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Finance and Strategy Committee
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MINUTES OF A MEETING OF THE
FINANCE AND STRATEGY COMMITTEE
HELD ON WEDNESDAY, 20 MAY 2009 AT 9.35AM
IN THE COMMITTEE ROOM, LEVEL 15
CIVIC ADMINISTRATION BUILDING
1 GREYS AVENUE
AUCKLAND

PRESENT: Councillors: Douglas Armstrong, QSO [Chairperson]
[until 10:02am, item 9; from 10:17am, item 9]
    Paul Goldsmith [Deputy Chairperson]
[until 11:15am, item 6; from 11:18am, item 6]
    Aaron Bhatnagar  
    Dr Cathy Casey  
    Mark Donnelly [until 11:49am, item 7; from 11:50am, item 7]
    Peseta Sam Lotu-Iiga  
    Richard Northey, ONZM  
ALSO PRESENT:   Bill Christian, JP  
    Graeme Easte [until 11:00am, item 5; from 11:20am, item 6; until 11:21am, item 6]
    Glenda Fryer [until 11:20am, item 6]
    Denise Roche [until 10:55am, item C2]

  1. Top APOLOGIES

    There were no apologies.

  2. Top CONFIRMATION OF MINUTES

    That the minutes of the Finance and Strategy Committee meeting held on Wednesday, 15 April 2009 be confirmed as a true and correct record.

    CARRIED

  3. Top EXTRAORDINARY BUSINESS

    There was no extraordinary business.

  4. Top PUBLIC FORUM

    4.1 KAY PETERSON - WAIHEKE RATES

    [ATTACHMENT 4.1A]

    That Ms Kay Peterson be thanked for her submission regarding the proposed application of the non-residential rating category.

    CARRIED

    Item 9 was taken and discussed at this time.

    [Secretarial note: The Chairperson vacated the Chair at 10:02am and the Deputy Chairperson assumed the Chair. The Chairperson resumed the Chair at 10:17am.]

    Items 14A C2 and 14B were taken and item C2 was discussed at this time.

  5. Top REPORTS REQUESTED/PENDING

    That the reports requested pending of the Acting Democracy Advisor, dated 11 May 2009, be received, noting the following changes:

    • Change Row 1 target date from TBA to November 2009 and add to the comments "This is to deal with the possibility that the October 2009 Auckland Bill may deal with the Zoo governance issue."
    • Change Row 2 from April 09 to May 09 to read "From May 09 to June 09".
    • Change Row 3 from May 09 to read "From May 09 to June 09".

    CARRIED

  6. Top BRISBANE BUSINESS MISSION - REPORT BACK AFTER TRAVEL

    The Chairperson moved:

    1. That the Finance and Strategy Committee notes the report entitled "Brisbane business mission - report back after travel" of His Worship the Mayor, Hon John Banks, QSO, which outlines the successful business mission to Brisbane and the cost and benefit to council.
    2. That the question of criteria for the prioritisation of up to 23 sister city/friendship city/strategic alliances be considered by the City Development Committee.

    Councillor Casey moved the following amendment:

    The Committee notes that post-amalgamation there will be 20 sister city/friendship city/strategic alliances with the Auckland Council and that consideration by the Regional Governance Committee on the implications for future international relations.

    A division was called for, voting on which was as follows:

    For the Amendment: Against the Amendment:
    Cr Dr Cathy Casey

    Cr Richard Northey

    		 Cr Douglas Armstrong

    Cr Aaron Bhatnagar

    Cr Mark Donnelly

    Cr Paul Goldsmith

    Cr Peseta Sam Lotu-Iiga


    His Worship the Mayor and Deputy Mayor Hay were absent.

    The amendment was declared LOST by 5 votes to 2.

    The Chairperson put the substantive motion:

    1. That the Finance and Strategy Committee notes the report entitled "Brisbane business mission - report back after travel" of His Worship the Mayor, Hon John Banks, QSO, which outlines the successful business mission to Brisbane and the cost and benefit to council.

    CARRIED

    1. That the question of criteria for the prioritisation of up to 23 sister city/friendship city/strategic alliances be considered by the City Development Committee.

    The amendment B was put by a show of hands and declared CARRIED by 5 votes to 1.

  7. Top PERFORMANCE REPORT FOR MARCH 2009 INCLUDING ANNUAL PLAN PROGRESS, FINANCIAL RISKS AND EFFICIENCY GAINS

    1. That the Finance and Strategy Committee notes that the performance report for the nine months ended 31 March 2009 highlighting:
      1. council's performance in keeping its year to date operating expenditure $8.0 million favourable to budget;
      2. a year to date capital expenditure under spend of $35.3 million against budget, comprising:
        • $42.2 million capital expenditure over spend, of which $10.0 million is the earlier than planned acquisition of 69 Captain Springs Road, offset by;
        • $77.5 million year to date capital expenditure under spend of which the Art Gallery development appears to be $11.9 million behind schedule; and road based renewal $9.5 million behind schedule; and
      3. organisational efficiency gains of $7.3 million and revenue increases of $6.7 million for the nine months ended 31 March 2009.
    2. That the Finance and Strategy Committee requests that officers use their best endeavours to continue to deliver an operating surplus in excess of budget through to the end of the year.
    3. That the Finance and Strategy Committee notes the organisation's commitment to continue savings and efficiency gains, and quality of service improvements.

    CARRIED

  8. Top MARCH 2009 QUARTER TREASURY OUTCOMES VERSUS RISK LIMITS

    1. That the Finance and Strategy Committee notes that during the March 2009 quarter, the Treasury Group operated within the policy limits established by the Treasury Management Policy, as approved by council, and in accordance with the strategic risk limits approved by the Treasury Management Steering Group.
    2. That the Finance and Strategy Committee notes that as at 31 March 2009, the cost of the debt portfolio was 7.18% and the return on the Trusts and Reserves portfolio was 7.09%.
    3. That the Finance and Strategy Committee notes that officers are preparing a report on the pros and cons of undertaking a further retail bond issue for the June 2009 Finance and Strategy Committee.
    4. That the Finance and Strategy Committee requests that any report from the Auckland City Council submitting on the Auckland Council transitional legislation include the recommendation to permit the Auckland Council (and possibly other councils) to borrow in foreign currencies provided the foreign exchange exposure is hedged.

    CARRIED

  9. Top FOLLOW-UP REVIEW OF PROPOSED "FARMING AND OPEN SPACE" RATING DIFFERENTIAL DEFINITION

    [ATTACHMENT 9A]

    That it be a recommendation to the June 2009 Combined Committees:

    1. That it be noted that the "Farming and Open space" rating definition continues to include all land on Waiheke, Great Barrier and Rakino islands used exclusively or almost exclusively for farming purposes, irrespective of size, as the "Farming and Open space" rating category has a lower differential than the residential rating category.
    2. That the "Farming and Open space" rating definition be extended to include all vacant land and residential land on Waiheke, Great Barrier and Rakino islands greater than 4ha rather than the 5ha consulted in the draft 10-year plan, on the basis that 4ha reflects the historical minimum subdivision criteria for rural like land.
    3. That officers be requested to develop a rating policy for the Hauraki Gulf Islands that recognises that adding a residential unit is the most likely development for vacant land under the Hauraki Gulf District Plan and therefore vacant land should have a residential classification rather than a non-residential classification.

    CARRIED

  10. Top TRUST AND RESERVES

    1. That the Finance and Strategy Committee notes that the amendments to the Charities Registration Act, which took effect from 1 July 2008, mean that the Council could set up a charitable trust or apply for donee status for specific receipts and the donee could claim tax relief.
    2. That the Finance and Strategy Committee notes that the aims and purposes of existing trusts and reserves will continue to be protected by the terms of their respective trust deeds following the formation of the Auckland Council.
    3. That the Finance and Strategy Committee notes that some trusts and reserves are small and inefficient to administer and these funds should be rationalised.
    4. That the Finance and Strategy Committee notes that the income from the Onehunga Endowment Fund could be applied to the Onehunga foreshore project, but that Council would need to increase general rates to cover the shortfall.
    5. That the Finance and Strategy Committee notes that there are a number of trusts and reserves whose income may be applied to either enhancement or maintenance of trusts or council assets.

    CARRIED

  11. Top AUCKLAND CITY COUNCIL FORMER PENSIONER HOUSING PORTFOLIO - UPDATE FROM HOUSING NEW ZEALAND CORPORATION

    The Chairperson moved:

    That the information contained in the report entitled "Auckland City Council former Pensioner Housing Portfolio - Update from Housing New Zealand Corporation" of the Property Officer, dated 27 April 2009, be received.

    Councillor Northey moved the following amendment:

    That the Finance and Strategy Committee requests a report from Housing New Zealand Corporation that addresses the issue of their future plans for the non-pensioner portfolio bought from Auckland City Council in the last ten years.

    The amendment was put by a show of hands and declared LOST by 5 votes to 2.

    The Chairperson put the substantive motion:

    That the information contained in the report entitled "Auckland City Council former Pensioner Housing Portfolio - Update from Housing New Zealand Corporation" of the Property Officer, dated 27 April 2009, be received.

    The substantive motion was put by a show of hands and declared CARRIED by 5 votes to 2.

  12. Top ARTNL'S STATEMENT OF INTENT FOR THE THREE YEAR PERIOD COMMENCING 1 JULY 2009

    1. That the Finance and Strategy Committee agrees to waive the requirement that the Shareholders Representative Group of the Auckland Regional Transport Network Limited (ARTNL) meet to recommend that the shareholders approve the new Statement of Intent; and
    2. That the Finance and Strategy Committee approves the Auckland Regional Transport Network Limited (ARTNL)'s 2009 Statement of Intent in accordance with clause 7.2 of the Shareholders' Agreement and article 2.4.1(a) of ARTNL's constitution.
    3. That the Finance and Strategy Committee authorises the Chief Executive to sign the relevant shareholders' resolution approving the new Statement of Intent on behalf of the council.

    CARRIED

  13. Top DIRECTORS REVIEW AND APPOINTMENT SUBCOMITTEE RESOLUTION - REVISION OF THE AUCKLAND CITY COUNCIL'S POLICY ON APPOINTMENT AND RENUMERATION OF THE BOARD MEMBERS OF COUNCIL ORGANISATIONS AND THE BOARD MEMBERS' GUIDE

    That it be a recommendation to Council:

    1. That the proposed amendments to the policy on appointment and remuneration of board members of council organisations, to bring the document up to date with current council decisions and practice, for distribution to all members of council boards, be approved.
    2. That the updated board members' guide for distribution with the above board appointment and remuneration policy, to ensure all board members understanding of their roles, responsibilities and relationships with council are maintained in line with current procedures, be approved.
    3. That the introduction of independent and external board reviews normally every two years, with each review tailored to the current circumstances relevant to each board at the time of the review, be approved.
    4. That the Chairperson of Directors Review and Appointment Subcommittee be delegated to notify the chairs of Auckland City Council boards of the changes to these documents, pending Council's approval.
    5. That it be noted that under the Local Government (Auckland Reorganisation) Bill, the Chief Executive must ensure that any decision made by the council to adopt or amend a policy concerning the appointment or remuneration of directors of a council controlled organisation must be confirmed in writing by the Transition Agency before implementation.

    CARRIED

  14. Top EXCLUSION OF THE PUBLIC : LOCAL GOVERNMENT OFFICIAL INFORMATION AND MEETINGS ACT 1987

    A. That the public be excluded from the following part(s) of the proceedings of this meeting.

    The general subject 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(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

    Item No.

    General subject of each matter to be considered

    Reason for passing this resolution in relation to each matter

    Particular interest(s) protected (where applicable)

    Ground(s) under section 48(1) for the passing of this resolution
    C1 DIRECTORS REVIEW AND APPOINTMENT SUBCOMMITTEE RESOLUTION - APPOINTMENTS AND REAPPOINTMENTS FOR 2009 Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(a)

    The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

    In particular, the report contains specific information about members of Auckland City Council's boards.

    		 Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

    C2 REVIEW OF THE EDGE® RISK EVALUATION CRITERIA, OPERATING LOSS MITIGATION AND REQUEST FOR WORKING CAPITAL Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(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.

    In particular, the report contains information on the working capital and commercial production strategies of THE EDGE®. Disclosing such information would disadvantage the commercial activity of THE EDGE® in a competitive market.

    		 Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
    C3 DELEGATED DECISIONS OF THE GROUP MANAGER PROPERTY AND PROPERTY MANAGEMENT MANAGER Public conduct of matter would be likely to result in disclosure of information for which good reason to withhold exists under section 7. Section 7(2)(h)

    The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

    In particular, the report contains references to the property's value and information that may impact on the property owner's commercial activities; identification of the site and contract terms which form the basis of negotiations between council and the landowner; sensitive information about council's proposed intentions for the site, which could prejudice or disadvantage its commercial activities.

    		 Section 48(1)(a)

    The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.
    1. That Mr Greg Innes, Chief Executive, Mr Tony Larsen, Chief Financial Officer, and Mr Richard Waddel, Chairperson, of THE EDGE® be permitted to remain at this meeting after the public has been excluded for confidential item C2 because of their specific knowledge of the THE EDGE®'s performance.

    CARRIED

    [Secretarial note: Item C2 was taken and discussed in the confidential section of the agenda but was resolved to be included in the open section.]

  15. Top REVIEW OF THE EDGE® RISK EVALUATION CRITERIA, OPERATING LOSS MITIGATION AND REQUEST FOR WORKING CAPITAL

    1. That the Finance and Strategy Committee receives THE EDGE® report on My Fair Lady, noting that:
      1. the Aotea Centre Board of Management accepts the accountability for the unsatisfactory financial result for My Fair Lady;
      2. a comprehensive review of the board's Theatrical Risk Policy will take place over the next few months; and
      3. the Board remains of the view that based on the circumstances at the time the decision was made, in particular the then economic climate, the Board's assessment of commercial risk and the risk criteria were not inappropriate.
    2. That the Finance and Strategy Committee notes and accepts the comments of the Chairperson of the Board that:
      1. THE EDGE® administer assets worth $400 million and they are tasked with effectively utilising them to further the city's arts agenda with consequential economic benefit; and
      2. the promotion of this agenda is by its very nature inherently a risky business and the Board uses their best endeavours to robustly and systematically mitigate this but elimination is not possible.
    3. That the Finance and Strategy Committee requests that the Aotea Centre Board of Management submit its review of the Board's Theatrical Risk Policy to the August 2009 Finance and Strategy Committee, and suggests that the policy is amended to ensure:
      1. comparison of the same productions across different markets takes into account different market factors (e.g. relative affordability of shows);
      2. comparison of productions in the same market takes into greater account competition from other types of entertainment and the type of risk sharing arrangement agreed between THE EDGE® and its partners;
      3. greater emphasis on risk mitigation planning;
      4. greater sensitivity to economic conditions; and
      5. regular interim reports to council on productions that are risky or involve a relatively high investment from THE EDGE® between the decision to support their undertaking the production and the time that it is staged.
    4. That the Finance and Strategy Committee notes THE EDGE®'s report on the steps being taken to minimise operating losses for the 2008/09 year, noting that THE EDGE® maintains the previous forecast of operating shortfall for the financial year 2008/09, despite actions having been taken to minimise losses.
    5. That the Finance and Strategy Committee approves an extension of the term of the existing working capital loan of $1.4 million to 31 December 2009, with interim interest to be paid in full by THE EDGE® by 31 December 2009.
    6. That the Finance and Strategy Committee delegates authority to the General Manager Finance to agree the new terms and conditions of the loan.
    7. That the Finance and Strategy Committee endorses that any future working capital assistance to THE EDGE®, if proved necessary, is to be provided in the form of an interest-bearing loan.
    8. That the Finance and Strategy Committee notes that the resolutions be made public and the elements of the report be released subject to discretion by the General Manager Finance and in consultation with THE EDGE®.

    CARRIED

    There being no further business the Chairperson declared the meeting closed at 12:35 pm.