EXTRAORDINARY COUNCIL MEETING

Transcription

1 EXTRAORDINARY COUNCIL MEETING THURSDAY, 25 MAY 2017 AGENDA Meeting to be held in the Council Chambers, Civic Centre, Commerce Street, Whakatāne, following the Projects and Services Committee but not before am Marty Grenfell CHIEF EXECUTIVE 22 May 2017

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3 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY 2017 ITEM TABLE OF CONTENTS SUBJECT PAGE NO 1 Membership Apologies Announcements Public Forum Recommendation from Standing Committee Bylaw Review: Consolidation on the Draft Combined Waters Bylaw Reports Proposed Food Act Fees and Charges 2017/18 Hearings Appendix 1 - Submissions Received Annual Plan Financial Forecasts Appendix 1 - Council - Summary Cost of Service Appendix 2 - Leadership Appendix 2a - Roads & Footpaths Appendix 2b - Water Supply Appendix 2c - Sewage Treatment & Disposal Appendix 2d - Stormwater Drainage Appendix 2e - Solid Waste Appendix 2f - Environmental Sustainability Appendix 2g - Community Safety Appendix 2h - District Growth Appendix 2i - Recreation & Community Services Appendix 2j - Corporate & District Activities... 47

4 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 2k - Council Controlled Activities Appendix 3 - Rating Impact Appendix 4 - Capital Expenditure 2017/ Appendix 5 - Approval of Additional Use of Income from Harbour Endowment Land vested in the Whakatane District Council... 59

5 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY 2017

6 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Membership Mayor A A Bonne Councillor A V Iles Councillor S Jarrett Councillor G V Johnston Councillor J C Jukes Councillor R N Orr Councillor A R Silcock Councillor N S Tánczos Councillor J A Turner Councillor G F van Beek Councillor M van der Boom 2 Apologies An apology for absence has been received from Councillor A R Silcock 3 Announcements Note - Appendix 6 of the Annual Plan Financial Forecasts will be provided prior to the meeting. Page 4

7 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Public Forum 4 Public Forum The Council has set aside time for members of the public to speak in the public forum at the commencement of each Council, Committee, Sub-committee and Community Board meeting (up to 30 minutes) when these meetings are open to the public. Each speaker during the public forum section of a meeting, may speak for three minutes. Permission of the Mayor or Chairperson is required for any person wishing to speak at the public forum. The public forum procedure does not apply in respect of any hearing, including the hearing of submissions where the local authority, committee or subcommittee sits in a quasi-judicial capacity. With the permission of the chairperson, members may ask questions of speakers during the period reserved for public forum. If permitted by the chairperson, questions by members are to be confined to obtaining information or clarification on matters raised by the speaker. The hearing of the two submitters for the Proposed Food Act Fees and Charges will be heard at 1.30pm 1. Jim Bennett - Organic Farm NZ 2. Sue Coffey - Ohope Craft Market Page 5

8 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Recommendation from Standing Committee 5 Recommendation from Standing Committee 5.1 Bylaw Review: Consolidation on the Draft Combined Waters Bylaw Title of Item: Committee: Meeting Date: Recommendation to Council Meeting: BYLAW REVIEW: CONSOLIDATION ON THE DRAFT COMBINED WATERS BYLAW POLICYCOMMITTEE THURSDAY, 4 MAY 2017 THURSDAY, 25 MAY Bylaw Review: Consultation on the Draft Combined Waters Bylaw Refer to pages of the agenda. RESOLVED: 1. THAT the Bylaw Review: Consultation on the Draft Combined Waters Bylaw report be received; and 2. THAT it be recommended to the Council to adopt the Draft Combined Waters Bylaw 2017, as attached as Appendices 1, for consultation; and 3. THAT it be recommended to the Council to adopt a Special Consultative Procedure for consultation when reviewing bylaws as outlined in the Local Government Act 2002; and 4. THAT it be recommended to the Council to make the Draft Combined Waters Bylaw 2017 and other consultation documents (appendix 2-4) available for consultation between 29 May and 30 June Jarrett/van der Boom CARRIED Page 6

9 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Reports 6 Reports 6.1 Proposed Food Act Fees and Charges 2017/18 Hearings Subject: To: Meeting Date: Written by: File Reference: PROPOSED FOOD ACT FEES AND CHARGES 2017/18 HEARINGS EXTRAORDINARY COUNCIL THURSDAY, 25 MAY 2017 STRATEGIC POLICY ANALYST A REASON FOR THE REPORT The Council s Food Act Fees and Charges 2017/18 hearings meeting is scheduled for 25 May The purpose of this report is to provide information to the Council to inform that meeting. 2. BACKGROUND Alongside the development of the Annual Plan, Council has been reviewing fees and charges for 2017/18. Changes and additions are proposed to fees under the Food Act 2014 (the Act). In line with requirements set out in Section 205(2) of the Act, public consultation under the Special Consultative Procedure was undertaken regarding the proposed fees from 17 March to 2 May 2017, with original timeframes extended as a result of storm events in April. The consultation process was advertised in local papers and on Council s website, with relevant documentation publicly available at Council offices and libraries. Documents were also sent directly to all registered premises in the District as parties likely to be affected by the proposed changes. Two submissions on the proposed changes were received, and they are attached to this report as Appendix 1. Both submitters have indicated that they wish their submissions to be heard by Council. They will be present at the meeting at the below times: Submitter Jim Bennett (on behalf of Organic Farm NZ) Sue Coffey (Ōhope Craft Market) Hearing Schedule 1:30pm 1:40pm 3. NEXT STEPS Following the hearing of submissions, the next stage of developing the Fees and Charges Schedule for 2017/18 is to deliberate on submissions received. Deliberations are scheduled to occur on 22 June, at which time the complete draft Schedule of Fees and Charges for 2017/18 will be recommended for adoption subject to any changes. Page 7

10 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Proposed Food Act Fees and Charges 2017/18 Hearings (Cont.) Supporting documents will be provided to Council to inform the deliberations process, including Submission Management Comments and an Executive Management Report. 4. ASSESSMENT OF SIGNIFICANCE The decisions or matters of this report are not considered significant in accordance with the Council s Significance and Engagement Policy. RECOMMENDATION: THAT the report Proposed Food Act Fees and Charges 2017/18 Hearings report be received. Attached to this report: Appendix 1: Submissions received on proposed Food Act Fees and Charges 2017/18 Report Authorisation Report writer: First Approval: Final Approval: Charlotte Haeusler Catherine Ball David Bewley Strategic Policy Analyst Team Leader Strategic Policy General Manager Planning, Regulatory, and Corporate Services Page 8

11 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 1 - Submissions Received Appendix 1 - Submissions Received Page 9

12 Charlotte Haeusler From: Wufoo Sent: Tuesday, 18 April :21 PM To: Submissions Subject: Proposed changes to 2017/18 Fees and Charges [#2] Follow Up Flag: Flag Status: Follow up Completed Name * Jim Bennett Are you Yes submitting on behalf of an organisation? * Organisation Organic Farm NZ name * Phone Number * * te.aranga@clear.net.nz Postal address 15a Tunui Place, Whakatane 15a Tunui Place, Whakatene, BOP 3120 New Zealand Do you wish to speak to I <strong>do</strong> wish to speak to my submission, and I would prefer to speak at an evening appointment. your submission? * Your submission In my role as chairperson of Organic Farm NZ, I have had initial discussions with staff at the Ministry of Primary Industries in Wellington about the potential impact of the Food Act on fresh produce growers who fall into the National Programme Category One (Low Risk). It is unclear if the Whakatane District Council's advertised schedule 1 10

13 of fees is intended to cover these "Low Risk" food producers, but if it does, then I submit that the level of these fees and the accompanying documentation, would likely have them decide to discontinue their business. Representing Organic Farm NZ at a meeting of the Organics Aotearoa Council in early March, I had the opportunity to question Ian McKelvie, MP, chair of the Primary Industries Select Committee, on this issue. Speaking to the Council, Ian (unsolicited) commented that regulations designed to tidy up the actions of large businesses, often had a major, disproportionate impact on smaller operators. From this discussion, we can be assured that Government is aware of the pending problem, and I ask that the Whakatane District Council does its best to minimise the damage to an economic activity which has huge potential for growth in our District. For National Programme Category One producers of fresh produce, registration of their Food Control Plan should be no more than $50. Verification should then take note of other auditing that these producers are already required to participate in. Accordingly, verification could also just be a paper review procedure and need cost no more than $

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16 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Annual Plan Financial Forecasts 6.2 Annual Plan Financial Forecasts Page 14

17 Annual Plan 2017/18 Financial Forecasts Subject: ANNUAL PLAN 2017/18 FINANCIAL FORECASTS To: EXTRAORDINARY COUNCIL MEETING Meeting Date: THURSDAY 25 MAY 2017 Written by: File Reference: GENERAL MANAGER FINANCE A REASON FOR THE REPORT The purpose of this report is to provide the Council with an updated set of financial forecasts for the 2017/18 Annual Plan. 2 BACKGROUND Draft Annual Plan budgets for 2017/18 were previously submitted to the Policy Committee on the 9 February The projected average rate increase in the draft budget was 2.96%. Significant events have since changed the financial requirements of the Annual Plan and Council and Committee decisions have been made in the interim period which impact on activity and capital expenditure budgets. This draft includes the financial impact of these changes which include; Purchase of the Whakatāne Holiday Park, and associated operational and capital works costs Decision to retain control of Aquatic Centre operations; Outcome of earthquake prone building investigation and plans for the Civic Centre ; The Flood in Edgecumbe and flood and storm damage across the District, subsequent recovery phase operations and anticipated impact on rates. 3 INDICATIVE FINANCIAL POSITION The accompanying financial reports provide details of the financial position projected for the 2017/18 Annual Plan, along with the proposed Capital Expenditure. The following table indicates the proposed rating increases for the 2017/18 financial year. 2016/ /18 LTP 2017/18 Annual Plan % Increase 2.80% 3.55% 4.22% The indicative rating increase for the third year of the LTP was 3.55%. The rating increase proposed for the 2017/18 year based on the draft financial forecasts attached is 4.22%. This increase is outside of the rates cap proposed in the LTP of the Local Government Cost Index (LGCI) plus 2%, which for the 2017/18 financial year is 3.90%. A Page 1 of 10 15

18 Key changes impacting the 2017/18 financial forecasts from those in the prior draft include; Salary changes including additional staff to support the Flood Recovery team ($416,000),and new Director of Museum role ($94K); Operational expenditure required for the recovery team operations ($572,500). Further information in relation to the impact that the flood and storm has had on the budget is provided further in the report; A reassessment of interest and principal repayments reflecting the re-forecasted 2017 capital expenditure loans and a reduction in the budgeted interest rate of 0.2%, now at 5.06% (LTP was 6.00%); The outcome of the Earthquake prone buildings investigation into the civic centre, which results in the 2018/19 capital budget being brought forward to complete the required works in the 2017/18 financial year; Purchase of the Whakatāne Holiday Park and the placement of temporary accommodation, which is estimated to have a net operational cost in year one ($29,000); Production Services use of depreciation reserves to fund principal repayments ($100,000), to reflect the underspend in renewals and shift across to operational expenditure; Increased Building Control levy revenues anticipated ($118,000); Additional budget for comprehensive storm water review project ($120,000). Depreciation budgets have been updated to reflect asset revaluations and completed works. For the purpose of these financial reports, in most instances depreciation reflects the amount indicated in the LTP budget, though the overall depreciation expense has reduced. There will be no rating impact, as rates are calculated on a funded depreciation amount. Significant changes have been made to the budgets from those prepared for the 2017/18 financial year of the LTP, largely in relation to the set up and ongoing cost of response to the Edgecumbe flood; though there are no significant changes in the levels of service proposed by the 2017/18 Annual Plan. 4 FINANCIAL IMPACT OF APRIL 2017 STORM EVENT In preparing the budget for the 2017/18 financial year, some assumptions on the amount of expenditure related to the April 2017 storm events and how it will be funded has been made. The following paragraphs outline these assumptions. 4.1 Cost Estimations and Funding Through to 30 June Welfare Costs Central government funding will cover one hundred percent of qualifying expenditure for initial welfare costs. Qualifying expenditure incurred during the initial response is initially estimated at $275,000. Council insurance policies should cover increased operating costs during the two events. A conservative assumption has been made that fifty percent of the additional staff costs for covering the Emergency Operations centre and the recovery team will be recovered through Council s business interruption insurance. Staff costs to date are recorded at $300,000, with a further $235,000 anticipated for the recovery team through to the end of the financial year. The business interruption policy carries a deductible of $100,000. A Page 2 of 10 16

19 4.1.2 Response Costs (Response and Infrastructure) Central government funding will cover qualifying expenditure after a deductible of $530,000. Initial estimates of expenditure to date for both infrastructure and response are around $602,000 combined. This is only just over the deductible of $530,000 and therefore little recovery is expected from central government Transportation costs The New Zealand Transport Authority (NZTA) will fund 100% of council s initial response costs and 74% of costs for the recovery and reinstatement of local roads. Special purpose roads will receive 100% funding from NZTA. Council has the ability to draw funding from the storm damage reserve. The balance of the reserve as at 30 June 2016 is $1,242,000 and the assumption for both the 2016/17 financial year (current year spending) and the 2017/18 Annual Plan is that reserve funding will be used for Councils share of costs. Capital projects for both Special Purpose and Local Roads required to remediate damage from the April storms have yet to be included in the 2017/18 Annual plan. It is anticipated that there will be no rating impact from including these projects into the Annual Plan and this can be done pre adoption or as a 2017/18 revised budget Waste Costs The Insurance Council has indicated that funding will be received from ratepayers insurance companies toward the costs incurred for the removal, cartage and disposal of waste. For costs not met through private insurers, it is understood that Council can seek discretionary funding from Central Government and/or claim under Council s insurance. Indications from Council s insurer are that recovery costs for waste (not covered through ratepayer insurance companies) can be recovered through its Business Interruption policy. Expenditure to date is $456,000 with a further $880,000 estimated through to the end of the financial year Three Waters Infrastructure Although costs incurred in replacing damaged infrastructure should be covered through Central Government funding (60% recovery after the $530,000 deductible), minimal recovery will be achieved as a combined claim Council will be only just over the $530,000 threshold. It has therefore been assumed that some of the funding shortfall related to replacing infrastructure can be covered through depreciation reserves. Additional operating costs during the initial response phase, such as the supply of additional pumps and the jetting of pipes will be claimed through Council s Business Interruption policy. It is expected that infrastructure damaged during the storms will be repaired during the 2016/17 financial year Ports and Harbours Expenditure in the Ports and Harbours activity relating to the wharf and the clean-up of the surrounding area can legitimately be funded through the Harbour Fund. It is anticipated that this can be achieved in the 2016/17 financial year at a cost of approximately $100, Rate Remissions Rates postponements of approximately $170,000 will be processed in the 2016/17 financial year. The forecast for the 2016/17 rate remission budget (pre flood) is a favourable variance of $80,000. It is anticipated that a portion of this additional expenditure can be covered within the pre flood forecast rating surplus for the 2016/17 (estimated at $275,000 as at the third quarter of 2017). A Page 3 of 10 17

20 4.1.8 Non-Claimable Expenditure Outside of those costs identified above, expenditure of $980,000 will be incurred on response and recovery expenditure that does not meet the criteria for central government funding. This includes security ($370,000), Safety gear ($79,000), Advertising ($49,000), ICT ($94,000) GIS support ($8,300), Flights and Surveying ($14,305), Food, Volunteer Supplies, Buses, Koha ($81,562). Some alternative funding sources are available for specified expenditure such as Liveable Homes ($5,216 to date) and Task Force Green ($55,090 to date). Council renewal reserves can legitimately be applied to fund some ICT expenditure and fit out of the recovery centre. Assuming a small proportion of expenditure can be claimed under Council s Business Interruption insurance, it is estimated that approximately $805,000 of non-claimable expenditure will need to be met through rates Impact on 2016/17 Financial Year Based on flood and storm related expenditure to date, the funding assumptions identified above and anticipated spending through to the end of the financial year, it is estimated that a total of $1.9 million will remain unfunded at the close of the 2016/17 financial year Budget Implications for the 2017/18 Annual Plan The following budget has been included for the Recovery team as a component of the Civil Defence activity in the 2017/18 Annual Plan (excluding accommodation costs). The additional rating impact of the net funding requirement in this activity is two percent. Cost Type Amount Explanation Salaries $650,144 Recovery team salaries Advertising, Media & Publications $97,500 Communications Catering and Venue Hire $20,000 Waste $415,000 To be recovered through Insurances General Expenses $10,000 Phones/Tolls $30,000 Waste - Recoveries ($415,000) MBIE Recoveries ($70,000) Payment to Operational Reserves $100,000 Against 2016/17 deficit Total Rate Funding Required $837,644 Increased Rate Requirement (2%) In addition, the Rate Remissions budget in the Finance activity has been increased by $240,000 to accommodate the flood remissions approved by Council. The total funding requirement in the 2017/18 Annual Plan related to the flood/storm events is $1,077,000 or a rate increase of 2.52%. It is proposed that potential interest funding of $300,000 receivable during the 2017/18 financial year in relation to the sale of assets be used as a revenue source from internal borrowing to offset the general rate requirement related to the flood/storm events. In doing so, this would reduce the rating impact down to $777,000 or a 1.85% increase on the general rate. A Page 4 of 10 18

21 5 FINANCIAL STRATEGY RATING LIMITS The Council set a limit on rates through the LTP being, the Local Government Cost Index (LGCI) plus 2%. In addition, rates revenue is limited to 80% of operating revenue. Rates funding is Council s primary source of income. In the 2016/17 financial year rate funding represents 61% of Council s operating revenue. The majority of rates are generally levied to fund three main components of Council s expenditure being; Operational Expenditure, Debt Servicing and Asset Renewals. The proposed financial forecasts breach the rating increase limit of LGCI Plus 2% 2016/ /18 Long Term Plan 2017/18 Annual Plan LGCI + 2% 4.45% 3.9% 4.22% The proposed financial forecasts comply with the rate revenue limit of 80% of operating revenue 2016/ /18 Long 2017/18 Term Plan Annual Plan Operating Revenue ($M) $66.96 $67.10 $70.98 Rate Revenue ($M) $41.05 $41.20 $42.78 Ratio < 80% 61.30% 61.40% 60.27% 5.1 Borrowing Limits in the Financial Strategy The LTP restricted total Council borrowing to $75 million. Total borrowing as at 30 June 2016 was $63.4 million, of which $39.3 million was external borrowing through the banks and Local Government Funding Agency (LGFA). With drawdowns to fund 2017 Annual Plan projects and Carryforwards, subject to completion of the Capex programme, additional borrowing of approximately $6- $7 million can be expected to be raised during the 2016/17 financial year. The Annual Plan hasn t taken into account the short term immediate funding requirement, nor the longer term impact of borrowing related to expenditure in the 2016/17 financial year associated with the floods and storm damage. Until funding streams can be identified for expenditure incurred, it is unknown the impact that this will have on longer term borrowing. Forecast interest rates have been sourced based on our proposed borrowing. The forecast interest rates are shown in the table below. 2015/ /18 LTP 2017/18 Annual Plan Indicative Interest Rates 5.96% 6.00% 5.06% A Page 5 of 10 19

22 Millions $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Debt Profile and Debt Servicing Costs Loan Repayments Interest Paid Closing Debt Position Limit A/P 2018 A/P $100 $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 The current financial forecasts comply with the proposed Borrowing limits of $75 million. The limit of rates being used to repay interest has been set at 12%. The following table illustrates that based on the proposed borrowing, this limit is not breached for the 2017/18 Annual Plan. 2014/ / /18 LTP 2017/18 A/P Interest as a % of Rates Revenue 10.49% 11.29% 11.64% 9.88% 6 CAPITAL EXPENDITURE A full Capital Expenditure schedule for the Annual Plan has been appended to this report. 7 RATE MODELLING Rate modelling has been prepared on the basis of the current financial forecasts. A review of the allocation of operating costs through the transfer station for the solid waste activity, following the renewal of contracts has resulted in an adjustment to the targeted/general rate split. In addition, the rate this year is reduced with the use of $200,000 from the waste targeted rate reserve. This has resulted in a decrease of the targeted rate and an increase in the general rate. The model shows an increase in Murupara water of $35.69 following the repayment of a reserve deficit. The repayment will be spread over three years. Whakatane stormwater rates have increased as a result of the budget revision for the Wainui Te Whara during the 2017 financial year. The revision has seen an additional loan funding, impacting debt servicing costs in the 2018 Annual Plan. Matatā properties show a reduction in stormwater rates due to 100% of the disaster mitigation rate moving to general rates for the 2017/18 year ($40,800 rating impact), along with a reduction in the overall stormwater rating requirement following the repayment of a prior year s deficit ($25,000). A Page 6 of 10 20

23 The modelling also assumes that Edgecumbe water will not be charged on a metered basis as was proposed for the 20107/18 financial year, to allow property owners further opportunity to assess their metered usage. It is anticipated that metering could commence in the 2018/19 financial year. The Uniform Annual General Charge and general rates have increased principally due to the increased rate funding requirement of the recovery activity and the rate remissions on flood damaged properties ($1,077,000). When combined with the changes from the September 2017 District revaluation, there are some significant swings in individual rate movements. 8 OPTIONS The Council have further funding options that could be considered over and above the budget provisions that have been presented above. By using a combination of at least two of these options, the reduction in the 2017/18 rate requirement would be sufficient that the rates cap would be no longer breached. 8.1 Use of the Harbour Fund During the 2012/22 LTP process, the Council sought approval from the then Minister of Local Government, David Carter to use additional income from the harbour endowment land against Council activities. The Ministers reply is attached to this report and identifies that Council can resolve to utilise the amount of; i. the extent to which the Council considers those assets contribute to the value of the harbour land through enhancing the local economy and/or adding to the recreational enjoyment or use of the harbour land; or ii. the budgeted operating surplus for the ports and harbour activity in any one year as an additional purpose for which such income may be used. In the 2017/18 financial year, the remaining operating surplus after allowing for operational deductions related to the ports and harbour activity as previously approved by the Council is $739,933. This means that a further drawdown to the maximum of $739,933 could be utilised to reduce the 2017/18 rate requirement, supplementing the general rate requirement of those activities on harbour owned land (Library and Exhibition Centre, Visitor Information Centre, Parks, Reserves and Gardens, Public Conveniences) and therefore reduce the overall rating requirement. 8.2 Use of the Edgecumbe Stormwater Operating Reserve As at the end of the 2015/16 financial year, a surplus of $54,000 remained in the Edgecumbe Stormwater Operating Reserve. This reserve could be used to reduce the rate requirement for Edgecumbe urban properties in the 2017/18 financial year. There is a risk that some of this surplus from prior years will be required in the 2016/17 financial year, however forecast indications to date are that an amount of $50,000 could remain available at the end of the financial year. Using $50,000 from the reserve would reduce the rate requirement by 0.12% and make a significant reduction to the rating increase for Edgecumbe urban properties. 8.3 Repayment of the 2016/17 deficit in the Civil Defence Activity The proposed 2017/18 budgets include a provision of $100,000 towards the repayment of the 2016/17 operating deficit projected in the Civil Defence activity. Current projections are that approximately $1.9 million of flood related expenditure will remain unfunded at the end of the 2016/17 and this repayment was a contribution towards this deficit. Removing this payment from the proposed budget would reduce the rating requirement by 0.23%. A Page 7 of 10 21

24 9 CONSIDERATIONS 9.1 Financial/Budget Considerations The financial and budget considerations of the financial forecasts and associated options are identified throughout the report. 9.2 Policy and Planning Implications The financial forecasts align with the community needs and are consistent with the Council s policies and plans. 10 ASSESSMENT OF SIGNIFICANCE Under Section 95 of the Local Government Act 2002 (LGA), the Annual Plan budget must be compared to the Long Term Plan for the year to which the Annual Plan relates, to assess the significance of any changes. Changes from the LTP which are considered Significant or Material for the relevant year trigger the need for the Council to consult, in accordance with Section 82 of the LGA. Significance is defined in the Council s Significance and Engagement Policy (SEP). Since the Council approved draft budgets in March 2017, there have been a number of factors that have impacted the proposed budgets, as set out in this report. Namely, a number of decisions have been made by the Council this financial year that will impact ongoing costs next year and beyond. In addition, the financial impact of the floods have been outlined in this report. Council had made a decision not to undertake formal consultation on draft budgets following the consideration of draft budgets. The consideration of whether to consult is again required given consideration of the proposed changes from the original draft budgets Thresholds for Determining Significance The Council s SEP identifies a number of thresholds to determine significance: 5% unbudgeted Capital Expenditure The increase in Capital Expenditure proposed through the attached budgets is less than 5% above what was proposed for 2017/18 in the LTP. This would not trigger the significance threshold. 1% unbudgeted Operational Expenditure The total impact of the proposals contained within the draft operating budget exceeds a 1% increase on the LTP budgets for 2017/18. This triggers the significance threshold. However, this threshold within the Policy was developed with the intention of it being applied to an individual proposal or decision, rather than being applied to the cumulative decisions of an Annual Plan budget. Strategic Assets The proposals contained with the proposed budget do not constitute a decision to transfer ownership or control of a Strategic Asset. Recent decisions regarding sale and purchase of assets have been made outside the context of the Annual Plan and have been accompanied by their own significance assessment. Levels of Service The proposed Annual Plan budgets do not propose changes to alter significantly the level of service of any significant activity Criteria for Determining Significance In addition to the significance thresholds, the SEP also outlines criteria for considering significance: S3.3 a) Proposal adversely affects all or a large portion of the Community the average rates increase proposed of 4.22% is not considered an adverse effect. S3.3 b) Impact of effected persons will be substantial - the impact of the rates increase on some properties is considered substantial, however the substantial rates increases are the result of the A Page 8 of 10 22

25 impact of revaluation of properties in Council considered the implication of the revaluation in March 2017 when deciding not to undertake formal consultation When the Council may not carry out consultation There are a number of things for Council to consider when determining whether it is appropriate to consult with the community on decisions being made. The majority of the rates increase proposed is as a result of the April floods. This must be considered in the context of the SEP, which sets out that Council will not consult when the matter is not of a nature or significance that requires consultation (Section 4.2(a)) and an immediate response is necessary because of emergency or in the interests of health and safety (Section 4.2(f)). In addition, and of relevance to much of the storm works; the works required are related to the maintenance of a Council asset and responsible management requires the maintenance works to take place(section 4.2(i)) Financial Strategy Also outlined in this report are the financial thresholds that the Council committed to through the Financial Strategy The purpose of the Financial Strategy is to facilitate prudent financial management by the Council by providing a guide against which proposals for funding and expenditure can be considered. The thresholds represent an agreement with the community of the financial constraints within which the Council intends to operate. While they do not represent a binding agreement, if the Council is to adopt the proposed budgets and thus exceed the threshold for the rates increase, then the Council must acknowledge this breach. Consideration must then be given as to whether this breach requires consultation with the community. If the Council is to approve the proposed budgets, including a breach to the Financial Strategy limit, then community consultation may be required and legal advice will be sought following this meeting. Consultation could involve a conversation with the community regarding providing the ongoing recovery response for the Edgecumbe Community. Given the legislative requirement to adopt an Annual Plan and corresponding budgets by 30 June 2017, there is a risk to the timeframes of being able to undertake consultation in time to inform budget setting Community Input and Publicity As noted above, the changes proposed to the budget are significant in terms of, firstly an increase in operating budget that exceeds 1% of the LTP budget for 2017/18. Secondly, the breach of the Council s Financial Strategy target also indicates a need to consult with the community on the proposed expenditure. However the ability for the Council to consult with the community prior to the legislative deadline for adopting the Annual Plan by 30 June 2017 represents a risk. Even if the Council deem that the budgets are not of a nature that warrants consultation, the Council is still required to give consideration to the views and preferences of persons likely to be affected by, or to have an interest in, the matter. This may be informed by the Council s previous knowledge of the views of the community. 11 CONCLUSION The financial forecasts for 2017/18 have been prepared to align with the Financial Strategy adopted by the Council in June 2015; however the proposed rates increase of 4.22% now breaches the rating cap set in the LTP. The financial forecasts propose total debt remaining well below the debt limit of $75 million. A Page 9 of 10 23

26 12 RECOMMENDATIONS 1. THAT the Annual Plan 2017/18 Financial Forecast Update report be received; and 2. THAT the Council adopts either options 8.1, 8.2 or 8.3 of the report. Attached to this report: Appendix 1 - Council Summary Cost of Service 2017/18 Appendix 2 - Group of Activities Cost of Service 2017/18 Appendix 3 - Rating Impact 2017/18 Appendix 4 - Capital Expenditure 2017/18 Appendix 5 Approval of Additional use of Income from Harbour Endowment Land Vested in the Whakatāne District Council Appendix 6 - Rate Modelling Indicative Rating Examples for 2017/ CV - still to be provided Rate Modelling Indicative Rating Examples for 2017/ CV 28% UAGC Rate Modelling Indicative Rating Examples for 2017/ CV 30% UAGC Report Authorisation Report writer: Helen Barnes General Manager Finance First Approval: Marty Grenfell Chief Executive A Page 10 of 10 24

27 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 1 - Council - Summary Cost of Service Appendix 1 - Council - Summary Cost of Service Page 25

28 2018 Proposed Annual Plan *Displays total costs for All Groups Cost Centre: All Groups Version: Working LTP GL Code Post Code Variance Actuals $ AP $ LTP $ Annual Plan $ AP $ DEPN Depreciation 14,548,259 15,119,453 16,366,705 15,978, ,205 FIEX Interest Paid 3,814,664 4,404,277 4,626,218 4,229,024 (175,253) DCST Direct Costs 43,593,959 41,081,706 39,760,750 43,425,173 2,343,467 OVH Overheads 11,088,126 11,331,078 11,683,738 11,714, ,779 OVHD Overheads charged - Depreciati 787, , , ,685 15,422 ICST Indirect Costs 1,982, EXP Expenditure 75,815,012 72,727,777 73,203,139 76,154,397 3,426,620 SUBS Subsidies & Grants 7,234,762 13,484,512 10,410,339 10,092,115 (3,392,397) SINC Sundry Income 15,290,635 14,863,500 14,837,322 16,410,003 1,546,503 FEES User Fees and Charges 7,368,634 7,325,370 7,609,551 7,875, ,913 GENR General Rates 16,895,648 18,711,630 16,982,877 20,501,038 1,789,408 TARA Targeted Rates 23,004,841 22,340,712 24,227,115 22,284,860 (55,852) INTI Internal Interest 1,767,255 50, ,500 46,667 (3,333) DVCI Development Contributions (168,687) 93,721 93,721 93,721 0 REV Revenue 71,393,088 76,869,445 74,313,425 77,303, ,242 PL Net Cost (Surplus) for All Groups (4,421,923) 4,141,668 1,110,286 1,149,290 (2,992,378) PAYR Payment to Reserves 18,196,844 3,038,876 3,238,522 3,400, ,127 LONR Loan Repayments 3,463,787 3,796,295 3,707,222 4,041, ,239 CAPT Capital Expenditure 16,214,726 30,112,176 24,654,876 24,459,753 (5,652,423) FAPP Application of Funds 37,875,356 36,947,347 31,600,620 31,901,290 (5,046,057) ASSS Sale of Assets 2,594, , DEVR Development Contribution Reser 708,169 1,221, ,653 1,327, ,204 DPRS Depreciation Reserve 5,864,404 9,873,251 12,395,755 11,393,885 1,520,634 LNRA Loans Raised 7,709,791 7,129,808 3,138,491 2,807,077 (4,322,731) NFD Non Funded Depreciation 8,421,506 9,081,334 10,213,263 9,715, ,299 OPXR Operational Reserve 16,998,826 5,499,958 3,744,181 5,507,874 7,916 FSOU Source of Funds 42,297,279 32,805,679 30,485,343 30,752,001 (2,053,678) NPL Non P&L Entry 4,421,923 (4,141,668) (1,115,277) (1,149,289) 2,992,379 Net Funds Applied/(Provided) (16,214,726) 0 (4,991)

29 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 2 - Leadership Appendix 2 - Leadership Page 27

30 2018 Proposed Annual Plan *Displays total costs for Leadership Cost Centre: Leadership Version: Working LTP GL Code Post Code Variance Actuals $ AP $ LTP $ Annual Plan $ AP $ FIEX Interest Paid 4,832 4,942 4,964 4,211 (731) DCST Direct Costs 1,748,936 2,018,485 1,958,020 2,087,446 68,961 OVH Overheads 935, , , ,923 52,335 OVHD Overheads charged - Depreciati 47,011 46,058 49,107 49,452 3,394 EXP Expenditure 2,736,149 3,007,073 2,985,116 3,131, ,959 SUBS Subsidies & Grants SINC Sundry Income 199,912 62,000 2,000 3,800 (58,200) GENR General Rates 2,332,837 2,557,818 2,619,644 2,898, ,083 TARA Targeted Rates 311, , , ,747 (9,023) REV Revenue 2,844,945 2,962,588 2,940,631 3,236, ,859 PL Net Cost (Surplus) for Leadership 108,796 (44,485) (44,485) 105, ,900 PAYR Payment to Reserves 13, , ,000 LONR Loan Repayments 5,515 5,515 5,515 5,515 0 FAPP Application of Funds 19,055 5,515 5, , ,000 OPXR Operational Reserve (89,741) 50,000 50, (49,900) FSOU Source of Funds (89,741) 50,000 50, (49,900) NPL Non P&L Entry (108,796) 44,485 44,485 (105,415) (149,900) Net Funds Applied/(Provided)

31 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 2a - Roads & Footpaths Appendix 2a - Roads & Footpaths Page 29

32 2018 Proposed Annual Plan *Displays total costs for Roads & Footpaths Cost Centre: Roads & Footpaths Version: Working LTP GL Code Post Code Variance Actuals $ AP $ LTP $ Annual Plan $ AP $ DEPN Depreciation 6,450,411 7,005,613 7,438,199 7,020,589 14,976 FIEX Interest Paid 547, , , ,677 (61,441) DCST Direct Costs 6,458,279 6,299,570 6,386,572 6,448, ,679 OVH Overheads 1,284,467 1,006,337 1,458,256 1,003,575 (2,762) OVHD Overheads charged - Depreciati 72,032 71,650 68,999 76,399 4,749 EXP Expenditure 14,812,805 15,009,288 16,003,976 15,113, ,201 SUBS Subsidies & Grants 6,518,727 8,964,685 8,537,067 7,633,222 (1,331,463) SINC Sundry Income 979, , , ,640 84,925 FEES User Fees and Charges 741, , , ,925 (9,874) GENR General Rates (13,111) (14,336) (14,066) (24,991) (10,655) TARA Targeted Rates 7,553,232 6,936,294 7,650,308 6,833,035 (103,259) DVCI Development Contributions (78,219) REV Revenue 15,702,034 16,738,157 17,097,632 15,367,831 (1,370,326) PL Net Cost (Surplus) for Roads & Footpaths 889,229 1,728,869 1,093, ,342 (1,474,527) PAYR Payment to Reserves 2,483,462 (18,375) 33,451 16,353 34,728 LONR Loan Repayments 841, , , ,956 (33,623) CAPT Capital Expenditure 7,261,707 9,551,958 8,904,059 7,399,975 (2,151,983) FAPP Application of Funds 10,586,998 10,439,162 9,787,216 8,288,284 (2,150,878) DEVR Development Contribution Reser 278,439 73,440 71,040 71,040 (2,400) DPRS Depreciation Reserve 1,827,066 2,404,329 2,536,741 2,137,518 (266,812) LNRA Loans Raised 863,067 1,058, , ,835 (377,825) NFD Non Funded Depreciation 4,368,411 5,103,613 5,300,844 5,043,549 (60,064) OPXR Operational Reserve 2,360,786 70, , ,000 30,750 FSOU Source of Funds 9,697,769 8,710,292 8,693,560 8,033,941 (676,351) NPL Non P&L Entry (889,229) (1,728,870) (1,093,656) (254,342) 1,474,528 Net Funds Applied/(Provided) (7,261,706) (1) 0 (0) 1 30

33 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 2b - Water Supply Appendix 2b - Water Supply Page 31

34 2018 Proposed Annual Plan *Displays total costs for Water Supply Cost Centre: Water Supply Version: Working LTP GL Code Post Code Variance Actuals $ AP $ LTP $ Annual Plan $ AP $ DEPN Depreciation 1,781,275 1,904,501 1,988,302 1,880,568 (23,933) FIEX Interest Paid 395, , , ,837 23,747 DCST Direct Costs 2,372,717 2,504,625 2,448,517 2,301,981 (202,644) OVH Overheads 1,049, ,389 1,105, ,118 72,729 OVHD Overheads charged - Depreciati 74,452 65,284 67,282 59,794 (5,490) EXP Expenditure 5,673,404 5,785,889 6,039,236 5,650,299 (135,590) SUBS Subsidies & Grants (187,600) 2,019, (2,019,715) SINC Sundry Income 2,950 11,000 22,733 11,000 0 FEES User Fees and Charges 181, , , ,000 (7,000) GENR General Rates 1,252 3,535 3,532 0 (3,535) TARA Targeted Rates 4,790,245 5,311,222 5,049,363 5,230,090 (81,132) DVCI Development Contributions 14,001 16,999 16,999 16,999 0 REV Revenue 4,802,506 7,621,471 5,351,627 5,510,089 (2,111,382) PL Net Cost (Surplus) for Water Supply (870,898) 1,835,582 (687,609) (140,210) (1,975,792) PAYR Payment to Reserves 1,105, ,672 16, ,999 (190,673) LONR Loan Repayments 441, , , ,303 91,668 CAPT Capital Expenditure 995,174 6,419,000 1,240,500 1,915,500 (4,503,500) FAPP Application of Funds 2,542,204 7,335,307 1,756,376 2,732,802 (4,602,505) DEVR Development Contribution Reser 55, , , ,240 (28,300) DPRS Depreciation Reserve 706,241 1,034, ,500 1,360, ,500 LNRA Loans Raised 400,601 2,684,745 60, ,760 (2,346,985) NFD Non Funded Depreciation 989,588 1,100,437 1,198,482 1,022,512 (77,925) OPXR Operational Reserve 1,261, , (500,000) FSOU Source of Funds 3,413,102 5,499,722 2,438,982 2,873,012 (2,626,710) NPL Non P&L Entry 870,898 (1,835,585) 682, ,211 1,975,796 Net Funds Applied/(Provided) (995,174) (3) (5,003)

35 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 2c - Sewage Treatment & Disposal Appendix 2c - Sewage Treatment & Disposal Page 33

36 2018 Proposed Annual Plan *Displays total costs for Sewage Treatment & Disposal Cost Centre: Sewage Treatment & Disposal Version: Working LTP GL Code Post Code Variance Actuals $ AP $ LTP $ Annual Plan $ AP $ DEPN Depreciation 1,327,094 1,427,077 1,792,851 1,536, ,191 FIEX Interest Paid 347, , , ,226 (37,525) DCST Direct Costs 1,936,415 1,182,968 1,393,804 1,635, ,185 OVH Overheads 508, , , , ,353 OVHD Overheads charged - Depreciati 25,298 26,999 23,175 39,162 12,163 EXP Expenditure 4,145,052 3,549,076 4,370,954 4,256, ,366 SUBS Subsidies & Grants 120, ,000 1,400, ,000 (88,000) SINC Sundry Income 104, , , ,250 (22,000) FEES User Fees and Charges 100, , , ,800 (23,000) GENR General Rates 20, ,265 40, ,760 (53,505) TARA Targeted Rates 2,692,155 2,812,197 3,603,615 3,365, ,337 DVCI Development Contributions (7,440) 51,202 51,202 51,202 0 REV Revenue 3,030,515 3,633,714 5,417,646 4,000, ,833 PL Net Cost (Surplus) for Sewage Treatment & Disposal (1,114,537) 84,638 1,046,692 (255,896) (340,534) PAYR Payment to Reserves 1,419, , , ,202 0 LONR Loan Repayments 196, , , ,980 23,305 CAPT Capital Expenditure 879,758 4,099,900 4,439,500 1,419,500 (2,680,400) FAPP Application of Funds 2,495,914 4,531,777 5,008,159 1,874,682 (2,657,095) DEVR Development Contribution Reser 56, ,108 22, ,152 (92,956) DPRS Depreciation Reserve 400,124 3,137,574 1,756, ,648 (2,548,926) LNRA Loans Raised 270, ,218 1,260, , ,482 NFD Non Funded Depreciation 444, , , , ,005 OPXR Operational Reserve 2,439,578 75, ,754 (2,167) FSOU Source of Funds 3,610,450 4,447,140 3,961,467 2,130,578 (2,316,562) NPL Non P&L Entry 1,114,537 (84,637) (1,046,692) 255, ,533 Net Funds Applied/(Provided) (879,758) 1 (0) 0 (1) 34

37 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 2d - Stormwater Drainage Appendix 2d - Stormwater Drainage Page 35

38 2018 Proposed Annual Plan *Displays total costs for Stormwater Drainage Cost Centre: Stormwater Drainage Version: Working LTP GL Code Post Code Variance Actuals $ AP $ LTP $ Annual Plan $ AP $ DEPN Depreciation 1,041,294 1,160,421 1,068,157 1,090,113 (70,308) FIEX Interest Paid 912,904 1,126,953 1,160,606 1,087,191 (39,762) DCST Direct Costs 1,306,213 1,001, ,932 1,194, ,288 OVH Overheads 404, , , ,729 83,640 OVHD Overheads charged - Depreciati 18,856 23,417 16,623 31,516 8,099 EXP Expenditure 3,683,377 3,770,000 3,558,475 3,944, ,957 SUBS Subsidies & Grants 50, SINC Sundry Income 59, , , ,000 (93,000) FEES User Fees and Charges GENR General Rates 316, , , ,538 (11,385) TARA Targeted Rates 2,863,089 3,092,052 2,826,195 3,378, ,979 DVCI Development Contributions (38,649) 25,520 25,520 25,520 0 REV Revenue 3,250,937 3,684,495 3,464,282 3,866, ,595 PL Net Cost (Surplus) for Stormwater Drainage (432,440) (85,505) (94,193) (78,868) 6,637 PAYR Payment to Reserves 2,073,663 90,520 25,520 25,520 (65,000) LONR Loan Repayments 669, , , ,601 (5,217) CAPT Capital Expenditure 2,969,126 1,217, , ,000 (232,000) FAPP Application of Funds 5,711,933 2,032,338 1,675,228 1,730,121 (302,217) DEVR Development Contribution Reser 66, ,160 6, ,800 14,640 DPRS Depreciation Reserve 419, , , ,000 (330,000) LNRA Loans Raised 4,602, , , ,200 83,360 NFD Non Funded Depreciation 801, , , ,989 (76,857) OPXR Operational Reserve 254, FSOU Source of Funds 6,144,373 2,117,846 1,769,421 1,808,989 (308,857) NPL Non P&L Entry 432,440 85,508 94,193 78,868 (6,640) Net Funds Applied/(Provided) (2,969,125) 3 0 (0) (3) 36

39 WHAKATĀNE DISTRICT COUNCIL EXTRAORDINARY COUNCIL - AGENDA THURSDAY, 25 MAY Appendix 2e - Solid Waste Appendix 2e - Solid Waste Page 37

40 2018 Proposed Annual Plan *Displays total costs for Solid Waste Cost Centre: Solid Waste Version: Working LTP GL Code Post Code Variance Actuals $ AP $ LTP $ Annual Plan $ AP $ DEPN Depreciation 6,511 9,866 51,564 10, FIEX Interest Paid 195, , , ,021 (30,589) DCST Direct Costs 4,657,835 4,532,973 4,893,574 4,253,437 (279,536) OVH Overheads 637, , , ,330 (65,883) OVHD Overheads charged - Depreciati 32,896 27,449 30,484 28, EXP Expenditure 5,530,483 5,318,111 5,883,038 4,943,437 (374,674) SUBS Subsidies & Grants 207, , ,000 0 SINC Sundry Income 75, FEES User Fees and Charges 705, , , ,000 35,000 GENR General Rates 920,721 1,304, ,227 1,800, ,113 TARA Targeted Rates 4,345,529 3,367,363 4,329,966 2,480,794 (886,569) DVCI Development Contributions (12,632) REV Revenue 6,242,492 5,467,277 6,072,193 5,110,821 (356,456) PL Net Cost (Surplus) for Solid Waste 712, , , ,385 18,219 PAYR Payment to Reserves 336, , ,000 0 LONR Loan Repayments 238, , , ,079 5,297 CAPT Capital Expenditure 398,457 15,000 35,000 35,000 20,000 FAPP Application of Funds 973, , , ,079 25,297 DEVR Development Contribution Reser 173, DPRS Depreciation Reserve 49,247 15,000 25,000 25,000 10,000 NFD Non Funded Depreciation ,616 65, (22,922) OPXR Operational Reserve 39, , ,000 20,000 FSOU Source of Funds 261, ,616 90, ,694 7,078 NPL Non P&L Entry (712,009) (149,166) (189,155) (167,385) (18,219) Net Funds Applied/(Provided) (398,457)