Corporate services committee meeting (24 March)

The corporate services committee meeting was held on 24 March 2016. Apologies were received from Crs Mirfin, Bouillir, Sangster and Ensor for absence, and Cr Dowler and the Mayor for lateness. The agenda included: (1) presentation from ASB Bank Economist, (2) remission application – policy on remission of excess metered water rate, (3) corporate services activity report, and (4) treasury report. I will summarise the main highlights.

Public forum

Public forum included presentations from Maxwell Clark who spoke about the water usage charge for a Murchison commercial property, which had been subject to a leak. He believed that the remission policy was out of date and that the water charges were excessive. He also spoke about freedom camping. He considered freedom campers added value to the regional economy and should be welcomed.

Remission application

A small business in Murchison sought a remission from water charge issued to them in December 2015 which was unusually high ($5,252.40) due to a water leak on the property. The business’s previous bill issued in June 2015 was for $1,194.90 and council records indicated that a letter had been sent to the customer stating their account was high.

The Council’s Policy on Remission of Excess Metered Water Rates states that the policy applies “to applications from ratepayers who have excess water rates due to a leak in the property’s internal reticulation.” The policy further defines internal reticulation as going “directly to the dwelling”, and states how the dwelling must be used only or mainly for residential purposes.

Cr Edgar argued that remissions came at a cost to budgets, and therefore other ratepayers would effectively subsidise the remissions.

In this instance the applicant was a business and they had been given prior notice of a potential leak. Accordingly, council (Cr Edgar moving the resolution) declined to issue the applicant a rates remission. Cr Bryant opposed this decision.

In my opinion it would be useful if an “over time” graph of water usage was presented on the invoice (ideally comparing earlier years) – so that unusual water consumption (ie leakage) could be easily identified by consumers. Digitisation (and on-demand printing of invoices, rather than using pre-printed invoices) would enable this kind of modification to invoices.

I am also of the opinion that there is the potential to do an end of year mop up in the water account and to pro-rata any surplus between valid remission applications submitted during the year. After all, the additional water consumption would not be planned and its likely the water account would have a corresponding surplus.

Corporate services activity report

Council received the corporate services manager’s report. Highlights included:

  • Financials. Year-to-date expenditure was favourable against forecast by $147,000 with favourable variances across most budget lines. The forecast year-end position compared to the budget is a net overhead deficit of $50,000 once the impact of treasury interest costs (down on budget by 0.45%) and depreciation is removed. The driver of the forecast deficit is additional professional fees (ie programmed investment valuations as part of our ongoing review of assets for potential sale). There is a high level of activity with ongoing work on reporting and improved debtor management.
  • Property. The revised Best Island land valuation was received at the start of March. Discussions were occurring with the Property Group and the Ashtons.
  • Information Services. The Confirm Enterprise asset management system was updated to the latest version. Cameras for staff Skype calling, video conferencing and Webinar participation have now been added into the Heaphy, Wangapeka and Sabine rooms. The electronic document and records managements systems project continues with the new Council file structure being installed into the test system in late March. A workshop on the strategy was planned for early April. The Strategy will ensure a more externally-focused strategy with an emphasis on using technology and digitisation to improve functions and processes, providing improved service options and a better customer experience with council.

Council also instructed staff to place on hold the current disposal process for surplus land at Mapua pending a review and report back to council on potential alternate uses of this land.

Treasury report

Council’s debt (at 29 February 2016) totalled $139 million, with an average interest rate of 5.274% (June 2015 was 5.166%). The weighted average interest rate on borrowings is 5.274%. The Council’s cost of funds including interest rate swaps, bank margins and line fees being taken into account is 5.321%, compared to a budget of 5.70%.

20160324-Corp-p28

At 29 February 2016 the Council had $147.78 million of interest rate swaps in place, including some “forward start” swaps. After adjusting for the forward start swaps, $144.78 million is ‘live’ which is equal to 104% cover over existing debt and 87% over forecast 29 February 2017 net debt (ie 12 month debt). The swap over-hang is due to debt being retired faster than forecast. The over-hang is expected to return to 100% within the next quarter as council takes on new debt.

Debt (funding) source

Bank Debt $19.0 M 13.7%
Private Placement $30.0 M 21.6%
LGFA Debt $90.0 M 64.7%
Total $139.0 M 100.00%

Credit exposure

Bank Cash/Cash Investments $m Notional Swaps $million Credit Exposure $million Compliance
Westpac $1.2 M $63.05 M $13.86 M Within Policy
ASB $10.7 M $41.73 M $21.82 M Within Policy
ANZ Nil $43 M $11.25 M Within Policy

Council’s cash investments total $11.9 million dollars with an average interest rate of 2.85% (June 2015 was 4.43%).

Agenda and minutes

The agenda and minutes are located at www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/corporate-services-committee-meetings/?path=/EDMS/Public/Meetings/CorporateServicesCommittee/2016/2016-03-24.

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