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STRATEGY AND RESOURCES COMMITTEE
17 JUNE 1996
A meeting of the Strategy and Resources Committee
was held on Monday 17 June 1996 at 4.00 pm
PRESENT: Councillor David Close (Chairman),
The Mayor,
Councillors Oscar Alpers, Carole Evans,
Ian Howell, Alister James, Garry Moore,
Margaret Murray, Denis O'Rourke
and Ron Wright.
APOLOGY: An apology for absence was received and
accepted from Councillor Pat Harrow. Councillor Alpers arrived at 4.10 pm and was
present for all clauses. The Mayor arrived at 4.35 pm, retired at
5.40 pm and was present for clauses 1, 2,
3, 4, 6, 8 and 13. The Committee reports that: PART A - MATTERS REQUIRING A COUNCIL DECISION
1. COURT OF APPEAL DECISION - SETTING RATES RR 3052
Officer responsible Author Legal Services Manager Peter Mitchell Corporate Plan Output: Legal Advice
The purpose of this report is to report on a recent Court of Appeal decision regarding rates. The Court of Appeal, on Friday 24 May 1996, delivered what will probably be seen as a landmark decision in terms of the law applying to territorial authorities in the setting of their rates. Briefly the background to the decision is that there had been challenges by commercial ratepayers to the rates fixed by the Wellington City Council for the 1 July 1994 to 30 June 1995 financial year and especially the rating differential as between the residential and commercial ratepayers. Wellington City had had a differential of 67:33 commercial to residential. The High Court in May 1995 had concluded that that differential could not be sustained on any reasonable basis and that a proposed shift by the Council of 1% per annum to redress the inequity was inadequate. The High Court judge had concluded that the primary consideration for justifying a rating differential must be disparity in use of Council outputs. The judge granted a declaration that the Council acted unreasonably and unfairly to the commercial ratepayers in striking the 1994/95 rates.
1 Cont'd In a subsequent judgment, the High Court judge had ordered that the Council determine what he described as the lawful rates for the commercial ratepayers for the 1994/95 year and that the Council then refund to those commercial ratepayers the amount of the excess rates paid. Wellington City had appealed both of these decisions to the Court of Appeal. Before the hearing by the Court of Appeal on 7 and 8 May 1996 the Local Government Association had applied to the Court of Appeal for an order that it be joined as a party to the appeals. The Association's application was on the basis that at the present time there is a "climate of challenge" to the rating decisions of local authorities throughout New Zealand and that it was important that the opportunity be taken for the Court of Appeal to consider rating issues generally. The Association noted that the precedent effect of any decision by the Court of Appeal was of exceptional importance, and in an affidavit stated that at the present time there are 12 sets of proceedings filed in the High Court throughout New Zealand against local authorities regarding rates that they have made. Although the Association's application to join as a party was opposed by the commercial ratepayers involved in the appeal the Court granted the order sought by the Association that it be allowed to be heard. In its decision granting this application the Court stated: "The Association represents the interests of local authorities throughout New Zealand. The manner in which local authorities fund their expenditures and determine their rating systems raise matters of general principle and public policy of fundamental importance to local authorities. In the interests of its members the Association is concerned about the underlying issues of principle and policy, and about the reasoning and wider effect of the decisions now under appeal; and the Court may well be assisted by its submissions on the appeals."
The substantive hearing was held on 7 and 8 May 1996 before a Court of five judges and the Court delivered a unanimous judgment on 24 May 1996. The Court commenced by reviewing the provisions of the Rating Powers Act 1988 relating to the making of general rates and differential rates. The Court noted: "The differential rating power is a power to differentiate, to discriminate as between specified types or groups of property and achieve a different sharing of the general rate burden than would obtain under a uniform rate. It authorises a local authority to determine what in its judgment is the appropriate sharing of that burden.... Differentiation between commercial and residential property is clearly within its scope. It authorises the allocation by a territorial authority of a specified proportion of the general rate burden to the commercial sector."
1 Cont'd The Court went on to note that the powers to make general and differential rates do not specify any special considerations governing the exercise of those powers. The powers are conferred in the broadest terms and without any direction as to their purposes or factors for consideration. The Court referred to the fact that special purpose authorities were legally required to take account of the benefits that in the opinion of that authority were likely to accrue, directly or indirectly, to any property from the work or service in respect of which the special rates are to be made. The Court said: "The legislature did not see the same need to link the differential power of territorial authorities to consideration of relative user benefits and was prepared to leave the power and its exercise for consideration in the round by the territorial authority."
The Court noted that the Rating Powers Act imposed public notice requirements in relation to the making of rates which were linked to the requirements of the Local Government Act governing the preparation and adoption of annual reports as a condition precedent to the making of rates. Furthermore, the powers relating to differential rating separately required public notification for a period of not less than 60 days of a proposal to make or alter a differential rate. The Court noted the accountability obligations on local authorities under the Local Government Act to follow the special consultative procedure to prepare and adopt an annual plan for each financial year and the requirement that it prepare a report assessing the performance of the local authority against policies, objectives, activities, performance targets and other matters specified in the annual plan. The Court stated:
"These measures provide the opportunity for public involvement in establishing the plan in advance of the year's operations and some public accountability in assessing the performance of the local authority. Through the local government political processes members of the community may express any concerns they may have as to the activities the council proposes for the year and the manner in which it is proposed by the local authority that they be funded before the councillors, as elected members for the district, exercise their judgement."
The Court went on to say ... "Reading the statutes together it is obvious that the provisions for making and reviewing rates are to enable the local authority to carry out its statutory functions and to perform the activities which it undertakes for the benefit of its community. A territorial authority has very wide rating powers. The exercise of those powers inevitably affects and is intended to affect the relevant incidence of rates on properties within the district."
The Court noted: 1 Cont'd (a) The council has a choice between capital value and other permitted rating systems; (b) It may select a combination of rates and charges from a general rate to separate rates to uniform charges to specifically focused user-pay charges (such as water consumed through a meter);
(c) There are statutory limits on the maximum general rate and percentage limits on uniform charges but otherwise the choice is unconstrained; (d) Neither the valuation regime under the Valuation of Land Act 1951 nor the rating legislation provided any direct linkage between values and benefits. The Court said: "There is force in Mr Barton's submission for the Local Government Association that it is implicit in the scheme of the legislation that a rating system in its diversity remains primarily a taxation system and not a system inherently based on a principle of user-pays."
The Court went on to comment: "... the authority to adopt a differential system for its general rates assumes the entitlement to discriminate as between types or groups of properties. The very concept of differential rates involves casting a heavier burden than justified solely by relative capital values on one sector rather than another.
The legislation contains no express criteria or purpose statement applicable in this case for making the various choices under those three heads, It imposes significant process obligations providing for public participation, openness and accountability in the decision making. But the substantive decisions are not expressly circumscribed. The legislation proceeds on the premise that the wider substantive judgments are made by the popularly elected representatives exercising a broad political assessment, and of particular relevance in the present case, having regard to the full range of matters specified in the section 84(1)(c) explanation which forms part of the resolution introducing or altering differential rating, and without the explicit mandatory linkage to benefits required where special purpose authorities adopt differential rating.
To confine the acceptable justification for the differentiation to those differences as correspond or are reasonably related to enjoyment of the benefit of services provided by the territorial authority is to ignore the scheme of the legislation and to disregard the breadth of the statutory powers. The legislation permits a territorial authority in making those choices which impact on the incidence of rates to make its own judgment as to what is appropriate and equitable. That decision making is the prerogative of the local authority subject to the statutory limitations and process constraints already referred to and to amenability to judicial review."
1 Cont'd The Court then went on to discuss amenability of rating decisions to judicial review and the legal test involved. The Court referred to the 1992 decision in the MacKenzie District Council v Electricorp and noted that judicial review of the exercise of local authority power was essentially a question of statutory interpretation. The local authority must act within the powers conferred by Parliament and must observe the purposes and criteria specified in legislation. Its decisions are amenable to review on the ground that the decision of the local authority to make those rates was one that no local authority could make. The Court noted that the local authority must have regard to the matters which they are bound by statute to consider and exclude considerations that are extraneous. Also they act outside the scope of the power if their decision is made for a purpose not contemplated by Parliament. Furthermore, any discretion is not absolute or unfettered. It is to be exercised to promote the policy and objectives of the statute. Even if the decision maker acts within the law and considers all relevant factors and closes its mind to irrelevant factors, if the outcome of the exercise of the discretion is irrational or such that no reasonable body of persons could have arrived at the decision, the only proper inference is that the power itself has been misused. However to prove a case of that kind requires "something overwhelming". The Court referred to English decisions where expressions such as "so absurd that he must have taken leave of his senses" and "a pattern of perversity" as setting the standard. The Court referred to the earlier decision in the MacKenzie District case where it had said that a local authority must have regard to the level of services provided to ratepayers and categories of ratepayers while not being obliged to adopt a narrow user-pays approach. The Court in the Wellington City case stated: "That approach does not require a close correlation between benefits provided to the particular sector and rates levied on that sector. Given the nature of the imponderables involved it does not call for an elusive search for a direct relationship between services and benefits. In referring to an authority which "is essentially engaged in supplying services for its district" the (MacKenzie) judgment recognises the breadth of that expression, "services", that they are for the district, and that services which local authorities may provide may give rise to benefits which are public rather than private and are for the benefit for the district in general."
The Court noted that the MacKenzie District case had referred to a local authority having a fiduciary duty to ratepayers to have regard to their interests. In the Wellington City case the Court commented that that was a consideration which was perhaps more readily applicable to spending than to funding decisions and was in any event subject to two considerations: 1 Cont'd (a) That rates are levied on property, not on ratepayers as such, and particularly with regard to differential rating the criteria in the Rating Powers Act are directed to characteristics of property rather than ratepayers. (b) The fiduciary concept does not open up a route by which the Court can investigate and if thought appropriate interfere with every exercise by local authorities of their discretionary powers. The Court concluded that that would undermine the legal principles of determining if a public body acted unreasonably. The Court also concluded: "Finally, there are constitutional democratic constraints on judicial involvement in wide public policies issues. There comes a point where public policies are so significant and appropriate for weighing by those elected by the community for that purpose that the Court should defer to their decision except in clear and extreme cases. The larger the policy content and the more the decision making is within the customary sphere of those entrusted with the decision, the less well equipped the Courts are to reweigh considerations involved and the less inclined they must be to intervene."
The Court found that the MacKenzie District was such a clear and extreme case because: (a) The Council there had misconstrued its statutory powers and failed to follow the statutory process: (b) The process adopted had led it to approve a budget providing for an unallocated surplus of $1.9 million contrary to provisions in the Local Government Act at that time which did not contemplate the possibility of such a surplus. (c) The Council had not considered the possibility of differential rating or changing to a land value or annual value system to recognise the dramatic impact on the district and Electricorp on the introduction of Electricorp as a new ratepayer. (d) There was no contemporary evidence that the Council had paid any regard to the level of services it was proposing to provide Electricorp and to how small was the value of the direct and indirect commercial benefits to Electricorp relative to the rates MacKenzie was anticipating receiving. The Court concluded that it was that extraordinary combination of circumstances which made MacKenzie an exceptional case. The Court then reviewed the process followed by Wellington City to determine whether the high threshold justifying judicial intervention had been reached. 1 Cont'd After reviewing the material considered by Wellington City the Court concluded that the High Court judge had erred in his approach and conclusions. The Court found that the Wellington City Council had weighed all relevant considerations, did not have regard to irrelevant considerations, consulted adequately, followed all the appropriate statutory procedures and processes, and made its rating determinations in good faith and in what it judged to the best interests of the city and its ratepayers. The Court found that the decisions by the Wellington City Council could not be invalidated as "unreasonable" to the extent that the decisions must be "... so perverse, absurd or outrageous in their defiance of logic that Parliament could not have contemplated such decisions being made by an elected Council." The Court said:
"Rating is essentially a matter for decision by elected representatives following the statutory process and exercising the choices available to them. The breadth and generality of the empowering provisions applying to territorial authorities and affecting the general rate and differential rating (in contrast with user charges and special purposes authorities), make it clear that rating was not intended to be a calculation of benefits and allocation of the incidence of rates by reference to the outcome. The very complexity and inherent subjectivity of any benefit allocation for the specified outputs points away from using relative benefit as a definitive criterion. The relative inter-dependence of the commercial and residential sectors suggests a degree of artificiality in any such exercise. The various assessments in this case, so apparently intuitive and unable to be supported by empricial data as they are, demonstrate this."
The Court went on to note: "Rating requires the exercise of political judgment by the elected representatives of the community. The economic, social and political assessments involved are complex. The Legislature has chosen not to specify the substantive criteria but rather to leave the overall judgment to be made in the round by the elected representatives. Unlike MacKenzie this is not one of those extreme cases meeting the stringent test for impugning the rating determinations."
The Court then went on to quash the orders made by the High Court judge in the two judgments which he had made. The Court's key findings can be summarised as follows: (a) A rating system is primarily a taxation system, and not a system inherently based on a principle of user pays. (b) The Rating Powers Act 1988 permits the Council, in making choices which impact on the incidence of rates, to make its own judgment as to what is appropriate and equitable. 1 Cont'd (c) Many services provided by the Council give rise to both private and public benefits and there is no technical answer as to how those services should be funded. It is the role of the Council to make appropriate expenditure and tax decisions which reflect the policy goals of the community it serves. (d) Rating is a matter for decision by Councillors following a statutory process and exercising the choices available to them. The law relating to rates makes it clear that rating is not intended to be a calculation of benefits and allocation of the incidence of rates by reference to the outcome. (e) Rating requires the exercise of political judgment by Councillors. The economic, social and political assessments involved are complex. Parliament has left the overall judgment to be made in the round by Councillors. (f) Courts should only interfere in council rating decisions in clear and extreme cases. As Councillors will be aware, there is still before Parliament the Local Government Amendment Bill (No 5) which will introduce new statutory requirements into the Local Government Act relating to financial management and borrowing. That Bill has yet to be enacted and at this stage it is not possible to give any definitive advice of the impact of those statutory changes on the Court of Appeal's decision. Certainly the Court of Appeal's decision focused on a territorial authority's powers under sections 12 and 80 of the Rating Powers Act 1988 to make general rates and differential rates. The Court was not directly concerned with interpretation of the existing financial provisions of the Local Government Act although they were referred to in the judgment. My initial assessment based on the Local Government Amendment Bill (No 5) as reported back to Parliament from the Internal Affairs and Local Government Select Committee is that the new funding provisions would not undermine the legal principles established by the Court of Appeal that rates are a taxation system. Even once the Local Government Amendment Bill (No 5) has been enacted, in my view the Courts would continue to take the view that the setting of rates requires the exercise of political judgement by elected representatives. Certainly in terms of judicial review applications the Court has set a very high threshold of a rating decision by a territorial authority being perverse or outside the limits of reason. The Bill does not affect that legal test. Once the Bill has been enacted officers will prepare a report for Councillors on the new statutory requirements and taking into account the Court of Appeal's decision in the Wellington City case.
1 Cont'd During discussion on the report Councillor Murray reminded Councillors that in the mid 1980s the Local Government Association made representations to the government of the day to have rates exempted from GST. These approaches were rejected by the government largely on the grounds that rates were a payment for services provided and not a taxation system. Councillor Murray's suggestion that, in light of the Court of Appeal's decision, renewed efforts be made to have GST on rates removed, was supported by the Committee. Recommendation: 1. That the Council write to the Local Government Association expressing appreciation of the effectiveness of the Association in presenting the view of local authorities to the Court. 2. That a copy of the Legal Services Manager's report be forwarded to all organisations known to have an interest in this issue. 3. That, in view of the Court's decision, the Council take steps to have the GST on rates removed, following a report from the Director of Finance to the July meeting of the Committee. 2. REPORT FROM CHRISTCHURCH CITY HOLDINGS LTD RR 3066
Officer responsible Author Chairman of the Board, Christchurch Bob Lineham City Holdings Limited Corporate Plan Output: Monitoring of Trading Enterprises Volume 1 Table 2
The purpose of this report is to advise the Committee on issues of interest handled by the Board of Christchurch City Holdings Limited at recent meetings. 1. BOND ISSUE On 7 June 1996 the company issued bonds for $24m which has enabled the repayment of the balance of the subordinated debt owing to the Christchurch City Council. This debt issue is in line with information previously reported to the Council. 2. MONITORING OF SUBSIDIARY COMPANIES Ongoing monitoring of subsidiary trading enterprises has continued and the Board has reviewed the accounts to 31 March for Christchurch International Airport Limited and Lyttelton Port Company Limited. The results of both companies are close to target. 2 Cont'd 3. DIRECTOR APPOINTMENT POLICY The company has recently undertaken a review of the Council's Director Appointment Policy. The Policy was originally adopted in May 1994 and subsequently confirmed by the Council at its inaugural meeting in November 1995. The purpose of this review has been to clarify some elements of the existing policy and has involved fine tuning of the process rather than significant changes. The Audit Committee recently recommended that this review take place following comments made at the conclusion of last year's audit. Attached is a draft policy recommended by the Board of Christchurch City Holdings Limited to replace the existing Council policy on this matter. 4. SELWYN PLANTATION BOARD LIMITED -
STATEMENT OF CORPORATE INTENT Consideration has been given to a draft Statement of Corporate Intent provided by Selwyn Plantation Board Limited for the 1996/97 year. The Board of Christchurch City Holdings Limited acts as agents for the Council in reviewing this matter. A number of issues have been identified which need clarification on this Statement of Corporate Intent. Discussions are being held with Selwyn District Council, the major shareholder in this company, and further discussion is needed with the company prior to bringing a recommendation back to the Council for adoption. 5. REVALUATION OF COMPANIES The Board of Christchurch City Holdings Limited has recently given detailed consideration to establishing an appropriate policy for revaluation of subsidiary trading enterprises. The purpose of this exercise has been to improve the basis on which the financial performance of the companies can be adequately assessed through the underlying values being regularly updated. A detailed report on this issue and various options open was prepared for the company by Ernst & Young as a basis for establishing an appropriate policy. Some of the companies currently revalue at least part of their assets while others continue to be recorded on an historical cost basis. In most cases the companies are revalued internally for insurance purposes but not necessarily updated on the Statement of Financial position of the company. It has been decided to request each of the Council's trading enterprises to establish an accounting policy to revalue fixed assets on a three yearly basis to net current value. This policy has been communicated to each of the companies and further discussions will be entered into to resolve issues of implementing this policy at an appropriate time. 2 Cont'd 6. SELWYN DISTRICT COUNCIL - TRANSFER OF
SHAREHOLDING IN SELWYN PLANTATION BOARD LIMITED A request has been received from the Selwyn District Council to approve a transfer of its shareholding in Selwyn Plantation Board Limited to a wholly owned subsidiary company called Selwyn Council Trading Enterprises Limited. Authority is required from this Council in view of the Preemptive Right Agreement in the Articles of Selwyn Plantation Board Limited. This request is consistent with this Council's transfer of its trading enterprises to a holding company and it is appropriate to give approval to this request from Selwyn District Council. Recommendation: 1. That the information be received. 2. That the attached Policy on Appointment of Directors be adopted. 3. That the Council approve the transfer of shares as requested.
3. AUDIT NEW ZEALAND - REPORT ON 1995 AUDIT RR 3044
Officer responsible Author Director of Finance Bob Lineham/Cecily Benson Corporate Plan Output: Volume I Public Accountability Page 3.1.1
Following the 1995 audit, Audit New Zealand produced an Executive Report which was considered in detail by the Audit Subcommittee in April 1996. The Audit Committee has requested that a summary of the key issues raised in that report be prepared for the Council and submitted through the Strategy and Resources Committee. This summary follows:
ANNUAL REPORT
The audit was principally directed to enabling Audit NZ to form an opinion on whether the financial statements fairly reflected the performance of Council for the year and the financial position at balance date. Audit NZ commended staff, especially Lindsay Moore, for preparing the Annual Report to a high standard and are working with staff on some areas to improve readability and reduce the volume of information in both the Annual Report and the Annual Plan. In addition, a number of key areas were reviewed and reported on in detail and these are summarised below: 3 Cont'd Management Controls
* The review found that a satisfactory control environment operates and that control over financial information systems are sound. Legislative Compliance
* Progress has been made in monitoring compliance with key legislation. Continuation of positive initiatives for monitoring compliance with the Building Act 1991 are seen as important. Financial Management
* The Council's financial position remains very sound. The Council is well placed to meet the additional responsibilities for financial management which will be required under the Local Government Law Reform Bill. Governance
* Processes employed to monitor performance of trading enterprises, and policies and procedures for selection of Directors, were found to be good. However, Audit NZ noted with surprise that these procedures were not followed in the appointment of replacement Directors after the recent elections. * Audit NZ encourages the Council to develop policies outlining the objectives and rationale for holding shares in its subsidiary companies. Contracting
* While tendering procedures are generally adequate there is inconsistency in the methods used among units for purchasing of goods and services. The Council would benefit from implementing documented Council-wide procedures. Infrastructural Asset Management
* Good progress is being made in the development of Asset Management Plans for the roading network and the processes followed are logical and complete. * To meet deadlines imposed by the Local Government Law Reform Bill will require the continued commitment of the Council and management, and no small amount of resource. Capital Project Management
* A review was undertaken of controls over project management in respect of the new Convention and Entertainment Centres. 3 Cont'd * Tendering procedures adopted for project management, architectural and quantity surveying services were considered to be transparent, fair and appropriate. * Feasibility studies of future capital works projects should include in the estimated operating costs a provision for depreciation and an assessment of the cost of capital employed. * Estimated operating results of future projects should be clearly distinguished from the greater city-wide benefits that may flow from the project. Works Operations Unit Pricing
* In a review of the pricing of the Works Operations Unit's outputs Audit NZ found no evidence to suggest there was any cross-subsidisation between internally and externally contracted and non-contracted work. * The Unit's budgets included all overheads. * There was no inconsistency in the manner in which allocated work and quotation work was managed or accounted for. Review of Complaint Systems
* Procedures for processing complaints received from the public varies considerably within the Council. * Due to current manual systems, the analysis and reporting of complaints statistics and the level of monitoring is limited to a few units. * Further analysis of complaints received could improve performance. Special Funds
* Attention has been drawn to the fact that after 1 November 1996, the Council is able to review the purpose of all special funds. Fixed and Infrastructural Asset Plans
* A number of issues were identified to assist in the management of the fixed and Infrastructural Asset Accounting systems which will help to improve the systems. The detailed management reports from Audit NZ have been forwarded to the appropriate Unit Managers with a request that the recommendations be implemented. Recommendation: That the information be received.
4. ACCOUNTS FOR WRITE OFF RR 3039
Officer responsible Authors
Funds Manager Paul Baldwin and Lindsay
Lamont
Corporate Plan Output: Funds Accounting Accounts Receivable
Volume I Page 5.2.text.5
The purpose of this report is to obtain the Council's approval to write-off $29.294.19 of unclaimable debtors accounts. The following accounts are recommended for write off by the Council in respect of debts that there is little likelihood of recovering following exhaustion of all reasonable efforts to obtain payment. Records of the debts will be retained and dividends from liquidators and the Official Assignee or other recoveries obtainable as a result of new information coming to hand will continue to be pursued. The credit agencies used will continue to log the debts as unsatisfied.
Name Amount Notes
Jason Cribb (trading $5,833.6 Purchase of bitumen products. The
as Cribb Contracting) 6 debtor has been adjudicated
bankrupt and Official Assignee
advises it is unlikely there will
be a dividend.
Ricco Contractors $2,400.5 Purchase of bitumen products.
Ltd (trading as 3 This debtor was a "cash customer"
Driveway Services) but cheques for several purchases
made in quick succession were
dishonoured and remain unpaid.
Ricco Contractors $6,588.4 Purchase of bitumen products. A
Ltd (Principals: M J 7 credit account was established in
Legge A C Black) late 1984. No invoices were paid
despite promises. The directors
had summary instalment orders made
by the District Court to repay
their debts which precluded any
further legal action. However,
these have languished and they do
not appear to have any substantial
assets.
Simeon J Taylor $2,354.6 Youth employment scheme job skills
(trading as Plastic 2 subsidy. The debt is for a refund
Repair Service) of subsidy paid to the employer in
respect of the balance of the
employment period following
termination of the employment
contract. Debtor bankrupt.
Stephen Jeffs $2,589.4 Youth employment scheme job skills
(trading as Combined 4 subsidy. Debt is for unexpired
Wholesalers and portion of the subsidy. Business
Packaging) has been sold and debtor has no
assets; he is also in prison.
Maree Brown (trading $2,219.6 Youth employment scheme job skills
as LeCouture Model 2 subsidy. Debt is for unexpired
Agency) portion of the subsidy. Debtor
cannot be found. Collection
Agency also reports she has
numerous debts and no known
assets.
4
Cont'd
Name Amount Notes
Pete Sunde (trading $2,124.5 Youth employment scheme job skills
as Pierres 5 subsidy. Debt is for unexpired
Airbrushing Studio) portion of the subsidy. The
business failed and the debtor
then went to Wellington. An agent
was used to go to the address
given but could not establish
contact. Unable to trace.
Southern Cross $5,183.3 Youth employment scheme job skills
Seafoods (NZ) Ltd 0 subsidy. Debt is for unexpired
(Principal director: portion of this subsidy. This was
Jo Sang Cheol) the first bulk funding undertaken.
However, the company had financial
difficulties due to fluctuations
in weather and supply of seafood
which were not foreseen when the
scheme was discussed with their
financial and legal advisers. The
company has ceased to trade and
the principal director has
returned to Taiwan. No hope of
recovery.
The Chairman commented: 1. The amount of debt to be written off represents 1% of the total amount paid to employers ($1,146,426) in wage subsidies for the Jobskills programme. 2. Measures were taken to minimise the Council risk as soon as the potential was realised. These included not placing new employees until a previous debt was paid, not bulk funding multiple employees and the usual debt collecting methods. 3. It was beyond the resources and abilities of the Jobskills scheme to check the viability of businesses. 4. The situation was unique in that employers were paid the total amount up-front to assist with the cashflow situation of taking on new employees. 5. All current schemes have retrospective payments on a claim form basis. 6. Although not all placements have run their full term, the Youth Employment Service do not expect to have to recover further large amounts. Employment Services cannot, however, be totally sure that no recoveries will have to be made but would expect any further amounts to be small. 7. The debt situation does not mean an over-run of the Jobskills budget. Recommendation: That the listed accounts totalling $29,294.19 be written off.
5. CANTERBURY DEVELOPMENT CORPORATION TRUST RR 3060 Councillor Close, Acting Chairman, Canterbury Development Corporation Trust, reported: At a meeting on 30 May 1996, the Trustees of the Canterbury Development Corporation Trust met to make appointments to the Board of Directors of the Canterbury Development Corporation. They resolved to appoint the five persons nominated by the City Council, namely, the Mayor, Councillor Alpers, Councillor Howell, Councillor Dodge and Councillor Moore. At an earlier meeting they had appointed Mr Derek Anderson and reappointed Mr Malcolm Corbett. Following interviews with six people, they resolved to appoint Caron Taurima, Richard Rowe, and Murray Wham to the remaining three vacancies. Caron Taurima, of Ngati Kuia-Rangitane descent, is the Managing Director of Carich Computer Training, a successful business engaged in training people in a wide range of computer skills. She is knowledgeable not only in training but also in management of small businesses. In 1995 she won an award for the best small business from the Maori Business Development Fund. Professor Richard Rowe, who holds the Chair of Plant Science at Lincoln University, is well known as an academic with a commitment to ensure that research is applied to practical ventures in horticulture. Over the last decade he has taken a particular interest in the development of the grape-growing industry in Canterbury. Murray Wham, General Manager of Defiance Flour Mills, has been instrumental in developing the product range of his company and in sourcing the wheat his company requires from Canterbury growers. In so doing, he has developed a productive partnership between urban and rural interests. Following a resolution of the Trustees, the writer has been acting as Chairman of the Trust. A re-reading of the Trust Deed makes it clear that it is the Council that has the right to appoint the Chairman. Recommendation: 1. That the information be received. 2. That the Council appoint Councillor Close as Chairman of the Trust. (Note: Councillor Close temporarily retired from the meeting during the discussion on recommendation 2. Councillor Murray chaired the meeting for the discussion and voting on this item.) 6. NEW ZEALAND LOCAL GOVERNMENT INSURANCE
CORPORATION LIMITED - ANNUAL GENERAL MEETING
AND DIRECTOR APPOINTMENT RR 3046
Officer responsible Author City Manager Mike Richardson Corporate Plan Output: Volume 1 Table III Corporate RevenuesThe purpose of this report is to recommend action for appointing a voting representative at the Annual Meeting and to make a recommendation for appointment of replacement directors. This Council holds 440,000 shares in the company and is the fourth largest shareholder. ATTENDANCE AT ANNUAL GENERAL MEETING
Advance notice has been received that the Annual General Meeting of New Zealand Local Government Insurance Company Limited (NZLGIC) will be held in Taupo on Monday 15 July 1996 in conjunction with the Local Government Association Conference. The articles of the company provide that voting representation at the meeting must be by duly accredited representative appointed pursuant to a Council resolution. A Councillor or staff representative attending the LGA conference should therefore be appointed to attend this meeting and vote on behalf of the Council. It would be appropriate to also appoint an alternate in case the first appointee is unable to attend on the day. ELECTION OF DIRECTORS
The articles of the company currently provide for a directorate of not less than four or more than six directors. Two of the directors are retiring by rotation, namely Messrs I W Lawrence and J H Gray. Mr Lawrence (currently chairman) has offered himself for re- election but Mr Gray is retiring from the board. Continuing members of the Board are A Clark (Deputy Mayor North Shore), D A Astley (Councillor, Auckland City), P W Reiger (Mayor, Palmerston North City), K N Sampson (General Manager, New Plymouth District Council). A recent legal opinion has determined that NZLGIC is subject to the LATE legislation and this has the implication that at least two directors must be from outside local government. Currently only Mr Lawrence has this qualification. The company is seeking legal advice on this issue and it is probable that the director election for this year will need to be on the old basis with a new constitution adopted during 1996/97 to govern next year's election of directors. With Mr Gray's retirement from the board significant local authority management experience will be lost from the board and there will no longer be any South Island membership. 6 Cont'd Directors must act in the interests of the company as a whole and therefore regional representation is not a key issue but it would nevertheless provide balance on the board to have a South Island member who could also add value and balance to the company's activities. Bob Lineham, Director of Finance, has indicated that he would be prepared to be nominated for the vacancy on the Board and I would support his nomination because of his knowledge of insurance and financial issues and the fact that he is respected at a national level as a local government management professional. He has been consulted by the company over recent months to provide external input into evaluating the work of overseas consultants in respect of the company. Participation as a member of this board would also provide for his further professional development. Mr Lineham would meet the criteria of the Council for appointment of directors to its trading enterprises. The Committee unanimously endorsed the City Manager's recommendation relating to the nomination of Mr Lineham as a candidate for the board of the company. In view of the limited time available to seek support for this Council's nomination, the Committee agreed that the matter should be dealt with at the Committee meeting with a view to seeking confirmation of this action at the June Council meeting. Accordingly, the Committee resolved: 1. That Mr Lineham be nominated as a candidate for the board of the company. 2. That the Mayor write to all shareholding councils seeking support for Mr Lineham's appointment. Recommendation: 1. That Councillor Dodge, or alternately Jonathan Fletcher be appointed to represent this Council at the Annual General Meeting of the company. 2. That the action taken by the Committee in nominating Mr Lineham as a candidate for the board of the company be confirmed.
7. TURNING POINT 2000 RR 3051
Officer responsible Author Communications and Promotions Manager Susan Selway Corporate Plan Output: Communications & Promotions, Volume II, Page 7.5.3
The purpose of this report is to seek Council endorsement of the proposed Terms of Reference for the Turning Point 2000 Executive Committee and Trust Board and invite the Council to select two of the Christchurch City Council representatives currently on the Executive Committee for membership on the Turning Point 2000 Trust Board. 7 Cont'd Italics have been used to highlight additional information and amendments included in the report since the Strategy and Resources meeting of 17 June 1996.
EXECUTIVE SUMMARY
1. Background Information
A list of Council resolutions on Project 2000 has been added to the report.
The concept of Turning Point 2000 as identified by the Steering Committee has been restated. A definition of `Core funding' has been included for clarification and estimated costs for the project duration identified by the Turning Point 2000 Executive Committee for the Annual Plan meetings in March 1995 have been included. The role of the Executive Committee has been restated. The role of Turning Point 2000 staff is restated.
2. Terms of Reference
3. Turning Point 2000 Trust
1. BACKGROUND INFORMATION
1.1 Christchurch City Council Resolutions
February 1994 The Council resolved to lead and coordinate early planning of celebrations for the year 2000 and endorsed the establishment of a Project 2000 Committee to develop a structure and strategy for the project.
July 1994 The Council approved the formation of a Steering Committee and delegated responsibility to the Mayor and Councillor Anderson to advertise and submit to the Council a list of persons for appointment to a Steering Committee and Executive Committee. The Council also resolved that the Steering Committee report back to the Council with recommendations as to the precise nature of the Project 2000 concept.
June 1995 The Mayor, Councillor Anderson and Councillor Close selected Steering Committee members. December 1995 Council meeting endorsed the Steering Committee report as the basis for planning and coordinating celebrations for the year 2000 in Christchurch and Canterbury .
7 Cont'd February 1996 Strategy and Resources Committee, resolution: that the Communications and Promotions Manager report to the Committee's Annual Plan meeting in March on the theme/focus and benefits of the Turning Point 2000 celebrations, together with more detailed costings.
March 1996 The Council endorsed the structure and membership of the Turning Point 2000 Executive Committee with the addition of Councillor Carole Anderton and Councillor Anna Crighton. April 1996 Annual Plan Meeting full Council, allocated an additional $40,000 in 1996/97 financial year to Turning Point 2000 to bring 1996/7 provision up to $100,000 .
1.2 Concept of Turning Point 2000
Turning Point 2000 should be viewed as a project which facilitates the planning and coordination of celebrations in the Year 2000 in Christchurch and throughout Canterbury.
1.3 Definition of `Core Funding'
The Christchurch City Council has resolved to take the lead in coordinating celebrations for the year 2000. The Council has also resolved to provide core funding for Turning Point 2000.
Core funding is defined as funding for staffing, administration, associated office management costs and the promotion of Turning Point 2000 to establish awareness in the community all of which are necessary to support the Executive Committee in meeting its objectives for the project. Core funding does not include finance for individual projects, events and activities.
In its report to the Council in December 1995 the Steering Committee advised that in order for the project to succeed it was necessary for core funding to be provided.
Provision for core-funding has been estimated over the next four years:
1996/1997 $200,000 (2 staff, administration and promotion)
1997/1998 $200,000 (2 staff, administration and promotion)
1998/1999 $280,000 (4 staff, administration and promotion)
1999/2000 $360,000 (6 staff, administration and promotion)
2000/2001 $200,000 (year ends 1 Jan 2001)
7 Cont'd Since these estimated costs were reported to the Christchurch City Council in March the local authorities throughout Canterbury have stated that they will be considering making a financial contribution to the administration costs of the project in their Annual Planning for 1997/8.
As Turning Point 2000 is a community project the need to attain additional funds via sponsorship and external funding agencies for major events and projects is imperative. By means of example, the Turning Point 2000 Executive Committee has applied to Trustbank Community Trust for funding.
To date approximately 830 hours have been given to the project by a number of skilled people in the community through involvement on the Steering Committee and Executive Committee. As the project develops the level of voluntary effort contributed by the community will grow.
As stated in the Steering Committee report " administrative back up is vital to ensure the energies of the volunteers are harnessed most effectively".
1.4 Role of the Executive Committee
Turning Point 2000 is a project to coordinate events, activities and projects that will be planned, managed and funded by other groups and organisations.
The role of Turning Point 2000 Executive Committee is to:
* Develop and build on a strategic plan.
* Represent the interests of the citizens of Christchurch and Canterbury.
* Define policies on specific areas relating to Turning Point 2000 in order to help facilitate the planning and coordinating of events, projects and activities.
1.5 Role of Turning Point 2000 Staff
The role of the Turning Point 2000 staff is to:
* Manage the project on a day to day basis to fulfil the objectives set out in the Steering Committee report.
* Provide administration service and policy advice to the Executive Committee.
* Develop a communication plan, which will form the basis of the promotion and coordination of the project throughout Christchurch and Canterbury.
7 Cont'd * Develop a marketing strategy to maximise the opportunity for promoting Christchurch and Canterbury nationally and internationally .
* Be the central point of contact for plans relating to the year 2000 celebrations in Canterbury.
* Provide advice and support to the community groups working on projects, events and activities for the year 2000.
* Raise additional funding for the project through corporate sponsorship and grants.
2. Terms of Reference The February meeting the Council endorsed the structure and membership of the Turning Point 2000 Executive Committee and requested that staff report back with proposed Terms of Reference. Staff have worked closely with the Executive Committee and have prepared Terms of Reference which include key elements of the final report of the Steering Committee endorsed by the Council in December 1995. The Terms of Reference will provide guidelines for project development and allow the Executive Committee flexibility to drive the project forward within agreed parameters. The proposed Terms of Reference have been agreed by the Executive Committee and require endorsement of the Council. Terms of Reference for the Turning Point 2000
Executive Committee The Executive Committee is a community based group responsible for coordinating Year 2000 celebrations in Canterbury so that the objectives for the year, as established by the Steering Committee and endorsed by the Christchurch City Council in December 1995, are achieved. The Executive Committee will: 1. Confine the celebrations of Turning Point 2000 within the geographical boundaries of `The Inland Kaikoura Range just north of the Clarence River in the north, to the Waitaki River in the South and East of the Main Divide'. 2. Confine the Turning Point 2000 celebrations to the period defined as follows: 31 December 1999-1 January 2001. 3. Work towards the objectives of the vision statement as outlined in the 1995 Steering Committee report to the Council. 4. Use the Steering Committee Report as the basis for the ongoing planning and development of the Year 2000 celebrations in Canterbury.
7 Cont'd 5. Co-ordinate a programme of events and activities and recommend major projects to appropriate bodies. 6. Encourage the involvement of all sectors of the Canterbury community, by consultation, in planning for and participating in the celebrations.
7. Recommend to the Christchurch City Council and other Canterbury Local Authorities a level of core funding to provide sufficient administration, staffing and office resources for the project.
8. Source funding for externally organised major projects and events from external sources, with funding for Council-organised events and projects to be provided in relevant Council unit budgets through the Annual Plan process.
9. Provide regular reports on finance and progress to the Council in line with normal Council requirements. 10. Ensure that the Council does not incur any obligation to fund particular events and activities unless the Council has given its specific approval. 11. Set annual objectives and targets. 12. Approve marketing and promotion strategies and approve the use of the logo. 13. Develop links with other Year 2000 planners in New Zealand and overseas in particular England and Sister Cities, Australia and the Sydney Olympics. 14. Coopt and substitute members as required. The Terms of Reference outlined above will apply to both the Trust Board and Executive Committee. The new structure of Turning Point 2000 is attached. 3. Formation of a Turning Point 2000 Trust
In a report to the Strategy and Resources Committee in February 1996, the Communications & Promotions Manager identified that it would be beneficial from a financial perspective for the Executive Committee to form a Turning Point 2000 Trust. Following consultation with Buddle Findlay, the Executive Committee have resolved to develop a Turning Point 2000 Trust to manage the financial affairs of Turning Point 2000. The Turning Point 2000 Executive Committee is keen to source finance independently of the Christchurch City Council through corporate sponsorship and from grants so that it can provide funding for specific community projects. The core funding for staffing and administration provided by the Christchurch City Council through the Communications & Promotions Unit would remain separate from the Trust funds so that it remains dedicated to the purpose for which it has been identified.
7 Cont'd The Executive Committee has resolved that on the formation of the Turning Point 2000 Trust eight of the members of the Executive Committee will become members of the Trust Board. The Trust Board will be chaired by the Executive Committee Chair, Ian Leggat. The larger Executive Committee will continue to meet monthly, co-opting members as required for specific projects, and will be responsible to the Trust Board. Christchurch City Council is invited to select two of its representatives on the Executive Committee for membership on the Trust Board. Christchurch City Council representatives on the Executive Committee are Councillor Carole Anderton, Councillor Anna Crighton, Councillor David Close and Councillor Ian Howell. Recommendation: 1. That the Council endorse the Terms of Reference for the Turning Point 2000 Executive Committee. 2. That on the formation of a Turning Point 2000 Trust and Trust Board the Terms of Reference apply also to the Trust Board. 3. That the Council select two of its current representatives on the Executive Committee for membership on the Trust Board. PART B - ITEMS DEALT WITH BY THE COMMITTEE AND
REPORTED FOR INFORMATION ONLY
8. LAND TRANSPORT PRICING STUDY RR 3009 The City Streets Manager submitted a report drawing Councillors' attention to the Land Transport Pricing Study. The study is part of a wide ranging review of land transport services designed to support the government's policy goal of a "safe, sustainable transport system at reasonable cost". The Committee resolved that the information be received and that this Council's submission emphasise the need for limits to be placed on the growth of transport in the interests of environment sustainability.
9. CATHEDRAL SQUARE UNDERGROUND BUS TERMINAL/
CAR PARK INVESTIGATION RR 3015 The Principal Policy Analyst reported, updating the Committee on the above project and on the discussion held at the meeting of the Central City Committee on 6 June 1996. The Committee resolved that a special meeting of the Strategy and Resources Committee and the Central City Committee be held at 12 noon on Friday 21 June 1996 to receive the officer's report on the underground bus terminal/car park proposal for Cathedral Square. 14. PREFERRED TIME FOR SEMINAR MEETINGS RR 3020
The Council Secretary reported, advising that at the May Council meeting Councillor Alpers had circulated a questionnaire seeking Councillors' preferences regarding the starting time for seminar meetings for the Standing Committees. During discussion on this report Councillor Evans expressed her concern regarding the clash of meeting times of the Environmental Committee and the Parks and Recreation Committee. Both Committees meet at 4.00 pm on the second Wednesday of the month and this means that Councillors and members of the public wishing to attend both meetings are unable to do so. It was agreed that Councillor Close and the Chairmen of both Committees should explore options for resolving this problem. The Committee resolved that seminar meetings start at 3.00 pm until the City Plan hearings commence in October and from that time seminars start at 4.00 pm.
11. ITEMS RECEIVED The Committee received the following reports: 11.1 Submissions on Food Amendment Bill RR 3138 The Council's submission on the Food Amendment Bill were received by the Committee. The submissions were considered and approved (subject to a number of amendments) by the Legislation Subcommittee on 20 May 1996. 11.2 Plant Replacement Programme
The Plant and Building Services Manager reported on expenditure on the plant replacement programme for the period to 31 May 1996.
12. ITEMS DEFERRED 12.1 Service Level Reviews and Policy Projects RR 3055 The Committee deferred consideration of this report until the July meeting of the Committee to enable further information to be obtained on two of the proposed studies.
13. SUPPLEMENTARY ITEM
REPORT FROM CHRISTCHURCH CITY HOLDINGS LTD RR 3114 The Chairman sought approval to introduce a supplementary report from Christchurch City Holdings Limited seeking the Council's approval for the Selwyn District Council to transfer its shareholding in the Selwyn Plantation Board to a wholly owned subsidiary company. The Chairman explained the reasons why the report had not been included in the main agenda and why it could not wait for the next meeting of the Committee. The Committee resolved that the supplementary report be received and considered at the present meeting.
14. RESOLUTION TO EXCLUDE THE PUBLIC The Committee resolved that the draft resolution to exclude the public set out on page 30 of the agenda be adopted.
CONSIDERED THIS 26TH DAY OF JUNE 1996
MAYOR