TAURANGA CITY COUNCIL Annual Report 2015/16. Summary

Transcription

1 TAURANGA CITY COUNCIL Annual Report 2015/16 Summary

2 CONTENTS 1 WELCOME FROM THE MAYOR AND CHIEF EXECUTIVE 3 YEAR IN REVIEW 4 OPERATIONAL HIGHLIGHTS 16 FINANCIAL HIGHLIGHTS 26 NON-FINANCIAL PERFORMANCE HIGHLIGHTS 28 FINANCIAL PERFORMANCE 37 AUDITOR S REPORT

3 1 Welcome to the summary of the Tauranga City Council 2015/16 Annual Report This summary annual report presents the highlights of the year: what we achieved during the past 12 months, how we performed financially and against our targets. Our city s phenomenal growth has defined this past year. Tauranga has stood out as one of five areas of New Zealand that are growing and rapidly. The speed of our growth definitely outdid our forecasts this year, with our new dwelling consents 86% above the ten-year average. Throughout the year we responded as required to ensure we continue to successfully manage Tauranga s growth, while continuing to provide efficient services to the community and invest in the future of the city. We brought forward capital projects to have enough development-ready land available to meet demand in our urban growth areas of The Lakes, Tauriko and Wairakei. This included providing core network infrastructure (transportation, water, wastewater and stormwater) and reserves. In fact, the majority of our $83m capital works programme was spent on the city s core network infrastructure, which accounted for 70% of capital expenditure this past year. Large capital projects that were delivered or progressed include Te Okuroa Drive and the Mangatawa Interchange, investment in our car parking buildings including a new floor on Elizabeth Street, upgrading Council s ICT systems, the Southern Pipeline wastewater main, a variety of stormwater management projects, and completing the Greerton Library which was wholeheartedly embraced by the community as soon as it opened. This year also saw Council agree to invest in the Tauranga Waterfront, our airport, and to look into options for civic amenities in the city centre.

4 2 We continued in parallel to provide the day-to-day services that the community relies upon. The surge in development activity created more demand for Council services such as building, engineering, planning and information services, upping both revenue and delivery costs. Other services such as waste disposal and animal services were also in high demand from the city s growing population. To respond to this, we increased staff levels in service areas that support the growth in building activity and the demand for services from a growing population. In general, across our activities, additional costs were offset by increased revenue. All in all, we ended the year in sound financial shape with debt levels at $297m, well below the $355m budgeted through the Long Term Plan. Our debt-torevenue ratio is also down to 155%. Lower debt was mostly a consequence of the reviewed timing of several large capital projects, including the Marine Precinct and the Southern Pipeline, which will be continuing into next year. Higher than expected revenue from development contributions and land sales also contributed to reducing debt. An ambitious capital works programme for the coming year (2016/17) will see our debt return to budgeted levels next year. Our Council and our city are facing key challenges into the future. As the city grows, we need to make sure it remains a place people want to live, learn, work and play and where they have options to do so. This means looking at our urban form, transport choices, digital opportunities and how we can support high productivity employment. Our city will undoubtedly continue to grow next year. How fast however, we can t predict. But we ll make sure our planning and processes give us the flexibility required to respond to what gets thrown in our direction. Tauranga has some exciting times ahead. Stuart Crosby Mayor Garry Poole Chief Executive This summary is an abridged version of the full Tauranga City Council Annual Report 2015/16. It does not include all the disclosures provided in the full annual report. For a more comprehensive understanding of the Council s financial and service performance, financial position and cash flows, read the full annual report available at

5 3 Year in review Here is a snapshot of the year just gone by the big projects we have advanced or delivered, the highlights of our financial results, and an overview of our non-financial performance.

6 4 OPERATIONAL HIGHLIGHTS LIBRARIES A BRAND SPANKING NEW LIBRARY AND COMMUNITY HUB FOR GREERTON In a major milestone for the local community, we completed the construction of a new library in Greerton this year. The new library is twice the size of the old library, and is a modern, engaging and vibrant facility for the Greerton community. In addition to library services, the new library includes a community meeting room and Learning Centre, for people to learn about IT and improve their digital literacy. It is a great example of how libraries have evolved to become community knowledge hubs, offering traditional book-based services; activities for children and adults; spaces to read, study, and meet friends; community history; and centres for people to access the internet and learn more about technology. Greerton Library was a major undertaking involving a number of groups and organisations. The efforts of the project team, including project consultant Beca, contractor Marra Construction and design consultant ChowHill Architects, were a key part of successfully delivering the new library. We also acknowledge and credit the advice of Ngai Tamarawaho and Greerton Mainstreet in the successful completion of this work. A Pou carved by Whare Thompson of Ngai Tamarawaho stands close to the front door. Our residents wholeheartedly embraced the brand-new facility from the outset, with more than 4,000 people visiting in its first three days smashing previous numbers and demonstrating that libraries are still a muchloved and highly valued cornerstone of our communities.

7 5 OPERATIONAL HIGHLIGHTS ECONOMIC DEVELOPMENT INTERNATIONAL EDUCATION BRINGS SIGNIFICANT RETURNS Council and Priority One support Education Tauranga, whose job it is to bring international students to the city. International education is one of New Zealand s biggest export markets and one in which Tauranga is doing very well. It is estimated that the value of the international education market to Tauranga has increased by $8.2m in the past year to now be worth $39.8m. There have been similar year-on-year increases since Council and Priority One began their support three years ago, with much of the money going direct to our schools. This is a significant return for a Council investment of less than $10,000. Korea is the biggest market for Education Tauranga, with students across all stages of education from primary to tertiary. English language education has seen the highest growth this year as a result of increased exposure in overseas markets; partnership with Education NZ; increased media attention on Tauranga s growth and buoyant job market; and excellent feedback and outcomes from former English language students. OPERATIONAL HIGHLIGHTS EMERGENCY MANAGEMENT NEW ZEALAND S FIRST PURPOSE-BUILT TSUNAMI VERTICAL EVACUATION STRUCTURE In June 2016 we completed a purpose-built tsunami vertical evacuation structure. This is the first of its type in New Zealand, a large reinforced mound at Gordon Spratt Reserve where 3,500 people can assemble safely above tsunami flooding. It also has dual use as a viewing platform with terraced seating overlooking the sports fields. The mound has been specially built to survive a significant earthquake and tsunami. It stands well above the highest level of water that has been estimated to reach Gordon Spratt Reserve in a major tsunami event. There is more work to be done this year to put in pathways and finish the grass surface. Our Parks team will plant some trees on the top for shade. It is the first of four structures that we will build for the Papamoa and Wairakei communities. The next vertical evacuation structure will be built in the Golden Sands area, planned to start mid This will also have a dual use for the community.

8 6 OPERATIONAL HIGHLIGHTS PARKS AND RECREATION BRINGING THE BIRDS BACK TO OUR CITY WITH NATIVE PLANTING This year we significantly progressed our native planting programme. We planted approximately 30,000 native trees and shrubs throughout our reserves and gullies in the city, to improve biodiversity and to create corridors for wildlife to flourish. We led numerous planting days in partnership with trusts and programmes such as the Kopurererua Valley Rotary Centennial Trust, Trees for Survival and the Regional Council s Coast Care programme, and businesses such as Comvita and Trustpower. The participation of scores of volunteers and schools from across the city made this year s programme a real success. Areas that acquired new leafy residents include Mauao, the Gordon Carmichael Reserve, the Kopurererua Valley, the Waimapu Esplanade Reserve, the Wairoa Esplanade Reserve, Sydenham Botanic Park, the Koromiko Street Wetland, the McArdles bush ecological restoration site and some of our dunes from Papamoa to the Mount. Ecological restoration is important to increase native biodiversity within the city. In recent years this activity has proven to be effective with a noticeable increase in bird life observed. This also contributes to providing beautiful reserves for our residents and visitors to enjoy. This year we were proud to receive a TripAdvisor Certificate of Excellence for the Waikareao Estuary walkway which has been undergoing ecological restoration since the early 2000s, with a concentrated effort in McArdles bush over the last four years.

9 7 OPERATIONAL HIGHLIGHTS CITY EVENTS COMMUNITY EVENTS BRING CONNECTION, ENTERTAINMENT AND INSPIRATION TO THE CITY Tauranga City Council s community events fund helps create a humming city, and adds to the city s annual events calendar, especially in the winter season. The fund ($50,000) aims to support environmentally responsible events that connect communities, celebrate Tauranga s diversity and make the most of the city s beautiful surroundings. This past year s round of funding was a huge success with 13 funded events eight community events, five sporting events and two youth events. The fund helped to get great events for young and old off the ground, such as the Wonderland Festival and House of Cards exhibition in the city centre, the Welcome Bay Family Music Festival, Night Owl Cinema (pictured) as well as Twelfth Night at the Historic Village. The varied events supported by the fund play an important role in bringing people together, giving new inspiration and atmosphere to the city, while showcasing everything Tauranga has to offer. Photo credit: pushinguppixels.co.nz

10 8 OPERATIONAL HIGHLIGHTS CIVIC COMPLEX CREATING TAURANGA S CIVIC HEART THE CIVIC SPACE OPTIONS PROJECT The Civic Space Options Project will determine the best options for Council accommodation and assess how this project could be a catalyst for other opportunities in the city centre. The Civic Space Options Project began in July 2015, following the discovery of toxic mould in Council s Willow Street buildings in November Further independent investigations revealed significant weather-tightness problems with the buildings, and moderate earthquake risk in two of the four buildings. Many of the building services lifts, air conditioning, power cabling, lights, plumbing and drain pipes are beyond expected life and/or need replacing the result of a lack of investment and maintenance of the buildings over the years. During the Long Term Plan process we received submissions asking for us to consider the opportunities presented by the building situation. The Civic Space Options Project Steering Group was formed with Elected Members, Council staff and iwi to determine the best options for Council accommodation and assess how this project could be a catalyst for other opportunities to create a civic heart. A potential scope was established that included: civic administration building, car parking, open space, library, museum, performance venue, hotel and other activities on site. Using New Zealand Treasury s Better Business Case methodology, a set of project objectives were formally adopted by Council in October 2015 to guide successful investment. These were: More active, safe and vibrant city centre Improved value for money for the community Improved local and regional economic development We then began a four-stage communications and engagement process. STAGE 1 - HEART AND MIND: WHAT IS A CIVIC HEART? The aim of the first community engagement stage during December 2015 to May 2016 was to talk to people about what a Civic Heart meant to them, what we needed to do to develop our identity and invoke pride in our city centre, and to raise awareness of the project in the community. We received feedback from more than 2,000 people, an overwhelming majority of whom said all the original scope elements have a place in a Civic Heart. Here s a high level summary of what the community said: Council offices should be within the city centre A library in the city centre is a must Tauranga needs a museum Yes, to a performance venue in city centre City square absolutely (waterfront or Masonic Park good options) Support for conference centre and hotel

11 9 STAGE 2 - FACTS AND FIGURES AND STAGE 3: LOOK AND FEEL The second and third stages were to investigate and discuss the wider economic and social benefits, affordability and funding options, and what Tauranga s Civic Heart could look like. Our specialist project team and external consultants worked through a rigorous and robust process exploring the significant multiple opportunities and options. They developed a conceptual master plan approach which would allow Council to invest wisely over a long period of time and ensure we provide value for money to our ratepayers at the same time as investing in our growing city. This work culminated in the Civic Space Options Programme Business Case which included a Strategic Case, Economic Case Exploring the Preferred Way Forward, Financial Case, Commercial Case and a Management Case. This was adopted by Elected Members on 15 June 2016 as the basis on which to proceed to the consideration of the proposed Long Term Plan Amendment. STAGE 4 - LTP AMENDMENT: PUBLIC CONSULTATION When the Long Term Plan was approved, we were unaware of the full extent of the building problems. In addition, our productivity has been impacted due to the organisation operating from multiple sites. Resolving these issues could not wait until the next Long Term Plan in 2018, so Council proposed an Amendment to its Long Term Plan. The proposed Amendment to the Long Term Plan included proposals to invest $68.6 million during the next four years to build a new civic administration building with surrounding open space on our Willow Street site, and $2.5m to transform Masonic Park into a civic square. It also proposed setting aside funding to explore the feasibility of a museum, the best solution for providing fit-for-purpose library services in the city centre, and a new 1,000-1,200-seat performance venue on the site. Public consultation began on 17 June 2016 and closed 18 July Hearings were held on 1, 2 and 3 August, and deliberations took place on 6 September More information at

12 10 OPERATIONAL HIGHLIGHTS ARTS AND HERITAGE LEST WE FORGET CELEBRATING OUR HISTORY The First World War was a key event in New Zealand and world history. We delivered four exhibitions to commemorate the centenary of the conflict, in a series called From Tauranga to the Trenches. The series told the stories of local private Reginald Watkins, the battle of Gallipoli, Nurse Jeanne Sinclair in A Marquette Angel and finally of the Māori Battalion in Te Hokowhitu a Tū shown during Matariki. We took these poignant stories around Tauranga and to Te Puke, in a mobile exhibition space. The containers visited schools, marae, rest-homes, Returned Services Associations, Classic Flyers, the Historic Village and public spaces in the Mount, the city centre and Te Puke. Over 25,000 people visited these exhibitions, learning about this important part of our history. The next exhibition will be on the Somme and will open in September 2016 to mark the 100- year anniversary of New Zealand s involvement in the deadliest battle of WWI. Delivery of the WWI exhibition programme will continue until 2018.

13 11 OPERATIONAL HIGHLIGHTS TRANSPORTATION BUILDING SKILLS TO IMPROVE ROAD SAFETY Over the past year, our Travel Safe team has worked hard to improve road safety and road safety awareness across the sub-region. We worked with 50 schools across Tauranga and the Western Bay of Plenty to deliver road safety education programmes. This included providing on-road cycle skills training to 3,200 Year 5/6/7/8 students, a Design your Own Helmet competition in which 970 primary and intermediate students took part, and the annual Orange Day Road Safety Parade led by 560 students, parents, and teachers. This past year we also delivered 35 workshops across Tauranga and the Western Bay of Plenty for vulnerable road users young drivers, elderly drivers and footpath users and developed strong partnerships with Sport BOP, Age Concern, police and other community stakeholders to further road safety through more collaboration. Going forward we will continue to develop an integrated approach with these partners and the community, to help deliver safer roads. ENGINEERING SUPPORTS TRAVEL CHOICES Providing a safer and more connected transport network for the people of Tauranga will help offer improved travel choices and see an increase in the number of trips by foot, bicycle or public transport. Quality infrastructure projects like the new Dive Crescent shared pedestrian/cycle path will help us reach this goal. This project is part of the wider urban cycle network, which comprises of 10 key cycle routes totalling approximately 150km across the city. The main objective of the Dive Crescent project was to replace a dilapidated seawall, but we took the opportunity to include a three-metre-wide shared path as part of the overall design. We received funding support for this project from the New Zealand Transport Agency.

14 12 OPERATIONAL HIGHLIGHTS WASTEWATER LINING THE WAY TO LONGER-LASTING TRUNK SEWERS Over the past few years, we have relined many of our trunk sewers. This project has enabled us to make the best use our existing wastewater network infrastructure and improve its efficiency. By lining the old concrete pipes with new PVC expanding liners, we have extended their expected lives by 50 years at least, although experience with similar technologies suggests this could be as long as 100 years. This process also increases the efficiency of our network by improving the pipes water-tightness. The work was carried out with as little disruption to residents and the environment as possible. By utilising the existing network, we removed the need to carry out substantial intrusive physical works. The works were also carried out at night to limit the impact of road closures on residents and businesses. The total length relined over the past two years is approximately 1,150 metres at a total cost of $2.2 million. The project has been extended to reline more of our network over the next two years. OPERATIONAL HIGHLIGHTS WATER SUPPLY THE MOST WATER WE HAVE EVER DELIVERED We reached a water production milestone at the end of this financial year: the total water production for the past year was the highest on record, at 13,556,082 cubic metres. The previous high was set in 1999, at 13,527,298 cubic metres. This event is noteworthy as the introduction of water meters in the early 2000s resulted in a significant reduction in water consumption. This milestone therefore reflects the impact of our city s growth, with an additional 37,000 people being supplied with a similar amount of water as in Over the past year, we reviewed the city s water demand forecast to determine when the capacity of the existing treatment plants could be exceeded, based on current growth forecasts. The study told us this could happen as soon as But we have plans in the pipeline to meet this growing demand, with the future Waiari water treatment plant scheduled for commissioning that same year.

15 13 OPERATIONAL HIGHLIGHTS MARINE FACILITIES LOCAL INDUSTRY BUYS IN TO THE TAURANGA HARBOUR MARINE PRECINCT After a successful tender process, six marine businesses acquired lots in the Marine Precinct, the future marine hub of the Bay. The owners of lots within stage 1 development of the precinct are Hutcheson Boatbuilders, Pachoud Yachts, Pacific 7, RMD Marine, SMF Engineering and Super Yacht Coatings International. Five of the companies were already based in Tauranga, with four currently operating from the precinct area, while Super Yacht Coatings - whose owners originally come from the Bay of Plenty - is relocating from Auckland. Together these businesses cover a wide spread of specialities, from fibre-glassing to marine engineering, vessel painting and timber decking to composite building, a specialised workboat fleet and a fishing fleet. This means increased potential for collaboration among precinct occupiers and with other marine businesses in the area. This is the first step in the Marine Precinct s strategy of providing a one-stop-shop for customers getting their vessels serviced in Tauranga. The Marine Precinct project will deliver a purposebuilt marine servicing facility at Sulphur Point, co-funded by the Council and the Bay of Plenty Regional Council through the Regional Infrastructure Fund. By mid-2017 (stage 1 development), the Marine Precinct will include lots in a range of sizes for marine businesses, a 6200-square metre vessel storage area (hardstand), deep-water marina berths for large vessels and New Zealand s largest vessel hoist / travel-lift (350 tonne haulage capacity and extra-wide).

16 14 AROUND THE BUSINESS Some highlights of the year from around the rest of the business CITY CENTRE We gave a green light for tidal stairs and a new pier and pontoon to be built along the city s waterfront to create better access to the water. RESOURCE RECOVERY AND WASTE We got the draft Waste Management and Minimisation Plan adopted for consultation with the community. More on this soon! AIRPORT We supported the increase of Air New Zealand flights in and out of Tauranga by 19 return flights per week, and 80,000 seats per year (up 20%). CITY PLANNING AND GROWTH We recommended the establishment of four new Special Housing Areas to help provide supply of land for residential development. BAYCOURT COMMUNITY & ARTS CENTRE We held THE show of the year, with Dame Kiri Te Kanawa gracing the stage of our theatre for one magical evening. Sold out in three days. ENVIRONMENTAL PLANNING We granted 1,062 applications of 25 different types, under five different pieces of legislation, and issued subdivision consents to create 669 lots associated with Special Housing Area developments across the city. BEACHSIDE HOLIDAY PARK We were named finalists in the NZI Sustainable Business Network Awards 2015, for the significant resource efficiency improvements we have made over the past four years.

17 15 BUILDING SERVICES We maintained full accreditation, following a comprehensive audit by IANZ, to be able to keep issuing building consents (2,723 this year, up 25%) and conducting inspections. CEMETERIES We installed new glass panels in front of the Chapel at Pyes Pa Memorial Park, to cut down the wind and rain blowing into the area and make it a more pleasant place for families and friends. COMMUNITY DEVELOPMENT We approved the sale of a portion of land at the Historic Village to the Tauranga Energy Consumer Trust (TECT) for the purpose of building a community hub. STORMWATER We started implementing our new safety to persons stormwater Level of Service, creating overland flowpaths, conducting flood mitigation works and creating a reactive reserve fund. ANIMAL SERVICES We started four-wheel drive patrolling of Mount Maunganui and Papamoa beaches to educate owners on their responsibilities and raise awareness of restricted dog exercise areas. ENVIRONMENTAL MONITORING We kicked off the implementation of a pool fencing education programme and inspections; working with pool owners to help them provide a private pool environment that is safe for all. GOVERNANCE SERVICES We led a delegation to our partner cities in Ansan, South Korea and Yantai, China, to develop opportunities in marine science, research relationships and international education in both cities. You can find more information about all our activities in the Groups of Activities section of the full Annual Report:

18 16 FINANCIAL HIGHLIGHTS Growing population, growing city New rating units (ratepayers) each year 2011 estimate 114, census 117, estimate 124, / / /17 +1,249 This means there are new ratepayers joining us every year, who help to pay to keep our city running and great to live in, and use the infrastructure, facilities and services. The growth in the number of ratepayers for the past two years has exceeded what we d projected in the Long Term Plan (LTP). Building activity is going through the roof ALMOST 1,600 new dwelling consents processed this year up 86% on the ten-year average Development contributions revenue totalled $ 27million 79% above the ten-year average Our revenue is growing notably as a result of our population growth $186 MILLION total operating revenue DEBT-TO-REVENUE RATIO: 155%

19 17 Our expenditure is also higher than expected as we work to meet the demand of more people using our services Total operational expenditure $ 191 million including depreciation An overall surplus of 39 million after asset revenue and other adjustments $ RATES COLLECTED sufficient to cover rates funding required Our asset base is growing too, with new facilities, infrastructure, property etc. We currently own $3.4 billion of physical assets + a further $114 million of recreation and community facilities owned by Bay Venues We spent $83m (capital expenditure) on infrastructure and other assets last year And our debt is lower than expected so our net wealth is higher NET DEBT stands at $297 MILLION at 30 June 2016 OUR CITY has equity of $3.1 billion

20 18 FINANCIAL HIGHLIGHTS The financial results for Tauranga City Council reflect a Council that is successfully managing and responding to the needs of a rapidly growing city. Financial impact of growth Rapid growth in residential property development over the last year has been reflected in our revenue and our expenditure both operational and capital. In the past year new dwelling consents totalled almost 1,600, which was 86% above the ten-year average. Residential Building Consents for New Builds (2006/7-2015/16) 2,000 1,500 1, /7 2007/8 2008/9 2009/ / / / / / /16 Operating revenue and expenditure The surge in development activity increases demand for our building, engineering, planning and information services. User fee revenue from these building-related activities totalled over $10m, about 67% above budget for the year. The graph to the right shows the trend in user fees associated with building-related activities over the last five years. $000 12,000 10,000 8,000 6,000 4,000 2,000 0 Building-related User Fees 2011/ / / / /16 () Budget () Offsetting this revenue are higher costs, with a significant increase in staff costs and operating costs, particularly consultants, to support the level of services we were required to deliver. The requirements of a growing population were also reflected in increased demand for other Council services such as trade waste, waste disposal, animal services and licencing. As a result, the user fee revenue from a range of activities, along with the associated costs of delivery, were also higher this past year.

21 19 Capital revenue and expenditure Development of new land for housing and commercial uses requires core infrastructure, including roads, water, wastewater and stormwater services and reserves. We work to fund new infrastructure from development contributions. The increase in development activity was reflected in higher development contribution revenue. Total development contribution revenue for the year was $27m. which was $10m above budget and 79% above the ten-year average. Because growth occurred more rapidly than expected, capital expenditure was brought forward for key infrastructure in The Lakes, Tauriko and Wairakei. Vested assets of $24m were received for the year. Development Contributions (2006/7-2015/16) $30,000,000 $20,000,000 $10,000,000 $0 2006/7 2007/8 2008/9 2009/ / / / / / /16 Citywide Development Contributions Local Development Contributions Underlying operating result The increase in user fee revenue from the higher demand for Council services fully offsets the increase in costs to deliver services. The rates collected were sufficient to meet the rates required to fund activities. You can refer to the introduction to the financial section of the Annual Report for a full explanation of the operating result. Managing infrastructure and other assets Council s property and infrastructure assets increased to $3.4 billion from $3.3 billion at 30 June The increase reflects additions of assets from the capital programme and vested assets, offset by property sales, and the upward revaluation of existing assets by $86m. Capital expenditure of $83m for the year was below budget, with several major projects including the Marine Precinct and Southern Pipeline continuing into next year. The Marine Precinct project was delayed pending finalisation of the sale of the stage 1 commercial properties within the precinct. This was finalised in June This delay deferred construction of the hardstand and purchase of the travel-lift into 2016/17. The Southern Pipeline project is at the point of considering options for the harbour crossing and completion of the pipeline through to Te Maunga which are programmed to be undertaken in 2016/17. There are also a number of transportation projects (slip lanes at SH29/ Taurikura roundabout (the Lakes), Te Okuroa Drive Stage 1, Elizabeth St Carpark, Grenada St Extension) that are expected to be completed early in 2016/17.

22 /16 Capital Expenditure vs Budget RENEWALS LEVELS OF SERVICE GROWTH 0 10,000 20,000 30,000 40,000 50,000 60,000 spend () Budget () Infrastructure assets were revalued on 1 July 2015 by $86m. The revaluation reflects increases in the value of network assets in water and wastewater, along with additional assets recognised in stormwater that were previously valued as part of the roading network. As a result of the higher asset value, depreciation expense was over budget by $2m for the year. The most significant depreciation movements were in water supply and wastewater. As a result of weather-tightness and earthquake issues associated with civic campus buildings, additional expenditure was incurred this year to relocate staff and operations from the existing buildings and to assess options for future accommodation and other campus facilities and amenities. The Civic Heart project has involved extensive analysis and consultation. This included a proposed amendment to the Long Term Plan to provide a long-term solution to staff accommodation as well as to look at options for the central library and other council facilities within the city centre. Most of the business case and consulting advice related to the project was recognised as operating expenditure, although the original budget had been included as capital. Debt trends Net debt at year end is $297m, which is significantly below the budget of $355m. The key drivers of the difference are slower capital delivery (with most of this capital work now planned for 2016/17), unbudgeted revenue from the sale of land ($10m), and additional development contribution revenue ($10m). The debt to revenue ratio is lower than budgeted at 155%, reflecting both lower debt and higher revenue, some of which is one-off (e.g. forestry harvesting in the Oropi water catchment). With the programmed delivery of capital projects in 2016/17 debt levels are expected to increase to the planned levels through 2016/17. There is continued demand for additional infrastructure in new growth areas. We work to fund this core infrastructure from development contribution revenue. However, growth still puts pressure on our debt levels as we are required to forward-fund infrastructure investment and recover from development contributions over time. As well as core infrastructure, new residential areas require additional community facilities and wider public amenities which cannot be funded from development contributions, so require loans funded by rates. As a result of this growth-related expenditure, total debt will continue to increase over the next few years. Other organisations supported by Tauranga City Council Council supports a range of other organisations that deliver services and benefits to the Tauranga Community. The list of organisations supported by Council is included in the table below. Council s accounts are consolidated with the accounts of two of its Council-Controlled Organisations (CCOs); Bay Venues Limited and the Art Gallery.

23 21 The largest of these entities is Bay Venues Limited (BVL) which owns and operates recreation and community facilities on behalf of Council, including the ASB Arena. Key events include the AIMS Games, a national sporting event for intermediate aged students that brings significant visitors to Tauranga during September. The 2015 AIMS Games brought together over 8,000 competitors representing 262 schools from throughout New Zealand. At the beginning of this year a further building adjacent to Blake Park was transferred to BVL to be developed as a high performance sports centre, in collaboration with the University of Waikato. The University of Waikato Adams Centre for Higher Performance was opened in April this year. BVL has total assets of $114million. Council has an investment in BVL of $84m and a loan of $10m, on which BVL pays annual interest. Council paid BVL annual operating grants of $3m which is rate-funded as well as collecting rates for depreciation on BVL assets of $3.9m. Council also pays an annual grant to BVL for asset renewals which is paid from the Council s depreciation reserve. As a one-off payment this year, a further $1.1m capital grant was paid to BVL to fund costs of developing the high performance sports centre. The Art Gallery has total assets of $10 million. This year the Gallery hosted 25 exhibitions, which brought over 54,000 visitors through their doors. Tauranga City Council has a 50% interest in Tourism Bay of Plenty (TBOP), and also provides TBOP an operational grant which is funded from commercial rates and a service delivery contract to operate the Visitor Information Service. The Mainstreet organisations represent commercial interests in four main town centres of Tauranga; the City Centre, Mount Maunganui, Greerton, and Papamoa. Council levies a targeted rate at the amount agreed by the Mainstreet organisations to support their operations. COUNCIL GRANTS AND COMMUNITY CONTRACTS TAURANGA CITY COUNCIL SUPPORT FOR EXTERNAL ORGANISATIONS ABOVE $25,000 ($000's) Bay Venues Limited (CCO) * 7,464 Tourism Bay of Plenty ** 1,206 Art Gallery (CCO) 900 Mainstreet Organisations*** Tauranga Mainstreet 297 Mount Mainstreet 145 Greerton Mainstreet 102 Papamoa Mainstreet 25 Priority One 860 Creative Tauranga Arts 296 Creative Communities Scheme 86 Sport BOP 294 Surf Lifesaving BOP 159 Citizens Advice Bureau 53 Export BOP 53 Total 11,940 * 2016 support to Bay Venues includes capital and operating grants and payments. It includes the renewals grant of $3.3m which was funded from the depreciation reserve held by Tauranga City Council, but excludes the rate-funded contribution to the depreciation reserve of $3.9m for the year. ** Includes $291k for Visitor Information Centre contract. *** Mainstreet organisations are funded from targeted rates on the relevant commercial businesses

24 22 Trends in our core financials The following tables summarise five years of key financial data. Operating revenue and expenditure have increased over the past five years with rapid population and housing growth experienced in the last two years reflected in higher user fees and operating expenditure. Development contribution revenue has increased substantially in the last two years from the lower levels that resulted from the downturn experienced from FINANCIAL OVERVIEW TAURANGA CITY COUNCIL FIVE-YEAR PERFORMANCE SUMMARY ($Millions) Rates Revenue * Other Revenue Operating Expenditure Operating Surplus/(Deficit) (5) (2) 4 5 (5) Development Contribution Revenue Capital Expenditure (including Vested Assets) *2 Working Capital (65) (112) (85) (77) (45) Gross External Debt Net External Debt *3 297 Fixed Assets (Net Book Value)* 4 3,277 3,255 3,263 3,266 3,404 * 1 Excluding water by meter revenue. * 2 Capital expenditure of $83m plus vested assets and excluding land sales. * 3 Net Debt includes the GST portion from NZTA for the sale of Route K ($9.3m). Adjusted Net Debt to eliminate this transaction is $304m. * 4 Fixed Assets include physical assets, property, plant and equipment, forests, investment property and non-current assets held for sale. TAURANGA CITY COUNCIL FIVE YEAR PERFORMANCE SUMMARY LIMITS Proportion of Rates to Operating Revenue 62.0% 61.6% 62.1% 63.7% 64.7% Net External Term Debt to Total Assets 11.9% 11.6% 10.7% 9.2% 8.3% Net External Debt per Rateable Property 7,669 7,340 7,104 5,676 5,603 Net Interest Expense to Operating Revenue 20% 13.3% 12.4% 12.3% 11.7% 10.1% Net Debt to Operating Revenue 250% 243% 224% 214% 164% * 155% * Net Debt includes the GST portion from NZTA for the sale of Route K ($9.3m). Adjusted Net debt ratio to eliminate this transaction is 170% TAURANGA CITY COUNCIL RATEPAYER DATA Number of Rating units 50,506 50,966 51,430 52,046 53,006 Total Capital Value ($ Millions) 27,084 27,347 27,103 27,513 28,041 Total Land Value ($ Millions) 14,817 14,821 13,803 13,888 14,004 Our gross and net debt levels have reduced over the last five years with the significant reduction between 2014 and 2015 resulting from the sale of the road known as Route K to NZTA for $61m.

25 23 Net Debt to Operating Revenue % $ Million % 250% 200% 150% 100% 50% 0 Net External Debt Net Debt to Operating Revenue % Overall, the value of fixed assets has increased. New core infrastructure delivered and the increasing value of our infrastructure more than offset the reductions in assets from the transfer of our recreation facilities to Bay Venues Limited and the sale of Route K. Net External Term Debt to Total Assets % 4, % $ Million 3,000 2,000 1, % 5.0% % Total Assets Net External Term Debt to Total Assets %

26 24 What did rates and user fees pay for over the past year? Your rates and user fees and charges cover the operational (day to day) costs of running a city. This includes providing core services and ensuring infrastructure is maintained. About 75% of all Council s operating expenditure is covered by rates. The remainder is covered by user fees and charges and subsidies from other organisations. The rates graph below shows the services that your rates fund. Over half of your rates (57%) were spent on core infrastructure (transportation, wastewater, water supply and stormwater) and a further 31% funded libraries, parks and recreation and other community facilities. 2015/16 Rates Distribution WASTEWATER 15% WATER SUPPLY 14% ECONOMIC DEVELOPMENT 2% STRATEGY & PLANNING 2% TRANSPORTATION 15% CULTURE AND COMMUNITY 5% SOLID WASTE 1% MONITORING, REGULATION & RESPONSE 3% LIBRARIES 5% DEMOCRACY 4% STORMWATER 12% PARKS & RECREATION 22% What did our new debt pay for over the last year? Capital expenditure pays for buying or building new assets, renewing existing assets and improving them to deliver a better service. The majority of our capital works programme was spent on our core network infrastructure (transportation, wastewater, water supply and stormwater) which accounted for 70% of our capital expenditure this year. Key projects that were delivered or are ongoing are identified below: *Capital expenditure excludes vested assets 2015/16 Capital Expenditure = $83m WATER SUPPLY 9% OTHER 14% MARINE FACILITIES 2% WASTEWATER 19% ICT 7% CITY CENTRE 2% PARKS & RECREATION 5% STORMWATER 12% TRANSPORTATION 30%

27 25 CAPITAL EXPENDITURE The following projects represent significant projects in terms of actual expenditure and public profile. ACTIVITY PROJECT ACTUAL 15/16 $M BUDGET 15/16 ANNUAL PLAN INCLUDING CARRY FORWARD BUDGET FROM 14/15 $M Wastewater Southern Pipeline $6.9 $18.0 Stormwater Stormwater Projects $10.0 $12.6 Marine Facilities Marine Precinct $0.7 $9.8 Libraries Greerton Library $3.2 $3.2 Transportation & Three Waters Te Okuroa Drive $3.8 $6.2 Transportation Mangatawa Interchange $4.0 $4.2 ICT Corporate ERP & City Online $3.0 $3.0 Emergency Management Tsunami Evacuation Routes $2.6 $1.9 Parking Management Car Park Buildings $3.8 $2.7 City Centre City Centre & Waterfront Development $0.5 $1.0 Various Activities Renewal of TCC assets $19.7 $21.5

28 26 NON-FINANCIAL PERFORMANCE HIGHLIGHTS Council delivers a range of different activities and services to the community. We strive to deliver the high level of service that the community expects of us. Our non-financial performance measures are set through the Long Term Plan and outline the level of service and performance targets for all our activities. Throughout the year, we monitor our performance to ensure we are achieving this, and report back the results quarterly and annually. We use a range of measures, from technical measures such as our compliance with bacteriological standards for drinking water quality, to perception-based measures such as the percentage of residents that feel safe when using our cycleways. We have 78 performance measures that cover the range of our 25 separate activities. For the 2015/16 year six of these were unable to be reported on either due to data being unavailable (such as census data released only every three years) or because there were no directly comparable results from previous years. Of the remaining 72 measures we achieved 52. This represents 72% of the measures we are able to report on, or 67% of all our performance measures. This is a positive result, but one we will continue to improve on. Eight of our activities met all their performance measures, including City Planning and Growth, Community Development and the Airport. Water Supply, Cemeteries and City Centre activities also met all their targets except for those that could not be reported on. Of the 20 performance measures we have not met, we will be looking to make improvements in these areas over the coming year. For example, we processed 98% of resource consent applications within statutory timeframes, however this is below our 100% target. This reflects the higher than expected volumes associated with the growth across our city and it will be a focus for improvement next year. We failed to meet our target of reducing the amount of waste the city sends to landfill, with the amount increasing rather than decreasing. The Waste Management and Minimisation Plan, recently adopted by Council, will seek to address this. Achieved Not achieved No data available Further detail on our non-financial performance for each activity can be found in the Groups of Activities chapter of the full Annual Report.

29 27 AREA OF ACTIVITY ACHIEVEMENT OF TARGETS EXAMPLES OF PERFORMANCE MEASURE IMPROVEMENTS Transportation Airport Parks and Recreation Tauranga Cemeteries Significant growth in parts of the city is having an impact on traffic flows and travel times on key routes. We are working with key transport partners (NZTA and BOP Regional Council) on optimising the network via Network Operating Plans (NoPs) while considering longer term transport issues through the Tauranga Transport Model. A new terminal extension for the Airport has been approved for 2017 which will significantly increase capacity. Open space is being acquired on an ongoing basis, generally in the form of neighbourhood reserves and stormwater reserves vested through subdivision. Beachside Holiday Park Wastewater Council is actively working to address one non-compliance Water Supply Stormwater Resource Recovery and Waste Libraries Baycourt Community Arts Centre Arts and Heritage Community Development Economic Development City Centre Strategic and City Events City Planning and Growth Management Council will aim to reduce the number of complaints per 1,000 properties to below 2. The draft Waste Management and Minimisation Plan is seeking to address this performance and improve it in the future. Percentage of customers that are satisfied with the range of titles and of formats available is slightly below the target, but the level of dissastisfaction remains low. Council will continue to support the arts in Tauranga through its ongoing funding of Creative Tauranga, Bay Court and the Art Gallery. Tauranga continues to successfully ensure land is available and serviced for new housing, mitigating land price increases. More emphasis on promotion and event awareness could improve this figure in the future. Elder Housing Marine Facilities Environmental Planning Building Services Environmental Monitoring 98% of resource consents are processed within statutory timeframes. This reflects the higher than expected consent volumes associated with growth across the city. Resources have been increased to reduce the waiting time for inspections. This will also be a focus for the next year. Animal Services Emergency Management 80% of roles in the emergency operations centre are filled. Aim is to raise this to 90% next year. Achieved Not achieved No data available

30 28 FINANCIAL PERFORMANCE Tauranga City Council: Statement of Comprehensive Revenue and Expenses for the year ended 30 June 2016 OPERATING REVENUE 2016 Council Budget Consolidated Rates, including Targeted Rates for Water Supply 137, , , , ,948 Fees and Charges 40,070 32,513 37,960 53,203 47,620 Other Revenue Grants & Subsidies 5,022 4,872 5,257 5,344 5,433 Finance Revenue 2,990 1,592 4,228 2,502 1,800 Total Operating Revenue 185, , , , ,648 ASSET DEVELOPMENT REVENUE AND OTHER GAINS Assets Vested to Tauranga City Council 24,008 38,009 15,412 24,008 15,412 Development Contributions 27,141 16,644 19,082 27,141 19,082 Grants & Subsidies Capital Expenditure Contributions 5,560 10,700 8,642 5,560 8,642 Other Gains 16,544 1,359 31,769 16,544 31,769 Total Asset Development Revenue & Other Gains 73,253 66,712 74,905 73,253 74,905 TOTAL REVENUE 259, , , , ,553 OPERATING EXPENDITURE Depreciation and Amortisation Expense (44,942) (42,897) (43,737) (50,218) (48,236) Personnel Expense (43,050) (40,498) (37,147) (51,477) (45,064) Finance Expense (20,834) (20,911) (24,809) (20,834) (24,809) Other Operating Expenses (82,246) (74,843) (68,056) (82,448) (69,417) Total Operating Expenditure (191,072) (179,149) (173,749) (204,977) (187,526) OTHER EXPENSES Other Losses (6,264) - (4,134) (6,264) (4,134) Provisions Expense (1,414) (25) (3,499) (1,414) (3,499) Unrealised Loss on Interest Swaps (21,221) - (9,133) (21,221) (9,133) Total Other Expenses (28,899) (25) (16,766) (28,899) (16,766) TOTAL EXPENDITURE (219,971) (179,174) (190,515) (233,876) (204,292) Operating surplus/(deficit) before tax and share of equity accounted investments 39,256 64,166 63,630 38,118 57,261 Share in Associate Surplus/(Deficit) (59) (49) SURPLUS/(DEFICIT) BEFORE TAX 39,256 64,166 63,630 38,059 57,212 Income (Tax Expense)/Benefit ,256 1,406 SURPLUS/(DEFICIT) AFTER TAX 39,256 64,166 63,630 39,315 58,618 OTHER COMPREHENSIVE REVENUE & EXPENSES Asset revaluation reserve Gains /(losses) 85,970-5,029 85,970 16,523 Tax on Other Comprehensive Revenue (3,148) Total Other Comprehensive Revenue & Expenses 85,970-5,029 85,970 13,375 TOTAL COMPREHENSIVE REVENUE & EXPENSES 125,226 64,166 68, ,285 71,

31 29 Tauranga City Council: Summary Statement of Financial Position Council Consolidated 2016 Budget What the Council and Group Owned: Current Assets 45,258 28,095 58,442 47,942 61,583 Non-current assets 3,516,294 3,400,904 3,373,590 3,542,806 3,399,798 Total Assets 3,561,552 3,428,999 3,432,032 3,590,748 3,461,381 What the Council and Group Owed: Current liabilities 89, , ,999 93, ,451 Non-current liabilities 334, , , , ,558 Total Liabilities 423, , , , ,009 Net Assets/Equity 3,137,688 3,008,446 3,012,462 3,154,658 3,029,372

32 30 TAURANGA CITY COUNCIL: SUMMARY STATEMENT OF CASHFLOWS The summary cashflow table below shows how the Council and the Consolidated Group generated and used cash during the respective financial years. In both financial years cash surpluses from operating activities were invested in the City s assets. Tauranga City Council: Statement of Cash Flows for the year ended 30 June Council Budget Consolidated Net cash flow from operating activities 64,000 62,296 84,570 69,585 81,959 Net cash flow from investing activities (65,948) (51,768) (13,945) (72,048) (11,767) Net cash flow from financing activities (15,048) (40,529) (65,078) (14,396) (65,078) Increase/(Decrease) in cash for the year (16,996) (30,001) 5,547 (16,859) 5,114 Add: Opening cash balance 35,563 30,016 30,016 35,804 30,690 Cash balance at end of year 18, ,563 18,949 35, Tauranga City Council: Statement of Movements in Equity for the year ended 30 June 2016 Council Retained Earnings $000 PP&E Reval Reserve $000 Restricted Reserve $000 Council Created Reserves $000 Total Equity $000 Balance as at 30 June ,824 2,150,090 (57,552) 77,100 3,012,462 Total Surplus/(Deficit) Income for the year 39,256 85, ,226 Net Transfers (to)/from Retained Earnings/Reserves 1,560 (14,802) 2,053 11,189 0 Balance as at 30 June ,640 2,221,258 (55,499) 88,289 3,137,688 Consolidated* Retained Earnings $000 PP&E Reval Reserve $000 Restricted Reserve $000 Council Created Reserves $000 Total Equity $000 Balance as at 30 June ,266 2,173,117 (57,111) 77,100 3,029,372 Total Surplus/(Deficit) Income for the year 39,315 85, ,285 Net Transfers (to)/from Retained Earnings/Reserves 1,107 (14,379) 2,203 11,069 0 Balance as at 30 June ,688 2,244,708 (54,908) 88,169 3,154,657 * Consolidated in Council financial statement refers to Council and its combined Council Controlled Organisations and subsidiary companies.

33 31 CAPITAL COMMITMENTS AND OPERATING LEASES Capital commitments represent capital expenditure contracted for at balance date but not yet incurred. Capital Commitments 2016 Council Consolidated Water Systems 13,194 5,860 13,194 5,860 Roading Network 23,397 6,202 23,397 6,202 Buildings 1,021 2,900 1,021 2,900 Intangible Assets Parks Facilities TOTAL CAPITAL COMMITMENTS 38,340 14,962 38,340 14, OPERATING LEASES AS LESSEE Tauranga City Council leases property, plant and equipment in the normal course of business. The majority of these leases have a non-cancellable term of 48 months with the exception of four leases at eighteen years plus. LEASES Leases can be renewed at Tauranga City Council s option, with rents set by reference to current market rates for items of equivalent age and condition. Tauranga City Council does not have an option to purchase the assets at the end of the lease term. There are no restrictions placed on Tauranga City Council and group by any leasing arrangement. The future aggregate minimum lease payments to be made under non-cancellable operating leases are as follows: Council Consolidated Not later than one year 1, ,580 1,135 Later than one year and not later than five years 4, , Not later than five years 1,067 1,892 1,067 1,908 TOTAL NON-CANCELLABLE OPERATING LEASES 6,399 3,051 7,085 3,770 OPERATING LEASES AS LESSOR TCC leases investment property under operating leases. The majority of these leases have a non-cancellable term of more than 72 months. The future aggregate minimum lease payments to be collected under non-cancellable operating leases are as follows: Council Consolidated Not later than one year 1,575 1,557 1,644 1,626 Later than one year and not later than five years 3,295 4,006 3,295 4,006 Not later than five years 8,331 7,681 8,331 7,681 TOTAL NON-CANCELLABLE OPERATING LEASES 13,201 13,244 13,270 13,313 No contingent rents have been recognised during the year (2015: nil).

34 32 OTHER QUANTIFIABLE CONTINGENT LIABILITIES Tauranga City Council is not aware of any potential general contract claims. FINANCIAL GUARANTEES TCC has provided a guarantee to Tauranga Energy Consumer Trust (TECT) for the interest free loan of $750k (2015:$0) to Bay Venues Ltd by issuing security stock under the terms of the Trust Deed. BANK GUARANTEES Tauranga City Council has guaranteed bank advances in relation to some local community organisation and sports clubs to the value of $80k as at 30 June 2016 (2015: $120k). These have not been recognised in the statement of financial position as Tauranga City Council considers there is very little probability of being required to reimburse the holder. The amounts disclosed above represent the outstanding loan balances guaranteed at balance date. Council s liability is to the extent of the outstanding loan. These guarantees are in turn subject to the personal indemnity of members of the respective organisations. GUARANTEE PROVISION NEW ZEALAND LOCAL GOVERNMENT FUNDING AGENCY (LGFA) Tauranga City Council is a shareholder of The New Zealand Local Government Funding Agency Limited. This entity was incorporated in December 2011 with the purpose of providing debt funding to local authorities in New Zealand. Standard and Poor s have given the entity a credit rating of AA+ which is equal to New Zealand Government sovereign rating. As at 30 June 2016 Tauranga City Council is one of the 31 shareholders made up of 30 local authorities and the Crown. All 30 local authority shareholders have uncalled capital equal to their individual shareholding and totalling $20 million in aggregate which can be called on in the event that an imminent default is identified. Also together with the other shareholders, Tauranga City Council is a guarantor of all of NZLGFA borrowings. At 30 June 2016, NZLGFA had borrowings totalling $6,501m (2015: $4,955m). Financial reporting standards require Tauranga City Council to recognise the guarantee liability at fair value. However, the Council has been unable to determine a sufficiently reliable fair value for the guarantee, and therefore has not recognised a liability. The Council considers the risk of NZLGFA defaulting on repayment of interest or capital to be very low on the basis that: We are not aware of any local authority debt default events in New Zealand; and Local government legislation would enable local authorities to levy a rate to recover sufficient funds to meet any debt obligations if further funds were required. The loss on default methodology was used to calculate the potential liability of the guarantee at balance date. This assessed the likelihood of any one local authority defaulting that required a call on the guarantee to be made once the uncalled capital had been applied to the default. The guarantee has been proportionally allocated on a rates income basis. LEGAL RISK Council is aware of a potential legal risk and has included this as a contingency. Council considers the probability of any material payment to be low. Council has not disclosed any further detailed information about this contingency due to its commercial sensitivity. TREATY SETTLEMENT 2016 Tauranga City Council has identified engagement with Tangata Whenua as a priority and it wishes to ensure that it effectively meets demands and expectations of the changing political, economic and social environments in Tauranga Moana. The Council is currently reviewing its engagement processes to further improve existing relationships and develop a strategic engagement framework which will take into account a number of factors, including the Tauranga Moana Treaty claims currently progressing through parliament. These claims are expected to be completed in Tangata Whenua are also in the process of developing their own strategic plan and it is envisaged that key aspects of Council s framework will align with and compliment this plan. A collaborative approach is perceived as a pragmatic way of Council working together strategically with Tangata Whenua for a common purpose. Our focus going forward is to continue to work closely with Maori communities to achieve understanding of both Council and Tangata Whenua processes and to ensure a consistent approach is maintained. Good communication is key to a more effective and improved management of city works. LEAKY BUILDING CLAIMS Tauranga City Council has recognised a provision of $6.1m relating to actual and potential claims under the Weathertight Homes Resolutions Service and the Financial Assistance Package for leaky homes. These are for claims that are still to be investigated and confirmed, which includes work to assess whether other available parties will share the liability and work to assess the costs. The provisions represent the estimated amount payable under these claims including the insurance excess based on information currently available. Tauranga City Councils maximum exposure to Leaky Buildings claims is currently estimated as an additional $31m. It is not considered probable that this liability will materialise hence this is recognised as a contingent liability.

35 33 SUPERANNUATION SCHEMES The Council is a participating employer in the DBP Contributors Scheme (the scheme), which is a multi employer defined benefit scheme. The funding arrangements are governed by the requirement of Section 44 of the National Provident Fund Restructuring Act 1990, which requires that any increase or decrease to the employer contribution rate should: result in contributions being at a level which, on reasonable assumptions, is likely to achieve neither a surplus or deficit in the trust fund of the DBP contributors scheme...at the time that the last contributor to that scheme ceases to so contribute. And by the Trust Deed, which requires the employers to contribute such amount as the Board of Trustees of the National Provident Fund, after consultation with the Actuary, may direct. In practice, a single contribution rate is determined for all employers which is expressed as a multiple of the contributions of members of the Scheme who are employees of that employer. At present, employer contributions are suspended. There is no minimum funding requirement and employers have no right to withdraw from the plan. Insufficient information is available to use defined benefit accounting, as it is not possible to determine, from the terms of the Scheme, the extent to which the deficit will affect future contributions by employers, as there is no prescribed basis for allocation. The actuarial examination as at 31 March 2016 indicated that the Scheme has a past service surplus of $11.7 million (7.4% of the liabilities). This amount was exclusive of Employer Superannuation Contribution Tax. This surplus was calculated using a discounted rate equal to the expected return on assets, but otherwise the assumptions and methodology were consistent with the requirements of PBE IPSAS25. The Actuary to the Scheme recommended previously that the employer contributions were suspended with the effect from 1 April In the latest report, the Actuary recommended employer contributions remain suspended. There were no overdue or prepaid contributions at balance date.

36 34 NOTES 1. Part 6 s 98(4)(b) of the Local Government Act 2002 requires Council to make publicly available a summary of information contained in its Annual Report. The specific disclosures included in the summary financial report have been extracted from the full financial report adopted on 20 September This summary has been prepared in accordance with PBE:FRS-43: Summary Financial Statements. 2. The summary financial report cannot be expected to provide as complete an understanding as provided by the full financial report. The full financial report dated 20 September 2016 has received an unmodified audit report. A full copy of the Annual Report is available from the Tauranga City Council main reception, Tauranga Public Libraries or on our website nz. 3. This summary financial report has been examined by the auditor for consistency with the full financial report. An unmodified auditor s report is included with this summary. 4. The financial statements at 30 June 2016 comprise the Tauranga City Council, which includes Bay Venues Limited, Tourism Bay of Plenty and Tauranga Art Gallery Trust. 5. The full financial statements of The Council comply with New Zealand equivalents to the International Financial Reporting Standards as applicable for public benefit entities and have been prepared in accordance with the requirement of the LGA. 6. The presentation currency for this summary report is in New Zealand dollars, rounded to the nearest thousand. The summary was authorised by the Tauranga City Council Chief Financial Officer, Paul Davidson, on 19 October Tauranga City Council (TCC) is a Public Benefit Entity (PBE). 8. The full financial statements have been prepared in accordance with Tier 1 Public Benefit Entity (PBE) accounting standards. 9. On 31 December 2015, the External Reporting Board updated the suite of accounting standards incorporating requirements and guidance applicable to Public Benefit Entities (PBE). These updated standards apply to PBE s with reporting periods on or after 1 January The Council has applied these standards in preparing its 30 June 2016 full financial statements. There have been no changes resulting from applying the updated accounting standards.

37 35 EXPLANATIONS OF MAJOR VARIANCES AGAINST BUDGET, PRIOR YEAR ACTUALS AND CURRENT YEAR ACTUALS Variance 2015 and 2016 Major Variances Statement of Comprehensive Revenue and Expenditure Rates Revenue Including Water by Meter Higher rates due to higher rate charge and more rating units due to growth Other Operating Revenue Asset Development Revenue and Other gains Operating Expenditure Other Expenses Interest receipts were lower in 2016 than the previous year due to timing of revenue and expenditure. This offset fees and charges that were higher in 2016 particularly in building-related activities. Higher value of assets vested to Council than previous year reflecting higher levels of growth. Refer comments on variation from budget Refer comments on variation from budget 2015 $m 2016 $m 2016 Budget $m Variance 2016 to Budget Higher number of rating units than budgeted particularly for water and wastewater connections User fees were above budget particularly in building related activities more than offsetting loss on Route K activity Lower value of assets vested to Council than budgeted due to specific assets related to roading projects now expected in later years. Revenue above budget for Developer Contributions due to an increase in economic activity. (174) (191) (179) Depreciation was above budget for the year due to upward revaluations of Marine and Infrastructure Assets. Personnel costs are above budget due to additional staff employed to meet additional workload requirements particularly in activities relating to building services as a result of high growth in residential property. Other Operating Expenses are above budget due to higher consultant costs to meet increased demand for Council services. (17) (29) 0 These include asset write offs and losses which are not budgeted for and vary from year to year. An increase in Provisions occurred for Weathertight claims. Unfavourable revaluation of Interest Rate Derivatives (swaps) based on market interest rates as at 30 June Operating Surplus/(Deficit) Before Tax

38 36 Variance 2015 and 2016 Major Variances Statement of Financial Position Current Assets Fewer properties were held for sale than in Non Current Assets Current Liabilities Non Current Liabilities Increased Investment in BVL, NZLGFA Borrower notes. Revaluation changes to Assets and movements of property held for sale to Investment Property. Variance mainly due to increased Rates in Advance Revenue and Expenditure accruals Variance is due to timing of undertaking Interest Rate Swaps in More Swaps have been placed in future years. Overall borrowings are under total Borrowings budget following capital budget underspend due to re-arrangement of some capital programmes $m 2016 $m 2016 Budget $m Variance 2016 to Budget Cash budgets assume minimal cash holdings. The identification of non current assets held for sale that were likely to be sold in the next 12 months differed from what was budgeted. 3,374 3,516 3,401 Relates to increased investment in BVL, budget did not include transfer of Community Halls to BVL. Revaluation changes to Assets and movements of property held for sale to Investment Property. (136) (90) (137) Variance due to Income in advance received for Vested assets not budgeted for. Also interest rates are lower than budget. (284) (334) (283) Variance is due to timing of undertaking Interest Rate Swaps in Borrowings are significantly below last year due ongoing effect of the sale of Route K on 30 June 2015 as well as overall capital underspends in current year. Net Assets/Equity 3,012 3,138 3,008 Major Variances Statement of Cash Flows Net cash flow from operating activities Increase due to budget rate increase per Long Term Plan. Refer also to budget increases. Net cash flow from investing activities Net cash flow from financing activities Sales proceeds fluctuate on an annual basis with the level of property sales. Variance mainly relates to the sale of Route K to NZTA in June Whilst the individual inflows and outflows vary with the timing of borrowings, the net repayment of borrowings is significantly lower than the prior year Variance due to rates being collected on behalf of Regional council, not budgeted for. Also increase in revenue from building growth within the city. (14) (66) (52) Sales proceeds fluctuate on an annual basis with the level of property sales. Reflects the capital programme for the year together with prior year carry forwards and projects not yet complete which will be carried forward to future years (65) (15) (41) The actual inflow and outflow varies based on the timing of borrowings. Borrowings exceeded repayments during the year. Increase/(Decrease) in cash for the year 6 (17) (30) Add: Opening cash balance Cash Balance at End of Year

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