profit ($25,283)
Year 4 (2013)

$12,857.00

$12,857.00

$0.00

 Loss ($167,319)
Year 5 (2014)

$12,857.00

$12,857.00

$0.00

 Profit ($116,319)
Year 6 (2015)

$12,857.00

$0.00

$0.00

 Unknown
Year 7 (2016)

$12,857.00

$0.00

$0.00

 Unknown
Total

$90,000.00

$38,571.00

$25,714.00

To date, the ski club had received $25,714 of ratepayer funds by way of forgiven loan repayments and the council had received $38,571 of the $90,000 loan it had provided to the ski club. With $25,714 outstanding (for 2015 and 2016 years).

Earlier this year council had the opportunity to consider the Ski clubs financial position for the 2013 year and at the same time view the 2014 accounts (pre-audited). In light of the financial position in 2014, council declined the club’s request to forgive the repayment of the 2013 installment.

On 11 August 2015, the club submitted its audited 2014 accounts to council and asked for remission of its 2014 and 2013 installments. In justifying its request for remission of its 2014 installment, the club informed the council that it needed $100,000 in cash reserves to open for the following season, and considered that its “slightly improved financial position” in 2014 should not have impacted on council’s assessment of its 2013 position. I disagree.

Council had every right to examine the financial position of the club at the time it considered remitting loans. At that time (2014), it was evident that the club was in “more” than a slightly improved financial position. It had made a profit of $116,319 and had built up a cash reserve fund of $40,000. Interestingly the 2014 accounts had not included the remission of the TDC loan, which would have increased their profitability. It had also increased its net assets from $369,841 in 2013, to $486,241 in 2014. Major assets had already been acquired (ie Groomer, Quad bikes, Hilux) between 2006 and 2008 and had an estimated useful life of 12 years. Replacement of these assets could not be expected for some time. A Toyota Prada and Van had been acquired in 2012 and 2014.

Examining the assets register showed replacement rental equipment expenditure was in decline (roughly $25,000 in 2012, and $10,000 in 2013). This equipment was fully depreciated within a year of purchase. Rental equipment levels had been built up over time, and the decline in purchasing new rental equipment appeared to reflected replacement rather than expansion.

The reducing investment in capital assets could also be seen in the overall decline in depreciation costs, from $88,812 in 2013 to $69,116 in 2014. Remembering that depreciation is treated as an expense and so comes off income, their financial position looked quite healthy going forward. Including depreciation, net operating surplus was a $223,547 loss in 2013 and a $35,960 in 2014. Excluding depreciation, operating surplus was a $133,735 loss in 2013, and a $105,076 profit in 2014.

Given the $40,000 in cash reserves, the forgiveness of 2014 installments from Nelson and Marlborough councils, and the indications the club would only need a $100,000 for the next financial year, it appeared that it could afford the $25,714 council was asking for (of which $12,857 had already been recognised in the 2014 accounts).

Council was asked to consider four options, although it pretty much came down to two options. Option 1, declined a remission in the 2013 and 2014 year, but remitted the outstanding loans in 2015 and 2016 (totaling $25,714). Or Option 3, declined a remission in the 2013 and 2014 year, and consider the 2015 and 2016 loans in the future when they come due.

Effectively, the issue councillors were being asked to debate was whether council should forgive the 2015 and 2016 loan installments.

Staff recommended option 1. Their reasoning was based on the costs incurred in assessing the remission of the 2015 and 2016 installments. When pressed, staff considered that the total cost of preparing the report (that was before council) was $10,000. And that this was a good indicator for future report costs.

I found this an extraordinary estimate, and I noted that no such estimate was included in the report itself. In my opinion, the cost of assessing the 2015 and 2016 installments would be much lower, as much of the report had already been written, and merely required numbers to be updated. It was a simple process of reviewing the financials and indicating if the ski club could afford to pay $12,857 (or not). I would have thought that this would not take much time at all. And certainly not incurring the hours that had been spent on the report before us (which only raised other issues).

Cr Bouillir made a compelling argument for remitting the loans on the basis of the community benefit that the club provided. She was concerned that not remitting the loans would risk the club again getting into financial trouble, and the use of the ski field being lost forever. Emphasis was also placed on the fact that the loan was seen very much as a grant when it was first provided.

In my opinion, I did not see such a risk, having viewed the clubs financial statements and the financial trends in its accounts. The reality was that this was a loan (which had been interest free) and the club could now afford to make repayment. The dire circumstances it was in several years ago had passed, and it was steadily building up its asset base and cash reserves.

If option 1 was supported, the council would have gifted (remitted) over $50,000 of ratepayer funds to the ski club, that could not be used for the benefit of another organisation, that might also require community support. While I could see that remitting $25,714 to avoid the risk of an additional $20,000 of council report costs, was a sensible risk management decision, I could not agree with staff that the cost of preparing two reports (in 2015 and 2016) would cost $20,000. I suspect some other councillors did not agree either.

In my opinion, the club was well run and fiscally prudent. It had shown a willingness to dispose of assets to raise cash when needed. Something it could not do a number of years ago. The club now had a good asset base. Although I note, that it appeared the club was not willing to leverage its assets to raise debt. While the council had provided financial support to the club through a difficult time (which was the purpose of the investment), that was no longer the case.

A division was called. By majority (Cr Edgar, Bouillir, Canton, and Bryant), Option 1 was carried, with the casting vote of the chair. Councillors Norris, Higgins, Inglis, and myself, dissenting.

Agenda and minutes

The agenda and minutes are located at http://www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/community-services-committee-meetings/?path=/EDMS/Public/Meetings/CommunityServicesCommittee/2015/2015-09-17.

Media

2015 ski season a successful one (Nelson mail). http://www.stuff.co.nz/nelson-mail/news/72692451/sun-slush-and-snow-for-cup-competitors

 

 

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