Agenda of Council - 21 July 2020 · MEETING AGENDA 21 JULY 2020 Item 5.1 Page 7 UNCONFIRMED MINUTES...

I hereby give notice that the

Additional Council Meeting

will be held on:

Date: Tuesday, 21 July 2020

Time: 9.00am ADDITIONAL

Location: Council Chamber

Third Floor

Office of the Waitaki District Council

20 Thames Street, Oamaru

Agenda

Additional Council Meeting

21 July 2020

Fergus Power

Chief Executive

ADDITIONAL COUNCIL MEETING AGENDA

21 JULY 2020


21 JULY 2020

Agenda Items

1 Apologies ............................................................................................................................. 5

2 Declarations of Interest ....................................................................................................... 5

3 Public Forum (not held as this is an Additional Council Meeting) ................................... 5

4 Confirmation of Previous Meeting Minutes ........................................................................ 6

4.1 Public minutes of the Council Meeting held on 30 June 2020 .................................. 6

4.2 Public minutes of the Council Meeting held on 30 June 2020 PE ............................. 6

(ie Agenda Item 9.1 to this meeting) could be confirmed here, in public as Agenda Item 4.2, if the Council agrees that there will be no discussion on the contents). To be determined during the meeting.

5 Leadership Reports ........................................................................................................... 24

5.1 Mayor's Report - 21 July 2020 .............................................................................. 24

6 Decision Reports ............................................................................................................... 32

6.1 Council Controlled Organisation Tourism Waitaki Limited - Final Statement of Intent 2020/2021 .................................................................................................... 32

6.2 Local Government Funding Agency Membership ................................................... 47

7 Memorandum Reports ....................................................................................................... 71

7.1 Pandemic Economic Recovery Manager's Report ................................................. 71

8 Resolution to Exclude the Public ..................................................................................... 77

9 Public Excluded Section ................................................................................................... 78

9.1 Public Excluded minutes of the Council Meeting held on 30 June 2020 ................. 78

10 Resolution to Return to the Public Meeting ..................................................................... 78

11 Release of Public Excluded Information .......................................................................... 78

12 Meeting Close .................................................................................................................... 78


21 JULY 2020

1 APOLOGIES

2 DECLARATIONS OF INTEREST

3 PUBLIC FORUM (NOT HELD AS THIS IS AN ADDITIONAL COUNCIL MEETING)


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Item 4.1

4 CONFIRMATION OF PREVIOUS MEETING MINUTES

4.1 PUBLIC MINUTES OF THE COUNCIL MEETING HELD ON 30 JUNE 2020

Author: Ainslee Hooper, Governance and Policy Advisor

Authoriser: Lisa Baillie, People and Culture Group Manager

Attachments: 1. Public minutes of the Council Meeting held on 30 June 2020

RECOMMENDATION

That the Council confirms the Public minutes of the Council Meeting held on 30 June 2020, as circulated, as a true and correct record of that meeting.


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Item 5.1

UNCONFIRMED MINUTES OF THE WAITAKI DISTRICT COUNCIL MEETING HELD IN THE COUNCIL CHAMBER, THIRD FLOOR,

OFFICE OF THE WAITAKI DISTRICT COUNCIL, 20 THAMES STREET, OAMARU ON TUESDAY, 30 JUNE 2020 AT 9.00AM

PRESENT: Mayor Gary Kircher (Chair), Deputy Mayor Melanie Tavendale (Associate Chair), Cr Hana Halalele, Cr Jeremy Holding, Cr Jim Hopkins, Cr Ross McRobie, Cr Bill Kingan, Cr Kelli Milmine, Cr Peter Newton, Cr Guy Percival, and Cr Colin Wollstein

IN ATTENDANCE: Fergus Power (Chief Executive) Paul Hope (Finance and Corporate Development Group Manager) Bill Chou (Information Services Group Manager) Ainslee Hooper (Governance and Policy Advisor)

IN ATTENDANCE FOR SPECIFIC AGENDA ITEMS:

Gerard Quinn (Pandemic Economic Recovery Manager) Mike Searle (Policy and Strategy Manager) Ian Wells (Accounting Manager) The Chair declared the meeting open at 9.00am and welcomed everyone present. He advised that the meeting was being livestreamed and welcomed members of the public who were watching, as well as the media representative in attendance in the Council Chamber.

1 APOLOGIES

There were no apologies.

2 DECLARATIONS OF INTEREST

There were no declarations of interest.

3 PUBLIC FORUM

There were no members of the public present, so the Public Forum was not held.

4 CONFIRMATION OF PREVIOUS MEETING MINUTES

4.1 PUBLIC MINUTES OF THE COUNCIL MEETING HELD ON 16 JUNE 2020

RESOLVED WDC 2020/135

Moved: Cr Jim Hopkins Seconded: Cr Colin Wollstein

That the Council confirms the Public minutes of the Council Meeting held on 16 June 2020, with minor grammatical changes, as a true and correct record of that meeting.

CARRIED


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Item 5.1

5 LEADERSHIP REPORTS

5.1 MAYOR'S REPORT - 30 JUNE 2020

The report, as circulated, provided comments to bring Councillors and the public up to date with issues that have arisen since the last Council Meeting on Tuesday, 16 June 2020.

The Chair took his report as read. He reported on the meeting with Ministers the previous day regarding the Mackenzie Alignment, and said it had been a ‘good discussion’. Opportunities, challenges and the sharing of costs were key topics with a view to finding a way to look after an area of ‘national treasure’. That meeting was also advised that Waitaki had been taking some cases of enforcement to court recently because of breaches to its district plan as well as enforcement options around biodiversity. The fund to help employ people in the environmental space was also discussed. It was noted too that Waitaki had been party to ECan’s application in relation to getting rid of wilding pines. If initiatives like these can create jobs, then it is hoped that they will be viewed favourably, and funding granted for them.

Chief Executive Fergus Power added that he believed funding to assist with enforcement of the district plan because of the importance of areas at a national level is something that should not fall on the local council or ratepayers. Given that there is recognition of the greater public good around roads, the same argument could be pursued with Ministers to see if there can be a change of approach and interest in the Crown investing in the protection of areas of national significance. Some Elected Members shared their support for this view.

The Chair advised that there had been a meeting the previous day with Tourism Waitaki and tourism stakeholders to discuss ‘where to from here’ and what would happen if TWL was successful in its application for central government funding. It had been a good opportunity for all parties to get onto the same page.

In response to questions, Mr Power advised that decisions on funding applications for regional tourism organisations (RTOs) (eg TWL) were expected in mid-July. Applications for tourism strategic funding (Waitaki had submitted one in relation to the Penguin Colony) were expected to be announced by the end of July or early August.

The suggested need for more messaging around staff of local businesses not parking in the free parks in town was discussed. More complaints had been received from members of the public who had been unable to find a park in order to ‘shop local’ and had simply returned home instead. That was working against the extra stimulus for local businesses that Council was supporting. One Elected Member believed there should be a stronger response.

Concerns were raised about not having the full details on costs when the free parking initiative was extended at the last meeting, and the need for them to be included when the report came to a future Council Meeting to review the initiative. This was agreed. ACTION: Chief Executive, with Group Manager Lichelle Guyan and Regulatory Manager Andrew Bardsley

The WaiYou initiative was highlighted. It was suggested that a follow up action for Council would be to develop a Waitaki district youth employment strategy. The Chair agreed.

Cr Ross McRobie expressed his concern that a reply had still not been received to the Mayor’s letter to the Prime Minister; and there had been no responses either to shovel-ready projects, or RTO projects, or war memorials. He highlighted that extreme urgency had been assigned to submitting applications for this central government funding and yet there seemed to be no urgency coming back with the answers. He did not believe that was good enough and asked that his comments be recorded. He expressed disappointment in the situation, and that it had been very, very tough on staff who had had to prepare applications at very short notice, but with no responses.


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Item 5.1

The Chair agreed with Cr McRobie’s comments. He congratulated staff on the way they had been able to develop and submit applications to meet the tight timelines. He also noted that plans had not always been as complete as perhaps they needed to be because Council did not have the resources. He highlighted Queenstown Lakes District Council’s success in securing $85m for its projects and noted that Waitaki was only seeking funding approval for $15m for its projects.

When asked to comment, Mr Power reiterated that the timelines were impossibly short. Teams across Council were already dedicated to their own work programmes and projects but getting access to central government funding was something that had to be squeezed in too and it was putting an enormous amount on pressure on staff. The very, very slow response time from central government was adding to the strain.


Moved: Deputy Mayor Melanie Tavendale Seconded: Cr Bill Kingan

That the Council receives and notes the information. CARRIED

6 DECISION REPORTS

6.1 ADOPTION OF THE 2020/21 ANNUAL PLAN

The report, as circulated, sought to enable Council to comply with key statutory requirements under the Local Government Act 2002 relating to planning, accountability and decision-making and adopt the Waitaki District Council 2020/21 Annual Plan. This enables the Council, via a separate and subsequent report, to set the rates from 1July 2020 for the 2020/21 financial year.

Group Manager Paul Hope presented the report. He explained that this was the end of a nine-month process which had had a few very unexpected twists and turns leading to the resolution for this item and the supporting Annual Plan which is quite different from what was thought would be adopted back in January/February. Council’s objective for officers was to have as low an impact on the community as possible and yet still deliver as many of the services indicated to the community and some additional ones discussed in December and February. That had been achieved. A small rate increase had been allowed based on growth in the database. However, the biggest part of the resolution relates to having an unbalanced budget. The Local Government Act 2002 (LGA02) requires that Council recognises this, and officers have put some details into the resolution about how that has been achieved and to make it clear how that impacts on the budget. “Financial prudence” is referred to in LGA02 but is not defined. It is proposed to defer some funding requirements that are very long-term because missing one year does not make a material or significant difference over long-term outcomes (eg deferring one year of loan repayments in relation to property assets). It is also proposed to use operating reserves which have been built up over time because they are there to fund operating expenditure at times when there is pressure on the budget, and this is that time. In the view of officers, using those reserves is appropriate, given what people the community are now facing and the fact that the longer term impacts of COVID-19 and the level of external funding to be made available were not yet known.

The Chair advised the meeting that, with the last rates invoice, a letter had been sent from him saying that Council was not going to have a penalty for rates not paid on the first instalment date; ie people had until the next rates instalment to make a payment. However, at the 16 June Additional Council Meeting, Council had adopted penalties including on arrears which would happen at the end of June, and a letter had gone out saying that there will be a penalty on that date. That was an error which now needed to be corrected to ensure that there is no penalty on that date. People who pay by 25 August will be fine. Such a correction was a slight alteration to


21 JULY 2020

Item 5.1

what was planned and had an unintended consequence that Council wanted to ensure was addressed.

Mr Hope advised that the correction would require slight changes to the wording both in the Annual Plan and in the rates resolution. Legal advice on this matter had stated that it was completely at Council’s discretion when that penalty is applied. Therefore, once Council had made that decision to make the correction, a letter was waiting to go out to ratepayers acknowledging the conflict and how it will be sorted. It will clearly state that the penalty will not be incurred until 25 August.

For absolute clarity, it was confirmed that the penalty will still be charged on rates arrears, but there will be six more weeks (ie until 25 August) until it had to be paid.

With regard to fees and charges, differences in photocopying charges were queried; library rentals were suggested as new line items; and it was suggested that the fee for getting married in the park should be waived.

A workshop to discuss the fees and charges was suggested. In response, it was noted that it may not be possible within the next 6-8 weeks due to other work priorities. Policy and Strategy Manager Mike Searle acknowledged the interest from Elected Members in seeking more detail about the fees and charges and suggested they could be scheduled as a part of the Long Term Plan discussions later in the year. The Chair suggested an initial discussion that focused on the reasoning for increases would be helpful, although he expected that some would be simply inflationary changes. He noted that a comparison set of fees and charges would have been helpful, but it was not available. Accounting Manager Ian Wells advised that there had been little or no changes other than to building fees which Council had agreed to just recently and that was why a comparison schedule had not been produced.

On that basis, the Chair suggested that the need to review the fees and charges was not urgent and understanding the rationale for them could be done as part of the LTP process. If a workshop could be scheduled earlier, then it would be, but it may not be within the next six weeks as this was a busy time for everyone as other work is progressed, including CouncilMARK.

It was suggested that the reasons for the building warrant of fitness fee would be helpful to explain, since there was still a perception from commercial property owners who have paid an external contractor to get that because they felt it was almost a double charge. It was AGREED that this would be part of the fees and charges discussion when it could be scheduled.

In relation to the Annual Plan document, content matters were discussed briefly. When asked if the rates postponements would have any impact on Council’s post-COVID-19 relief packages, Mr Hope clarified that he understood Council would develop a postponement policy for the next 3-4 months and it could be adopted at any time. He noted that advice received had recommended that that policy work could be undertaken later and, in the meantime, delegations to the Chief Executive and himself had been included so that they could be more generous with penalties and payment arrangements to support ratepayers. This explanation was acknowledged.

Cr Jim Hopkins said he would move the report’s recommendations with one minor change to 3(a) to read that “operating revenues will not be at a level …” (additional words italicised). Cr Kelli Milmine agreed to second the motion.


21 JULY 2020

Item 5.1


Moved: Cr Jim Hopkins Seconded: Cr Kelli Milmine

That Council:

1. Notes the following steps for completing the 2020/21 Annual Plan process:

a) before adopting the 2020/21 Annual Plan, formally resolve that Council recognises that the budget being adopted is not a balanced budget; and

b) adopt the 2020/21 Annual Plan; and

c) receive and note the 2020/21 fees and charges; and

d) set the rates by resolution for the 2020/21 financial year; and

2. Notes that the increase in total rates required from $32.155m to $32.252m represents the anticipated growth in rates income from development and that the objective of a zero average rate increase has been achieved; and

3. Resolves that the budget for the 2020/21 financial year is not a balanced budget in that:

a) operating revenues will not be at a level sufficient to meet 2020/21 operating expenses primarily due to the use of operating reserves to fund operating expenditure and the decision to not fully fund the depreciation cost on some additional property assets, however Council believes that it will still deliver the levels of service indicated in the Long Term Plan and equitably fund and maintain the service capacity of assets through their useful lives; and

b) Council has had full regard to the considerations contained in s100, s101(1) and (2) of the Local Government Act 2002, in particular the requirements to manage its revenues and expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future needs of the community; and

c) given the current COVID-19 pandemic and its effects, both known and potential, on the local economy and its ratepayers, the Council believes it is acting prudently in adopting an unbalanced budget; and

4. Adopts the attached Waitaki District Council 2020/21 Annual Plan; and

5. Delegates authority to the Council’s Chief Executive, in consultation with the Mayor, to make any necessary final corrections to the 2020/21 Annual Plan prior to legal deposit.

CARRIED


21 JULY 2020

Item 5.1

6.2 RESOLUTION TO SET THE RATES FOR THE 2020/21 RATING YEAR

The report, as circulated, sought to set the rates for the 2020/21 financial year in accordance with the Local Government Act 2002, the Local Government (Rating) Act 2002 and the 2020/21 Annual Plan.

Group Manager Paul Hope and Accounting Manager Ian Wells were present for this agenda item and responded to questions from Elected Members.

Mr Hope explained that the long resolution was required by legislation in order to set the rates. Further to the discussion in the previous agenda item, Mr Hope provided new wording for the second paragraph of the penalty regime to change the date to 25 August 2020.

The new wording was as follows: “As authorised under section 58(1)(ab) the Local Government Rating Act 2002, a further charge of 10% of any amount of rates or metered water charges that remain unpaid from the previous financial years on [the later of 1 July or 5 working days after the resolution is made] will be added on 25 August 2020. In addition, a further charge of 10% on any amount of rates or metered water charges to which a penalty is added on 25 August 2020 that remain unpaid from the previous financial years will be added on 1 March 2021.”

A question was raised about whether there had been any consideration of the concerns raised by the small number of ratepayers who had been adversely impacted in relation to rates payments by the boundary change between Ahuriri and Corriedale Wards as part of the 2018 Representation Review. Mr Hope advised that there was nothing that could be included in the resolution to address those concerns. However, when asked to do so, he agreed to see if there was some other way that Council could address their concerns. ACTION: Group Manager Paul Hope and Accounting Manager Ian Wells


Moved: Deputy Mayor Melanie Tavendale Seconded: Cr Ross McRobie

That Council agrees to set the rates and due dates for payments, and to authorise the penalty regime for the 2020/21 year commencing 1 July 2020 and ending 30 June 2021, in accordance with the information contained in the 2020/21 Annual Plan as set out below. All amounts are GST inclusive and the rates in the dollar are shown per $100 of value.

Name of Rate Summary Narrative

Local Government Rating Act

Ref

Rate Set (GST

inclusive)

Required Revenue

(GST inclusive)

(To be read in conjunction with the Funding Impact Statement.)

General Rate

A uniform rate in the dollar based on the land value of each rating unit in the District.

s13(2)(a) $0.0573 $2,435,794

Uniform Annual General Charge

Charged on each Separately Used or Inhabited Part (SUIP)

s15(1)(b) $348.00 $4,786,814


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Item 5.1

of a rating unit in the District.

District Services Rate

A targeted rate be set at a uniform rate in the dollar, based on the capital value of each rating unit in the District.

s16(3)(a) $0.0274 $2,314,234

Ward Services Charges

Charged on each Separately Used or Inhabited Part (SUIP) of a rating unit in the District differentiated by Ward.

s16(3)(b)

Ahuriri Ward Services Charge

$119.00 $240,250

Corriedale Ward Services Charge

$324.00 $836,229

Oamaru Ward Services Charge

$521.00 $3,751,217

Waihemo Ward Services Charge

$119.00 $235,519

Ward Services Rates

A targeted rate set at a uniform rate in the dollar, based on the capital value of each rating unit in each Ward.

s16(3)(b)

Ahuriri Ward Services Rate $0.0213 $474,392

Corriedale Ward Services Rate $0.0104 $289,189

Oamaru Ward Services Rate $0.0476 $1,150,354

Waihemo Ward Services Rate $0.0467 $470,971

Community Board Rates

A targeted rate set at a uniform rate in the dollar, based on the land value of each rating unit in each Ward.

s16(3)(b)

Ahuriri Community Board Rate

$0.0062 $39,405

Waihemo Community Board Rate

$0.0205 $128,370

Targeted Rates by Locality

Targeted rates set at a uniform rate in the dollar, based on the capital value of each rating unit in the defined area.

s16(3)(b)


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Item 5.1

Oamaru Business Area Rate A $0.3713 $560,792

Oamaru Business Area Rate B $0.1857 $106,821

Oamaru Urban Area

$0.0229 $429,501

Township Amenity Rates

Targeted rates set at a uniform rate in the dollar, based on the land value of each rating unit in the defined area.

s16(3)(b)

Duntroon

$0.0421 $1,725

Hampden

$0.1423 $34,500

Herbert

$0.0383 $1,725

Kakanui

$0.0111 $5,750

Kurow

$0.1200 $20,747

Lake Ohau $0.0128 $3,807

Maheno

$0.0496 $1,725

Moeraki

$0.0275 $7,086

Oamaru

$0.1217 $662,397

Omarama

$0.0582 $23,723

Otematata

$0.1307 $70,402

Palmerston

$0.2338 $53,621

Shag Point

$0.0157 $1,725

Weston

$0.1045 $45,301

Roading Rate

A differentiated targeted rate based on the capital value of each rating unit in the District.

s16(3)(a)

Electrical Generation

$0.0661 $506,575

Mineral Extraction

$2.6659 $381,355

Forestry $0.3444 $181,591

General

$0.0861 $6,557,571

Public Hall Rates

Charged on each Separately Used or Inhabited Part (SUIP) of a rating unit in the defined areas.

s16(3)(b)

Airedale Public Hall Rate

$20.00 $540

Ardgowan Public Hall Rate

$20.00 $2,760

Awamoko Public Hall Rate

$30.00 $2,550


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Item 5.1

Dunback Public Hall Rate

$30.00 $3,900

Duntroon Public Hall Rate

$20.00 $3,020

Enfield Public Hall Rate

$20.00 $2,760

Five Forks Public Hall Rate

$20.00 $1,600

Hampden Public Hall Rate

$30.00 $8,370

Kakanui Public Hall Rate

$20.00 $7,560

Kurow Public Hall Rate

$50.00 $15,800

Lower Waitaki Public Hall Rate

$80.00 $15,360

Macraes Public Hall Rate

$60.00 $3,180

Maheno Public Hall Rate

$30.00 $5,880

Moeraki Public Hall Rate

$40.00 $9,040

Ngapara Public Hall Rate

$20.00 $1,720

Omarama Public Hall Rate

$50.00 $18,550

Otekaieke Public Hall Rate

$20.00 $1,700

Otematata Public Hall Rate

$40.00 $20,640

Otepopo Public Hall Rate

$30.00 $5,400

Palmerston Public Hall Rate

$40.00 $27,840

Pukeuri Public Hall Rate

$20.00 $2,060

Tokarahi Public Hall Rate

$30.00 $3,210

Totara Public Hall Rate

$40.00 $8,880

Waianakarua Public Hall Rate

$30.00 $1,800

Waitaki Bridge Public Hall Rate

$20.00 $3,100

Weston Public Hall Rate

$40.00 $23,680

Windsor Public Hall Rate

$50.00 $3,300

Sewerage Rates and Charges

Targeted rates based on a fixed amount per water closet. Some targeted rates will be differentiated.

s16(3)(b)

Oamaru

$187.00 $1,498,342

Duntroon

$93.00 $1,020

Kakanui

$187.00 $62,236

Kurow

$239.00 $71,905

Lake Ohau Village

$312.00 $22,183

Lake Ohau Village – connection availability

$156.00 $8,905

Moeraki

$896.00 $172,897

Moeraki – connection availability

$449.00 $20,201

Omarama

$332.00 $180,471


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Item 5.1

Otematata

$284.00 $155,922

Palmerston

$365.00 $224,548

Water Rates - Urban

Targeted rates based on a fixed amount per rating unit or nature of connections Some targeted rates will be differentiated.

s16(3)(b)

Oamaru Water – Supply

$240.00 $1,601,837

Oamaru Water – Reticulation

$227.00 $1,426,221

Kurow

$594.00 $177,215

Lake Ohau Village

$320.00 $23,987

Lake Ohau Village - connection availability

$160.00 $8,795

Omarama

$624.00 $203,786

Otematata

$482.00 $253,899

Palmerston Zone – Waihemo Water

$824.00 $438,560

Rural Water Uniform targeted rates based on the type of connection.

s16(3)(b)

Awamoko

$530.00 $134,095

Bushy Creek $186.00 $18,186

Dunback Zone – Waihemo Water

$824.00 $171,323

Duntroon $627.00 $51,744

Enfield Zone – Oamaru Water

$559.00 $150,060

Goodwood Zone – Waihemo Water

$824.00 $198,929

Hampden/Moeraki zone – Oamaru Water – domestic supply

$439.00 $217,343

Hampden/Moeraki zone – Oamaru Water – rural supply

$559.00 $77,819

Herbert/Waianakarua zone – Oamaru Water

$559.00 $338,214

Kakanui Zone Oamaru Water – ordinary supply

$559.00 $246,249

Kakanui Zone Oamaru Water – crib unit supply

$439.00 $21,054

Kauru Hill

$445.00 $86,942

Lower Waitaki

$595.00 $248,251

Stoneburn

$352.00 $116,188

Tokarahi

$421.00 $292,069

Weston Zone – Oamaru Water

$559.00 $562,236

Windsor

$416.00 $78,194


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Item 5.1

Metered Water Rates

Targeted rates per cubic metre, based on the volume of water supplied.

s19(2)(a)

Oamaru Water – All zones – metered supply

$1.19

Waihemo Water – All zones – metered supply $1.19

Kurow – metered supply

$0.52

Omarama – metered supply

$0.96

Otematata – metered supply

$0.52

Construction Loan Rates

See full description in the Funding Impact Statement.

Oamaru Water Treatment Loan Rate (excludes businesses with water meters)

$92.00 $513,358

Instalments

Rates, except metered water rates, will be collected by four equal quarterly instalments due on the following dates, or the first working day after this date. Payments will be applied to the oldest debt first.

Instalment Number Due Date

One 25 August 2020

Two 25 November 2020

Three 25 February 2021

Four 25 May 2021

Metered Water Rates

Actual consumption of water by meter will be billed based on meter readings undertaken quarterly and will be due for payment on the following dates, or the first working day after this date. Payments will be applied to the oldest debt first.

Water usage invoiced for Due Date

Period ended 30 June 2020 25 August 2020 (billed at the 2019/20 rate)

Period ended 30 September 2020 25 November 2020

Period ended 31 December 2020 25 February 2021

Period ended 31 March 2021 25 May 2021

Period ended 30 June 2021 25 August 2021


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Item 5.1

Penalty Regime

As authorised under section 58(1)(a) the Local Government (Rating) Act 2002, an additional charge of 5% of any amount of an instalment or metered water charge that remains unpaid after the due date for that instalment or metered water charge will be added on or after the 25 August 2020, 25 November 2020, 25 February 2021, 25 May 2021 and 25 August 2021 respectively for each instalment or metered water charge.

As authorised under section 58(1)(ab) the Local Government Rating Act 2002, a further charge of 10% of any amount of rates or metered water charges that remain unpaid from the previous financial years on [the later of 1 July or five working days after the resolution is made] will be added on 25 August 2020. In addition, a further charge of 10% on any amount of rates or metered water charges to which a penalty is added on 25 August 2020 that remains unpaid from the previous financial years will be added on 1 March 2021.

Delegations

Council confirms that all matters that can be delegated under section 132 of the Local Government (Rating) Act 2002 are delegated to the Chief Executive, Finance and Corporate Development Group Manager, and Rates Supervisor.

CARRIED

6.3 COUNCIL CONTROLLED ORGANISATIONS - FINAL STATEMENTS OF INTENT 2020/2021

The report, as circulated, covered the available Statements of Intent for 2020 – 2021 for Council Controlled Organisations (CCO), and sought an extension of one month for the remaining CCO.

Group Manager Paul Hope presented the report, and responded to questions from Elected Members. He noted that the Statement of Intent for Tourism Waitaki Limited had been received after the close-off time for receipt of agenda items, which now required the resolution to extend the timeframe to receive it until the 21 July Additional Council Meeting. Mr Hope also reminded Elected Members that any revised Statement of Intent could be received at any time.


Moved: Cr Colin Wollstein Seconded: Cr Jim Hopkins

That Council:

1. receives and notes the attached Statements of Intent for three of the four Council Controlled Organisations, namely:

• Omarama Airfield Limited;

• Whitestone Contracting Limited;

• Waitaki District Health Services Limited; and

2. Extends the time for Tourism Waitaki Limited to produce a Statement of Intent by one month.

CARRIED


21 JULY 2020

Item 5.1

6.4 ROAD STOPPING (NEN STREET)

The report, as circulated, sought to stop and dispose of an unformed road in the Waitaki District.

Group Manager Paul Hope presented this agenda item on behalf of Group Manager Neil Jorgensen. He explained the technical term of “closing the road” – that the road had never been formed and could never be formed.

Cr Ross McRobie said he would move the report’s recommendations and Cr Jeremy Holding agreed to second the motion.

Discussion on the motion:

When asked if any other landowners had been advised, Mr Hope explained that formally closing the road was the first step in a process. Once that decision had been made by Council, then marketing would occur, and all adjourning properties would be advised as part of the rating process. The property would be sold on the open market. Knowing that there was at least one interested purchase was all that was required to commence the process.


Moved: Cr Ross McRobie Seconded: Cr Jeremy Holding

That Council:

1. Proceeds with the steps necessary to stop part Nen Street (Oamaru) as outlined in Schedule “A”; and

2. Delegates authority to the Chief Executive to negotiate the disposal of the associated land.

CARRIED

The Chair directed discussion forward to Agenda Item 7.2.

7.2 PANDEMIC ECONOMIC RECOVERY MANAGER'S REPORT

The report, as circulated, sought to inform Council of the current economic situation in the Waitaki during the COVID-19 pandemic period.

Pandemic Economic Recovery Manager (PERM) Gerard Quinn was present for this agenda item and responded to questions from Elected Members. There was brief discussion about Paymark figures; mobile telephone hot spots; rural broadband and safety on farms aspects that some saw as a driver for better coverage across the whole district; data access and future dashboard data items; PGF applications; and the postponement by the Dunedin City Council of the Dunedin – Oamaru cycleway and the view of some Elected members that Waitaki District Council also needed to prioritise its Alps 2 Ocean trail extensions.


Moved: Cr Peter Newton Seconded: Cr Bill Kingan

That the Council receives and notes the information.

CARRIED


21 JULY 2020

Item 5.1

At 10.05am, the Chair directed discussion back to Agenda Item 7.1 and welcomed North Otago Irrigation Company Limited (NOICL) representatives to the meeting.

7 MEMORANDUM REPORTS

7.1 UPDATE FROM NORTH OTAGO IRRIGATION COMPANY LIMITED

The report, as circulated, provided an update to Council on the activities and performance of the North Otago Irrigation Company Limited (NOICL) over the first half of the 2019 / 20 year. This is a requirement of the loan agreement between Council and NOICL.

Board Chairperson Matt Ross, Chief Executive Andrew Rodwell and Commercial Manager Stephen Craig-Pearson were present for this agenda item to speak to the information provided and to answer questions from Elected Members.

Mr Ross thanked Council for its ongoing support of NOICL and advised that the Board had had a good year. He believed it was a strong board, which had engaged in ‘robust conversation and thought’. There had been one recent change – Independent Director John Wright had retired during this rotation after six years on the Board, and Ms Sina Cotter Tait had just been appointed. She was a qualified engineer from Christchurch, and he was looking forward to her contribution.

Mr Craig-Pearson delivered the presentation on the company’s highlights for the year, which included: (i) high scheme reliability across the season; strong environmental performance as illustrated by the very high pass rate in audits of the Farm Environment Plans; and (iii) a strong financial performance.

Discussion topics included operating profit, assets, policies and farming practices; and ‘intelligent irrigation’ (which measures what is done a farm each day and irrigates accordingly). Mr Rodwell advised the meeting that those using this new tool were the ones who are trying to move the curve forward. It was highlighted that the company’s focus going forward would be on the sale of shares.

Elected Members congratulated the company on how far it had come and the good results it had achieved for the year.


Moved: Cr Colin Wollstein Seconded: Cr Jeremy Holding


CARRIED

The Chair thanked Mr Ross, Mr Rodwell and Mr Craig-Pearson for their report and presentation update and said that Council appreciated all that the company was doing for the Waitaki economy. He highlighted the graph of water usage in the presentation as demonstrating the very positive impact the company’s irrigation was having in the district. Mr Ross thanked Council for the opportunity to meet with them, and then the NOICL representatives left the meeting.

At 10.29am, the Chair advised that, with all public agenda items now discussed, the public session would be closed, and the livestream broadcast would also conclude at this time. The meeting would be reconvened after morning tea and move straight into the public excluded session.

The meeting was adjourned at 10.30am and reconvened at 10.45am.


21 JULY 2020

Item 5.1

The Chair directed discussion straight to Agenda Item 8.

8 RESOLUTION TO EXCLUDE THE PUBLIC


Moved: Cr Bill Kingan Seconded: Cr Colin Wollstein

That the public be excluded from the following parts of the proceedings of this meeting.

The general subject matter of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48 of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Ground(s) under section 48 for the passing of this resolution

9.1 - Public Excluded minutes of the Council Meeting held on 16 June 2020

s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons

s7(2)(c)(ii) - the withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest

s7(2)(i) - the withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)

s48(1)(a)(i) - the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding would exist under section 6 or section 7

9.2 - Recommendations from Development Contributions Committee PE


s7(2)(b)(ii) - the withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information



21 JULY 2020

Item 5.1

s7(2)(i) - the withholding of the information is necessary to enable Council to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations)

9.3 - Pandemic Economic Recovery Manager's Report - Public Excluded

s7(2)(c)(i) - the withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely to prejudice the supply of similar information, or information from the same source, and it is in the public interest that such information should continue to be supplied

s7(2)(c)(ii) - the withholding of the information is necessary to protect information which is subject to an obligation of confidence or which any person has been or could be compelled to provide under the authority of any enactment, where the making available of the information would be likely otherwise to damage the public interest

s7(2)(e) - the withholding of the information is necessary to avoid prejudice to measures that prevent or mitigate material loss to members of the public


CARRIED

9 PUBLIC EXCLUDED SECTION

The public excluded minutes apply to this section.


21 JULY 2020

Item 5.1

10 RESOLUTION TO RETURN TO THE PUBLIC MEETING


Moved: Cr Colin Wollstein Seconded: Cr Ross McRobie

That Council resumes in open meeting and decisions made in the public excluded session are confirmed and made public as and when required and considered.

CARRIED

11 RELEASE OF PUBLIC EXCLUDED INFORMATION

In accordance with Waitaki District Council Standing Orders, and pursuant to resolutions in the public excluded session of this meeting, Council decided to release previously public excluded information in the public minutes of this meeting, as recorded below.

9.1 PUBLIC EXCLUDED MINUTES OF THE ADDITIONAL COUNCIL MEETING HELD ON 16 JUNE 2020 PE


Moved: Cr Jim Hopkins Seconded: Cr Kelli Milmine

That the Council:

1. Confirms the Public Excluded minutes of the Council Meeting held on 16 June 2020, with amendments agreed at this meeting, as a true and correct record of that meeting.

CARRIED

9.3 PANDEMIC ECONOMIC RECOVERY MANAGER’S REPORT – PUBLIC EXCLUDED


Moved: Cr Peter Newton Seconded: Cr Kelli Milmine


CARRIED

12 MEETING CLOSE There being no further business, the Chair declared the meeting closed, at 11.15am.

TO BE CONFIRMED at the Additional Council Meeting to be held on Tuesday, 21 July 2020.

...................................................

CHAIRPERSON


21 JULY 2020

Item 5.1

5 LEADERSHIP REPORTS

5.1 MAYOR'S REPORT - 21 JULY 2020

Author: Gary Kircher, Mayor

Attachments: 1. Mayor's Report - 21 July 2020 Additional Council Meeting

RECOMMENDATION


PURPOSE

The attached report is provided to bring Councillors and the public up to date with issues that have arisen since the last Council Meeting on Tuesday, 30 June 2020.

Attachment – Mayor’s Report to 21 July 2020 Additional Council Meeting

COUNCIL MEETING AGENDA

21 JULY 2020

Item 5.1 - Attachment 1

MAYOR’S REPORT – 21 July 2020 Council Meeting

During this period while we are having Council meetings every two to three weeks, I am including an update in each Council meeting agenda to share some of the events and activities that are happening. The situation around COVID-19 and its impacts remains fluid, and of course life still goes on in other aspects of Council activities. This is an opportunity for Councillors and the wider community to be informed on some of those matters.

Lower Thames Street and Itchen Street

Sometimes processes can get a bit ahead of themselves, and that is the situation with the proposals for the intersection of Lower Thames Street and Itchen Street. This proposal originally came about as the result of a submission by Greg Clydesdale, a senior lecturer at Lincoln University. Greg’s idea was not so much about the intersection itself, but rather was more about creating a great public space, and a scene that would be irresistibly photogenic. He argued that one of the most photographed buildings in New Zealand, the Dunedin Railway Station, would not be nearly as attractive if it had a road running next to its frontage rather than the gardens that exist there. Likewise, three of our iconic buildings, the ANZ bank (at that time it was the National Bank), the Forrester Gallery, and the i-site building, would all look much better with a green, grassy foreground setting off the wonderful, white Oamaru stone. This would make the buildings stand out so much more, rather than the dull, grey road and the dull, grey footpath. He was not arguing to remove the sealed footpath, but he was proposing that a green space would both enhance the view, as well as create a public space for people to enjoy.

Whether that is the case or not can be argued, but the reality is that Councillors simply have not discussed the matter in any detail. The media coverage from various quarters is ahead of that important step and, as people making decisions on behalf of our community, we need to have input before the concept goes any further. Council staff had carried out some work on the concept over 18 months ago, resulting in a short video that shows modifications to Lower Thames Street from the Opera House down to Itchen Street. When Councillors saw that at the time, we had concerns with elements of it, but we have not discussed it formally since then. Also around that time, I received a design for a plaza area in front of the i-site building, created by local landscape designer, Linda Wilson, with some great ideas in her initial sketch. And a year ago, we had the presentation of a greenspace in front of the Council building, put forward by Annabel Berry as part of a launch of the Oamaru Business Collective. Incidentally, I was very pleased to see that group get together as we have needed a retail-focused group for some time, to help businesses work together. The proposal was one of several initiatives being proposed by the group.

These various designs all had similar themes, creating a more people-friendly space. All still needed some fine-tuning, but that discussion has not happened where it needed to – with Councillors, then with the businesses and the public. With a significant change such as this, there are some important steps to come. And it is best to be able to try different options and test elements within them to make sure any final design is as perfect as it can be before the layout can be set, figuratively and literally, in concrete. My personal belief is that any change needs to be positive, without losing what we already have. That means keeping carparks, keeping good access to the bank, the Gallery, Steam Cafe, and the (I hope soon to be) reopened information centre. If we get this right, we will continue making Waitaki the best place to live!


21 JULY 2020


* NOTE: I do want to take my hat off to staff who applied for, and gained, significant funding from NZTA to progress this proposal. We do have to get the process right first, and that will happen. A workshop will be held soon with our Councillors so we can make decisions on more of the details and principles, before the next discussion involving the business community and the public.

Letter to the Prime Minister and Cabinet

Unfortunately, there is nothing more to report on this issue at the time of writing this update. We continue to wait patiently for a response to the letter emailed on 14 May.

Information Centre

With the cutbacks that Tourism Waitaki made, one of the victims of the difficult decisions being made has been the i-sites in Omarama and Oamaru, and funding for the Information Centre in Kurow. And the public response has been rapid, and loud. People in the industry have appreciated the service and have been shocked to see it disappear. Much of that loud response has been aimed at Tourism Waitaki, which had the unenviable task of having to make major cuts to its activities and staff, including going through a significant restructure. Such is the tourism industry at the moment!

But there is some light at the end of that tunnel, with domestic tourism currently exceeding expectations around the country. Accommodation and attractions that had been closed until further notice have been opening with the bounce created by Kiwis coming out of lockdown and wanting to get out and about, exploring our own backyard! There are also a reasonable number


21 JULY 2020


of overseas visitors who have added to that number. Nowhere near as many as we are used to of course, but still somewhere in the tens of thousands. People who stayed here through lockdown, and who are now on an extended tour of New Zealand.

And there has been light shining at the end of Tourism Waitaki’s tunnel too, with two government funding opportunities for them – the Regional Tourism Organisation fund which could yield them approximately $400k for destination management and planning, and the Strategic Tourism Assets fund which could assist with the running costs of the nationally-important Oamaru Blue Penguin Colony. Although both of these funds have targeted purposes which cannot be applied to other aspects of TW’s operations, it does give the company options about what it does overall, especially with the funding made available by our Council.

One of these options is to assist in reopening the i-site, though as an information centre rather than the branded i-site that it was. I remain hopeful that the planets can be aligned which will see this happen. There are many who will point to technological changes which make physical bricks-and-mortar information centres obsolete, but until that is fully embraced and until visitors stop looking for local people to give their personal views on what is worth seeing or going to, then the service will remain in demand. The answer will likely see a number of moving parts working together – perhaps a Tourism Waitaki employee providing the oversight, with a combination of volunteers and potentially a relocation of the geopark pop-up shop which would provide great synergies for both entities. I am keen to keep pushing for an appropriate solution, so we can encourage more people to stay longer and to spend more as they enjoy Waitaki!

On a separate note, the i-site status is also a very fluid topic, with central government looking at how information centres branded as i-sites might survive into the future. Whether there is central government funding to help these facilities stay open remains to be seen.


21 JULY 2020


CouncilMARK – Progressing well

A number of staff have been busy since my last Mayoral Report, working on the CouncilMARK document which will then be followed up by an on-site assessment by the two-person assessment team. As I reported last time, this is an important process for us, to help the Council organisation to identify what we are doing well and where we can improve. It starts with governance and includes all aspects of the many activities that we carry out. The work being done helps give the assessors an understanding of what we currently do and how we do it. Councillors will have an opportunity to review that on 20 July, and the assessors are due here on 26-27 August. To me, this is such a good opportunity for us to become better governors and to have a clearer direction on how we can work better for ratepayers! After a reasonably lengthy time at Waitaki District Council, I can honestly say that I remain excited about continuing to improve how we serve our community.

Improving Our Governance On the topic of further improving, it is important that we do not rest on our laurels and so we have had another governance session looking at our vision, our goals, and our strategic priorities. Our Councillors and I had done some work on this already this term, but a follow-up session planned for April had to be postponed. That has now taken place, thanks to the great facilitation skills of two of our Group Managers, Neil Jorgensen and Lisa Baillie.

The session modified our vision to – Waitaki, the best place to be. It is a vision which we believe in, and which we can measure all of our decisions against. It is important that we make it valid and important every day throughout the organisation, and it will be something that we remind our community that this is what we are working towards. We are getting better at that, and reaffirming that direction is another important step in making it a reality.

Thank you, Neil and Lisa, for the time and effort you put into the governance session with us – we have appreciated it and hope it has been as equally beneficial to you both as well.

3 Waters – An improved outlook!

To be honest, I was getting tired of discussing 3 waters when it did not look like local government was making any progress with the issue. Central government seemed to be hell-bent not just on making reform happen, but also with telling us what that reform would look like. LGNZ maintained its position of agreeing that reform needed to happen, but that it should be up to us to meet the standards, whatever they were, that were set by central government.

So we were very pleased when the announcement was made in Hawkes Bay that there was a softening of their stance, with Councils given the option to opt-in to looking at reform, and financial benefits for doing so. It is difficult to see how any Council could say no to being part of the first tranche – a $761m fund which will be divvied up based on population size and geographic area. Exactly how that is calculated is unknown as yet, but it will mean millions of dollars for the Waitaki district if we do agree to opt in. In return, we will be expected to provide data (and quite a lot of it) on our 3 waters infrastructure – drinking water, wastewater, and storm water.


21 JULY 2020


And in an act of trust by central government that is rarely seen, Councils will be able to have a large degree of freedom on how they spend that money, providing it is on the 3 waters services. There is a lot more to learn of course, and that involves more webinars, Zoom meetings, and a series of road shows at towns and cities across New Zealand. But the overall outlook is a lot rosier, and the last two years of discussions, battles, and arguments look to have taken a much better turn.

Alps2Ocean Ultra

Three and a half years ago, I had a meeting with Michael Sandri who wanted to talk to me about an idea he had for an ultra-marathon, whatever that was. He explained the concept and told me how it was a big thing overseas, but New Zealand had not had one yet. He also told me of his ultra race adventure he had recently entered in the desert near Las Vegas. He told me how he did not complete it, getting totally wiped out by the extreme heat! And he was doing it for the enjoyment…. My initial thought was that who would ever do something like that to themselves, and my next thought was that his suggestion that he might get SEVENTY people to come and run 315km along the Alps2Ocean trail was just ridiculous!

But three years later, three races later, with around 125 entrants each year, each paying well over $2,000 just for the entry fee, and many of them paying thousands of dollars just to get to Oamaru to compete, I am now in awe of Michael, the team he gathered around him, and the athletes who took part.

This truly has been an incredible event. Not only has it brought hundreds of people to Waitaki, it has raised over $700,000 for charity. The Council has been a sponsor and partner in the race, contributing $25,000 and many hours of assistance to help make it happen, but our community has been rewarded many times over. $75,000 has gone towards the Alps2Ocean cycle trail helping to improve it. Local children have been sponsored and encouraged to compete at the highest level in a variety of sports, and other locals have benefited from the race’s proceeds.

Every year I have had some small involvement, and I have been overwhelmed by the generosity of our people. I have been so proud of what this small tie has achieved, and I have been proud of how well they have shown Waitaki to the world! I know of at least one Australian waiting to come to live here, and I have written a letter of support to someone from Europe to encourage


21 JULY 2020


our authorities to allow him to start up a New Zealand branch for his IT/medical business. And that is just the ones I am aware of!

So, to Michael, his two sidekicks, John Crombie and Linton Clarke, thank you from the people of

Waitaki! You have held an event that has been touted as the best by many of the athletes who

have tested themselves against it, and you have finished it on top!

For three years, Michael Sandri greeted every single athlete as they finished every stage of the

Alps2Ocean Ultra.

MEETINGS ATTENDED BY MAYOR GARY KIRCHER

30 June Council Meeting

30 June Council Workshops with CCOs 30 June Councillor briefing 1 July Meeting with Mark Rogers re WDHSL 1 July Meeting with Ralph Davies re tourism 1 July Meeting with Mike McElhinney, Tourism Waitaki Chair 2 July Meeting with Heather McGregor, Waihemo Community Board Chair 2 July Meeting re subdivision 2 July Meeting with Eddie Robinson re Creative Spaces 2 July Riding for the Disabled AGM 2 July Meeting with Dagmar Rohrbach re drive-in movie debrief 3 July Meeting with Geoff Douch, Network Waitaki CEO 3 July Meeting with Allan Dick re Tourism 6 July Mayor and Chief Executive Meeting 6 July 45 South TV Interview 6 July A20 Ultra Wrap-up event

7 July Workshop – Tourism Opportunities Part 1 7 July Workshop – Briefing from MBIE 7 July Workshop – Tourism Opportunities Part 2 7 July Workshop – Compliance and Enforcement Policy 7 July Councillor briefing


21 JULY 2020


8 July Meeting with Road Metals 10 July Meeting with Vicky Munro, Ahuriri Community Board Chair 10 July Zone 5 Water Reforms Zoom meeting 13 July Corporate Planning Meeting 13 July DPR Workshop – Infrastructure/Renewable Energy/Transport 14 July Governance Strategy Session 14 July Submission Hearings/Deliberations on LGFA proposal 14 July Workshop – Tourism in Waitaki Part 2 14 July Councillor Briefing 15 July LGNZ National Council Meeting 16 July R&P Mayors’ Meeting 16-17 July 19 July

Rural and Provincial Meeting Oamaru Farmers’ Market AGM

20 July Draft Agenda Meeting 20 July 45 South TV Interview 20 July CouncilMARK Workshop

Mayor Gary Kircher


21 JULY 2020

Item 6.1

6 DECISION REPORTS

6.1 COUNCIL CONTROLLED ORGANISATION TOURISM WAITAKI LIMITED - FINAL STATEMENT OF INTENT 2020/2021

Author: Paul Hope, Finance and Corporate Development Group Manager

Authoriser: Fergus Power, Chief Executive

Attachments: 1. Tourism Waitaki Limited - Statement of Intent 2020 - 2021 FINAL- dated 20 June 2020

RECOMMENDATION

That Council receives and notes the attached Statement of Intent for 2020 / 21 for Tourism Waitaki Limited.

DECISION OBJECTIVE

To receive the Statement of Intent for the 2020 / 2021 year from the fourth Council Controlled Organisation, Tourism Waitaki Limited.

SUMMARY

In accordance with Section 64 of the Local Government Act (2002), all Council Controlled Organisations (CCOs) are required to prepare and submit to Council an annual Statement of Intent (SOI). An SOI lays out the intentions for the next financial year and the objectives to which it contributes.

Three of Council’s CCOs presented their 2020 / 2021 SOIs at the 30 June 2020 Council Meeting. Council resolved at that meeting to extend the timeframe for the remaining CCO (Tourism Waitaki Limited) to submit its 2020 / 2021 SOI for a month. Tourism Waitaki Limited’s SOI has since been received, and is being formally presented to Council at this meeting.

DECISION-MAKING EXPECTATIONS

Governance Decision-Making: Receive the information

Operational Decision-Making: None

Communications Media Releases – contributed to by officers and Elected Members

Media/public enquiries regarding governance decision-making topics above can be addressed by governance

Media/public enquiries regarding operational decision-making topics above can be addressed by officers


21 JULY 2020

Item 6.1

SUMMARY OF DECISION-MAKING CRITERIA

No/Moderate/Key No/Moderate/Key

Policy/Plan No Environmental Considerations No

Legal Key Cultural Considerations No

Significance No Social Considerations No

Financial Criteria No Economic Considerations No

Community Views No Community Board Views No

Consultation No Publicity and Communication No

BACKGROUND

Council has the opportunity to comment or make suggestions on the SOIs under Section 65 and Schedule 8 of the Local Government Act. This feedback can be on any aspect of the SOI including nature and scope of activities, objectives, shareholder expectations, reporting and frequency, performance targets, or Governance Policy.

DISCUSSION

The operations and expectations of Tourism Waitaki Limited (TWL) have changed significantly over the last four months as a result of the COVID-19 situation. The impact of COVID-19, particularly in terms of international travel, will continue for all of the next year and beyond. Given this, TWL has made significant changes to its SOI. As Council is in the process of discussing the impact of these events and proposed responses with the company, any feedback in relation to the SOI can be provided through that process. This feedback can then be reflected as required in the next iteration of the document if the company considers an adjustment is required.

SUMMARY OF OPTIONS CONSIDERED

Option 1 – Receive the Statement of Intent (Preferred)

Option 2 – Decline to receive the Statement of Intent

ASSESSMENT OF PREFERRED OPTION

There is no reason not to receive the Statement of Intent as provided by Tourism Waitaki Limited. If any major issues were noted in those Statements, then this can be fed back to the TWL board and a revised SOI received as soon as practicable in this new financial year.

CONCLUSION

In view of the process that has been followed and the extension of time approved at the 30 June 2020 Council Meeting, as noted above, it is now recommended that the Statement of Intent for the 2020 / 2021 year from CCO Tourism Waitaki Limited, as attached to this agenda report, is formally received and noted by the Council.


21 JULY 2020

Item 6.1

ADDITIONAL DECISION-MAKING CONSIDERATIONS

Outcomes

We keep our district affordable

We enable opportunities for new and existing business

We provide and enable services and facilities so people want to stay and move here

We understand the diverse needs of our community

Waitaki’s distinctive environment is valued and protected

We maintain the safest community we can

Legal Considerations

The requirements under the LGA are covered in the body of the report.


21 JULY 2020


DRAFT STATEMENT OF INTENT

Version date: Amended 20 June 2020

2020 /2021

TOURISM WAITAKI LTD


21 JULY 2020


CONTENTS:

3. Vision

Introduction

The Company description

The Company Objectives

4. Nature and Scope of Activities

Shareholder Expectations

Reporting Frequency and Content

6. Reporting and Performance Focus, Methods and Measures

8. Financial Projections for the Company

Governance, Policies and Procedures – Corporate Governance Statement

Treasury Policy

Dividend Policy

Accounting Policies

Tendering Policy

Procedure for Acquisition of Other Interests

Activities for Which the Company Seeks Compensation from any Local Authority

Sales of Goods/Services to the Shareholder


21 JULY 2020


VISION

Visitors are drawn to explore the People and Place of Waitaki,( within the constraints imposed by Covid 19)

as defined by its rich natural heritage, unique geology, biodiversity and geogastronomy.

PURPOSE

Make a positive contribution to our communities

INTRODUCTION

This Statement of Intent has been prepared in accordance with Section 64 of the Local Government Act 2002 and in the

knowledge that Covid 19 has severely Impacted local, national, and International tourism.

It outlines the activities and intentions of the Tourism Waitaki Limited for the next year and the objectives to which those

activities will contribute. Performance focus, methods and measures are specified, along with the Company’s policies relating to

governance and other matters.

The Statement of Intent is reviewed annually by the Company in consultation with Waitaki District Council.

THE COMPANY – DESCRIPTION

Tourism Waitaki Limited is the registered legal name of the former Waitaki Development Board, which was established in

December 1996 and is 100% owned by the Waitaki District Council. Under the provisions of the Local Government Act 2002 it is

deemed to be a Council Controlled Organisation.

Council’s primary objective for continued ownership and control of Tourism Waitaki, is to advance tourism within the district by

fostering a positive, diverse, and sustainable tourism sector.


21 JULY 2020


THE COMPANY - OBJECTIVE

Tourism Waitaki enables operators and our communities to deliver original and engaging experiences in the Waitaki.

In recognizing the aspiring Waitaki Whitestone Global Geopark encompasses all visitor touch-points throughout the District, the

reputation of the Waitaki District will escalate to a point where it will be sought out as a destination by New Zealanders (and in

future overseas visitors ).

They will look to connect with and enjoy attractions, the environment, learn about our rich heritage and history, and engage

with vibrant and distinctive communities across the district.

Neighboring regions will be viewed as natural and easy extensions to visitor journeys.

.


21 JULY 2020


Nature and Scope of Activities (subject to Covid 19

constraints)

• Maintain business partnerships and commercial

relationships with stakeholders at local, regional, and

national levels.

• Support Waitaki tourism operators to maintain their

business through advice and advocacy.

• Supply visitor information through digital services and

other outlets

• Maintain the Oamaru Blue Penguin Colony and its

scientific activities

• Re-establish visitor experiences at the OBPC when

visitor numbers allow

• Re-establish the Heritage Walking Tours when visitor

numbers allow

• Promote and market the Alps to Ocean Cycle Trail.

• Promote and market the Waitaki Whitestone aspiring

Global Geopark.

Shareholder Expectations

Council expects that in conducting the affairs of the

Company, the directors shall ensure:

• Business activities are conducted in an efficient and

effective manner.

• Assets and liabilities are prudently managed.

• Overall performance supports Council’s reasons for

continued ownership.

• Decisions are based on the achievement of long-term

strategic needs and objectives, not short-term

expediencies.

• The Company acts as a good employer and as an

environmentally conscious and responsible citizen.

• The Company in its consultative practices has due

regard for Maori.

• Transparent and collaborative relations are maintained

with the shareholder.

• Maintains a positive relationship with the Waitaki

District community, encouraging locals to be tourism

advocates and ambassadors.

Reporting Frequency and Content

A Director of the Company shall attend any meeting at

which the Annual Report or Half Yearly Report is presented

to Council as shareholder.

The following information will be available to the

shareholder based on an annual balance date of 30th June:

Draft Statement of Intent

By 1 March each year, the Directors shall deliver to the

shareholder a Draft Statement of Intent for the following

year which fulfils the requirements of Section 64 of the

Local Government Act 2002.

Completed Statement of Intent

By 30th June of each year, the Directors will deliver to the

shareholder a Statement of Intent for the following year

which fulfils the requirement of Section 64 of the Local

Government Act 2002.

Quarterly Reports

Within six weeks of the end of each quarter the TWL shall

report to the Shareholder in accordance with contractual

requirements.

Half Year Reports

Within two months after the end of the first half of

each financial year, the Directors shall deliver to

the shareholder an un-audited report containing

the information required by the Financial

Reporting Act 1993 and a commentary on the

results for the first six months together with a

report on the outlook for the second six months

with reference to any significant factors that are

likely to have an effect on the Company’s

performance, including an estimate of the

financial result for the year based on that outlook,

a report on the performance targets achieved

during the six month period, the scale of non-

Council related business activities and statements

for any grants awarded by the Tourism Waitaki to

another party, including information measuring

the effectiveness of the grant.


21 JULY 2020


Annual Report

Within three months after the end of each financial year,

the Directors shall deliver to the shareholders an annual

report and audited financial statements, with respect to the

financial year, containing the following information as a

minimum:

• A report on the operations of the Company to enable

an informed assessment of the Company’s

performance including:

• Performance against identified focus areas, methods

and measurements in this Statement of Intent.

• Performance against the Corporate Governance

Statement.

• Audited financial statements as required under the

Financial Reporting Act 1993.

• A report on compliance with the Company’s Tendering

Policy.

• Any grants awarded by Tourism Waitaki Limited to

another party, including information measuring the

effectiveness of the grant.

Annual Budget

Annual revenue and expenditure figures shall be provided

by 30 November, to enable it to be included within the

Draft Annual Plan for the Waitaki District Council.

In addition to the above reports to Council, there will be 2-4

meetings per year with the shareholders Executive

Committee.


21 JULY 2020


Reporting and Performance Focus, Methods and Measures The Company’s performance focus areas are to:

Customers: Manaakitanga

Goal: To strengthen the Waitaki destination and brand

awareness

How: Undertake international trade, domestic and

consumer engagement

1.1. Survey International and Domestic visitors to our

region to achieve valuable insights.

1.2. Improve Waitaki’s digital presence and exposure to

visitors to boost awareness.

1.3. Adopt the Waitaki Whitestone aspiring Global

Geopark as an umbrella brand for the district.

FOCUS METHODS &

MEASUREME

NTS

Domestic Trade Work with

neighboring

RTO’s and TNZ

to achieve a

wider regional

approach to

marketing, to

encourage

reinstatement

of domestic

tourism.

Create a

domestic

campaign/mar

keting plan to

draw visitors

to the district

Measure: A

campaign/mar

keting plan for

Summer

2020/21

Measure:

Visitor

numbers are

measured

against Covid-

19 lockdown

tourist

numbers

Partner with South Island Airports Engage with

the Kia Ora

South

program,

CHCH Airport

and Lower

South

program,

Dunedin

Airport, in

joint

marketing

campaign

opportunities

in NZ and

Australia

Measure:

Attend or

contribute to

at least one

Joint

marketing

campaign per

year.

Grow relationships with Neighboring

RTO’s

Work to form

an alliance

with the

Southern

Region RTO

cluster to

build a

Southern New

Zealand

regional

promotion

plan referred


21 JULY 2020


to as '45

South', to

achieve

efficiencies in

marketing.

Measure:

Become a

formal partner

in a Southern

Region

Alliance '45

South' for

2020/21.

Visitor Surveys Carry out

quarterly

Visitor Surveys

in the District

to measure

the return of

domestic and

International

visitors

Measure:

Sample size

min.100pax/s

urvey per

quarter from

OBPC.

Digital Platforms Review TWL

and OBPC

website, social

media

platforms to

increase ease

of use and

engagement.

Measure:

Update the

TWL and

OBPC website

and social

media

platforms by

Feb 2021.


21 JULY 2020


Contribution: Ako

Goal: Be a trusted leader in tourism

How -

1.1 Manage TWL businesses in a financially sustainable manner.

1.2 Continue to improve customer experiences at TWL attractions.

1.3 Provide industry data and insights to operators to support their business decisions during Covid 19

FOCUS METHODS & MEASUREMENT

Best Practice Business Management Ensure the health and well-being of our staff and customers

is part of our best practice.

Develop annual budgets for each TWL business unit.

Enhancements and developments are achieved within

budget & resources.

Measure: Business Unit has a budget and enhancement plan.

Improve Customer Experience Survey Customers and staff to explore innovative ways to

enhance each experience.

Ensure the integrity of the environment is protected at all

TWL businesses, measured by annual Qualmark ratings.

Measure: The annual Qualmark Assessment is maintained at

OBPC as a Silver rating or, exceeds to Gold.

Contribution to local industry Be a resource for local operators and aspiring tourism

businesses to obtain knowledge, data, and insights.

Measure: Hold virtual drop-in sessions twice a year.

Issue bi-monthly newsletters to operators.

Collaboration & Ambition: Whanaungatanga

Goal: Tourism elevates community pride

How -

1.1. Create robust and trusted relationships with operators and communities.

1.2. Welcome diverse viewpoints, cultures, stories, and experiences, weaving these into the tourist offering in the Waitaki.

1.3. Be true to who we are in promotion, marketing, storytelling, and messaging, bringing passion and pride-of-place to the

forefront of all we do.

FOCUS METHODS & MEASUREMENTS

Relationships Support businesses which have survived Covid 19 via a strong

membership and advertising partnership program with

Tourism Waitaki.

Measure: Membership to Tourism Waitaki grows by 4%

Adopt a “destination approach” in future investment in

promotion, experience, and product development

Encourage opportunities to support experience

development. Foster collaboration, entrepreneurial thinking,

clustering, and specialization with other sectors where

competitive advantages and mutual benefits exist.


21 JULY 2020


Measure: Develop district touring routes which profile the

Waitaki Whitestone Geopark

Seek additional Industry funding support as a result of Covid

19 impacts.

TWL will continue to seek to additional Government funding

to support the RTO functions and OBPC.

Measure: Obtain additional government funding to support

operations at OBPC and the RTO

Financial projections for the Company

Year Ending 30 June 2020

Shareholder’s Equity $500,000

Ratio of Consolidated Shareholders’ Funds to Total Assets

The ratio of consolidated shareholders’ funds to total assets will continue to exceed 5%.

‘Shareholders’ Funds’ (Equity) are defined as the paid-up capital plus any retained tax paid profits earned and less any dividends

distributed to shareholders. They include accumulated surpluses – revaluation reserves, trust funds and any other reserves or

funds which have been accumulated in accounts known as either “Revenue Reserves” or “Capital Reserves”.

‘Total Assets’ are defined as the sum of all current and non-current assets plus investments of the Company.

Directors Estimate of the Company Value

The Estimate of the Commercial value of the shareholders’ investment shall be the opening balance of shareholders’ funds. The

directors will advise the shareholders on an annual basis if they differ materially from this state.

GOVERNANCE, POLICIES AND PROCEDURES Corporate Governance Statement

Role of the Board of Directors

The Directors’ role is defined in section 58 of the Local Government Act 2002. This section states that all decisions relating to the

operation of the Council Controlled Organization shall be made pursuant to the authority of the directorate of the Organization

and its Statement of Intent. The Board consults with the Company’s shareholder in preparing and reviewing the Statement of

Intent.

The Board will meet a minimum of six times a year and more frequently as required. Meetings may be in person or by

teleconference. The Board is responsible for the proper direction and control of the Company’s activities. This responsibility

includes such areas of stewardship as the identification and control of the Company’s business risks, the integrity of

management information systems and reporting to shareholders. While the Board acknowledges that it is responsible for the

overall framework of the Company, it recognizes that cost effective internal control systems will preclude errors and

irregularities.

The board shall ensure that suitable governance policies are in place to give effective and efficient direction of the company.

The Role of the Shareholder

a) The Board aims to ensure that the shareholder is informed of all major developments affecting the Group’s state of affairs.

The shareholder is consulted with on the review of the Company’s Statement of Intent and is responsible for the

appointment of directors. Information is communicated to shareholder in the Annual Report, the Half-year Report and

Shareholder meetings or special meetings where required.

Board Appointments


21 JULY 2020


b) Directors are appointed by the shareholder in accordance with Council policy. The Board is subject to the shareholder’s

director rotation policy requiring all the directors to retire over any three-year period. Retiring Directors shall be eligible to

apply for reappointment.

Director and Board Performance The Board formally reviews its performance, and the performance and contribution of individual directors on an annual basis,

taking into account the current and future needs of the Company, and performance improvement processes are implemented as

required. The annual review also provides information to the shareholder on the mix of skills needed to assist with the

identification of new directors. The Board shall review the role of the Chair annually.

Company Management Structure

All operations and management of the Company and its business units are delegated to the General Manager, Tourism Waitaki

Limited who appoints and relies on key personnel for support.

Code of Conduct

The Board has adopted policies for its members, executive and staff, specifying the business standards and ethical

considerations in conducting its business with stakeholders.

Treasury Policy

There is no exposure to foreign exchange. Interest rate risk, sensitive spending and delegated financial authority is managed in

accordance with the Delegation Policy Manual. No speculative investments are authorised. Investments are held with a

registered bank and require Board approval.

Audit

External auditors are used to evaluate the quality and reliability of information provided to the shareholders.

Rebate

Any rebate paid by the company during the course of this agreement will be in the form of a reduction in grant funding

compounded into the next 3-year negotiation cycle.

Accounting Policies

The accounting policies recognized by the Institute of Chartered Accountants Australia and New Zealand for the measurement

and reporting of financial performance and financial position will be adopted by the Company.

A full statement of Accounting Policies will be presented in the Company’s Annual Report.

All financial statements, reports, and information will be consistent with Council reporting styles and standards where both

possible and practicable.

Procedures for Acquisition of Other Interests

The acquisition of shares or interest in other companies or organizations will only be considered by the Directors where such

acquisition is consistent with the long-term commercial objectives of the Company.

If the directors believe that the Company should invest in, or otherwise acquire, any interest in another company or

organization, they will obtain the prior approval of the shareholders.

Activities for Which the Company Seeks Compensation from any Local Authority

There are no activities for which the Company seeks compensation from any local authority.

The Council is not permitted to provide any guarantee, indemnity or security in respects of the assets, liabilities or trading

activities of the Company.


21 JULY 2020


Sales of Goods/Services to the Shareholder

The Company provides goods and services to the Waitaki District Council as part of its normal business activities. These goods

and services shall be charged for on a commercial basis

TWL SOI 2020-21 Final Doc 20 June 2020.


21 JULY 2020

Item 6.2

6.2 LOCAL GOVERNMENT FUNDING AGENCY MEMBERSHIP

Author: Paul Hope, Finance and Corporate Development Group Manager


Attachments: 1. Liability Management and Investment Policy with draft changes (version 14 July 2020)

RECOMMENDATIONS

That Council:

1. Notes the feedback received on the proposal to join the Local Government Funding Agency (LGFA) and amendments to the Liability Management and Investment Policy; and

2. Adopts the amended Liability Management and Investment Policy, noting that it will be further reviewed as part of the 2021-31 Long Term Plan process;

3. Confirms that it wishes to join the LGFA as a non-guaranteeing member; and

4. Instructs officers to prepare, with appropriate input from qualified advisors, all the necessary documents, agreements and other materials to put LGFA membership in place and allow borrowing to take place and for this to be presented to the 25 August 2020 Council Meeting.

DECISION OBJECTIVE

To consider feedback on the proposal to join the Local Government Funding Agency (LGFA) and amendments to the Liability Management and Investment Policy and decide if Council wants to pursue membership further.

SUMMARY

Council has consulted on the matter of joining the LGFA and received limited feedback, all in support of the proposal. It is recommended that this matter be pursued further.

DECISION-MAKING EXPECTATIONS

Governance Decision-Making: Decide on the proposal to join the LGFA

Operational Decision-Making: Selection of advisors and agents necessary to undertake borrowings

Notification to submitters

Communications Media Releases – contributed to by officers and Elected Members

Media/public enquiries regarding governance decision-making topics above can be addressed by governance

Media/public enquiries regarding operational decision-making topics above can be addressed by officers


21 JULY 2020

Item 6.2

SUMMARY OF DECISION-MAKING CRITERIA

No/Moderate/Key No/Moderate/Key

Policy/Plan Key Environmental Considerations No

Legal Moderate Cultural Considerations No

Significance No Social Considerations No

Financial Criteria No Economic Considerations No

Community Views No Community Board Views No

Consultation No Publicity and Communication No

BACKGROUND

The LGFA is the primary lender to local government in New Zealand. It has achieved this position by being the most cost-effective source of funding for local government and at present 68 out of 72 local authorities in New Zealand are members of the LGFA. A major benefit of being a member is having access to additional funding sources and at potentially lower interest rates than other forms of finance. Waitaki District Council has never been a member of the LGFA.

There are two forms of membership of the LGFA; a guaranteeing member or non-guaranteeing member. A guaranteeing membership would mean that, if Council was to borrow $20 million or more, then it would be liable with all the other participating borrowers in the event of a default by any of the borrowers. As Council will not be borrowing more than $20 million, it is proposed that Council applies as a non-guaranteeing member.

Joining the LGFA does not mean that Council has any legal obligations to use the LGFA as a lender. The Council would be free to borrow from whichever borrowing source provided the most favourable terms.

On 26 May 2020, Council agreed to apply for membership as a non-guaranteeing member of the LGFA subject to carrying out public consultation. Public consultation took place between 17 June 2020 and 8 July 2020. The consultation was undertaken in accordance with the approved consultation plan and included coverage in the local media and highlighting the issue on the website and notice boards.

Three submissions were received, all in favour of Council joining the LGFA; two in favour of joining as a non-guaranteeing member and one in favour of joining as a guaranteeing member.

As reported to the 26 May 2020 Additional Council meeting, if membership to the LGFA is successful, changes will need to be made to the Liability Management and Investment Policy primarily to include new wording associated with being able to borrow from the LGFA. Proposed changes to this policy were included in the public consultation process to join the LGFA. The policy, with proposed changes highlighted in blue, is included as Attachment 1. Changes to the Local Government Act 2002 mean that there is no longer any requirement to record endowment properties and therefore the attached policy has been changed to reflect the legislative change.


21 JULY 2020

Item 6.2

SUMMARY OF OPTIONS CONSIDERED

Option 1 – Not pursue LGFA membership.

Option 2 – Confirm the desire to join the LGFA as a non-guaranteeing member and amend policies to allow this (preferred).

Option 3 – Seek to join the LGFA as a guaranteeing member and amend policies to allow this.

ASSESSMENT OF PREFERRED OPTION

Membership of the LGFA provides the most cost-effective source of finance available to local government. It will produce an important saving on interest costs compared to other forms of finance. The main point of discussion is whether Council wishes to be a guaranteeing or non-guaranteeing member.

There are limited but important differences between these two forms of membership. The following is the explanation provided about the differences.

A joint and several guarantee applies whereby all participating borrowers will be liable in the event of a default by any of the borrowers. The exception to this is – if a local authority borrows less than $20.0 million, it is not compulsory to participate in the guarantee but it is limited to borrowing a maximum of $20.0 million from the LGFA and it will be charged an additional 0.10%, except for Commercial Paper where the 0.10% add on does not apply.

Given the amount expected to be borrowed, it is recommended (for the sake of simplicity) that Council joins as a non-guaranteeing member. This could be changed at a later date if needed.

The option to pursue a guaranteeing membership should be pursued if there is a concern that the $20 million maximum will not be sufficient. This option would require some additional input from the selected advisors and additional disclosure and informational requirements in the joining agreements.

The option to not join should be pursued if it is believed that greater bank borrowing is more appropriate.

Next Steps

1. If the Council approves the preferred option, officers will undertake the process to confirm to the LGFA the desire to join. Officers will also prepare, with appropriate external advice, all of the required documentation and agreements to allow borrowing to occur as a non-guaranteeing member, including selection of a paying agent and a trustee.

2. Notify all submitters of the outcome of the 14 July 2020 submission deliberations and today’s Council meeting.

3. Make the necessary changes to the Liability Management and Investment Policy and upload the final version to Council’s website.


21 JULY 2020

Item 6.2

ADDITIONAL DECISION-MAKING CONSIDERATIONS

Outcomes

We keep our district affordable

We enable opportunities for new and existing business

We provide and enable services and facilities so people want to stay and move here

We understand the diverse needs of our community

Waitaki’s distinctive environment is valued and protected

We maintain the safest community we can

Policy and Plan Considerations

Changes to the Liability Management and Investment Policy are required if Council joins the LGFA.


21 JULY 2020


This is a copy of the current Liability Management and Investment Policy with the proposed changes highlighted in blue. Waitaki District Council Liability Management and Investment Policy

Authorisation and Status

Policy Owner Finance and Corporate Development Group Manager

Version 14 July 2020

Policy Contact Finance and Corporate Development Group Manager

Last Reviewed By

Approved By Last Reviewed Date

Approved Date Date of Next Review

Notes

1. Introduction The Waitaki District Council (Council) undertakes borrowing, investment and risk management activities (in total referred to in this document as the liability management and investment policy). Council’s borrowing and investment activities are carried out within the requirements of the Local Government Act 2002. This liability management and investment policy document provides the policy framework for all of Council’s borrowing and investment activities. 1.2 Philosophy Council acknowledges that there are various financial risks such as interest rate risk, liquidity risk and credit risk arising from its borrowing and investment activities. Council is a risk adverse entity and does not wish to incur unnecessary risk from its borrowing and investment activities. In relation to Council’s borrowing and investment activities, the management focus is on prudent risk management in order to protect Council’s budgeted interest costs and stabilise Council’s cashflows. Council is able to invest in the development of the district. It is acknowledged that some investments and associated borrowings may carry a higher degree of risk than Council normally associates with cash investments.

2. Borrowing Policy 2.1 Objective Council’s objective is to achieve the lowest possible net borrowing cost within policy parameters by prudently managing funding risk and interest rate exposure. This is achieved by maximising benefits from favourable interest rate movements whilst having levels of protection in place against prolonged and significant adverse interest rate movements. 2.2 General Policy Council approves, by resolution, the external borrowing requirement (including financial leases) for each financial year during the annual planning process. A resolution of Council is not required for indebtedness in connection to hire purchase, deferred purchase or the giving of credit, the aggregate amount Council determines as not being so significant as to require specific authorisation is $250,000 or where the period of indebtedness is less than 91 days. Council must confirm all new loans required to fund expenditure that has arisen subsequent to the Annual Plan. In approving new debt Council considers the impact on its borrowing limits as well as


21 JULY 2020


the size and the economic life of the asset that is being funded and consistency with Council’s long term Plan. Council’s infrastructural assets generally have long economic lives and long term benefits. The use of debt is seen as an appropriate and efficient mechanism for promoting intergenerational equity between current and future ratepayers in relation to Council’s assets and investments. Council’s ability to readily attract cost effective borrowing is largely driven by its ability to rate and manage its relationships with investors and financial institutions. 2.3 Principles The following principles are embedded within the policy:

• Borrowed funds will be used to fund capital expenditure and equity investment, except as

provided for working capital purposes under Cash Management policies.

• Debt will be used as a residual source of funds after Council has considered all other available

options.

• The mix of debt, reserve and revenue funding will be determined by Council.

• Debt raised will be repaid over the economic life of the asset generally restricted to a maximum

of 20 years but may be extended to 30 years.

• Unless Council otherwise resolves, interest costs will be treated as part of the operational

expenditure and will be funded annually from operating revenue.

• The repayment of principal on debt generally will be funded from operating revenue. Although

Council may resolve to repay loans from other capital sources.

• Loans raised by Council where security is required are to be secured as a charge over rates or

rate revenue.

• Debt financing is recognised as a component in Council’s Revenue and Financing policies and

long term plan to provide intergenerational equity which prevents costs being incurred by the current users which are for the benefit of future users.

• Council may raise specific debt associated with significant “one-off” projects and non-financial

investments from time to time, including investments in CCTOs.

• Council may borrow through hire purchase, credit, and deferred payment or lease

arrangements in the ordinary course of Council business.

• Loans are raised to meet cash management requirements, as internal borrowing is preferred.

2.4 Borrowing Limits In managing debt, Council will adhere to the following limits (as calculated from Council’s latest financial statements):

• Total interest expense (after interest rate risk management costs/benefits) on net debt will not

exceed 20% of general revenues.

• Net debt will not exceed 175% of total revenue.

• Net interest will not exceed 20% of total revenue.

• Net interest will not exceed 25% of annual rates

• Net debt per rateable property will not exceed $4,000.

where:

• interest expense includes all external and internal costs of borrowing

• general revenues include all income recognised in accordance with Council’s accounting

policies but exclude vested assets or write-up of assets to fair value

• net debt is gross external and internal debt, less any funds held by external parties or

separately invested by Council for the purpose of repayment of the borrowing; and

• per rateable property will be based the number of rating units contained in the rating database

at the start of the financial year. That when considering new borrowing Council should have regard not only to the limits of this policy but also to how the debt will be funded, and the ability to pay of the group of ratepayers that will be rated for the refinancing and repayment of that debt.


21 JULY 2020


Council recognises that in the event of a disaster, at a time where borrowing levels are close to these limits, Council may, after using all other options provided in section 2.5 4.9.5, need to borrow above these limits. This additional borrowing will only be made after Council has considered the Districts ability to pay the cost of financing the additional debt. 2.5 Borrowing Mechanisms Council is able to borrow through a variety of market mechanisms including issuing stock and debentures, direct bank borrowing or accessing the short and long term capital markets directly and the Local Goverenment Funding Agency (LGFA) or indirectly through a Local Government Act vehicle (although this alternative is unlikely in the immediate future given the relatively small amount of Council debt). In evaluating strategies for new borrowing (in relation to source, term, size and pricing) takes into account the following:

• Available terms from banks, capital markets and the LGFA and loan stock issuance.

• Draw down amounts to match forecast capital expenditure.

• Council’s overall debt maturity profile, to ensure concentration of debt is avoided at

reissue/rollover time.

• Prevailing interest rates and margins relative to term for both loan stock issuance, and bank

borrowing and LGFA debt.

• The total cost of raising borrowing.

• The market’s outlook on future interest rate movements as well as Council’s its own.

• Legal documentation and financial covenants.

Council is able to use a mixture of short term facilities (which generally have lower credit margins) as well as longer term facilities to achieve an effective borrowing mix, balancing the requirements of liquidity and cost. Council will also maintain committed short term bank floating rate facilities to enable the repayment and drawdown of debt. 2.6 Liquidity and Funding Risk Management Liquidity risk management refers to the timely availability of funds to Council when needed, without incurring penalty costs. Council minimises its liquidity risk by:

• Matching operational and capital expenditure closely to its revenue streams and managing

cashflow timing differences to its favour.

• Matching borrowing drawdowns to its major capital expenditure and managing cashflow timing

differences to its favour.

• Maintaining its financial investments in liquid instruments.

• Maintaining a committed overdraft facility with its relationship bank.

• Avoiding concentration of debt maturity dates (refer below).

To manage liquidity risk the Council must maintain committed funding facilities at a minimum of 110%

of the projected peak debt level over the ensuing twelve month period. Liquidity includes cash and

term deposits and financial market investments e.g bonds. For funding risk To minimise the risk of large concentrations of debt maturing or being reissued in periods where credit margins are high for reasons within or beyond Council’s control, Council ensures debt maturity is generally spread widely over a band of maturities. Specifically, Council manages this by ensuring that:

• No more than 30% or $10 million (whichever is the higher) of total debt is subject to refinancing

in any rolling 12 month period financial year.

• Total debt in this context includes existing as well as planned debt.


21 JULY 2020


2.7 Interest Rate Risk Management Interest rate risk refers to the impact that movements in interest rates can have on Council’s financial budgets and cashflows. Council’s borrowing gives rise to direct exposure to interest rate movements. Council seeks to minimise this interest rate risk given the following:

• Council’s desire to have predictable, certain interest costs.

• The need to avoid large adverse impacts on annual rates arising from interest rate related rises.

• The long term nature of Council’s assets and intergenerational factors.

For amounts greater than $5 million, Council’s general tendency is to have a high percentage of longer term fixed rate or hedged borrowing. Notwithstanding the above, it may be appropriate, depending on Council’s outlook on interest rates to have a floating rate profile (any debt or interest rate risk management instrument where interest rates are being reset on a frequency of less than 180 days). The following table provides guidelines for achieving a fixed rate profile, together with the ability to take some floating rate exposure within certain discretionary authorities. The following applies when external borrowing is expected to be greater than $5 million. For amounts less than $5 million any effects are unlikely to be large so a simplified approach is used.

Term of Exposure Maximum Floating Rate Exposure

Financial Services Unit Manager 1

0 - 1 year 20%

1 - 5 years 30%

1 percentages and terms of exposure in excess of the Financial Services Unit Manager’s authority require approval of the

delegated Council Committee.

For the purposes of interest rate hedging, core debt projections should be supported by budgetary analysis contained in the Annual Plan and the Long Term Plan. Core debt is defined as the level of current and projected future debt as determined by the Group Manager Finance and Corporate Development in consultation with the Chief Executive.

The Council will maintain fixed interest rate cover of its core debt within the control limits detailed in the table below. Fixed rate debt is defined as all debt that has at least one more rate reset outstanding (typically quarterly), or has more than three months to maturity in the case of a fixed rate term loan. Compliance with these parameters is not necessary if gross external debt is less than $7.5 million.

Fixed Rate Cover Percentages

Period Minimum Maximum

0 to 2 years 40% 100%

2 to 4 years 20% 80%

4 to 8 years 0% 60%

The Finance and Corporate Development Group Manager is primarily responsible for the monitoring and managing the interest rate hedging profile of the Council. If the fixed rate cover is below or above the Fixed Rate Cover Percentages, the reasons for the non-compliance with the policy must be documented in an exception report.


21 JULY 2020


The interest rate risk management strategy is determined on a quarterly basis by monitoring the hedging framework, existing and planned debt, interest rate markets and evaluating the outlook for short term rates in comparison to the rates payable on its borrowing. Council approves an appropriate hedged/floating rate mix every quarter. Council may also be exposed to interest rate re-pricing risk on the maturity of existing fixed rate debt that will be refinanced, as well as issue yield risk on planned new debt. Council manages these exposures using the following operational parameter:

• Council can approve hedging up to 100% of re-pricing risk on existing fixed rate debt and issue

yield on planned new debt within the next twelve month period. The approved interest rate risk management strategy is implemented through the use of the following:

• Using interest rate risk management instruments (refer note below) to convert fixed rate

borrowing into floating rate or hedged borrowing and floating rate borrowing into fixed rate or hedged borrowing.

• Using interest rate risk management instruments to hedge re-pricing risk on existing fixed rate

debt and issue yield on planned new borrowing. The use of interest rate risk management instruments is approved by Council. A current list of approved interest rate risk management instruments with appropriate definitions is included in Appendix ll. Additions to and deletions from this list are approved by Council. All hedging contracts are only to protect the interest rate arising on actual debt and forecast debt planned to be raised. Hedging can only take place with counterparties who have a long term credit rating of strong or better. 2.8 Security Council may borrow on an unsecured basis or if it decides to offer security for borrowing and other financial obligations then it will generally offer security over rates and rate revenue. In unusual circumstances with prior Council approval, security may be offered in the form of a charge on specific assets. 2.9 Repayment Council normally repays borrowings on maturity, from general funds. However, other sources of funds may be identified when the loan is approved. Typical examples are development contributions and asset sales. Table loans provide for the full repayment of the loan over the term of the loan authority. For loans drawn for the purpose of separate rate accounts, Council will consider offering those ratepayers a lump sum option under the provisions of the early payment of rates under Sections 55 and 56 of the Local Government (Rating) Act 2002. When the repayment provisions for any specific loan have been fully funded, no further contributions will be required for that loan. Council may select specific debt to be repaid in any one year to optimise the mix of debt. 2.10 Local Government Funding Agency Council may borrow from the New Zealand LGFA and, in connection with that borrowing, may enter into the following related transactions to the extent it considers necessary or desirable:

• Contribute a portion of its borrowing back to the LGFA as an equity contribution to the LGFA.

• Provide guarantees for the indebtedness of the LGFA.

• Commit to contributing additional equity (or subordinated debt) to the LGFA if required.

• Subscribe for shares and uncalled capital in the LGFA and.

• Secure its borrowing from the LGFA, and the performance of other obligations to the LGFA or

its creditors with a charge over the Council’s rates and rates revenue.


21 JULY 2020


3. Internal Debt Management 3.1 Objective Council’s primary objective in funding debt internally is to use cash held in capital replacement, depreciation, separate rate, and special and trust funds effectively by establishing an internal loan portfolio that provides funding to internal cost centres. This creates operational efficiencies as savings are created by eliminating the ‘bankers margin’ that would be owing through Council simultaneously investing and borrowing with the bank. 3.2 Legal Compliance Internal borrowing was authorised by the Local Government (Rating) Act 2002. Council considers that by applying available funds against debt through this internal debt management policy it is using its funds to most efficient use at low risk. 3.3 General Policy The internal loan portfolio is used as an input into determining Council’s external debt requirements. Where possible, reserves are used to reduce external debt, effectively reducing Council’s net interest cost. Where debt financing is approved by the Annual Plan, Council in setting the quarterly treasury strategy will determine the effectiveness of using either external or internal debt. Internal borrowing activities are consistent with the parameters set out in Section 2. 3.4 Principles The following principles apply to the management of Council’s internal loan portfolio:

• The internal loan is recorded on a schedule of internal loans reported to Council Quarterly as

part of the Quarterly Treasury Report.

• Principal and interest amounts are repaid in quarterly instalments. Instalment amounts are

agreed on establishment of the loan and determined on a table mortgage basis.

• Interest is charged to each internal loan and for short-term operational deficits in separate rate

accounts.

• Interest will be paid to separate rate, depreciation reserves and special and trust funds

quarterly, based on average quarterly account balances at the weighted rate of earnings of internal and external investments.

• All rate income collected for the purpose of a loan will be repaid to the loan. Where the actual

interest rate varies from the budgeted interest rate Council first applies the interest charge then applies the balance of the income to the loan principal. 3.5 Interest Rates Interest rates applied to the internal investments and debt is calculated using the following guidelines: In setting the rates Council estimates the likely internal borrowing interest rate. The actual interest rate is calculated quarterly. The interest rate is based on Council’s actual weighted average cost of funds and takes into account the following factors:

• Actual earnings on cash invested for the quarter.

• Actual cost of External borrowings for the quarter.

4. Investment Policy 4.1 Objective Council’s primary financial objective is the protection of its investment capital while striving to achieve an optimal return on investment. In its non-financial investment activity, Council’s primary objective is the attainment of its strategic and economic development objectives as well as the protection of its investment capital. 4.2 Legal Compliance This policy records Council’s policy on the management of its financial assets including, but not limited to, trust funds, special funds, shares, property held in whole or part for investment purposes and financial reserves.


21 JULY 2020


4.3 General Policy Council’s philosophy on the management of investments is to optimise returns in the long term while balancing risk and return considerations. Council recognises that as a responsible public authority any investments that it does hold should be low risk. It also recognises that lower risk generally means lower returns. It is noted that Council may have significant reasons other than financial in investing in Council Controlled Trading Organisatios (CCTOs) and other organisations. Council does not hold financial investments other than those involving special and trust funds, asset replacement reserves, disaster funds, and cash management balances. In its financial investment activity, Council’s primary objective when investing is the protection of its investment. Accordingly, only creditworthy counterparties are acceptable. Council’s policy on managing credit risk is contained in Section 7. Council is required to consider its continuing involvement in any investment and the expected return from that investment for the ensuing year. Performance measurement guidelines are contained in Section 8. 4.4 Principles The following principles are embedded within the policy:

• The reasons for investments other than cash will be recorded by way of Council resolution.

• Council has set cash management targets and surplus cash funds held in Council’s main bank

account will be managed in accordance with those targets. Refer Section 5.

• Credit ratings of counterparties are against updated Standard and Poor’s (S&P) advices.

• Council does not hold non-financial investments other than those held at the commencement

date of this policy and those specifically approved by Council resolution and in terms of the intentions expressed above. 4.5 Investment Mix Council maintains investments in the following assets:

• Equity investments, including CCTO’s and other shareholdings (covered in Section 4.7 6).

• Property investments incorporating land, buildings and a portfolio of ground leases (covered in

Section 4.8 7).

• Loans and guarantees for community development purposes (covered in Section 4.10 8).

• Financial assets incorporating longer term and liquidity investments (covered in Section 4.11 9).

4.6 Local Government Funding Agency

Council may invest in shares and other financial instruments of the New Zealand LGFA, and may

borrow to fund that investment. The Council’s objective in making any such investment will be to:

• Obtain a return on the investment; and

• Ensure that the LGFA has sufficient capital to become and remain viable, meaning that it

continues as a source of debt funding for the Council. Because of this dual objective, the Council may invest in LGFA shares in circumstances in which the return on that investment is potentially higher than the return it could achieve with alternative investments.

If required in connection with the investment, the Council may also subscribe for uncalled capital in

the LGFA. 4.76 Equity Investments Council maintains equity investments, including investment in its CCTO’s, and other relatively smaller historic shareholdings in various local government sector companies. Council’s investments in these assets fulfil various strategic, economic development and financial objectives as outlined in Council’s long term financial strategy. Council’s liability in these entities is restricted to any uncalled share capital.


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Council reviews performance of the CCTO investments on a twice annual basis to ensure that their stated objectives are being achieved. Performance criteria are set in the Statements of Corporate Intent of each organisation. All others are reviewed on an annual basis on receipt of annual reports. Any disposition of these investments, as well as acquisition of new equity investments requires Council approval and are subject to provisions within the Local Government Act 2002. Council decides on the allocation of proceeds from the disposition of equity investments on a case by case basis. 4.87 Property Investments Council’s primary objective is to only own property that is necessary for the economic, physical, social development and heritage of the District and to achieve an acceptable rate of return. Council seeks to actively develop its property holdings and is not a passive player in the market. Council reviews the performance of its property investments on a quarterly basis, and ensures that the benefits of continued ownership are consistent with its stated objectives. Proceeds from the disposition of property investments are used for meeting development costs, retirement of debt relating to such property, alternative property investments or for other capital projects, as approved by Council. Council from time to time (subject to an assessment of the strategic value of the property, including return on investment), will sell the freehold interest of its leased land to the occupiers. Sales are at market value established by an independent valuer. Sales may be under deferred payment terms. Council retains security of the land title until payment is received in full. Income from reserves under the Reserves Act must be returned to the reserve properties and is either used to reduce the annual rate requirement or placed in a cash reserve for future projects. Council holds some strategic properties where there are few alternative uses for the land. As a result Council has a small holding of forestry assets, many on its various parks and reserves. The forestry assets primarily exist to provide protection to the land or to meet aesthetic requirements. Economic gains are incidental to holding these assets. Council decides on the allocation of any surplus proceeds (after repayment of loans) from the disposition of forestry investments on a case by case basis. 4.9 Endowment Property An endowment is a ‘gift of money or property to an institution for a specific purpose, especially one in which the principal is kept intact indefinitely and only the interest income is used’. Council endowment properties are held in two portfolios, Harbour Endowment which is for the benefit and development of the harbour with some land in trust for a dock and Council Endowment which is held for general purposes, municipal purposes or purposes of public utility. Council is responsible for ensuring that the endowment trusts maximise their earnings. Many of the current endowment investments generate poor returns on investment. The endowment investments generate returns commensurate to the low risk of the investment. Council intendeds to actively manage these accounts to maximise the returns as was originally intended. The consideration of properties for divestment is to allow for the free-holding of sites to encourage the economic development of the district through the private sector and to maximise the income from endowments. Divestment allows for the strengthening of the capital base for increased earnings and additional revenue streams. Endowment properties will be reviewed with consideration to form a commercial investment model that allows up to 40% of endowment capital investment outside the district. There are forty-nine (49) Harbour endowment properties of which forty (40) are recommended to be considered for divestment. There are fifty three (53) Council endowment properties with thirty four (34) identified to be considered for divestment. Divestment of endowment properties will be considered on a property by property basis as per prudent and best management practices with reference to statutory requirements and the terms of endowment. See table.


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Location Legal description Cfr

Thames Street Part Section 27, Block III, Town of Oamaru

Part OT181/297

Itchen Street Lot 9,DP 285

Itchen Street Lot 10, DP 2302 OT15C/962

3 Humber Street Lot 1, DP 16237 OT176/59

Clyde Street Lot 2, DP 10988 Part OT181/297

Clyde Street Lot, 1 DP 10988

Clyde Street Lots 3/5, DP 10988

Clyde Street Lots 5/8, DP 285 OT15B/743

Humber Street Pt Lot 4, DP 285 OT181/297

Humber Street Lots 1 - 3, DP 285 OT15B/742

Esplanade Part Section 27, Block III, Town of Oamaru

Part OTB1/773



Esplanade Part Lot 1, DP 18767

Esplanade Lots 1 & 2, DP 8582 OT393/72

Esplanade LOT 2 DP 18767 Part OTB1/773

Schedule of Endowment properties – former Oamaru Harbour Board land – to consider for divestment from 1 July 2009

Esplanade Lot 12, DP 6515 Part OT15B/1185

Esplanade Lots 8 - 10, DP 6515

Esplanade Lots 2 - 7, DP 6515

Esplanade Lot 1, DP 10194 & Pt Lot 1, DP 11147

Part OTB1/772

Esplanade Lot 1, DP 12415 Part OTB1/773

Esplanade Lot 4, DP 18767


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Esplanade Lot 5 & Pt Lot 6, DP 18767



Harbour Street Lot 1, DP332876 134675

Harbour Street Lot 2, DP 88 & RoW over Harbour St

134676


OT18C/519


OT18C/520

Harbour Street Lots 5 & 6, DP 88 & RoW over Harbour St

OT18C/521

Wansbeck Street Lots 7 & 8, DP 88 & RoW over Harbour St

OT294/243

Harbour Street Lots 29 & 30, DP 88 & RoW over Harbour St

OT18C/649

Tyne Street Lots 27 & 28, DP 88 & RoW over Harbour St

OT18C/648

LOCATION LEGAL DESCRIPTION CFR


OT18C/648

Tyne Street Lots 22 - 24, DP 88 & RoW over Harbour St

OT18C/647


OT18C/646

Tyne Street Lot 17, DP 88 & RoW over Harbour St

OT15C/401


OT413/83


OT413/83


OT413/83

Schedule of Endowment Properties – to consider for divestment


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Corner Thames & Itchen St

Lots 31 and 32, DP 88 OT15C/1041

Thames Street Lot 1, DP 21229 OT13A/1386

8 Trent Street Section 25, Block XIII, Town of Oamaru

OT18C/1162

14 Nen Street Section 28, Block XII, Town of Oamaru

OT18C/1107

84 Aln Street Section 1, Block L, Town of Oamaru

209999

104 Aln Street Section 11, Block L, Town of Oamaru

184604

223 Thames Street Part Lot 2, DP 16330 OT14D/72

227 Thames Street Lot 1, DP 16330 OT7C/58

37 Ribble Street Lot 3, DP 16330 OT7C/60

45 Ribble Street Lot 1, DP 22013 OT14D/71

163 Thames Street Section 2, Block VI, Town of Oamaru

OT10A/549

84 Thames Street Lots 1 & 2, DP 3102 187043

50 Thames Street Lots 10 & 12, DP 107 184607

78 Ribble Street Section 17, Block XXII, Town of Oamaru

OT17C/234

218 Thames Street Section 1, Block XX, Town of Oamaru

OT18C/622

29 Aln Street Section 20, Block XLIV, Town of Oamaru

1120

43 Eden Street Section 4, Block LIV, Town of Oamaru

156907

83 Eden Street Section 1, Block LXIV, Town of Oamaru

49334

15 Ure Street Lot 1, DP 8480 129098

9 Hull Street Section 24, Block XLII, Town of Oamaru

176038

Isis Street etc Pt Sections 8 & 9, Block LXXX, 16-19, Block LXXXI, 2-26, 4,

OT11B/514


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Block LXXXIX and 23-25, Block XC, Town of Oamaru.

22 Lune Street Section 11, Block LXXXVI, Town of Oamaru

105784

16 Isis Street Lot 2, DP 7922 443479

14 Chelmer Street Section 13 and Part Section 14, Block LXVII, Town of Oamaru

OT241/155

31 Test Street Lot 1, DP 12820 OT5B/211

55 Test Street Section 10, Block XXIX,Town of Oamaru

241/149

59 Greta Street Section 21, Block LXXV, Town of Oamaru

117941

Lancaster Street Sections 1 - 22, Block LXI, Town of Hampden

OT147/21

Sections 1-5, SO23698 [Blocks LIV LX,Town of Hampden]

OT14B/742

Sweetwater Creek Rd Sections 25 and 43 - 46, Block III, Waihemo SD

OT49/188

Mt Watkins Rd Parts Lot 1, DP 2193 OT385/73

Stafford Street Sections 9, Block XVII, and 18, Block LXIV, Town of Hampden

OT147/22

168 Thames Street Section 5, Block XXIII Town of Oamaru

OT3132581

There are restrictions in how Council must deal with endowment properties in the Local Government Act 2002. Section 140 LGA (Local Government Act 2002) requires Council to retain endowment trust property for the purpose for which the property was vested in Council. However, section 140 (4) (b) authorises a Council:

• To sell or exchange such property unless disposal is expressly prohibited by the terms of the

endowment or trust; and

• To use the proceeds of sale or exchange for a purpose identified in accordance with section

141.


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Section 141 LGA allows Council to sell or exchange endowment property subject to due process and . Council is required to show in the LTCCP how it is to utilise funds derived from the divestment of endowment property. However, section 141 states that a council must not exercise the power to sell or exchange given by 140(4) (b) unless- 1. The the proposed use of the proceeds of sale is consistent with the terms of the endowment and 2. The council has first included in its draft LTCCP a statement of- 3. Its intention to sell or exchange the property; and 4. The use to which the proceeds of the sale or exchange will be put; and 5. The Council has adopted the LTCCP in accordance with Part 6 of the Act. Additional requirements apply where the Crown was the donor of the property (section 141(1)(c). In other cases, the Council must make a reasonable attempt to notify the donor of the property, or his or her successor of its intention to sell the property (section 141(1)(d). 4.108 Loans, Advances and Guarantees Council makes loans to other parties for various projects that are considered to be economic or community development or for works under the Local Government Act. Council administers funds provided to Council by other organisations where these funds may be advanced in the form of a loan, and which may be secured or unsecured. Council reviews performance of these loan advances on a regular basis and ensures that interest and principal repayments are made in accordance with the loan agreement. Council may also agree to guarantee advances made by other parties where Council considers the advance to be in the nature of economic or community development in accordance with Council’s policies in these issues. Council ensures that the business plan of the guaranteed party furthers the strategic objectives of Council and that financial statements are received on a regular basis. Should the guarantee be called up, Council will take immediate steps to recover the money. Given that a number of investments are made for community purposes, there may not be a financial return from all investments. Where income is received, disposition will be determined on a case by case basis. Where loans from Councils funds are at non-commercial interest rates the forgone interest (as compared with the internal borrowing rate) will be recognised as an expense to that activity. Council will generally negotiate interest rates close to the Council’s internal borrowing rate. Council will resolve for each new loan:

• The value of the loan

• The term of loan

• Repayment criteria

• Security requirements

• Interest

• Penalty interest and other default requirements.

All loans will be documented with a signed loan agreements appropriately documented given the size and potential risk exposure to Council. 4.119 Financial Investments Council maintains financial investments for the following primary reasons:

• Invest surplus cash and working capital funds (also see Section 5 Cash Management).

• Provide ready cash in the event of a natural disaster. This cash is intended to assist

reinstatement and to finance short-term needs between the disaster and the resumption of normal income streams (see Section 4.11.4 9.5 below).

• Invest amounts allocated to special and trust funds, separate rate accounts, sinking funds and

loan repayment reserves.


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Normally financial investments are held to maturity. Proceeds from the disposition of financial investments are used for operational expenditure purposes or for the purpose for which they have been established. Interest income from financial investments is credited to general funds, except for income from investments for separate rates, special funds and sinking funds where interest is credited to the particular fund. 4.119.1 Financial Investment Objectives Council’s primary objective when investing is the protection of its investment. Accordingly, only creditworthy counterparties are acceptable. Creditworthy counterparties are selected on the basis of their current Standard and Poor’s (S&P) rating which must be strong or better (A1 for short-term, A+ for long term). Council monitors credit ratings in the Quarterly Treasury Report from updated S&P advices. Within the above credit constraints, Council also seeks to:

• Maximise investment return

• Ensure investments are liquid

• Match maturity of investments in line with expenditure requirements to avoid realisation of

investments prior to maturity date

• Minimise potential capital losses due to interest rate movements if investments need to be

liquidated before maturity. The above objectives are captured in Section 7, Counterparty Exposure Limits which provides operating parameters for investment activity including approved counterparties and relevant credit limits. 4.119.2 Approved Investment Instruments Within the constraints of Section 7 of this policy, Council invests in the following instruments:

• Government investments

• Registered bank investments

• Local authority investments

• SOE investments

• Corporate investments

A full list of approved instruments and their definitions is contained in Appendix III. 4.119.3 Interest Rate Risk Management Council sets overall investment strategy quarterly. Council implements the interest rate risk management strategy by:

• Using risk management instruments to protect investment returns and to change the interest

rate profile.

• The use of interest rate risk management instruments is approved by Council. A current list of

approved interest rate risk management instruments with appropriate definitions is included in Appendix ll. Additions to and deletions from this list are approved by Council. 4.119.4 Disaster Fund Council maintains a disaster fund for the purposes of providing immediate cash resources to fund reinstatement of services/assets following a major unforeseen event, such as a natural disaster, and to meet its obligations under the National Disaster Recovery Plan. Council established policies for the disaster fund in October 1993. The fund is required to be readily available. The fund is set at $10 million and may be held in cash or other appropriate negotiable investment instrument or committed bank funding facilities. Council will make case by case decisions as to whether funds drawn from the Fund are required to be replenished at the earliest opportunity from the area of benefit.


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5. Cash Management Cash management policy deals with the net balance in Council’s main bank accounts with its principal banker. Council will maintain a three month rolling (by week) Money Management Report that forms the basis of its cash management activity. Generally these surpluses are available for periods less than 90 days. Any cash which is to be invested for a period longer than three months is covered by Section 4 of this policy document. Council manages its working capital balances by matching expenditure closely to its revenue streams and managing cashflows timing differences to its favour. Cash management activities must be undertaken within the following parameters:

• A daily nil balance is targeted in Council’s main bank account, with surplus monies transferred

to call deposits.

• Cash management instruments are limited to: o Call deposits with registered banks. o Registered certificates of deposit and promissory notes with maturities less than three months. o Term deposits (less than three months) with registered banks.

• Cash may only be invested with approved counterparties within the limits detailed in Section 7.

• Council has a committed bank overdraft facility. This facility will be used when there is

expected to be a net benefit.

• The use of interest rate risk management instruments on cash management balances is not

permitted.

6. Foreign Exchange Policy Council has minimal foreign exchange exposure arising through the purchase of foreign exchange denominated plant, equipment, materials and library books. As required by the Local Government Act 2002 Council does not borrow or enter into incidental arrangements within or outside New Zealand in currency other than New Zealand currency.

7. Counterparty Exposure Limits Council ensures that all financial investment, interest rate risk management as well any foreign exchange activity is undertaken with institutions that are of high quality credit to ensure amounts owing to Council are paid fully and on due date. More specifically, Council minimises its credit exposure by:

• Ensuring all investment, cash management, interest rate risk management and any foreign

exchange transactions are undertaken with entities (excluding Government) that have a strong or better (A1 for short term, A+ for long term) Standard and Poor’s (S&P) credit rating.

• Limiting total exposure to prescribed amounts.

• Rigorously monitoring compliance against set limits.

The following table summarises credit requirements and limits:

Institution Minimum S&P Short Term Credit Rating1

Minimum S&P Long Term Credit Rating2

Total Exposure Limit for each Counter Party

Portfolio Limit for each counter-party3

Government N/A N/A Unlimited 100%

Registered Bank

- On balance sheet exposures

A1 A1

A+ A+

$5 million $5 million

60%


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- Off balance sheet exposures

Strongly Rated Local Authorities, Corporates and SOEs (on balance sheet exposures only)

A1 A+ $2 million 20%

1. For investments with maturities less than 12 months 2. For investments with maturities greater than 12 months 3. Exposure limits do not apply when cash balance is less than $5m If any counterparty’s credit rating falls below the minimum specified in the above table then all practical steps are taken to reduce the credit exposure to that counterparty to zero as soon as possible. Exposures to each counterparty are computed as follows: On-balance sheet

• Total amounts invested with that counterparty (excluding current account balances with

Council’s main banking service provider). Off- balance sheet (eg approved interest rate risk management instruments in Appendix ll)

• Credit exposure on interest rate contracts is computed by multiplying face value of outstanding

transactions by an interest rate movement factor of 5%.

8. Performance Measurement Measuring the effectiveness of Council’s treasury activities is achieved through a mixture of subjective and objective measures. The predominant subjective measure is the overall quality of treasury management information. Objective measures are established by Council resolution on an annual basis in conjunction with management as follows: 8.1 Borrowing

• Adherence to policy

• Unplanned overdraft costs

• Comparison of actual interest costs vs budget borrowing costs

• Comparison of actual borrowings with budgeted borrowings.

Comparison of financial ratios to budgeted measures as per the Annual Plan and Forecast Financial Statements. 8.2 Equity Investments

• Adherence to policy

• Return on investment

• Six monthly review of performance measures, comparison of actual to budgeted measures as

per Statement of Corporate Intent. 8.3 Property Investments

• Adherence to policy.

• Quarterly comparison of actual gross and net income to budgeted gross and net income.

• Quarterly comparison of actual rental yield to budgeted rental yield.

• Quarterly comparison of actual property sales to budgeted property sales.


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8.4 Financial Investments

• Adherence to policy.

• Comparison of actual quarterly and year to date accrued returns vs investing the entire treasury

portfolio at the weekly average three month bank bill rate for short term investments.

9. Content of Appendices Appendix I Approved Borrowing Instruments and Definitions. Appendix Il Approved Interest Rate Risk Management Instruments and Definitions. Appendix lII Approved Financial Investment Instruments, and Definitions. Standard & Poor’s Definitions and Current Listing. Appendix IV Approved Borrowing Instruments and Definitions Appendix 1 Approved Borrowing Instruments and Definitions 1. Bank Sourced Borrowing 1.1 Bank Bill Facilities Commercial bills cover all types of bills of exchange, which are defined under the Bills of Exchange Act 1908 as: “An unconditional order in writing, addressed by one person to another signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at fixed or determinable future time, a sum certain in money to, or to the order of a specified person, or to bearer.” Bank bill facilities are normally for a term of up to three years but may be for as long as five years. Bank bills are bills of exchange, drawn or issued usually by the original borrower and accepted or endorsed by a bank. For a bank accepted bill, the bank makes the payment of the face value of the bill on maturity. Most bank bills traded in the New Zealand market are bank accepted bills. Bank endorsed bills have been endorsed by a bank with another party as acceptor. In the event of default of the original acceptor, payment can be sought through the chain of endorsers to the bill. An investor in bank bills can sell the bills prior to maturity date and receive the cash. Bank bills are a longer term borrowing instrument than cash loans. Bills are normally drawn for terms of 30, 60 or 90 days with a few being drawn for 180 days. The 90 day bank bill is the underlying traded benchmark instrument for the short end of the market. Costs The principal costs to the borrower are the discounting bank’s yield at which it discounts the bill at the time of drawdown, an arrangement fee, an acceptance fee, a line fee (expressed in basis points or percentage per annum) and margin. Acceptance fees, arranger fees, line fees and margins in aggregate normally range between 35 - 300 basis points (i.e. 0.35% - 3.00%), depending on the credit worthiness of the borrower.


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1.2 Revolving Credit Facilities (Variable Amount Term Loans) Revolving credit facilities are similar from a borrower’s perspective except interest is paid in arrears rather than upfront as in the case of bank bills. Revolving credit facilities are usually for a term of up to three years but may be for as long as five years and like bank bills drawings under the facility are priced off the bank bill bid rate. Most facilities allow for the borrower to draw up to the facility amount in various tranches of debt and for various terms out to a maximum term of the maturity date of the facility. Like bank bills most borrowers use these facilities to borrow on a 90 day basis. Costs The principal costs are the same as with bank bills, the lending bank’s yield sets the base rate at the time of lending, an arrangement fee, an acceptance fee, a line fee (expressed in basis points or percentage per annum) and the margin. Acceptance fees, arranger fees, line fees and margins in aggregate normally range between 35 - 300 basis points (i.e. 0.35% - 3.00%), depending on the credit worthiness of the borrower. 1.3 Short Term Money Market Lines Short term money market loans or cash loans can be committed or uncommitted. A customer pays for a guarantee of the availability of the funds in a committed loan. In an uncommitted loan, funds are provided on a best endeavours basis and no line/commitment fee is payable. In addition to a line fee, a margin may be charged on any line usage. The minimum amount for a cash loan is $1,000,000. Smaller loans can be arranged, although the interest rate quoted will be a reflection of the size of the loan. The main usage of cash loans is to cover day-to-day shortfalls in funds. The interest rate is governed by the term of the borrowing and the implied or implicit credit rating of the borrower. Cash loans are short term only and are normally drawn for a term of one (overnight) to seven days. Interest collection can be daily. 2. Capital Markets Programme Commercial Paper (CP) programmes normally provide for issuance with tenors of between 7 and 364 days. The majority of CP issued in the New Zealand market is for terms of 30, 60, or 90 days. Corporate bonds commonly in existence in the New Zealand market have essentially the same characteristics as government stock. These are a source of longer term fixed or variable rate finance that can be sold either in bearer or registered form (normally registered). Bonds are normally issued with coupon interest paid in arrears on a six monthly basis for fixed rate instruments, and three monthly for floating rate instruments. Local authority bonds are issued by a variety of local governments by tender or private placement. The bonds are registered securities. They are repayable on a fixed date, and are generally issued for terms ranging from one to fifteen years. Local authority bonds are priced twice annually and issued at a discount to face value. A fixed coupon payment is made twice annually to the holder of the security. The pricing formula is the same as government bonds. The term bond is usually reserved for securities with terms longer than a year, to clearly distinguish between short term (CP) and long term (bonds) debt instruments. CP and bonds usually constitute unconditional, unsecured and unsubordinated obligations of the issuer, except indebtedness given preference by operation law. 3. Structured and Project Finance Project and structured financing matches up debt to suit the quantifiable income stream from the project. This type of financing is appropriate for the funding of standalone assets that are able to be ring-fenced and over which security can be taken. The sort of assets to which this usually applies are assets which are transferable, and for which an international equity market exists, e.g. infrastructural assets. The owner of the asset usually retains an equity interest in the asset.


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Appendix Il Approved Interest Rate Risk Management Instruments and Definitions 1. Approved Interest Rate Risk Management Instruments A. Interest rate risk management instruments approved for use, consistent with the policy contained in Section 2.8 are:

• Fixing through physical borrowing instruments - loan stock, debentures, bank term loan.

• Floating through physical borrowing instruments - short term revolving stock, and bank

borrowing.

• Forward rate agreements and bond forward rate agreements.

• Interest rate swaps.

• Purchase of interest rate options products including caps, floors, bond options.

• Interest rate collar type option strategies.

B. The following interest rate risk management instruments are not permitted for use:

• Selling interest rate options for the primary purpose of generating premium income is not

permitted because of its speculative nature.

• Structured or leveraged interest rate option strategies where there is any possibility of Council’s

total interest expense increasing in a declining interest rate market or where Council’s total interest cost is increasing faster than the general market rate.

• Interest rate futures contracts, mainly for administrative ease.

2. Interest Rate Risk Management Instruments - Definitions Bank Bill Mid-Market Settlement Rate The bank bill mid-market settlement rate as determined at 10:45am each business day on Reuters page BKBM. This is the standard rate for the settlement of interest rate swaps, forward rate agreements and interest rate caps and collars. Bond Options Council when purchasing a bond option, has the right but not the obligation to buy or sell a specified government stock maturity on an agreed date and time and at an agreed rate. Forward Rate Agreement An agreement between Council and a counterparty (usually a bank) protecting Council against a future adverse interest rate movement for a specified period of time. Council and the counterparty agree to a notional future principal amount, the future interest rate, the benchmark dates and the benchmark rate (usually BKBM). This definition includes the bond forward rate agreement where the benchmark rate is the underlying government bond yield. Interest Rate Collar Strategy The combined purchase (or sale) of a cap or floor with the sale (or purchase) of another floor or cap. Interest Rate Options The purchase of an interest rate option gives the holder (in return for the payment of a premium) the right but not the obligation to borrow (described as a cap) or invest (described as a floor) at a future date for a specified period. Council and the counterparty agree to a notional future principal amount, the future interest rate, the benchmark dates and the benchmark rate (usually BKBM). Interest rate option products include caps, floors and bond options. Interest Rate Swap An interest rate swap is an agreement between Council and a counterparty (usually a bank) whereby Council pays (or receives) a fixed interest rate and receives (or pays) a floating interest rate. The parties to the contract agree notional principal, start date of the contract, duration of the contract, fixed interest rate and the bench mark rates (usually BKBM).


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Appendix III Approved Financial Investment Instruments and Definitions 1. Approved Financial Investment Instruments and Definitions Investment instruments available in the market (excluding equities and property) can generally be discussed under four broad categories relating to the issuer of these instruments. 1.1 New Zealand Government

• Treasury bills are registered securities issued by the Reserve Bank of New Zealand (RBNZ) on

behalf of the government. They are usually available for terms up to a year but generally preferred by investors for 90 day or 180 day terms. They are discounted instruments, and are readily negotiable in the secondary market.

• Government stocks are registered securities issued by the RBNZ on behalf of the government.

They are available for terms ranging from one year to twelve year maturities. Government stocks have fixed coupon payments payable by the RBNZ every six months. They are priced on a twice annual yield basis and are issued at a discount to face value. They are readily negotiable in the secondary market. 1.2 Local Authorities

• Local authority stock is registered securities issued by a wide range of local government

bodies. They are usually available for maturities ranging from one to ten years. A fixed coupon payment is made semi-annually to the holder of the security. They are negotiable and usually can be bought and sold in the secondary market. 1.3 Registered Banks

• Call and term deposits are funds accepted by the bank on an overnight basis (on call) or for a

fixed term. Interest is usually calculated on a simple interest formula. Term deposits are for a fixed term and are expected to be held to maturity. Term deposits are not negotiable instruments. Termination prior to maturity date can often involve penalty costs.

• Registered certificates of deposits (RCD) are securities issued by banks for their funding needs

or to meet investor demand. They are registered at the RBNZ or held on behalf of by the dealing bank. Details include the name of the investor, face value and maturity date. They can be transferred by registered transfer only. RCDs are priced on a yield rate basis and issued at a discount to face value or a grossed up basis. They are generally preferred over term deposits because investors can sell them prior to maturity.

• Bank bills are bills of exchange drawn or issued, usually by a corporate borrower and accepted

or endorsed by a bank. The investor is exposed to bank credit risk when investing in such instruments. Bank bills are readily available for any maturity up to 180 days, although 30 to 90 day terms are more common. They are priced on a yield basis and issued at a discount to face value. Investors in bank bills can sell the bills prior to maturity date. 1.4 Corporates

• Companies with good credit ratings generally issue corporate bonds. These bonds can be

registered securities or bearer instruments. There are two types of bond, the medium term note (MTN) and the floating rate note (FRN). The MTN has a fixed coupon payment that is made semi-annually to the holder of the security. They are priced on a semi-annual yield basis and are issued at a discount/premium to face value. The interest rate on the FRN is set on a floating rate basis usually off the bank bill 90 day bid rate.

• Corporate bonds are negotiable and can be bought and sold in the secondary market.

• Promissory notes are issued by borrowers who usually have a credit rating and standing in the market that is sufficient to enable the notes to be issued without endorsement or acceptance by a bank. The notes are usually underwritten by financial institutions to ensure that the borrower obtains the desired amount of funds. Promissory notes are issued with maturities ranging from 7 days to over one year. The common maturities are for 30 and 90 days. The face value of the note is repaid in full to the bearer on maturity.


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7 MEMORANDUM REPORTS

7.1 PANDEMIC ECONOMIC RECOVERY MANAGER'S REPORT

Author: Gerard Quinn, Economic Development Manager


RECOMMENDATION


PURPOSE

The purpose of this report is to inform Council of the current economic situation in the Waitaki during the COVID-19 pandemic period.

SUPPORT AND STIMULUS FUND

Eligibility criteria and information on how to apply to Council’s Waitaki Support and Stimulus Fund are available on Council’s website. Because the support needs of people and businesses will be many and varied, the Support and Stimulus package is further broken down into three Funds:

• The Mayoral Relief Fund – to support individuals and families.

• The Community Resilience Fund – to strengthen our communities.

• The Economic Resilience Fund – to give support and stimulus to businesses and stimulate the economy.

Each support area has slightly different eligibility rules and criteria, but in general, to be eligible for any support, applicants must:

• Live in the Waitaki district; or

• Be a community organisation or business which is based in the Waitaki District or delivering a service that benefits and adds resilience to the district or a part of it; or

• Be a business or organisation based in the Waitaki district or delivering a service that benefits and adds resilience to the district; or

• Be an individual, community group, informal collective or business seeking funding to deliver a project which will provide additional resilience to the community sector or economy of the district.

Applications which are looking for some form of relief must be able to show that the condition requiring relief is a result of the pandemic.

CARD TRANSACTION SPEND

For the week ending 5 July 2020, card spend was $3.63M across the ten indicator store types. This compares to expenditure of $3.84M in the preceding week, a drop of 5.4%. The following chart shows the proportion of spend in each of the ten indicator store types, for the period 2 February to 7 July 2020.


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Source EDC PowerBI

The following charts provide the latest Paymark card spend figures by store-type. The ‘Change this week’ figure is the change to the preceding week of 2020, not a comparison to the corresponding 2019 spend.


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VISITOR SPEND

Waitaki is enjoying a small recovery in visitor spend as new Zealanders take domestic holidays post ‘lockdown’ instead of spending on overseas travel. Visitors spent $7M in Waitaki during May. The chart below shows the historical spending pattern of visitors (both domestic and international) in Waitaki over the last twelve years.

Source: MBIE Monthly tourism spend groups by RTO- May 2020.

This chart shows the May spend of visitors by product type. It is hoped that this trend will have continued during the July school holidays. Council’s Communications team has created the opportunity for several district promotions, ensuring there is plenty of national coverage presenting Waitaki as a desirable location for domestic travellers. The team is currently working on creating itineraries for two media ‘famils’, one for the Otago Daily Times and one for New Zealand Media and Entertainment (NZME), both to happen around the end August, offering an Oamaru/Waitaki valley experience.

The team is also assembling a pitch to Life and Leisure magazine to run a feature article on the district.


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On 10 July, the team shot a video in eight different locations with comedian Ben Hurley, promoting Waitaki as a destination. The video will be used on Council’s social media channels for a limited period (two months). Locations included the Penguin Colony, Rainbow Confectionery, Whitestone Cheese, Steampunk HQ, Craftwork brewery, Elephant Rocks, Moeraki Boulders and the Fishwife at Moeraki township. All video shooting and editing was done in-house.

JOB SEEKER REPORTS

Job Seeker benefit numbers have increased over the last three months, but the rate of growth in the number of benefits granted has almost plateaued in the last month.

APPRENTICESHIPS

Government is boosting its apprenticeship support schemes as a response to the pandemic. The three main avenues of support are:

1. Targeted Training and Apprenticeship Fund (TTAF) – funded by TEC, this will support learners to undertake apprenticeship training without fees from 1 July 2020 to 31 December 2022.

2. Apprenticeship Boost – funded by the Ministry of Social Development (MSD), employers can apply through MSD for the Apprenticeship Boost for existing apprentices whether an apprentice has just started their training programme or is nearing the end of their first two years. A Wage subsidy up to $12,000 in year 1 and $6,000 in year 2 is provided.

3. Regional Apprenticeship Initiative (RAI) – funded by MBIE/PGF, specifically for new apprentices taken on from 1st August 2020. Ability for each business to access up to $50,000 per apprentice (new employee or an existing employee starting an apprenticeship qualification). This Includes up to $24,000 wage subsidy in years 1 and 2, and access to discretionary funding for pastoral care focussed on the development and retention of the apprentice.

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Waitaki Job Seeker benefits


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Council has entered into an agreement with Aoraki Development (AD), the economic development agency for South Canterbury, to act as an independent Central South Island third-party administrator of the RAI. This will streamline and localise the process, with AD acting as the conduit/clearing house/cash distributor through whom the up to $40,000 per new apprentice can quickly get to our local businesses. Council’s Economic Development Manager (EDM) is utilising the various channels into employment and into the district’s employers to promote the scheme and gain an estimate of how many apprenticeships may be taken up.

PGF APPLICATIONS

The EDM is assisting a number of local companies to prepare applications to the Provincial Growth Fund. These applications range across the primary, agricultural support and community activity sectors.


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8 RESOLUTION TO EXCLUDE THE PUBLIC

RECOMMENDATION

That the public be excluded from the following parts of the proceedings of this meeting.

The general subject matter of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48 of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Ground(s) under section 48 for the passing of this resolution

9.1 - Public Excluded minutes of the Council Meeting held on 30 June 2020




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9 PUBLIC EXCLUDED SECTION

10 RESOLUTION TO RETURN TO THE PUBLIC MEETING

RECOMMENDATION

That the Council resumes in open meeting and decisions made in public excluded session are confirmed and made public as and when required and considered.

11 RELEASE OF PUBLIC EXCLUDED INFORMATION

In accordance with Waitaki District Council Standing Orders, and purusant to resolutions in the public excluded session of this meeting, Council will decide whether to release previously public excluded information in the public minutes of this meeting. If such information is authorised for release, it will be recorded under Agenda Item 11 in the public minutes of this meeting.

12 MEETING CLOSE

Agenda of Council - 21 July 2020 · MEETING AGENDA 21 JULY 2020 Item 5.1 Page 7 UNCONFIRMED MINUTES...

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