A full council meeting was held on 3 March 2016. Apologies were received from Crs Edgar, Dowler and Mirfin for absence and myself for being 10 minutes late. Cr King departed halfway through the meeting.
The agenda was rather brief and included: (1) 2016-17 annual plan briefing and engagement material, (2) Regional landfill joint venture proposal, (3) December 2015 quarterly financial update, and (4) Plan Change 59 – late machinery resolution. No public forum presentations were received.
2016-17 annual plan briefing and engagement material
Council approved the release of the engagement material contained in Attachment 1 of the agenda. Overall, the budgets for the 2016-17 financial year are not significantly or materially different to those outlined in the Long Term Plan (LTP) for 2015-25. Changes that have occurred have improved council’s financial position and reduced rates income rises. Rates income rises are now 1%, well below the forecast of 2.96% in the LTP for the 2016-17 year. Capital and operational budgets and programmes remain largely unchanged from that set out in the LTP for 2015-25.
Council intends to spend $32.5 million on capital projects and $105.9 million on operational activities throughout the District during 2016-17. These figures do not include funds that may be carried over from the 2015-16 budgets.
2016-17 Annual Plan – Comparison with 2015-25 LTP
|2015 LTP||AP 2016-17||Var||Inc/Dec|
|Rates increase 2016-17||2.96%||0.97%||-1.99%||Decrease|
|Net Debt 2016-17||$178,593.00||$166,423.00||-12,1700||Decrease|
|Net Debt Peak (in 2018-19)||$197,518.00||$185,428.00||-12090||Decrease|
|Capital Spend 2016-17||$32,524.00||$32,550.00||26||Increase|
|Debt to Equity ratio||13.78%||12.74%||-1.04%||Decrease|
|Net Debt/Operating – (Limit 225%)||165.13%||155.98%||-9.16%||Decrease|
|Net Interest Expense to Annual Rates Income (up to 25%)||13.86%||13.58%||-0.30%||Decrease|
|Net Interest Expense to Revenue (Policy limit is 15%)||9.06%||8.82%||-0.25%||Decrease|
Regional landfill joint venture proposal
In early 2014, council agreed that the optimum solution for the region’s waste was to enter into a shared services arrangement with Nelson council’s York Valley landfill (until it reached capacity in around 15 years) and to retain the Eves Valley site for future operations. Such an approach would defer substantial capital investment into Eves Valley in the short term – and reduce pressure on councils unsustainable debt position. A shared services approach also offered opportunities for scale efficiencies and reduced operational costs for both councils.
In August 2014, the two Councils signed a Memorandum of Understanding (MoU). The MoU outlined a “contract-for-service” approach, where Nelson City Council would own and operate York Valley and TDC would pay commercial disposal fees, but receive an annual lump sum and a share of the operating surplus of the landfill. In December 2014, following public consultation by Nelson council, the councils considered a modified MoU and in April 2015 the MoU was signed by the councils.
Unfortunately agreement was not reached on the “contract for service” approach due to differing interpretations of the service contract. In order to avoid the proposal being derailed, council pursued a joint venture approach, using an NRSBU model of governance. One familiar with both councils. Under this revised joint venture approach, a valuation of each councils assets was required. The Deloitte valuation report (at page 49) and peer review by Morrison Law (at page 73) was attached to the agenda. The reports concluded that if both councils were to make an equal contribution to the joint venture, TDC would have to top-up the arrangement by paying Nelson council $4.2 million.
Council resolved to enter into a joint venture with Nelson council to start on 1 July 2017, with a one-off top-up payment of $4.2 million.
December 2015 quarterly financial update
The report sets out council’s financial performance and position for the 6 months ended 31 December 2015, as well as a re-forecast to the end of the current financial year. The report forecasted a year-end operating surplus of $2.852 million.
|Year End Forecast||Revised Budget||Variance|
|Accounting Surplus/(Deficit)||$9.16 M||$5.67 M||$3.49 M||Favourable|
|Operating Surplus/(Deficit)||$1.674 M||-$1.178 M||$2.852 M||Favourable|
|Total Net Debt||$155.2 M||$173.63 M||-$20.427 M||Favourable|
|Expenditure||$99.79 M||$101.63 M||-$1.84 M||Favourable|
|Income||$108.95 M||$107.3 M||$1.65 M||Favourable|
|Capital Expenditure||$45.34 M||$50.4 M||-$5.07 M|
The positive result is compared against the revised budget, which is a total of year 1 (2015-16) of the LTP 2015-25, plus carry overs from 2014-15, approved as part of the 10 September 2015 carry over report to council.
Staff anticipated that approximately $5 million will be carried forward into the 2016-17 financial year for capital projects that have not been able to progress this financial year (2015-16). Staff also advised that that the $4.2 million payable to Nelson City Council on 1 July 2017 for the difference in the price for the landfill joint venture would affect the net debt figure (ie $159.4 million, being $155.2 million + $4.2 million).
During the general debate, questions were also asked about overspending on the Mapua development. Staff were unable to provide any figures, but advised that the overspend would be reported in full to the next commercial sub-committee meeting (on 24 June 2016).
Increased building coverage
Plan Change 59 allowed for increased building coverage in the residential zone in Richmond, Motueka, Wakefield and Brightwater. It was notified on 28 November 2015 and submissions closed on 2 February 2016. No submissions were received. I have expressed my opinion on building coverage in earlier posts (see greeningtasman.wordpress.com/2015/10/15/environment-and-planning-committee-meeting-8-october/ and greeningtasman.wordpress.com/2013/08/03/high-density-housing-a-sensible-approach/).
Council resolved to approve Plan Change 59 to commence as an operative change from 12 March 2016.
Agenda and minutes
The agenda and minutes are located at www.tasman.govt.nz/council/council-meetings/standing-committees-meetings/full-council-meetings/?path=/EDMS/Public/Meetings/FullCouncil/2016/2016-03-03.