POLICY AND DEVELOPMENT COMMITTEE MEETING. Council Chamber Timaru District Council King George Place Timaru

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1 POLICY AND DEVELOPMENT COMMITTEE MEETING on Tuesday 26 April 2016 Council Chamber King George Place Timaru

2 TIMARU DISTRICT COUNCIL Notice is hereby given that a meeting of the will be held in the Council Chamber, District Council Building, 2 King George Place, Timaru on Tuesday 26 April 2016, at the conclusion of the District Services Committee meeting. Committee Members: Clrs Tracy Tierney (Chairperson), Anthony Brien (Deputy Chairperson), Peter Burt, Steve Earnshaw, David Jack, Richard Lyon, Pat Mulvey, Kerry Stevens, Steve Wills and the Mayor. LOCAL AUTHORITIES (MEMBERS INTERESTS) ACT 1968 Committee members are reminded that if you have a pecuniary interest in any item on the agenda, then you must declare this interest and refrain from discussing or voting on this item, and are advised to withdraw from the meeting table. Peter Nixon CHIEF EXECUTIVE

3 POLICY AND DEVELOPMENT COMMITTEE 26 APRIL 2016 AGENDA Item No Page No 1 Apologies 2 Identification of Items of Urgent Business 3 Identification of Matters of a Minor Nature 4 Chairperson s Report 5 1 Confirmation of Minutes 6 5 Council Investments and Borrowing as at 31 March Aorangi Stadium Trust Trustees 8 11 Social Housing Insurance 9 14 Receipt of Audit and Risk Subcommittee Minutes 10 Standing Committee Recommendations 11 Consideration of Urgent Business Items 12 Consideration of Minor Nature Matters # April 2016

4 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 26 APRIL 2016 Report for Agenda Item No 5 Prepared by Tina Rogers Group Manager Corporate Services Confirmation of Minutes Minutes of the meeting. Recommendation That the minutes of the meeting held on 22 March 2016, be confirmed as a true and correct record. # April 2016

5 TIMARU DISTRICT COUNCIL MINUTES OF A MEETING OF THE POLICY AND DEVELOPMENT COMMITTEE HELD IN THE COUNCIL CHAMBER, DISTRICT COUNCIL BUILDING, 2 KING GEORGE PLACE, TIMARU ON TUESDAY 22 MARCH 2016 AT 11.45AM PRESENT Clrs Tracy Tierney (Chairperson), Tony Brien, Peter Burt, Dave Jack, Richard Lyon, Pat Mulvey, Kerry Stevens, Steve Wills and the Mayor APOLOGIES IN ATTENDANCE Clr Steve Earnshaw Chris Fisher Geraldine Community Board John McDonald Pleasant Point Community Board Paddy O Reilly Temuka Community Board John Talbot Chairperson Orari-Temuka-Opihi- Pareora Water Zone Committee(for item 7) Christina Robb Canterbury Water Management Strategy Programme Manager(for item 7) Chief Executive (Peter Nixon), Group Manager Corporate Services (Tina Rogers), Group Manager District Services (Ashley Harper)(for item 7), Drainage and Water Manager (Grant Hall)(for item 7) and Council Secretary (Joanne Brownie) 1 CHAIRPERSON S REPORT The Chairperson reported on duties she had carried out since the last meeting including the Economic Development Transition Working Group meeting, Downlands Water Supply Committee meeting and discussions with the Group Manager Corporate Services. 2 CONFIRMATION OF MINUTES Proposed Clr Wills Seconded Clr Stevens That the minutes of the meeting, held on 9 February 2016, be confirmed as a true and correct record. 3 TIMARU DISTRICT HOLDINGS LTD QUARTERLY REPORT TO DECEMBER 2015 The Committee considered the TDHL quarterly report for the period October to December Proposed Clr Stevens Seconded Clr Burt That the report be received and noted. # April 2016

6 4 TIMARU DISTRICT HOLDINGS LIMITED DRAFT 2016/17 STATEMENT OF INTENT The Committee considered the draft TDHL Statement of Intent for 2016/17. Discussion took place around the benefit of reducing TDHL debt rather than TDC debt. The Group Manager Corporate Services explained that it is more cost effective to repay TDHL debt as Council can borrow through the Local Government Funding Agency at a cheaper rate. Proposed Clr Burt Seconded Clr Mulvey That the Timaru District Holdings Ltd Statement of Intent 2016/17 be approved. 5 AORANGI STADIUM TRUST SIX MONTHLY REPORT TO DECEMBER 2015 The Committee considered the Aorangi Stadium Trust s six monthly report to December Proposed Clr Wills Seconded Clr Burt That the Aorangi Stadium Trust six monthly report to December 2015 be received and noted. 6 AORANGI STADIUM TRUST DRAFT 2016/17 STATEMENT OF INTENT The Committee considered the draft Statement of Intent 2016/17 for Aorangi Stadium Trust. Proposed Clr Jack Seconded Clr Tierney That the Aorangi Stadium Trust draft Statement of Intent 2016/17 be approved. The meeting adjourned at 12noon and reconvened at 1.30pm. MOTION CARRED 7 ORARI-TEMUKA-OPIHI-PAREORA WATER ZONE COMMITTEE ANNUAL REPORT The Committee considered the annual report of the Orari-Temuka-Opihi-Pareora Water Zone Committee for CWMS Programme Manager and the OTOP Committee s Chairperson presented the report, highlighting the 3 main directions the committee is taking to meet the CWMS targets for the zone and answering questions from the councillors. The report will be circulated to the community to make people more aware of the amount of work being undertaken in water management and water quality. Clr Lyon, Council s representative on the OTOP Committee, thanked John Talbot for recently taking on the chairmanship role and advising that new member Hamish McFarlane has been elected as the deputy chairman. He noted the strength of the OTOP committee lies in its representation from a wide variety of sectors of the community. # April 2016

7 Proposed the Mayor Seconded Clr Lyon That the Orari-Temuka-Opihi-Pareora Water Zone Committee 2015 Annual Report be received and noted. The meeting concluded at 1.50pm. Chairperson # April 2016

8 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 26 APRIL 2016 Report for Agenda Item No 6 Prepared by Tina Rogers Group Manager Corporate Services Council Investments and Borrowing as at 31 March 2016 Background Investments General Funds $22,296,000 Special Funds $18,266,885 Total Investments as at 31 March 2016 $40,562,885 Based on market valuation the Portfolio increased by 1.91% over the March Quarter compared to the Benchmark Portfolio which increased by 1.97%. The duration of the Portfolio was within the 25% fluctuation band when compared with the Benchmark Portfolio's duration for this quarter. Portfolio Duration Benchmark Portfolio Duration 2.69 years 2.28 years During the quarter, an ANZ bond matured and a new Genesis bond was purchased. The Genesis bond matures in 2022, has a yield of 4.14% and is rated BBB+. As part of the Special Funds, the Council continues to hold $13.1m invested in banks on a short term basis. The yields available for term deposits are still higher than those available for bonds of a similar term. Borrowing Bank debt $ 0 Bonds issued $ 84,000,000 Total borrowing outstanding $ 84,000,000 During the quarter, a loan for $5m matured. New borrowing is scheduled to occur in April to replace this loan. # April 2016

9 Interest rate swap hedges are in place fixing the interest rate for $37.9m, of these loans for between 1 and 15 years and $41m of bonds are for a fixed rate. The Debt Maturity Profile is as follows: The weighted average cost of funds excluding the margin was 4.36% compared to the benchmark rate of 3.08%. The following chart illustrates the debt and cover profile set against the Liability Policy Control bands. Recommendation That this report be received and noted. # April 2016

10 General Funds Held as at 31 March 2016 Institution Percentage Category Invested Maturity Rate Amount Registered Banks 100% $1 million BBB or better, $10 million A1 or better BNZ (A1+ short term) General Funds 31/03/2016 Call ,296, BNZ (A1+ short term) General Funds 7/01/2016 5/07/ ,000, BNZ (A1+ short term) General Funds 22/12/ /05/ ,000, ANZ (A1+ short term) General Funds 22/02/ /08/ ,000, ANZ (A1+ short term) General Funds 22/03/ /09/ ,000, ASB (A1+ shert term) General Funds 11/03/2016 7/09/ ,000, ASB (A1+ shert term) General Funds 22/03/ /10/ ,000, Westpac (A1+ short term) General Funds 22/12/ /04/ ,000, Kiwibank (A1+ short term) General Funds 22/12/ /06/ ,000, Total Registered Banks 22,296, Total General Funds 22,296, # April 2016

11 Special Funds Held as at 31 March 2016 Institution Percentage Category Invested Maturity Rate Nominal amount Amount Rated Local Authorities (Limit 70% of portfolio, $1m BBB per issuer, $2m A- rating per issuer, $3m A+ rating per issuer, $4m AA or better rating per issuer) Manakau City Council AA Stock 7/09/ /09/ , ,003 Manakau City Council AA Stock 5/11/ /09/ , ,003 Total Rated Local Authorities 2.97% 500, ,006 Unrated Local Authorities (Limit 60% of portfolio, $2m per issuer) Total Unrated Local Authorities 0.00% - - NZ Registered Banks (Limit 100% of portfolio, $2m A- rating per issuer, $3m A+ rating per issuer, $4m AA- rating or better per issuer (Deposits $10m A1 or better rating)) ANZ BBB Stock 18/04/ /04/ ,000,000 1,016,908 ASB AA- Stock 8/06/2011 8/06/ ,000,000 1,051,610 BNZ AA- Stock 20/12/ /12/ , ,361 BNZ BBB+ Stock 17/12/ /12/ ,000,000 1,000,000 Kiwibank A+ Special Funds 25/11/ /05/ ,000,000 1,000,000 Westpac A1+ Special Funds 31/03/2016 call ,600,000 7,600,000 ASB A1+ Special Funds 22/03/ /09/ ,000,000 3,000,000 BNZ A1+ Special Funds 28/10/ /04/ ,500,000 1,500,000 Total Registered Banks 92.93% 16,850,000 16,974,879 SOE'S Total SOEs 0.00% - - Corporates (Limit 70% of portfolio, $1 m BBB rating per issuer, $2m A- rating per issuer. $3m A+ rating per issuer, $4m AA- or better per issuer) (Limit 60% of portfolio, $1 m BBB rating per issuer, $2m A- rating per issuer, $3m A+ rating per issuer, $4m AA- or better per issuer) Genesis BBB+ Stock 18/03/ /03/ , ,000 Total Corporates 4.11% 750, ,000 Total Special Funds % 18,100,000 18,266,885 Totals Stock 5,166,885 Special Funds 13,100,000 18,266,885 # April 2016

12 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 26 APRIL 2016 Report for Agenda Item No 7 Prepared by Peter Nixon Chief Executive Aorangi Stadium Trust - Trustees Purpose of Report The purpose of the report is to review the trustees for the Aorangi Stadium Trust. Background The Trust deed, as amended in March 2014, provides that: The Board shall be persons appointed by the ( Council ) and the Council shall have the power to make such appointment and at any time remove any such Board Member that it has appointed. The Council shall in exercising its power of appointment of Board Members have regard to the need for the Trust to have Board Members with skills and experience in areas appropriate to the objectives to the Trust. Council Councillors may be appointed as Board Members. The Trustees are currently Councillor Tracy Tierney, Councillor Richard Lyon, and staff members Tina Rogers and Matt Ambler. Given that the Trust leases the stadium to the Council to manage and the operations are now well established, it would be appropriate to revise the governance appointments. Staff are involved from an operational perspective so it would be more appropriate to have Councillors as Trustees to replace the staff. Options The trustees can be anyone that the Council appoints. The Trust Deed provides that there must be between three and six trustees. Identification of relevant legislation, Council policy and plans Not Applicable. Assessment of Significance This matter is not deemed significant under the Council s Significance Policy. Consultation No consultation has occurred on this matter. # April 2016

13 Funding Implications There are no funding issues as all positions are unpaid. Conclusion The operation of the stadium as part of the council operations is now well established. It is therefore appropriate to review the governance structure. Recommendation That the appoints two Councillors to replace staff as Trustees. # April 2016

14 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 26 APRIL 2016 Report for Agenda Item No 8 Prepared by Tina Rogers Group Manager Corporate Services Social Housing Insurance Purpose of Report This report is review insurance associated with Social Housing units to decide the risk appetite of the Council. Background The Property Management Policy was adopted in July following statement: This included the That Council continue the policy of insuring on replacement cost those buildings considered by respective Group Managers and the Chief Executive to be vital to the organisation but not to include social housing units built prior to Council is obligated to arrange replacement for new (2007) units as part of agreement with HCNZ. This was subsequently discussed at the Audit and Risk Subcommittee where a further report on the social housing units was requested. The various locations of the housing units provide a level of diversification of risk. Insurance is a method of transferring risk to another party. Details of the 236 housing units are: Location Pre 1960 s 1960 s s-2000 After 2000 Total Timaru Temuka Geraldine Pleasant Point 6 6 Pareora Under the terms of the Housing New Zealand suspensory loan, the 23 units constructed in 2007 and 2008, are to be insured for replacement value. # April 2016

15 Options The options are either to continue to insure the remaining 213 units for indemnity value only, knowing there is a risk, or increase the insurance to replacement cost. This would result in a change to the Property Management Policy. Insuring the required properties for replacement cost and the remaining properties for indemnity value has an annual cost of approximately $38,000. If all properties are insured for replacement cost, there is an additional annual cost of approximately $57,000, which equates to $240 extra per unit per annum. Insuring the required and additional units for replacement cost is summarised below: Replacement insurance for: Annual Insurance cost (Approx) Additional cost above current policy Additional annual cost applied to all units Required units $38,000 $0 $ s-2000 units $55,500 $17,500 $ s units $86,000 $48,000 $203 All units $95,000 $57,000 $240 Identification of relevant legislation, Council policy and plans Revenue and Financing Policy. Property Management Policy. Assessment of Significance This matter is not deemed significant under the Council s Significance and Engagement Policy. Consultation Internal discussions have occurred. Tenant views have not been specifically sought but generally tenants are reluctant to pay increased costs and also reluctant to see maintenance activity reduce. Other Considerations There are no other considerations relevant to this matter. Funding Implications There will be funding implications but the increased costs will generally be recovered from the tenants. The social housing activity is self funding so additional costs are either to be met from tenants or from reduced expenditure elsewhere. Maintenance is the only discretionary expenditure in this activity and reducing this is not seen as desirable to maintain the asset on a long term basis. Should a disaster happen with these buildings, insurance proceeds would not cover the replacement of all of the buildings. There is insufficient funding in the housing funds to cover the additional funding that would be required if the disaster affected the majority of these buildings. A loan would be required in this instance to complete the replacement, if that was the wish of the Council at that time. # April 2016

16 There is the option to review the Revenue and Financing Policy as part of the next Long Term Plan to consider if the social housing activity should remain fully self funding. The timing of any change in policy would need to be considered to minimise the impact on tenants. Conclusion Insurance is a method of transferring risk. The majority of Council buildings are insured for replacement but the policy specifically states that social housing units prior to 2007 are to be insured for indemnity only. Recommendation That the Committee considers the level of insurance appropriate for the social housing units and amends the Property Management Policy as necessary. # April 2016

17 POLICY AND DEVELOPMENT COMMITTEE FOR THE MEETING OF 26 APRIL 2016 Report for Agenda Item No 9 Prepared by Tina Rogers Group Manager Corporate Services Receipt of Audit and Risk Subcommittee Minutes Minutes of the Audit and Risk Subcommittee meeting. Recommendation That the minutes of the Audit and Risk Subcommittee meeting held on 12 April 2015, be received. # April 2016

18 TIMARU DISTRICT COUNCIL MINUTES OF A MEETING OF THE AUDIT AND RISK SUBCOMMITTEE HELD IN MEETING ROOM 1, DISTRICT COUNCIL BUILDING, KING GEORGE PLACE, TIMARU ON TUESDAY 12 APRIL 2016 AT 11.00AM PRESENT IN ATTENDANCE Clrs Tracy Tierney (Chairperson), Anthony Brien and the Mayor, Keiran Horne, Chief Executive (Peter Nixon) and Group Manager Corporate Services (Tina Rogers) Corporate Services Personal Assistant (CG Te Au) 1 CONFIRMATION OF MINUTES Proposed Clr Brien Seconded Keiran Horne That the minutes of the Audit and Risk Subcommittee meeting held on 2 December 2015, be confirmed as a true and correct record. Matters Arising Item 4 Corporate Risk Register The Subcommittee noted that the Council has received a copy of the high and critical items on the Corporate Risk Register. 2 AUDIT AND RISK SUBCOMMITTEE DELEGATIONS The Subcommittee considered a report on Subcommittee s delegations. Health and Safety Risk Management. Although the Subcommittee reviews and recommends to Council, the Council is aware of its responsibilities under the new Health and Safety Act. Health and Safety is not a standing agenda item, however how Health and Safety issues are reported on is being reviewed. Participation in National Risk Management practise. The formation of a local government risk agency is currently being looked at being established nationwide. It is still in the discussion phase. If it is formed Audit and Risk Subcommittee will be involved with it. Proposed the Mayor Seconded Keiran Horne That the report be received and noted. 3 CORPORATE RISK REGISTER The Subcommittee considered a report on the development of the Corporate Risk Register. # April 2016

19 Health and Safety items are part of the register. A collective group of Council staff form the Health and Safety Committee which meets monthly. Their minutes are forwarded to the Management Team which has a standing agenda item for Health and Safety. Specific work that has taken place in the last quarter was discussed including the identification and follow up of hazards. The Health and Safety Officer follows up on any hazards and this is escalated if the hazard becomes outstanding. The reviews one third of its worksites annually. Proposed Clr Brien Seconded the Mayor That the report be received and noted. 4 HEALTH AND SAFETY The Subcommittee considered a report on the implementation of the Health and Safety at Work Act All staff have received training on the new Health and Safety Act with the emphasis on taking responsibility, and Business Cards where issued that gives staff the responsibility to stop any unsafe practice they see. Further training for Unit Managers on Health and Safety unit plans will take place and includes using guidance from Australian Councils which are well advanced in this area. Council Controlled Organisations were discussed. Timaru District Holdings Limited (TDHL) holds a property portfolio and is required to be responsible for any person on their property doing property work, i.e. contractors. TDHL engages the who operates under its own Health and Safety policies as if it was a TDC site. Engineering assessments have been made on TDHL buildings, four are scheduled for demolition due to earthquake risk and are in the process of being vacated. Tenants have copies of the engineers reports. One building was unsafe and was vacated immediately for repair and signed off by engineers before being reoccupied. Following on from the Simpson Grierson presentation Health and Safety Policies are being reviewed with assistance from KPMG. This includes the use of Contractors. The PCBU is the, this is for all Council worksites, including the airport and Civil Defence. It was noted that Council s risks are very diverse due to the diverse work sites from the Milliscreen to the Library. There has been a lot of flow on of information through LGNZ, SOLGM, Corporate Managers and Human Resource Managers. Proposed Keiran Horne Seconded the Mayor That the Health and Safety report be received and noted. # April 2016

20 5 SHARED BUSINESS PROCESS REVIEW The Subcommittee considered a report outlining the review of common business risk areas being undertaken across the sector which has been initiated by the Canterbury Finance Managers and was widened to all South Island councils that wished to participate. The benefits of a shared review are the development of best practice and the sharing of expenses. Proposed the Mayor Seconded Keiran Horne That the Shared Business Process Review report be received and noted. 6 BUILDING INSURANCE The Subcommittee considered a report highlighting community buildings that are insured for indemnity value only. A list of buildings that only indemnity insurance was discussed. Rural Halls - the indemnity insurance does not mean that the hall would not be replaced if it was destroyed. This would be looked at depending on community need. Council pays the insurance on the majority of these halls. The hall committees will be advised of the type of insurance the halls have to give them the option of replacement value insurance and therefore the higher premiums would be passed onto the hall. It was noted that replacement insurance may set an expectation that the hall would be rebuilt. Social Housing (pre 2007) If the cost of full insurance was passed on to tenants it would represent a rent increase of approximately $240 per year. The likelihood of having to replace all social housing units at once was very minimal, i.e. catastrophic earthquake. We need to look at buildings individually to understand our stock better in terms of age, values, what the full / partial replacement costs will be. All lessees for the properties noted in the report, excluding housing units, should be advised by letter that Council is assessing its risks/insurance, advising them of the type of insurance currently held and giving them the opportunity to assess their situation. Proposed the Mayor Seconded Clr Brien That all lessees, excluding social housing tenants, be advised by letter of the type of insurance currently held, giving them the opportunity to assess their situation; and That a report on the Social Housing insurance options be prepared for consideration by the. 7 WORK PROGRAMME The Subcommittee considered a report outlining the Audit and Risk Subcommittee s work programme for the year. # April 2016

21 The Subcommittee noted that insurance is reviewed prior to the beginning of each financial year and this is approved by the Chief Executive. Revaluation methodology is presented to the. Policies are reviewed by the relevant Standing Committee on a cyclical basis or in line with the LTP timeframe, however in the lead up to the LTP there will be some policies coming through this Subcommittee. The policies review is nearing completion and a Policies Register will be finalised in the near future. Additional items were added to the work programme as follows: October: Internal Audit Budget Allocation. December: Audit and Risk Subcommittee Workshop/Induction Proposed Keiran Horne Seconded Clr Brien That the Work Programme report be received and noted. The meeting concluded at 12.00pm Chairperson # April 2016