Extraordinary Meeting of the Hawke's Bay Regional
Council
Date: Wednesday 9 October 2019
Time: 10.00am
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Venue:
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Council Chamber
Hawke's Bay Regional Council
159 Dalton Street
NAPIER
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Agenda
Item Subject Page
1. Welcome/Apologies/Notices
2. Conflict
of Interest Declarations
3. Confirmation of
Minutes of the Regional Council Meeting held on 25 September 2019
4. Call for Minor Items
of Business Not on the Agenda 3
Decision Items
5. Report and
Recommendations from the Regional Planning Committee 5
6. Amendment to
Significance and Engagement Policy to Ring Fence Napier Port IPO Proceeds 9
7. Appointment of
Hearing Panel for Wairoa District Council Wastewater Discharge Consent 19
Information or Performance Monitoring
8. 2018-19 Annual
Report and Summary 21
9. Discussion of
Minor Items Not on the Agenda 25
Decision Items (Public Excluded)
10. Confirmation of the Public
Excluded Minutes from 25 September 2019 Regional Council Meeting 27
HAWKE’S BAY REGIONAL COUNCIL
Wednesday 09 October 2019
Subject: Call for Minor Items of
Business Not on the Agenda
Reason
for Report
1. Hawke’s Bay Regional Council standing order 9.13
allows:
1.1. “A meeting may discuss an
item that is not on the agenda only if it is a minor matter relating to the
general business of the meeting and the Chairperson explains at the beginning
of the public part of the meeting that the item will be discussed. However, the
meeting may not make a resolution, decision or recommendation about the item,
except to refer it to a subsequent meeting for further discussion.”
Recommendations
2. That Council accepts the following “Minor Items of Business Not on the Agenda” for discussion as Item 9:
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Item
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Topic
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Raised
by
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1.
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2.
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Leeanne Hooper
PRINCIPAL ADVISOR GOVERNANCE
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James Palmer
CHIEF EXECUTIVE
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HAWKE’S BAY REGIONAL COUNCIL
Wednesday 09 October 2019
Subject: Report and
Recommendations from the Regional Planning Committee
Reason for Report
1. This item presents the recommendations arising from the 25 September
2019 extraordinary Regional Planning Committee meeting for Council’s
consideration and approval.
Agenda Items
2. In the agenda published for the Regional Planning Committee meeting
on 18 September 2019, there were four decision items of which, due to the
quorum being lost, three were not resolved. As a result, an extraordinary
meeting of the RPC was called for the morning of 25 September for resolution of
two of the outstanding decision items, being:
2.1. The TANK Plan Change 9 Options for Notification and Beyond decision item (7) sought the
Committee’s guidance on a preferred plan change track for notification,
submissions through to decision-making.
2.2. The Hawke's Bay Regional Planning Committee Terms of Reference
decision item (8) presented an interim annotated version of
the revised Terms of Reference (TOR), incorporating relatively minor amendments
to align the TOR with the Hawke’s Bay Regional Planning Committee Act
2015 for the Committee’s agreement and subsequent referral to the
Appointers for their agreement.
3. In relation to the TANK Plan Change 9 Options for Notification
and Beyond decision item,
the Committee was unable to reach agreement on a recommendation to the Council.
4. The staff
report recommended that the Committee recommend the modified streamlined
planning process (SPP) for notification and post-notification stages of the
proposed TANK plan change (PC9) to Council. The modified SPP proposed by staff
would feature an extended submission period, plus a round of further
submissions and a hearing by a panel of accredited commissioners – all
optional extras to more closely mimic the submissions phase of a standard
Schedule 1 process. An application to use a modified SPP would require
approval from the Minister for the Environment prior to public notification of
PC9. The staff rationale for recommending the modified SPP rested on weighing
the retention of submitters’ substantive appeal rights against the depth
of community engagement for TANK to date, alignment with the Government’s
proposed freshwater planning process in a Bill currently before a Select
Committee, and the overall implications on HBRC’s policy and planning
work programme through to 2025.
5. At the
Committee meeting a motion to use a modified SPP was lost. An alternative
motion to use the RMA’s standard Schedule 1 Part 1 process was also lost.
Consequently, there are no recommendations from the Committee to the Council on
this item nor is there a clear direction under the Committee’s Terms of
Reference for the item to be referred back to the Committee.
6. In relation to the Hawke's Bay Regional Planning Committee Terms
of Reference decision item, the Committee received and accepted the
recommendations as presented in the staff report. Consequently, the
Committee’s recommendations are now presented to the Council for its
consideration.
Decision
Making Process
7. These items were specifically considered at the Committee level.
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Recommendations
That Hawke’s Bay Regional Council:
1. Agrees that the decisions to be made are not significant under the
criteria contained in Council’s adopted Significance and Engagement
Policy, and that Council can exercise its discretion and make decisions on
this issue without conferring directly with the community and persons likely
to be affected by or to have an interest in the decision.
2. Notes that the Committee has not provided Council with a direction
in respect of the two notification pathway options available under the
Resource Management Act 1991.
3. Receives
and accepts the Report and resolutions from the
Regional Planning Committee, those resolutions being:
That the Regional
Planning Committee:
3.1. Receives and notes the “Hawke’s Bay Regional
Planning Committee Terms of Reference” staff report.
3.2. Agrees that the decisions to be made are not significant under the
criteria contained in Council’s adopted Significance and Engagement
Policy, and that Council can exercise its discretion and make decisions on
this issue without conferring directly with the community and persons likely
to be affected by or to have an interest in the decision.
3.3. Agrees that the preferred approach is to agree on amendments to
the RPC’s February 2014 version of Terms of Reference that:
3.3.1. incorporates minor corrections, editorial improvements, and
various other uncontentious amendments that improve alignment with the
Hawke’s Bay Regional Planning Committee Act 2015
3.3.2. sets aside the following matters (which were within scope of the
first statutory review of performance of the RPC):
3.3.2.1. Voting
and Quorum
3.3.2.2. The
process by which the number of Council members eligible for voting will be
reduced to ensure equal numbers of appointed tāngata whenua
representatives
3.3.2.3. The
setting of the Quorum
3.3.2.4. Consensus
decision making and the 80% voting threshold.
3.3.2.5. The
presumption that the current Standing Orders of Council apply to the
operation of the committee unless amended by the committee.
3.3.2.6. Confirmation
of functions and powers of the committee (noting the legal advice that the
broader scope in draft terms of reference is not inconsistent with the
specified legislation).
3.3.2.7. Refer
back provisions and clarification of the options available to Council in the
event that no recommendation is received from the Committee. This issue
relates in particular to section 12(4) of the Act which provides that
“In the event of an inconsistency between the obligations of Council
under the terms of reference and its obligations under the specified
legislation, the specified legislation prevails.
3.3.3. Agrees to use best endeavours to seek resolution and agreement on
those matters in recommendation 2.3.2 above, and then when agreement has been
reached, thereafter agree that the RPC’s terms of Reference be approved
and referred to the Appointers (or their nominated delegate) for their
written agreement.
3.3.4. Recommends that Hawke’s Bay Regional Council:
3.3.4.1. writes to each of the RPC Appointers inviting them to consider and
agree to the amended Terms of Reference for the RPC as proposed; and
3.3.4.2. as an Appointer itself, Council agrees to the amended Terms of
Reference for the RPC as proposed.
Hawke’s
Bay Regional Planning Committee Terms of Reference
4. Writes to each of the Regional Planning Committee Appointers
inviting them to consider and agree to the amended Terms of Reference for the
RPC as proposed; and
5. As an Appointer itself, Council agrees to the amended Terms of
Reference for the Regional Planning Committee as proposed.
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Authored by:
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Ceri Edmonds
Manager Policy and Planning
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Gavin Ide
Principal Advisor Strategic Planning
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Approved by:
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Tom Skerman
Group Manager Strategic Planning
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Attachment/s
There are no
attachments for this report.
HAWKE’S BAY REGIONAL
COUNCIL
Wednesday 09 October 2019
Subject: Amendment to
Significance and Engagement Policy to Ring Fence Napier Port IPO Proceeds
Reason for Report
1. This item
provides an update to Council regarding the proceeds from the Napier Port
Initial Public Offering (IPO) and suggests amendments to Council’s
Significance and Engagement Policy to qualify ‘Napier Port Future
Investment Fund’ as a strategic asset.
Background: Napier Port Initial Public
Offering (IPO) transaction
2. On 19 August
2019, the Napier Port IPO transacted in line with agreed transaction proceeds
agreements. This resulted in the Hawke’s Bay Regional Investment Company
Limited (HBRIC) receiving $107,858,750 ($107.9m) in cash proceeds,
significantly greater than anticipated during the community consultation on
options to fund the development of Napier Port.
3. After deduction
of approximately $600,000 ($0.6m) of IPO associated transactions costs, the net
proceeds from the IPO available for re-investment equates to approximately
$107.3m (subject to final reconciliation).
4. A commitment
was made through the community consultation to establish a ‘future
investment fund’ in which this capital is ‘ring fenced’ and
the investment proceeds from it would, subject to market conditions, more than
match the current dividend flow from the Port.
5. In order to
begin achieving operating returns from the proceeds immediately, as resolved
previously with Council, the net proceeds would be transferred to
Council’s designated investment fund managers for deployment.
6. The funds have
been deployed in accordance with the Council’s existing Statement of
Investment Policy and Objectives (SIPO) which dictates, defines and mandates
the parameters within which the investments and their ongoing management and
reporting are to operate.
7. As at 25
September 2019, $103m or 96% of the net proceeds from the transaction (subject
to final reconciliation) have already been transferred to Council’s fund
managers.
8. The remaining
$4.3m is in short term deposit pending final reconciliation and definitive tax
advice on dividend disbursements.
9. Staff believe
the existing SIPO provides an appropriate and robust governance framework for
the Napier Port Future Investment Fund. The SIPO is a dynamic document and is
reviewed annually or sooner if market conditions warrant.
10. All numbers used in this
report have been rounded to the nearest $100,000.
Background: Council’s
Statement of Investment Policy and Objectives (SIPO)
11. Effective as at 1 July
2018, the purpose of SIPO is to assist Councillors, Council staff and external
Investment Managers in effectively supervising, monitoring and evaluating the
management of all externally managed funds.
12. The SIPO outlines and
encourages use of methodologies and processes that reflect industry best
practice, encompass the principles of good governance, and reflect
Council’s vision and risk tolerances.
13. The SIPO clearly defines
Council’s investment structure for all externally managed funds. This
structure includes various asset classes, investment management style(s), asset
allocations and acceptable investment ranges that, in total, are expected to
produce an appropriate level of diversification and total return over the
investment time horizon.
14. As a responsible public
authority, Council is a risk averse entity. The SIPO dictates that Council
investments must be prudent and the associated risks and returns balanced
against the key aim of capital preservation. Council’s investment
framework is supportive of its intergenerational responsibilities to current
and future ratepayers. The primary focus is capital protection, followed by an
appropriate return and acceptable liquidity.
Isolating, Preserving and Protecting (ring
fencing) Napier Port IPO Proceeds
15. Recognising the need and
fulfilling the commitment to the community to protect net IPO proceeds (subject
to final reconciliation), staff recommend the creation of an indefinite
“Napier Port Future Investment Fund” providing a source of
intergenerational capital reserves to support Council operating activities
while maintaining a SIPO-mandated level of diversification and total return
over the investment time horizon.
16. Staff also recommend that
Council’s Significance and Engagement Policy (attached) is amended to
specifically include “Napier Port Future Investment Fund” as a
strategic asset, listed as:
16.1. Napier Port Future
Investment Fund (inflation adjusted capital base retention of net proceeds from
partial sell down of 45% ownership in Port of Napier Limited following Initial
Public Offering).
17. This amendment is aimed to
protect the inflation adjusted capital base of the “Napier Port Future
Investment Fund” by requiring that any decision to expend or reduce any
portion of the capital base would require community engagement or a formal
special consultative process in accordance with LGA s83 provisions. It should
be noted that a subsequent Council resolution may nullify this policy change,
however staff believe this provides an immediate and necessary level of
protection consistent with feedback from the Napier Port IPO consultation
process.
Current State: Napier Port IPO Proceeds
18. In August 2019, HBRIC
received a total of $107.3m in net cash proceeds (subject to final
reconciliation) from the Napier Port IPO after deduction of approximately $0.6m
of associated IPO transactions costs
19. This was paid as $63.3m in
proceeds from the sale of its 45% shareholding in Napier Port, along with a
fully imputed special dividend of $44m - to substantially utilise all of Port
of Napier Limited’s imputation credit balance which would have otherwise
been lost due to change in ownership following the IPO.
20. As at 25 September 2019,
$103m (or 96%) of net proceeds from the Napier Port IPO transaction have been
transferred to the aforementioned two external investment managers.
20.1. Jarden (formerly First
New Zealand Capital) and Mercer manage $22m each as part of the “Napier
Port Future Investment Fund” on behalf of the Council.
20.2. Jarden (formerly First
New Zealand Capital) and Mercer manage $29.5m as part of the “Napier Port
Future Investment Fund” on behalf of HBRIC.
21. The remaining $4.3m is in
short term deposit pending final reconciliation and definitive tax advice on
dividend disbursements.
22. Upon final reconciliation
and definitive tax advice, this remaining $4.3m will be issued evenly to the
external fund managers for deployment in the Napier Port Future Investment Fund
in accordance with Council’s SIPO bringing the total funds under
management for the Napier Port Future Investment Fund to $107.3m.
23. In order to fulfil the
commitment to the community to ‘ring fence’ the capital base from
IPO proceeds, a component of the Napier Port Future Investment Fund is likely
to remain on HBRIC’s balance sheet in order to maximise tax efficiencies.
24. All externally managed
funds are subject to Council’s SIPO and associated investment mandates
regardless of whether the funds are managed on behalf of the Council or HBRIC.
25. The diagram below provides
a visual depiction of current state of “Napier Port Future Investment
Fund” deployment amongst the investment managers as well as current state
of future tax-efficient dividends to the Council from HBRIC (subject to final
reconciliation).
Future State: Napier Port IPO Proceeds
26. Staff continue to evaluate
tax-efficient and tax-neutral options to further return subscribed capital
and/or dividend from HBRIC to Council subject to ongoing discussions with
external tax advisor(s).
27. Staff expect to provide an
update to the Council on this matter within the first or second quarter of FY
2019-20 noting that this is an indicative estimate subject to change.
Future State: Napier Port IPO Proceeds
under HBRIC’s management
28. Pending
finalised transaction costs, a conclusive review of tax-efficient options of
returning additional capital to the Council, it is estimated that HBRIC will
continue to manage an investment portfolio of a yet to be determined amount of
IPO proceeds as a result of its inability to fully repatriate IPO proceeds
without negative tax consequences.
29. As indicated
above, all IPO proceeds, including those managed by external fund managers on
behalf of HBRIC are mandated to comply with Council’s SIPO.
30. Staff intend to evaluate the tax implications of any
investment income derived from the “Napier Port Future Investment
Fund” on behalf of HBRIC impacting Council’s ability to enhance its
operating activities.
31. HBRIC will
also continue to own a 55% share in Napier Port, currently valued at
approximately $340m at time of this report.
Decision
Making Process
32. Council
is required to make every decision in accordance with the requirements of the
Local Government Act 2002 (the Act). Staff have assessed the requirements in
relation to this item and have concluded:
32.1. The use of
the special consultative procedure is not prescribed by legislation.
32.2. The decision
is not inconsistent with an existing policy or plan.
32.3. Given
the nature and significance of the issue to be considered and decided, and also
the persons likely to be affected by, or have an interest in the decisions
made, Council can exercise its discretion and make a decision without
consulting directly with the community or others having an interest in
the decision.
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Recommendations
That Hawke’s Bay Regional Council:
1. Receives and
notes the “Amendment to Significance and Engagement Policy to Ring
Fence Napier Port IPO Proceeds” staff report.
2. Establishes
and maintains a dedicated ‘Napier Port Future Investment Fund’
comprised of:
2.1. Net
proceeds of the IPO transaction (approximately $107.3m subject to final
reconciliation) plus retention of investment income equivalent to the annual
rate of inflation in order to maintain the real value of the IPO proceeds.
3. Amends the
Significance and Engagement Policy to include Napier Port Future Investment
Fund as a Strategic Asset.
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Authored by:
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Shash
Davé
Chief Financial Officer
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Approved by:
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Jessica
Ellerm
Group Manager Corporate Services
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Attachment/s
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⇩1
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Proposed
edits - Significance and Engagement Policy for 2018 - 2028 Long Term Plan
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Proposed
edits - Significance and Engagement Policy for 2018 - 2028 Long Term Plan
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Attachment 1
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HAWKE’S BAY REGIONAL COUNCIL
Wednesday 09 October 2019
Subject: Appointment of Hearing
Panel for Wairoa District Council Wastewater Discharge Consent
Reason
for Report
1. To provide
information relating to the upcoming resource consent hearing for Wairoa
District Council and to enable the appointment of commissioners to the Hearing
Panel.
2. The application
is APP-123774 – Wairoa District Council – Activities and discharges associated with the receipt,
treatment, storage and general management of wastewater received at the Wairoa
Wastewater Treatment Plant
3. This
application is to replace the expired resource consents for the Wairoa waste
water treatment plant discharge.
4. The application
was publicly notified in August 2019 and 22 submissions were received.
5. A pre-hearing
meeting with submitters will take place on 17 October 2019. Provisional dates
for the hearing are 5 and 6 December 2019 and these dates will be confirmed or
amended following the pre-hearing meeting.
6. Three Hearing Panel members are proposed for this hearing.
7. The following
people are recommended as commissioners for this hearing: Mr Bill Wasley
(chair), Rauru Kirikiri and Dr Jim Cooke. Mr Wasley has chaired a number of resource
consent hearings for the Regional Council recently. Rauru Kirikiri was on the
Port of Napier consent hearing panel. Dr Jim Cooke has specialised experience
in 
water, wastewater discharges,
and water quality.
8. All the
recommended commissioners are accredited RMA decision makers.
Decision
Making Process
9. Pursuant to
Section 34(1) of the Resource Management Act (RMA) the Hawke's Bay Regional
Council has delegated the following functions, powers and/or duties under the
RMA[1]:
9.1. The appointment of Hearings Committee members or independent
commissioners to a Hearing Panel to undertake the functions pursuant to s 34A
RMA and the appointment of the Chairperson of the Hearing Panel.
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Recommendations
That the Hearings Committee
1. Receives and notes the “Appointment
of Hearing Panel for Wairoa District Council Wastewater Discharge Consent” staff report.
2. Makes the following appointments in accordance with its delegation
to do so: Mr Bill Wasley (chair), Rauru Kirikiri and
Dr Jim Cooke to act as commissioners to hear and decide resource consent
applications (APP-123774) by Wairoa District Council to discharge waste water
to the Wairoa River.
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Authored by:
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Malcolm
Miller
Manager Consents
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Approved by:
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Liz Lambert
Group Manager Regulation
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Attachment/s
There are no
attachments for this report.
HAWKE’S BAY REGIONAL COUNCIL
Wednesday 09 October 2019
Subject: 2018-19 Annual
Report and Summary
Reason for Report
1. To provide the Council with the 2018-19 Annual Report and Summary
for review to enable adoption post audit clearance on 16 October 2019.
Background
1. The proposed timeframes for development and adoption of the 2018-19
Annual Report were considered by Council on 31 July 2019. That item noted that
the process was complicated this year by the Napier Port IPO Transaction
which affected the Group Financials and the Local Elections.
2. Council’s Auditor, Stephen Lucy from Audit New Zealand,
attended the 11 September 2019 Corporate and Strategic Committee meeting to
provide the Councillors with an opportunity to ask questions related to the
audit. The 60 non-financial performance measures were also included on the
Committee agenda for review and discussion prior to the completion of the
audit.
3. Due
to a number of contributing factors we do not believe audit clearance will be
received before the Council meeting takes place on 9 October to enable the
adoption of the 2018-19 Annual report. The Annual Report however, is largely
complete and is attached, including your feedback on the non-financial
performance measures, for your review.
4. Audit Director
Stephen Lucy has recommended the existing Council meet on 16 October before the
election results are officially declared to formally adopt the Annual
Report. The same situation occurred in 2016, and while it’s not
ideal, it is preferred that the existing Council adopt the Annual Report given
their understanding of the work which has been performed throughout the year
and the substantial post balance date event being the Napier Port Initial
Public Offer.
5. The statutory deadline for the adoption of the Annual Report is four
months after balance date, being 30 October 2019.
6. Subsequent to Council approval and adoption, and in line with
Section 98 of the Local Government Act, the 2018-19 Annual Report will be
printed for distribution and published on the Council’s website.
7. A summary document of the information contained in the Annual Report
is also required under Section 98 of the Act. This summary is audited to ensure
that it fairly and consistently represents the information regarding the major
matters in the full Annual Report. The summary must be published on the
Council’s website no later than one month from adoption of the full
Annual Report. This is being graphically designed and will be provided under a
separate cover and in hard copy to Councillors only as soon as it’s
available.
8. The final Annual Report is provided under a separate cover.
The final audit report has yet to be received from Audit NZ, and will be tabled
at the Council meeting on 16 October 2019.
Financial Performance
9. Year one of the
2018-28 Long Term Plan signalled a step change in activity particularly in the
areas of land and water to achieve real results on-the-ground at pace and at
scale.
10. This was in response to
the challenge set by the Council’s 2017-2021 Strategic Plan, which set
ambitious timeframes to achieve strategic goals in the focus areas:
10.1. Water quality, safety
and certainty
10.2. Smart, sustainable land
use
10.3. Healthy and functioning
biodiversity
10.4. Sustainable services and
infrastructure.
11. This is the first year of
the new Financial Strategy set out in the 2018-28 Long Term Plan. The Financial
Strategy aims to accelerate and scale up activity to influence behavioural
change to achieve outcomes by front loading activity to have a greater impact
sooner.
12. As a result, operating
expenditure in 2018-19 was $53m, an increase of $5.1m or 10% compared to the
previous year. External operating expenditure increased by $3.2m and personnel
costs increased by $2.8m or 16%. This demonstrates the significant
increase in capacity and capability required to carry out an ambitious work
programme.
13. Total capital expenditure
was budgeted at $15.4m for the year. However, $3.2m of this has been
carried forward to 2019-20. Despite an increase in staffing numbers and
cost, many vacancies were difficult to fill and were vacant for part or all of
the year. This was particularly apparent in Asset Management where a lack
of resource and capability resulted in an underspent in Infrastructure Asset
Construction of $2.2 million.
14. Another $1m of capital
carried forward represents IT project work or spend. Following a full
review of the approach to IT transformation, greater priority has been placed
on ensuring the organisation has the correct processes, resources and
disciplines in place to warrant or benefit from system implementation before
work begins. This should ensure that as projects are initiated, spend is
maximised due to the organisation being ready, and the up-take of solutions is
optimised.
15. We also saw longer than
anticipated set up phase for policy design and implementation for some of the
new initiatives. For the Catchment Management team, the design of the
Erosion Control Scheme dominated most of the year, and is reflected through
$600k of the budget being carried forward. In total, approximately $1m of
budgeted operating expenditure has been carried forward to the 2019-20 year for
a number of various work streams and as a result of resourcing challenges,
difficulty gaining access to land, reliance on partnership or external funding
or are reserve balances being carried over.
16. Overall, operating
expenditure exceeds budget due to the re-allocation or prioritisation of
internal work streams over debt fund capital projects which have been delayed
or deferred to the new financial year.
17. The increased level of
activity was funded through:
17.1. Rates –
Rates revenue makes up 50% or less of annual revenue. The 2018-19 year
saw an on average 19% increase in rates (including 5.3% related to the regional
collection of Civil Defence Emergency Management). Rates revenue for the
year was $23.2m, an increase of $3.7m from the previous year.
17.2. Recovery of user
charges via fees and charges – Fees and charges provide around 20% of
the annual funding requirement of the Regional Council. The 2018-19 year
included a greater user-pays approach. Both consents and compliance were 80%
chargeable to the consent holders (up from 60% and 70% respectively in previous
years). A total of $1.9m in revenue was collected from direct charges,
which was an increase of $520k from the previous year. This however was $600k
less than budget due to more time than anticipated spent responding to important
but non-recoverable activity such as the pollution hotline.
17.3. Investment income –
Total Investment income including $10m dividends was $13.7m. It included
leasehold income of $1.8m, forestry income of $23k, returns from managed funds
and cash on term deposit of $1.8m.
18. Our investment strategy
aims to maintain and grow investments for generating income, allowing general
rates to continue being subsidised by investment income. During this year
we received $10m in dividends from the 100% ownership of Napier Port via HBRIC
Ltd. Post balance date, ownership in this asset has been diluted to 55%
via an Initial Public Offering, which is outlined in the attached full
report. This post balance date event has already had a significant impact
on the valuation of the asset. HBRC valuation of assets has increased by
over $64m in the 2018-19 year including a revaluation of HBRIC.
19. Overall investment income
was $3.2m less than budget due to returns from managed funds being un-realised
(they are balance sheet gains) and a delay in expected Forestry income, which
will be recognised when the forests are harvested. During the course of
the 2018-19 year $40m of funds were placed into diversified investment
portfolios managed by two separate fund managers. Appointment of the fund
managers and subsequent establishment of the funds took longer administratively
than anticipated which has an impact on the timing of the placement of funds
(planned July 18, allocated in Nov 2018), however, the $40m placed achieved overall
gains of $1.88m or 4.7% including adjustment for inflation. Forecast
returns were 4.5% net of inflation which has resulted in a shortfall of
investment income for this year. Gain on invested funds is recognised in
the financial statements as an unrealised gain as the returns were not divested
in the year due to favourable cashflow position.
20. Debt – The
Long Term Plan outlines a preference for funding for intergenerational projects
through debt. In 2018-19, we borrowed $2.5m to fund regional infrastructure
projects, work on regional parks and open spaces, and research and development
projects.
21. External grant funding –
Government grants are received from the New Zealand Transport Agency for bus
services and road safety projects, New Zealand Trade and Enterprise for
regional development projects, Ministry of Justice and the Ministry of the
Environment for iwi initiatives, and the Ministry of Primary Industries for
afforestation, environmental and water initiative projects.
22. The closing financial
position for the year is an operating surplus of $2.6m compared to a planned
surplus of $5.8m. The total comprehensive revenue and expense position is
$68.6m which exceeds the planned $8.2m surplus. This significant increase
is due to unrealised revaluation gains across all asset classes, most
specifically a $58m increase in the valuation of HBRIC (reflecting the value of
ownership of Napier Port).
Hawke’s Bay Regional Investment
Company Ltd (HBRIC)
23. The HBRIC Ltd Board of
Directors approved the HBRIC 2018-19 annual report on 30 September 2019.
24. HBRIC Ltd has been issued
a qualified audit opinion, because the group financial statements include the
financial statements for the group’s subsidiary, Port of Napier Limited,
for the year end 31 March 2019 rather than for the year end 30 June 2019.
The HBRIC audit opinion is attached for reference.
25. This qualified option
flows through to the HBRC Group accounts as this incorporates the same
decisions made by the directors of HBRIC Ltd.
Decision Making
Process
26. Staff have assessed the
requirements of the Local Government Act 2002 in relation to this item and have
concluded that, as this report is for information only, the decision making
provisions do not apply.
|
Recommendation
That Hawke’s Bay Regional Council receives and considers the
2018-19 Annual Report and Summary.
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Authored by:
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Drew Broadley
Community Engagement and Communications
Manager
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Desiree Cull
Strategy and Projects Leader
|
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Shash
Davé
Chief Financial Officer
|
Melissa des
Landes
Senior Group Accountant
|
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Brylee
Finlayson
Financial Accountant
|
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Approved by:
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Jessica
Ellerm
Group Manager Corporate Services
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James Palmer
Chief Executive
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Attachment/s
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⇨1
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Draft 2018-19
Annual Report
|
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Under
Separate Cover
|
|
⇨2
|
2018-19
Annual Report Summary
|
|
Under
Separate Cover
|
|
⇨3
|
HBRIC 2018-19
Annual Report signed
|
|
Under
Separate Cover
|
HAWKE’S BAY REGIONAL
COUNCIL
Wednesday 09 October 2019
Subject: Discussion of Minor
Items Not on the Agenda
Reason for Report
1. This document has been prepared to assist
Councillors note the Minor Items of Business Not on the
Agenda to be discussed as determined earlier in Agenda
Item 5.
|
Item
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Topic
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Raised
by
|
|
1.
|
|
|
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2.
|
|
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HAWKE’S BAY REGIONAL COUNCIL
Wednesday 09 October 2019
SUBJECT:
That the Council excludes the public
from this section of the meeting being Confirmation of Public Excluded Minutes
Agenda Item 10 with the general subject of the item to be considered while the public
is excluded; the reasons for passing the resolution and the specific grounds
under Section 48 (1) of the Local Government Official Information and Meetings
Act 1987 for the passing of this resolution being:
|
|
GENERAL SUBJECT OF THE ITEM TO BE
CONSIDERED
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REASON FOR PASSING THIS RESOLUTION
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GROUNDS UNDER SECTION 48(1) FOR THE PASSING
OF THE RESOLUTION
|
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Napier Port IPO Proceeds Deployment
|
7(2)s7(2)(i) That the public conduct of
this agenda item would be likely to result in the disclosure of information
where the withholding of the information is necessary to enable the local
authority holding the information to carry out, without prejudice or
disadvantage, negotiations (including commercial and industrial
negotiations).
|
The Council is specified, in the First
Schedule to this Act, as a body to which the Act applies.
|
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Authored by:
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Leeanne
Hooper
Governance Lead
|
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Approved by:
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James Palmer
Chief Executive
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