Source: https://infocouncil.fndc.govt.nz/Open/2020/03/ARFC_20200325_AGN_2288_AT.htm
Timestamp: 2020-04-06 08:36:06
Document Index: 224385312

Matched Legal Cases: ['art 5', 'art 5', 'art 5', 'art 5', '§ 7', '§ 9', '§ 11']

Agenda of Assurance, Risk and Finance Committee Meeting - 25 00 2020
Wednesday 25 March 2020 at 1.00 pm
5 Reports. 17
5.1 Emerging Risk - Fresh Water Resilience. 17
5.2 Draft Far North Holdings Limited Statement of Intent 2020 to 2023. 31
5.3 Far North Holdings Limited - Half Year Report 47
6 Information Reports. 57
6.1 Financial impact relating to the drought 57
6.2 Internal Audit and Assurance Report 59
6.3 Risk Management 61
6.4 Financial Report for the period ending 29 February 2020. 71
6.5 Revenue Recovery Report 93
6.6 BCA Accreditation update report. 99
7 Public Excluded. 101
7.1 Confirmation of Previous Minutes. 101
7.2 2020 Far North District Council Assurance Work Programme. 101
7.3 FNDC Current Legal Action Potential Liability Claims. 101
8 Karakia Whakamutanga – Closing Prayer. 102
9 Meeting Close. 102
File Number: A2860745
1. 2020-02-12 Assurance, Risk and Finance Committee Unconfirmed Minutes - A2847404 ⇩
ON Wednesday, 12 February 2020 AT 1.00 pm
PRESENT: Cr John Vujcich, Mayor John Carter (HWTM), Member Bruce Robertson, Cr Ann Court, Cr Mate Radich, Cr Kelly Stratford, Cr Moko Tepania
That the apology received from His Worship the Mayor and Cr Mate Radich be accepted and leave of absence granted.
There were no requests for deputations for this meeting.
Agenda item 3.1 document number A2823691, pages 10 - 38 refers.
Audit New Zealand representatives David Walker and Trevor Rusling spoke to the report.
Agenda item 3.2 document number A2825732, pages 39 - 44 refers.
Agenda item 3.3 document number A2826403, pages 45 - 47 refers.
Agenda item 3.4 document number A2826762, pages 48 - 54 refers.
Agenda item 3.5 document number A2827848, pages 55 - 55 refers.
The following two items were issues late under supplementary agenda. Members requested they instead be deferred to the 26 February 2020 Council meeting for consideration.
1. Level of Service KPI Quarter 1 and 2 Performance Report.
2. Building Consent Authority Accreditation.
The meeting closed at 4.17 pm.
The minutes of this meeting will be confirmed at the Assurance, Risk and Finance Committee Meeting to be held on 25 March 2020.
5.1 Emerging Risk - Fresh Water Resilience
· Fresh Water Resilience has been identified as an emerging risk for inclusion on the Organisational Top Risks Dashboard.
· Addition of this emerging risk on the Organisational Top Risks Dashboard will enable governance focus.
5.2 Draft Far North Holdings Limited Statement of Intent 2020 to 2023
File Number: A2859977
This report presents the draft Statement of Intent of Far North Holdings Limited for the three years from 1 July 2020 to 30 June 2023.
a) review the comments from staff as identified in the report and advise which, if any they would like to address;
b) advise Far North Holdings of any amendments that are suggested by the shareholder, that are not covered in the report;
and that all amendments be notified, through the Chief Executive, to the Board of FNHL prior to 30 April 2020.
a. Provide transparency to the community about the proposed activities and intentions of the CCO for the forthcoming year,
b. Enable Council, as the shareholder in the CCO to influence the direction of the company,
Section 64, LGA requires every CCO to have a SOI that complies with clauses 7 and 9 of Schedule 8 of the LGA. These clauses outline the statutory content of a SOI for a trading organisation.
The shareholder, Council, can either agree with the draft SOI or require the Board to modify the SOI on any matter included in Clauses 7 to 9. Modification must be by way of resolution and the shareholder is first required to consult the Board as to the matters to be modified.
The Statement of Intent has been reviewed and a number of questions were identified that require a direction from the shareholder.
Page 5 – decisions for which prior Council approval is required.
There are four types of decision that require prior approval from Council. However, the most significant decision that FNHL could make is the purchase of another business and that is not included. Staff suggest that the Committee consider adding this to the decisions requiring Council approval.
Page 5/6 – work plan to deliver on Strategic Objectives.
The SOI provides information on how the workplan contributes to Strategic Objectives. It is not clear if the strategic objectives are those of FNHL alone or if they should incorporate the strategic objectives of Council, and more specifically, the four well beings now that they have been re-introduced to the Local Government Act 2002 (LGA). Staff have reviewed the table and suggest that the words currently included are descriptions of the projects but that they do not identify the strategic objective of either FNHL or FNDC that is being achieved by the project. Staff suggest that the committee consider which objectives should be responded to and advise FNHL accordingly.
Page 8 – Accounting Policies.
The SOI identifies FNHL as a Tier 2 entity in relation to the New Zealand International Financial Reporting Standards, however, it does not indicate that there are circumstances where the accounts will deviate from the International Public Sector Accounting Standards (IPSAS) under which Council, as the parent, have to report. Staff suggest that it would be helpful in the SOI to indicate that in some cases, additional disclosures are required of FNHL in order for Council to meet its own reporting disclosures.
Page 8 – Acquisition of shares.
The SOI currently states that if FNHL wishes to acquire shares in another business or company they will notify the shareholder 30 days in advance. Staff suggest that this should be reviewed to require that FNHL to seek “permission” from the shareholder at least 30 days in advance.
Page 8 – Performance outlook.
This section of the SOI indicates that Council has undertaken to develop a statement of expectations aligning with the 2021-31 LTP process. This decision has not been formally adopted by Council at this point and staff suggest that this be removed at this point to allow the Committee to review all the additional requirements that are now options within the LGA and introduce them as a set rather than one at a time, if at all.
Page 10 – current board membership.
This section of the SOI indicates that two Directors appointments will cease in June and July 2020 with the remaining three ceasing in 2021. In 2019, Council approved a final extension for two Directors being Bill Birnie to July 2021 and Ross Blackman to July 2020. Council has a policy “Appointment and Remuneration of Directors for Council Organisations (#2117)” which specifies the desirable tenure for directors. Policy states that after six years, directors can be appointed for a further three years but should not remain as directors for more than nine years. Staff suggest that the SOI outlines the potential impact of the changes that will need to occur and that any re-appointment of Directors will be in line with Council policy.
The draft SOI contains information as specified in Schedule 8, LGA.
The receipt of the draft Statement of Intent from the Council CCTO, Far North Holdings Limited, is part of the compliance requirements of a statutory process. The reason for the recommendation is to review the draft SOI and recommend any amendments to the Board by 30 April 2020.
1. FNHL Statement of Intent 2020 to 2023 - A2860794 ⇩
Part 5, Sections 55-74, of the Local Government Act 2002 (LGA).
Schedule 8, Clauses 1-10, of the Local Government Act 2002 (LGA).
The Chief Financial Officer has prepared this report.
DRAFT Statement of Intent 2020 to 2023
Far North District Council’s Strategic Leadership Team
Purpose of Statement of Intent 1
About Far North Holdings Limited (FNHL) 3
Nature and Scope of Activity. 3
FNHL Strategic Direction. 4
Decision for which prior Council approval is required.. 5
FNHL Objective.. 5
Work plan to deliver on Strategic Objectives. 5
Financials. 7
Operating Profit 3-year Forecast 7
Consolidated Shareholders’ Funds and Total Assets. 7
Accounting Policies. 8
Reporting to Shareholders 8
Transactions with Far North District Council 8
Acquisition of Shares 8
Performance Outlook. 8
Performance Targets. 9
Board’s Approach to Governance.. 10
Current Board Membership.. 10
Engagement with the Shareholder 11
About Far North Holdings Limited (FNHL)
As Council’s commercial vehicle, FNHL facilitates and develops commercial and infrastructural assets, and business growth, in the Far North District. In doing so, it will:
- Operate under good governance
- Identify, collaborative or joint ventures opportunities
- Manage existing assets and bring commercial expertise in property management
- Create profits for its Shareholder and improve the Shareholder asset value.
FNHL leads the delivery of property and infrastructure assets in its ownership and under its management. These actions contribute to the development of the Far North District.
FNHL primary roles are:
- To plan, manage, operate and develop; land, maritime, aviation and public assets within its ownership, or under the terms of any management agreement entered into; and
- To plan, facilitate and secure commercial outcomes in its area of Influence that support the growth of the Far North District.
As a secondary role, FNHL may use its management skills and resources to assist both Council and third parties with consultancy services including project management, funding and business support/planning on a commercial basis.
Nature and Scope of Activity
FNHL currently owns and operates commercial and infrastructural assets in the maritime, aviation, primary and investment property sectors.
FNHL may:
- Elect to investigate and invest in any other commercial opportunities that may arise including any proposed by its Shareholder
- Carry out asset management, and may enter into management agreements for defined services on behalf of its Shareholder, or third party
- Divest any of the assets held, subject to any restrictions that may apply in specific cases (such as where the Council has the right of first refusal, council resolution or where the offer-back requirements of the Public Works Act apply).
FNHL will align itself with the Shareholder’s broader strategic objectives by leveraging off these assets to undertake the following business activities (but not limited to) by
- Developing and enhancing a maritime economy
- Attract business and investment in the maritime economy
- Continue with the BOI Marina infrastructure and land-based development
- Ensure all maritime assets owned by FNHL are cost effectively maintained through asset management plans that appropriately balance care of asset with expenditure
- Seek funding sources to further develop or upgrade such maritime assets
- Developing and enhancing property in its ownership
- Maximise the investment in the BOI Airport and reviewing options for freight, extension to the existing runway and associated airside infrastructure
- Continue to pursue the development of the Ngawha Innovation & Enterprise Park
Where agreed with the Shareholder, enter into a management contract for commercial, strategic and non-strategic property assets in order to:
- Undertake acquisitions of strategic property on behalf of Council
- Undertake disposals or re-development of non-strategic land
- Negotiate third party leases where Council is the tenant
- Undertake management of commercial leases
- Evaluate any other properties, developments, businesses and investments as to their current and future potential.
FNHL Strategic Direction
This SOI sets the strategic framework, activities, and performance measures we have set for the next three years to deliver the outcomes its Shareholder seeks.
At the time of preparation of this SOI FNHL has several projects seeking high level funding and approvals. For the moment, this SOI is based on known projects. FNHL will liaise with Council on the new projects and update the SOI reflecting any change.
FNHL is to be aware of and, where appropriate, seeks to align itself with FNDC’s vision, mission and principles statement as outlined in the 2018/28 Long Term Plan (LTP) and related Annual Plans.
For community outcomes FNHL will be guided by the 2018/28 LTP and Council’s Vision. “A District of sustainable prosperity and well-being”, its mission “creating great places, supporting our people and its values”.
Over the period of the SOI, FNDC will provide FNHL with any other documents that it should have knowledge of, whether they be in the consultation stage, or have been formally adopted, that reflect any changes to the Council’s vision or aspirations that FNHL needs to align with.
Decision for which prior Council approval is required
The following criteria are used to guide and demonstrate what types of decisions require Shareholder approval:
1. Decisions which will affect the CCO’s ability to meet any statutory responsibility
2. Decisions which will impact on any intended service levels for a CCO activity (except if the impact is minor or has been agreed by the council through the SOI process)
3. Decisions which will commit the council to future provision of funding
4. Decisions which are not based on a “full arm’s length” commercial basis requiring FNDC approval will to be shown in the accounts as such
FNHL Objective
As the FNDC’s commercial vehicle, FNHL will facilitate and create commercial and infrastructural assets in the Far North District, or if outside the Far North District, with the Shareholders approval, with the aim of creating profits for its Shareholder and creating shareholder value.
Work plan to deliver on Strategic Objectives
The table below shows the key capital projects and initiatives we plan to undertake to deliver on our strategic objectives.
Key Project / Initiative
Delivery in 2020-23
Assist with the proposed development and project management of Te Pu o Te Wheke
To establish a multi-use, leading edge community, cultural and tourism hub to revive Kaikohe's main centre
Te Hononga, Kawakawa
To provide a new interpretive Gallery co-governed by Ngati Hine / Hundertwasser Trust, relocate the FNDC library, and provide new workshops for local artists and business to use.
Redevelopment of the Kawakawa town centre, that will make Kawakawa a destination in its own right, linking; the famous toilets, twin coast cycleway and town square.
May 2020 completion. With FNHL providing ongoing promotion and support over the SOI term.
Manea Opononi
The development of an interactive theatre experience telling the story of Kupe.
The development of a tourist attraction, telling a story of national significance to Maori, will be a major tourism attraction and provide economic benefit to the Hokianga.
Anticipated completion of building is December 2020.
Maximise the investment in the BOI Airport, including reviewing options for freight, the runway and associated airside infrastructure.
Reflecting the investment made by Air NZ in the apron / taxiway to accommodate larger aircraft, and more frequent flights and the PGF’s investment in the new terminal additional infrastructure is needed to accommodate business growth e.g. car hire etc
204ha Dairy Farm.
To create commercial business opportunities to grow the economic and employment opportunities in Northland.
On-going with the objective that within 12 months the necessary planning needed will have been approved and potential tenants will have been identified and secured. Such as to enable a start to be made on site before the end of 2020.
FNHL is project managing the redevelopment and enhancement of the Te Waiariki Ngawha Springs hot pool complex located near Kaikohe.
Te Waiariki has the potential to further build the Mid-North's total visitor market and provide employment for up to 30 people, while delivering benefits to the local community through enhancing an important local landmark
December 2020 open to public.
In addition to the above projects, FNHL shall continue to review, maintain and re-invest in existing assets and operations to ensure maximum benefit to the Company. FNHL will also evaluate on an ongoing basis, other investment opportunities as they arise.
Operating Profit 3-year Forecast
FNHL is forecasting an operating profit before tax for the 2020/21 year to be $2.6 million, for the 2021/22 year $2.7 million and for the 2022/23 year to be $2.8 million.
Consolidated Shareholders’ Funds and Total Assets
For the period from July 2020, the Company is forecasting continued growth in total assets and shareholder’s funds through the completion of PGF developments and asset revaluations.
FNHL has adopted an accounting policy for the government grants received through the Provisional Growth Fund. The grants received are offset against the value of the asset and the grant income will be recognised through the profit and loss through the revaluation of the asset. This will be different to the accounting treatment FNDC will incorporate into the group accounts.
The Shareholder may require FNHL to pay a dividend of 50% of its after-tax operating profit on 28th February in the following financial year. For the following years the company will endeavour to pay the following minimum amounts:
2020/21 financial year $1,300,000
2021/22 financial year $1,350,000
2022/23 financial year $1,400,000
FNHL may from time to time present commercial proposals to the Shareholder for an alternative use of the Shareholder’s share of after-tax operating profit for its consideration.
In the event that by 5 November 2021 the company has not been able to develop the Ngawha dairy farm to its potential as an innovation and enterprise park, and thus not led to the establishment of businesses or industry thereon, the company will look to dispose of the farm, and from those proceeds or other resources, will look to repay to its shareholder, over a period no longer than 4 years, the sum of $5.0 million by means of share redemption.
FNHL is a for-profit Tier 2 entity that has adopted accounting policies that are consistent with the New Zealand International Financial Reporting Standards and generally accepted accounting practice. Details of the accounting policies are set out in the notes to FNHL’s annual financial statements at 30 June 2019 published on our company website. There is no material change in accounting policies envisaged over the period covered by this SOI.
FNHL will provide quarterly reports to its Shareholder in November, February, May and an Annual Report in September. FNHL will provide details of its forecasts of earnings, cash flow and balance sheet structure, if requested by its Shareholder.
In addition, representatives from FNHL will attend Community Board meetings at least once a quarter to update them on current projects and plans that affect their ward, and will include regular communication with the relevant board when physical works are to commence in the ward.
Transactions with Far North District Council
In transactions with FNDC for the provision of goods and / or services, FNHL will seek trading terms and conditions applicable to external customers.
If FNHL wishes to acquire shares in another company or organisation, it will notify its Shareholder at least 30 days in advance.
FNHL has an agreed set of performance measures and targets which form the basis for accountability to delivering on Council’s strategic direction, priorities and targets. These are reported on a quarterly basis, in accordance with the CCO Governance Manual. These include measures agreed as part of the 2018/28 LTP.
FNDC has undertaken to develop a Statement of Expectations aligning with the 2021/31 LTP. FNHL’s subsequent SOI’s will be driven by this Statement of Expectation.
Engage in successful commercial transactions
Shareholders’ funds increase by $1.125m, after payment of dividend
Shareholders’ funds increase by $1.125m after payment of dividend
Provide a commercial return to FNDC
Dividend return to FNDC
Pay minimum $1.3m
Pay minimum $1.35m
Pay minimum $1.4m
Annual operating profit after tax to exceed $1.5m
To achieve a return on funds invested
Return on Investment (ROI) is higher than the average cost of borrowing on its commercial assets
AV cost of borrowings
Av cost of borrowings 4.85%
Effective Governance and Financial Control
Clean audit sign-off each year from Audit NZ
Annual Board Review with appointed Audit NZ representative
To remain within Banking covenants
Board Audit and Finance committee meetings to be conducted semi-annually
Ensure that the Bay of Islands Airport operates within regulatory requirements
Enhancing the Far North as a visitor destination
Complete a customer and airline industry survey that demonstrates satisfaction levels with facilities and services at either BOI or Kaitaia Airports
Enhancing and developing a maritime economy
Complete a marina user or maritime services customer satisfaction survey that demonstrates satisfaction levels with facilities and services available
Enhancing the Far North as a destination
Research customer satisfaction via survey within the cruise ship industry that demonstrates satisfaction levels with FNHL as security authority and provider of disembarking infrastructure
Board’s Approach to Governance
§ William Birnie CNZM (Chairman - term ends July 2021)
§ Sarah Petersen (Chair Audit & Risk – Term ends 28 February 2021)
§ Kevin Baxter (term ends 30 June 2020)
§ Hon Murray McCully CNZM (term ends 28 February 2021)
§ Ross Blackman (term ends July 2020)
In undertaking its activities, the Board of FNHL will exhibit and ensure:
1. Sound business practice in its commercial undertakings, operating as an efficient and effective business
2. Ethical and good behaviour in dealing with all parties
3. An active partnership approach with Maori, and all other people in business throughout the Far North, promoting effective communication where appropriate
4. To comply with all relevant legislative requirements including those relating to the principles of the Treaty of Waitangi
5. An open and transparent approach to decision-making with its Shareholder, while respecting the need for commercially sensitive information to be protected
6. Operate according to the best practice statements produced from time to time by the Institute of Directors in New Zealand (Incorporated)
7. That Council’s vision and aspirations are considered and that FNHL is conscious that it needs to contribute to the overall financial performance of Council
8. FNHL is a good employer in accordance with the legislation guidelines set by Government.
The Board will adopt the following approach to its fiduciary responsibilities to ensure good governance:
§ Prepare a 3-year SOI setting out its strategic goals and obtain the Shareholder’s agreement to this statement
§ Define its organisation structure and individual accountabilities by ensuring management have clearly defined job descriptions
§ Set corporate budgets for earnings and cash flow
§ Delegate both responsibility and authority to its Chief Executive
§ To hold regular board meetings to monitor progress towards the Company’s goals and objectives; and
§ Prepare Quarterly and Annual Reports to its Shareholder as required and in accordance with current business plan.
Engagement with the Shareholder
To ensure the implementation of good governance within FNHL and within the Shareholder, both parties agree to maintain a high level of communication between each other.
The Chief Executives will use their best endeavours to communicate in a timely manner and ensure that matters are raised so there will be ‘no surprises’.
FNHL’s relationship with the governing body of Council will generally be for the purposes of developing strategic direction, agreeing statements of intent, service agreements and levels of funding, and performance monitoring and reporting.
The Board believes that regular communication with the Shareholder is essential to the good governance of the business and therefore FNHL will, in addition, seek to meet informally with FNDC as required by either FNHL or its Shareholder, to deal with any other matter of mutual interest.
Processes will be established for on-going and regular contact with senior management (SLT) to share information, provide a commercial dimension when required and to ensure alignment with Council’s strategic direction.
FNHL will attend Iwi Forums, where invited, and attend Community Board meetings where appropriate or invited to if agenda items warrant their presence.
5.3 Far North Holdings Limited - Half Year Report
File Number: A2860860
To present the half year report for Far North Holdings and seek guidance on the content of future reports.
· There is a legal requirement for Far North Holdings Limited (FNHL) to submit a half yearly report to the shareholder.
· This is specified in Part 5 s66 of the Local Government Act 2002 (LGA).
a) Accept the Half Year Report from Far North Holdings Limited
b) Request that future reports contain the following information
i) Annual and Year to Date budget
ii) Commentary on any significant variances
iii) Detail of significant income and expenditure, for example fees & charges and salaries to aid the shareholder understand the financial position.
Far North Holdings Limited are required to submit a half yearly report to the shareholder within 2 months of the end of the half year for the financial year under Part 5, section 66 of the Local Government Act 2002. FNHL submitted the report as required.
The report contains a Chairman’s report that outlines some financial information in relation to performance against budget as well as information on significant projects. However, it is not possible for the shareholder to consider this information in any detail as the budgets are not included in the financial statements. Staff recommend that FNHL be requested to include this information in all future reports.
The Statement of Financial Performance shows very high-level information. There is a single entry for both income and expenditure so this does not allow the shareholder to consider the operational position of FNHL in any detail or to understand if there are any issues that would be of concern. Staff recommend that FNHL be requested to provide detail on income and expenditure at a more detailed level to allow a better understanding of the position reported.
This statement should also provide some form of variance analysis or commentary to explain significant variations.
To accept the report in compliance with the LGA requirements and to seek more informative information in future reports
There are no specific financial implications for this report
1. FNHL Half year financials - A2860857 ⇩
Local Government Act 2002 Part 5 S66.
This report has district wide relevance.
There are no specific issues that have implications for Maori.
6.1 Financial impact relating to the drought
File Number: A2860896
That the Assurance, Risk and Finance Committee receive the report Financial Impact Relating to the Drought.
6.2 Internal Audit and Assurance Report
File Number: A2856441
To provide the Assurance, Risk and Finance Committee with an update on internal and external audit recommendations.
This report provides an update on the number of internal and external audit recommendations that have been completed or are underway. Since the last report on 12th February, 14 further recommendations have now been completed.
That the Assurance, Risk and Finance Committee receive the Internal Audit and Assurance Report.
Good progress has been made implementing recommendations from internal and external audits. There are plans in place to complete any outstanding recommendations.
· All General Non-Compliances identified in the IANZ Building Consent Authority Accreditation Assessment Report are now conditionally cleared.
· 21 out of 30 recommendations from the LGOIMA Compliance and Practice Audit Report undertaken by the Office of the Ombudsman have been put in place. Further progress will be made by the end of March 2020.
· The 2017 KPMG Procurement Audit Report recommended that we develop evaluation criteria for scoring attributes prior to the scoring of tender submissions. Anchored scales have now been introduced for some parts of the business where this approach is best used, e.g. roading maintenance and dust seal contracts. Anchored scales are based on objective facts that are closely linked to the components that will differentiate bidders based on the value for money they bring to the contract.
· The 2018 Annual Management Report from Audit New Zealand included a recommendation to assess whether resource consent bonds still meet the definition of a liability and if not; they should be released. The Environmental Services team designed a process to review the bonds and have now completed site visits to ascertain if resource consent conditions have been met. The final step in the process is currently underway.
File Number: A2857046
· Risk progress updates are provided for three of the top organisational risks detailing progress of treatment plans.
· Outstanding risk progress reports will be provided at the next scheduled Assurance, Risk and Audit meeting of 6 May.
· An emerging risk has been identified.
· Excellent progress continues to be made on group risk.
The Transformation and Assurance team continues to work with the organisation to refresh / establish Group Risk Registers, with treatment plans, and regular reviews, escalating emerging risks as these are identified
Three risk progress reports, for your information, with treatment plans are attached. Steady risk treatment progress is being made with ARF011 Organisational Cohesion Risks inherent risk score trending down.
Risk ARF002, BCA Status Risk, is the subject of a separate report to this committee.
Four of the scheduled risk progress reports are outstanding. The Assurance, Risk and Audit Committee will understand that due to the current situation a number of staff have been seconded to alternative duties. Our intention is to deliver these risk progress reports at the Assurance, Risk and Finance Committee meeting scheduled for the 6th May.
An emerging organisational risk has been identified, the Fresh Water Resilience risk. Under separate cover there is a recommendation to approve the inclusion of this risk onto the Organisational Top Risks Dashboard.
An elected member workshop is to be scheduled to cover the FNDC Risk Management Framework and refresh of the Organisational Top Risks Dashboard.
The Transformation and Assurance team continues to work through the organisation to refresh or establish Group Risk Registers. The District Services Risk Register has been refreshed with ongoing risk management imbedded as a standing agenda item at the District Services Managers Meeting. The standing agenda item focuses the managers on an appropriate risk conversation facilitated by the provision of a set of risk questions:
Standard risk questions for meeting agendas
· Is the risk register up-to-date?
· Is the risk treatment progress to schedule?
· Has our data baseline for any of our risks changed or has a significant change to our external environment occurred or occurring e.g. legislation?
o Does this data indicate that the risk impact score has changed?
o Has the likelihood of this risk materialising changed?
o Are there any new or emerging risks?
o Do we need to test any of our controls?
· Do we need to escalate (e.g. to SLT then to ARF) or de-escalate any of our risks?
1. 2020 03 ARF001 Climate Change Risk Progress Report - A2858263 ⇩
2. 2020 03 ARF004 Asset Management Risk Progress Report - A2858510 ⇩
3. 2020 03 ARF011 Organisational Cohesion Risks Progress Report - A2858600 ⇩
6.4 Financial Report for the period ending 29 February 2020
File Number: A2858536
To provide an overview and information on the current financial position and performance of the Far North District Council as at 29 February 2020.
That the Assurance, Risk and Finance Committee receive the report Financial Report for the period ending 29 February 2020.
This reports financial information as at 29 February 2020.
1. Council Financial Report February 2020 (Pd8) - A2862334 ⇩
for the period ending 29-February-2020
Financial Overview................................................................................................................................................................ 2
Council Financial Performance – Income..................................................................................................................... 4
Council Financial Performance – Operational Expenditure.................................................................................... 5
Council Financial Performance – Capital Expenditure............................................................................................. 6
Unbudgeted Expenditure.................................................................................................................................................... 9
Budget Movements............................................................................................................................................................ 11
Treasury Report................................................................................................................................................................... 14
Treasury Compliance........................................................................................................................................................ 16
Statement of Financial Performance............................................................................................................................ 17
Statement of Capital Performance................................................................................................................................ 18
Analysis of Operational Income and Expenditure by LTP Group....................................................................... 19
Key financial metrics from the Statement of Financial Performance for the Far North District Council as at 29-February-2020.
The overall performance of Council has continued with business as usual even though the drought conditions have taken precedence and will continue in the coming months.
The organisation is refocusing their priorities in order to accommodate the drought situation so expenditure will be pulled back in areas such as training, professional fees, and staff vacancies, where appropriate.
Overall, we had a Variance to Budget YTD movement from -$6.8M in December 2019 to $1.4M in February 2020 Net Operating Position mainly due to:
06 Amount
08 Kerikeri Wastewater Subsidy
09 $4,914k
10 Delay in claiming subsidy due to the delay in completion of the plant. It is anticipated the current completion of WWTP construction programme is July 2020. Reticulation completion is anticipated by September 2020
11 Rawene/Omanaia Water Treatment Plant Subsidy
12 $466k
13 Project is complete however final commissioning was put on hold due to the drought crisis. Commissioning involves pumping lots of water, so the decision was made to postpone this activity, which means delay in claiming subsidy
14 Operational Expenditure
17 Refuse – Solid Waste
18 $714k
19 Contractor fees is showing savings due to lower volume of refuse and recycling received at the transfer stations
20 Strategic Policy and Planning
21 $677k
22 Budget re-forecasted as savings following restructure in the group
23 District Facilities
24 -$438k
25 Unbudgeted renewals programme being undertaken at Russell wharf which is funded from depreciation reserves.
The December 2019 Financial Report gave an overall update on the financial position of Council, for the remaining months commentary will only be by exception.
*In the tables above and throughout this report, variances +/- 5% from budget are indicated as on track / green, anything outside this is red.
Council Financial Performance – Income
Please note these figures relate to the Statement of Financial Performance controllable costs only, which excludes general rates and rates penalties.
· A dividend payment to be received from Far North Holdings Limited (FNHL) has been delayed and will be received in March.
Central Government Subsidies – New Works
· Unbudgeted subsidy has been received from the NZ Transport Agency (NZTA) for the construction of approved Community Board footpaths across the three wards.
Council Financial Performance – Operational Expenditure
Please note these figures relate to the Statement of Financial Performance controllable costs only, which excludes allocations, interest costs, depreciation and other asset costs and gain/loss on disposal.
· There are still a number of vacancies not yet filled across the organisation and a number of departments are yet to use their training allocation.
· Unbudgeted engagement of contracted consultants continues to meet demand for resource and building consents work. Travel and accommodation costs for Building Consent contractors are not recoverable. In the Resource Consents group, discount penalties, fee waivers and successful fee objections.
· Network and asset management recorded time against various projects (operational or capital) is not recorded in a timely manner or against the correct activity. This is still being reviewed and will be corrected by the end of the financial year.
· An increased variation to the annual management fee to Far North Holdings Limited (FNHL) for the Kaitaia Airport has been applied.
· The removal of sludge is continuing, and funds are fully committed for the Kawakawa and Opononi area.
· Due to the current season, stormwater is behind budget as this activity is normally reactive, however work has commenced in drainage clearing.
Council Financial Performance – Capital Expenditure
These figures are direct from the Statement of Capital Performance.
· The construction of 24 additional kennels at Bonnets Road, Kaitaia has not yet commenced. Due to a change in the scope of works, Council is currently negotiating with one tenderer who submitted a quote to see if they are still able to deliver the building works.
· The purchase of the Melka Boarding Kennels in Kaikohe is progressing and a deposit has been paid for the sale and purchase of this property.
· The Kawakawa Library/Service Centre will be relocated to Te Hononga and has been delayed till March 2020.
· The Kerikeri Library installation of air conditioning units has been delayed. In early November there were delays due to uncertainty about insurance cover and how that would affect the project. A meeting with Council’s insurance broker explained the wording in the contract and what that meant for the project. The contract has now been awarded and work will be commencing in March 2020.
· Works on the Windsor Landing Carpark and Access has now commenced as an outcome from the Environment Court which was in our favour.
· Seal Extension unsubsidised works at Porotu Road, Puketi Road and Kumi Road has been delayed due to more design requirements under the maintenance contract for North and South. Preparatory works are now expected to commence in summer through to mid-autumn.
· Kaitaia Transfer Station weighbridge relocation works are now complete, and the balance of funds will be used to complete an extension to the transfer station.
· An external consultant was engaged in October 2019 for development of a proof of concept (miniature model) for the Information and Communications Technology (ICT) support for the Northland Transport Alliance project. This will be presented to the Northland Transport Alliance group in January 2020.
· Planned work for the Asset Management System project is in a development phase with Infor Global Solutions (NZ). System configuration is scheduled to be completed in April 2020 and the data migration by August 2020.
· Kerikeri Wastewater Treatment Plant is continuing, however, an additional $1.5M has been approved by Council to fund the balance of works as well as prior year funds being used.
· The Paihia Wastewater Treatment Plant is currently under budget and is nearing completion in April.
· Unbudgeted works is being completed for the Russell Wastewater Treatment Plant, a carry forward request was overlooked and approval for $175K has been approved.
· The final commissioning of the Rawene/Omanaia Water Treatment Plant has been delayed due to the current water crisis.
· Work is required to respond to an appeal decision to the Environmental Court in March 2020 for the East Coast (Taipa) Wastewater Treatment Plant.
· Unbudgeted works is being carried out for the Ahipara Wastewater Treatment Plant jetty replacement. A carry forward request was overlooked and $4,549 has now been approved
· Parks and reserves are under budget; scoping works are being finalised and works anticipated to be undertaken in summer.
· Scoping is underway for public toilets in Taupo Bay and Hundertwasser for upgrade works.
· Footpath renewals are under budget due to resourcing issues with the Northern contractor; however, this work will now be delivered by the Southern contractor over summer.
· Minor Safety works are being undertaken around Kerikeri. Resilience Slip works are progressing well at West Coast Road and Broadwood Road and design works are being undertaken for various slip sites.
· Unsealed road metaling is under budget in the South due to unfavourable conditions, which are not suitable to apply materials and complete works.
· Roading and Footpaths drainage works in the north area are currently under budget due to resourcing and works being re-prioritised.
· Server renewals - Council at its meeting on 19 November 2019 approved the recommended supplier. Work is progressing to determine the project timeline and delivery is expected between Dec 2019 and Feb 2020.
· Desktop computer, computer equipment, peripheral, tablets - developing forecast for future replacement.
· Computer Systems - Programme is progressing with updates and upgrades planned for this Financial year. Current activity is within the Citrix Upgrade and Office 365. Work will continue to focus on upgrades with Objective and other core systems.
· Pool Vehicles is under budget and vehicles are renewed as required.
· Corporate Services Administration - part of the wider accommodation project with office furniture replaced as needed.
· The Paihia I-Site refurbishment project has not yet commenced. Staff are awaiting a quote to lower the desks and expects to use the budget this financial year.
· Library stocks are updated continuously throughout the year and are dependent on item deliveries and timing.
These are additional works not included in the original budget for the current year.
Unbudgeted work greater than $100,000 must be approved by Council, anything less than that can be approved by a General Manager with appropriate financial delegation.
*Expenditure over $100K approved by Council (in grey)
Unbudgeted Operational
Building Consents (BCA)
Contract Professional Fees
Asset Management & Infrastructure Planning
Equipment Purchases (uncapitalisable)
Facilities operations - buildings
Unbudgeted Capital Works
BOI Sports Land Purchase Kerikeri
CAPEX New Works Contract Services
Kerikeri Wastewater Infrastructre
Bonnets Road (PGF)
Lake Omapere (PGF)
Karikari and Doubtless Bay Rangers Program
Digitisation Scanning
Stormwater Bonnett Road Kaitaia
9-11 Old Beach Road Stormwater Upgrade
Korora Park Toilet
Kaimaumau Public Toilet
Ahipara Toilet
Kohukohu Resource Consent
CAPEX New Works Licenses and Consents
Horeke Housing for the Elderly
CAPEX Renewal Works Contract Services
Kaikohe Memorial Park Upgrade
24-26 Yarborough Street New Sewer Connection
Mains replacement Rawene
Opononi STP - Fence Renewal/Upgrade
Kaitaia Parks & Reserves
Waima Housing for the Elderly
1506 Inland Road Sewer Connection
Kaikohe Parks & Reserves
Ramp Road Public Toilet
Whangaroa Hall Renewals
Rawhiti boat ramp toilet RC
JBC Customer Services Area Minor Improvements
Disability Access Halls Western
Kaka Street Ramp
Kororipo Basin (Pear Tree)
Parks & Reserves Northern
Kaitaia Oxford St Housing for the Elderly
Kawakawa Commercial St Car Park
Unbudgeted Roading
West Coast Rd RP9563
Diggers Valley Rd RP12722
Fairburn Rd RP9588
Wharekawa Rd RP3552
Waiotehue Road Dropout RP 5400
Waiotehue Rd RP5251
6,562,491
These are budgets timed in future years, brought forward into the current year (positive values) OR budgets timed in the current year to be moved out to future years (negative values).
The figures that follow exclude the $5.1M Roading budget adjustment moved out to future years to reflect the lower of FNDC or NZTA budget. Also, Operational of 6.2M includes $5.6M Water by Meter income budget, which was entered twice in error into the system.
Resource Consents Administration
Opex Reforecast as at 31 Oct 19
Resource Consents Appeals
Infrastructure planning - stormwater
Infrastructure planning - facilities
New FTE Contract Specialist
Do not think full budget will be spent this year
Expenditure is running at a lower rate than expected
Anticipated costs award Supreme Court Case
-96,189
Kaitaia New Source (Sweetwater)
Kaitaia New Water Source Sweetwater Bore & Pipeline
Server and Network Renewal Project reforecast from 2020/21
TechOne HRP Renewals budget transfer from 20/21 FY
Mission Road-Kerikeri
Transfer from holding code to individual project codes and retiming
Te Haumi Seawall
Te Haumi Seawall & Carpark remediation & renewal works reforecast from 2024/25
Kaikohe Hone Heke Reserve
Kaikohe Hone Heke Reserve Repair retaining Wall
Horeke Hall Wastewater Treatment System septic tank replacement
North Park Drive to Whangatane Drive-Kaitaia
Northland college to Saleyards-Kaikohe Footpath
Disability Halls Access Western Budget Movements new works from 2020-21
Footpaths Western Ward
Waianga Place-Opononi Footpath
SH1 Matthews Avenue-Kaitaia
Northern Bin Benches Bollards Signs Tables
Northern Bins Bollards Benches $20,000 reinstated back to this year
Western Bin Benches Bollards Signs Tables
Western Bins Bollards Benches $20,000 reinstated back to this year
Kaikohe Lions Club Budget Movements renewals from 2034
Long Beach Road footpath corner to carpark-Russell
Rawene Cemetery Water Main Approved by Will Taylor
Whangaroa Hall - Exterior Upgrade to address weather tightness issues
Rangihamama Road to Taheke Road SH12-Footpath Kaikohe
Dominion Road-Kaitaia
9B Hone Heke Road Kerikeri SW Pipeline Upgrade
Tfr of Renewal Budget Approved by: W Taylor
Opononi/Omapere Stormwater Imps
40 Fairlie Cresc SW Imps Approved by: W Taylor
Rawene Old Courthouse
Rawene Community Library Renewals reactive
Russell Robertson St Stormwater Lines
Tfr Future Renewal Budget Russell Robertson Street
HFTE Oxford St & Puckey Ave mailbox renewal
Jaycee Park/Centennial Park
Cent Park historic train repairs Renewal heritage asset
Kaitaia Swimming Pool Dive Board Retiming for this year
1506 Inland Rd Sewer Connection Renewal Asset 301462
Landfill Russell
Russell Landfill Leachate pump Renewal from 2021-22
Kawakawa WWTP RMU
To be removed - allowed for in 551134 Capex Reforecast
Re-forecast to FY21/22 Capex Reforecast
Parks & Reserves Western
Re-forecast out to FY21/22 Capex Reforecast
Kohukohu Housing for the Elderly
Rawene Grundy Street Reticulation
Needs to be removed-Project completed Capex Reforecast
Ahipara Parks & Reserves
Funding to be removed saving frm FY18/19 no works required - Capex Reforecast
District Wide Treatment Plant Instrumentation Upgrade
Whangaroa Parks and Reserves
Proctor Library HVAC
Budget savings Proctor Library HVAC system
Korora Park Carpark Apron replacement Renewal from 2023-24 and 2024-25
Paihia Parks & Reserves
Parks & Reserves Eastern
KK Doves Bay; Paihia Lily Pond Carpark Russell Strand; Russell Tapeka -FY22/23
Taupo Bay Toilet
Re-forecast to FY23/24 Capex Reforecast
Paihia Specified Works
Paihia Specified Works Capex reforecast to 20/21
-35,259
Ward Wide Town Beautification / Improvements Western
Kaikohe Streetscape UpGrade
Re-Forecast to FY21/22. Budget to be renamed to Urban Streetscapes
-68,985
Kerikeri Domain Playground
Kerikeri PS9
Needs to be moved out to 2020-2021 and is meant to be PS3 Bill to investigate
Russell Parks & Reserves Renewals
Russell Parks & Reserves Capex reforecast to 21/22
-84,530
Wastewater Telemetry
Wastewater Telemetry Capex reforecast to 21/22 & 22/23
-90,754
Kaikohe Training Yard
Reforecast out to YR1 next LTP FY22/23 Capex Reforecast
Lindvart Park Pavillion
Kerikeri Backwash Tank
Kerikeri Backwash Tank Approved by T Proctor
Opononi Housing for the Elderly
Kerikeri WTP Structural Work on Clarifier
Kerikeri WTP Structural Work Approved by T Proctor
-110,008
Hihi WWTP Construction
To be moved out to 2020-2021 Capex Reforecast
District Wide Reservoirs Structural Works
Reforecast to FY20/21 Capex Reforecast
-140,754
Rawene Housing for the Elderly
-144,404
Community Hub Kaikohe
Kaikohe Hub Capex reforecast to 20/21
Kerikeri Rugby Pavilion
Kerikeri Rugby Pavilion Capex reforecast to 20/21
Waipapa Roundabout Disposal Field
Will not be delivered. Needs to be removed from LTP. Should not be SW proj
Wastewater Telemetry Capex reforecast 21/22 & 22/23
-398,580
-5,520,139
-4,972,455
Note that $648,688 Digitising Scanning will be recovered overtime as agreed by Council and Building Consents (BCA) professional fees of $500,00 can be largely recovered from fees and charges.
Note – Of the $85.5M total borrowing, $30M is Short Term:
$10M repayable in March 2020
$20M repayable in June 2020
Statement of Capital Performance
Analysis of Operational Income and Expenditure by LTP Group
6.5 Revenue Recovery Report
File Number: A2860357
This is the second report for the financial year 2019/20 and provides information on action taken to collect the current and arrears balances for rates, water and Sundry Debt so far this year, and to provide information on how collection is tracking against targets.
This document has been prepared to outline current and arrears balances for rates, water and Sundry debt as at 29 February 2020 and the actions taken by the Debt Management Team for the collection of the General Title rates and water and Sundry Debt.
The total arrears balance for General Title rates has been reduced by 27% since 31 July 2019 and water by 35%. Maori Freehold Land rates was reduced by 1% since 31 July 2019 and water by 9%.
Below were the actions and focus areas for the third quarter of the rating year for the Debt Management Team for the collection of the General Title rates and water.
· Continuing from last rating year, there are 62 properties currently with an external Law Firm to proceed with legal action for rates and water arrears.
o So far, action has commenced on 57 properties;
§ Judgment by default has since been granted for 12 properties and another 8 are being prepared for court action.
§ 7 were settled prior to applying for judgement and 1 has been settled after judgment.
§ 9 have a Deed of Settlement agreement in place and another 6 have a payment agreement in place.
§ Owners for 3 properties are to officially abandon the land.
§ 11 require additional action, including serving of substituted service.
· First phase of mortgage demand for rates and water for General Title properties commenced in December for 194 accounts and the second phase commenced on the 20th of February for a further 362 accounts.
o 39 accounts now have Direct Debit set up and 3 have a separate payment arrangement.
o Final demand will only be issued for accounts which still have arrears and without an agreed payment arrangement after the 3-month notice period.
o Phase one will be issued to mortgage providers on the 20th of March and the second phase on the 20th of May.
For the total number of General Title rates and water accounts marked as ‘Balance to be collected by other means’:
· The arrears balance for 12% is made up of last year’s outstanding rates and 16% of the last two years.
· For the remaining 72%, the arrears balance is split across several years. Some of these will have received Final Demand letters and are waiting to be referred for Legal proceedings or further action needs to be taken.
The Te Hono team relations and development initiatives have opened communications about payment of rates for Maori Freehold Land.
· A list of 57 Maori Freehold land properties with Mortgages with a debt totalling $373K have been passed to the Te Hono team to initiate conversations.
Focus for the final quarter of the rating year for General Title rates and water.
· Final mortgage demand for all mortgage demand accounts.
· Direct Debit switch/set up offer supported by ASB to be introduced with option for another next rating year to promote the Online Services launch.
· Prepare policy for approval by Council of next actions post default judgment from the courts.
The total Sundry Debtors aged debt has been reduced by 71% since 30 June 2019. The Debtors ledger was split alphabetically between Debt Management Officers at the start of the rating year, with each team member focussing on aged debt. Additionally, the team have:
· Regular monthly and fortnightly meetings with Compliance Support and Building Consents Support teams to resolve outstanding issues and implement process improvement where applicable.
· Continued collaboration with Council Legal team for advice and support for Sundry debtors aged debt collection.
· Trial collaboration with the Monitoring Officer in Kaitaia to combine visits to premises with debt collection and ensuring compliance with the various local government acts.
1. ARF Revenue Recovery Report - A2860368 ⇩
General Title rates and water rates analysis by age at 29 February 2020.
Maori Freehold Land rates and water analysis by age at 29 February 2020.
Sundry Debtors by age for 29 February 2020.
6.6 BCA Accreditation update report
File Number: A2855393
To update the Assurance, Risk and Finance Committee on the Building Consent Authority’s (BCA’s) progress in addressing the General Non-Compliances (GNC’s) identified in the October 2019 International Accreditation New Zealand (IANZ) Audit.
All relevant information has been provided to IANZ on or before the deadline of the 14th of February. IANZ has responded with written confirmation that all general non-compliances have been conditionally cleared. It is expected that the BCA accreditation certificate will be issued in due course. Given the IANZ audit clearance, the risk has reduced from high to medium. This will be updated in the high-level Council risk register.
That the Assurance, Risk and Finance Committee receive the BCA Accreditation update report.
The deadline for providing IANZ with the evidence was 14 February 2020. A total of 23 general non-compliances were identified during the IANZ audit with 19 of these resolved during the audit, leaving four to be resolved. A work plan to provide the necessary evidence to clear the GNC’s was agreed with IANZ. A total of 11 evidence examples were required to clear the remaining four non-compliances and IANZ are now satisfied with the evidence provided. An out of cycle October 2020 audit (these audits are usually completed biennially) has been scheduled. At that time IANZ will review progress made generally and in the non-compliance areas identified in the 2019 audit.
The IANZ final report will highlight a list of recommendations that the BCA needs to address ahead of the next audit in October 2020.
The BCA will be introducing new tablets for inspections that will reduce the amount of manual inputs required to complete a Code of Compliance Certificate (CCC). This will facilitate the achievement of compliance with the required time frames.
The BCA will be focused on a higher level of internal audits leading into the next IANZ audit to ensure compliance. A process of time recording has been introduced to validate the application of the Regulation 8 calculator that determines how many admin and technical staff are required to provide a compliant BCA service. This work is critical to ensure the right amount of resource in the BCA.
7.2 - 2020 Far North District Council Assurance Work Programme
7.3 - FNDC Current Legal Action Potential Liability Claims
8 karakia whakamutanga – closing prayer