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25. 6. 97
STRATEGY AND RESOURCES COMMITTEE
16 JUNE 1997
A meeting of the Strategy and Resources
Committee
was held on Monday 16 June 1997 at 4.00 pm
PRESENT: Councillor David Close (Chairman), Councillors Oscar Alpers, Carole Evans, Gordon Freeman, Ian Howell, Alister James, Garry Moore, Margaret Murray, Denis O'Rourke and Ron Wright.
IN ATTENDANCE: Councillor Ishwar Ganda.
APOLOGY: An apology for absence was received and accepted from the Mayor.
ABSENT: Councillor Pat Harrow.
Councillor Howell retired at 6.00 pm and was present for clauses 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12 and 13.
Councillor Freeman retired at 8.05 pm and was present for all clauses except clause 17.
The Committee reports that:
PART A - MATTERS REQUIRING A COUNCIL DECISION
1. CANTERBURY DIALOGUES SEMINARS:
FUNDING ASSISTANCE RR 5464
| Officer responsible | Author |
| Director of Policy | Dave Hinman |
| Corporate Plan Output: Public Accountability: Public Consultation |
The purpose of this report is to advise the Committee about, and seek funding assistance for, the forthcoming "Canterbury Dialogues" seminar series, to be hosted by the Canterbury Employers Chamber of Commerce in association with this Council, the Canterbury Regional Council, and the Ministry for the Environment and facilitated by the Sustainable Cities Trust.
INTRODUCTION
In August 1996, the Canterbury Employers Chamber of Commerce together with senior management of the City Council, convened a successful "Strategic Planning Programme" workshop for more than 40 corporate chief executives in the city. A number of elected members attended part of the seminar.
Building on the success of that event the "Canterbury Dialogue" seminar series has been devised, extending involvement to include other local government agencies and the community sector. The programme will comprise a series of four seminars, to be held on a monthly basis commencing in August of this year, and concluding with a final wrap-up session early in 1998.
THE SEMINARS
The purpose and format of these seminars can be summarised as follows:
Aim. "To develop integrated management solutions that nurture, protect and enhance the quality of life in Christchurch. To support this process by holding a successful seminar series which facilitates "dialogue" about the future of Christchurch between key sector groups within the Canterbury area - the business sector, the local government sector and the community sector." It is hoped that from the "dialogue" specific initiatives will be created for further development.
Programme
Seminar 1 - Christchurch the Growing City - overview and growth scenarios for Christchurch . Key speaker - Dr Peter Newman, Perth, WA.
Seminar 2 - The Environment - a closer look at environmental pressure points, including air, noise, soil, water, waste, the built environment and recreational options. Key speaker - Alisdair Hutchison, Ministry for the Environment.
Seminar 3 - Corporate Sector - what is the corporate sector's role in maintaining and enhancing the quality of life in Christchurch. Key Speaker - (to be advised).
Seminar 4 - Social Cohesion - will explore this topical issue in the NZ context and what it could/should mean for Christchurch. Key Speaker - (to be advised).
Following each of the 2 [Omega] hour seminar sessions, a public forum will be held, involving the key speaker, report back from the groups, and public feedback.
Each of the seminars, and the public forums will be facilitated by Dr Morgan Williams, Parliamentary Commissioner for the Environment.
FUNDING
Funding has already been obtained from Trustbank Community Trust, Canterbury Regional Council and the Canterbury Employers Chamber of Commerce. A sum of $16,000 is sought from this Council. There will be no charge for attendance at the seminars. Support from the Council is sought because:
The Council has been invited to send five elected member representatives to participate in the main seminar sessions, together with appropriate staff. While much of the subject matter will not be new to the Council, the potential for input of new perspectives and in particular the opportunities for dialogue and "bridge building" make this a worthwhile exercise.
RECOMMENDATION
That the Council support the Canterbury Dialogue seminar series and contribute $16,000 to the cost as requested.
The Chairman commented:
The Council has been heavily engaged for several years in developing its vision for Christchurch through the preparation of the new City Plan and a range of economic development initiatives.
In addition, plans are being developed and implemented for long-term management of solid and liquid waste and environmentally friendly waterways. In the broad area that can be termed social cohesion, the Council has balanced its programme of events and entertainment with a more focused approach to community development and social initiatives.
The proposed seminars will provide an ideal opportunity to examine the directions in which we are heading in consultation with business leaders, community leaders and independent experts. As the chief responsibility for implementing any suggestions and proposals that arise from the seminars will fall on the City council, it is important that an adequate number of elected members and officers participate in the seminars.
Professor Peter Newman, who spoke at the "Pathways to Sustainability" Conference in Newcastle recently, impressed everyone with his grasp of the issues and his clear exposition of the choices facing big cities.
In response to concerns that no first term Councillors had been nominated to attend the seminar, it was agreed that a memorandum be circulated to all Councillors inviting them to register their interest in attending the seminar series; the memorandum to emphasise the need to make a commitment to attend the four seminars and the implementation session in early 1998.
Recommendation:
1. That the Canterbury Employers Chamber of Commerce be thanked for its initiative and that $16,000 be contributed as requested.
2. That a minimum of seven elected members and four staff participate in the main sessions, and that other staff attend sessions where their expertise is relevant.
3. That, subject to their availability, the Mayor, Councillors Close, Evans, Moore, Murray, O'Rourke and Wright represent the Council at the seminar.
2. 1997 LOCAL GOVERNMENT NEW ZEALAND CONFERENCE RR 5419
| Officer responsible | Author |
| Council Secretary | Max Robertson |
| Corporate Plan Output: Councillors |
The Council is requested to appoint its delegates to this year's Local Government New Zealand Conference, to be held in Wellington from Monday 7 July to Wednesday 9 July inclusive.
The following members and staff have represented this Council at the last three conferences:
1994 Conference (Palmerston North)
The Mayor
Councillor Anderson
Councillor Close
Councillor Freeman
Councillor Murray
City Manager
1995 Conference (Nelson)
Councillor Anderson
Councillor Arbuckle
Councillor Close
Councillor Freeman
Councillor Murray
City Manager
1996 Conference (Taupo)
Councillor Anderton
Councillor Crighton
Councillor Dodge
Councillor Freeman
Councillor Keast
Director of Policy
As registrations closed on 30 May, five Councillors have been registered for the conference, plus the City Manager and Director of Policy.
The Chairman commented:
As the Land Transport Pricing Study and Social Cohesive funding issues are likely to dominate this year's conference it is suggested that the Chairman of the Community Services and City Services Committees attend this year's conference together with the Chairman of the Strategy and Resources Committee and Councillors Freeman and Murray.
Recommendation: That the above Councillors represent the Council at the 1997 Local Government New Zealand Conference.
3. NEW ZEALAND MUTUAL LIABILITY FUND - RISKPOOL RR 5439
| Officer responsible | Author |
| Director of Finance | Murray Sinclair |
| Corporate Plan Output: Insurance/Management Page 5.1.7. Vol.1. |
INTRODUCTION
The New Zealand Local Government Insurance Corporation (NZLGIC) in conjunction with Jardine Risk Consultants Limited are promoting a mutual liability fund called RiskPool. RiskPool has been developed as an alternative to conventional liability insurance for Local Government. RiskPool is unique in that the Fund is owned and controlled by its members who are represented by a board of management.
Local Government self-managed mutual liability funds have been operating overseas for many years. The overseas experience in Australia and the United States is that the mutual funds have become so successful and competitive that commercial insurers are now seeking to re-enter the market they abandoned a number of years ago.
Mutual Liability Funds are not uncommon in other industries both in New Zealand and elsewhere.
The proposed fund is to provide cover for public liability and officials indemnity (professional advice) insurance.
CURRENT LIABILITY ARRANGEMENTS
The Council currently obtains its liability cover through insurance arrangements. The premium for 1996/97 was $191,335 plus GST. This provides cover of $10M with excesses of $2,000 for public liability and $10,000 for officials indemnity.
There are currently only two proven providers of this type of cover of local authorities in New Zealand.
PURPOSE OF RISKPOOL
The purpose of RiskPool is to provide an industry owned method of funding liability insurance which will ensure that adequate cover is always available on a reasonable basis irrespective of the vagaries of the cyclical insurance market. The fact that the fund is owned by the participants means that any profits will be retained for the benefit of the members.
Although the commercial insurance market currently provides adequate cover there is a limited number of providers and the market is subject to cyclical uncertainties.
PRINCIPAL BENEFITS
The principal benefits members can expect from RiskPool are:
Retention of Insurer profit. Savings over commercial premiums are achievable and once the target capital is achieved surpluses can be applied to reduce cost in future years and/or a wider range of service.
Cover flexibility. The discretionary nature of the fund allows more generous approach to claims which might otherwise be excluded on a technicality.
Future proofing. If the fund is successful over time members will have the comfort of certainty of future arrangements by no longer being exposed to the potential for arbitrary withdrawal of insurers from the market.
Ownership and control of RiskPool is vested in the members providing the members with a strong voice in the way that the fund is operated.
Contribution calculations will, after risk audits undertaken during the first year, be based on actual risk profiles of individual members. This will provide rewards for risk management excellence.
The fund is able to offer broad coverage reflecting the requirements of Local Government.
Access to value added services at no additional costs:
risk management
legal services
claims handling and negotiation
access to pooled information, expertise and resources
Possible disadvantages of joining RiskPool are:
Being a Mutual Liability Fund if there is a shortfall in the fund in respect of any year then the members must contribute to make up that shortfall.
If RiskPool becomes a predominant player in the Local Government indemnity insurance market place, the beneficial effect of any competition will be lost.
The Board has "absolute and unfettered discretion" in respect of claims made to RiskPool. Furthermore, indemnity once extended can also be withdrawn on a discretionary basis. A measure of comfort is derived from the constituency of the Board which makes these decisions.
RISKPOOL STRUCTURE
Provided there is sufficient support from local authorities it is proposed that RiskPool will provide liability protection for those local authorities who join from 4.00pm, 30 June 1997.
RiskPool has been promoted by New Zealand Local Government Insurance Corporation Limited in conjunction with Jardines Risk Consultants. It is however to be managed by a Trust Company, shares of which are held in trust by New Zealand Local Government Insurance Corporation Limited (LGIC) on behalf of the members. LGIC is wholly owned by local authorities. There is to be a total of six directors, four of whom are to be appointed from local government. Bob Lineham, the Council's Director of Finance, has been requested to be one of the four local authority directors appointed to the establishment board. The other directors are:
Roger Duncan, Director of Finance, North Shore City Council
Michael Ross, Chief Executive, Clutha District Council
Michael Willis (Chairman), City Manager, Palmerston North City Council
Ray Andres representing Jardine Risk Consultants Limited in their capacity as Scheme Managers
Rod Mead representing LGIC as Fund Manager
In addition to creating a pool from the premiums from members the fund will buy substantial reinsurance cover and the Board of the NZLGIC has agreed to provide a guarantee of last resort of $2M for the first five years. The reinsurance will provide for claims in excess of $1M for any one loss and for total claims in excess of the total fund in any one year.
The financial basis of RiskPool has been validated by Tillinghast-Towers Perrin who are well recognised as a leading actuary to the insurance industry and the managers of mutual funds. The actuary has confirmed that a target capital of $2M should be reached if their recommendation is followed that surpluses be retained for the first five years. The LGIC guarantee provides additional financial strength and security during RiskPool's formative years.
PROFESSIONAL LEGAL AND INSURANCE ADVICE
The Scheme Rules, Deed of Trust and Protection Wording have been examined by the Council's legal advisers (Buddle Findlay). The principal concern they initially raised related to whether a local authority has the powers to belong to such a scheme given the underlying obligations to meet any shortfall in the fund which could be the result of a claim on the fund by another member. Denis Sheard expressed the view however that if a Queens Counsel opinion could be obtained which cleared his doubts in this area then this would be satisfactory. RiskPool therefore engaged the services of Mr A P Randerson QC, who concluded that subject to each local authority being satisfied as to the "prudence and reasonableness" of the proposed scheme sections 223J(a) and 247C of the Local Government Act 1974 allows a local authority to join RiskPool.
In summarising the situation Dennis Sheard has noted that RiskPool has the following advantages and disadvantages which have been included in the list set out and described in a preceding section of this report. These are:
Advantages: Retention of Insurer Profit
Cover flexibility
Future Proofing
Disadvantages: Discretionary Cover
Market Competition
Ultra Vires and Fiduciary Duty (This has now been dealt
with as set out in the preceding paragraph.)
The protection wording of RiskPool has been referred to an independent insurance consultant. He has concluded that the protection cover gives a slight overall increase in protection. He has however outlined a limited number of points where minor changes to the protection wording are suggested and these will be taken up with RiskPool.
ANNUAL CONTRIBUTION
The annual contribution to RiskPool for 1997/98 will be $181,200 plus GST, which is $10,000 less than the cost the insurance cover currently in place for 1996/97. This is based on the current level of cover (being $10M) and excesses (being $2,000 for public liability and $10,000 for officials indemnity). This contribution may vary in future once a risk profile of the Council has been completed.
TIMING
In order for the fund to be established by 30 June 1997 it has been necessary to advise RiskPool of whether this Council will participate in the scheme before the matter could be brought before Council.
Council officers (including the Director of Finance and the Director of Operations) consider that the Council should join this fund and have advised RiskPool that subject to ratification by the Council at its June meeting this Council will join RiskPool.
CONCLUSION
RiskPool offers some potential benefits over traditional insurance. The protection wording offered by RiskPool substantially achieves the same range of cover previously available from traditional insurers.
Although there is potential exposure for the Council through the ability of the fund to make a call on the local authority members, this is the nature of a mutual fund and needs to be offset against the potential benefits and viewed in the light of the reinsurance arrangements which will back up the fund. It is necessary to bear some risk to participate in potential benefits.
Recommendation: That the Council confirm that it will join the mutual liability fund - RiskPool.
4. EEO IMPLEMENTATION RR 5237
| Officer responsible | Author |
| Personnel Manager | Marshall Wright, Personnel Manager |
| Corporate Plan Output: Personnel Services, EEO Implementation |
The Local Government Act Section 119G provides that every local authority shall develop and publish an Equal Employment Opportunities programme for their local authority.
Section 119G subsection 3 provides that for the purposes of this section and Section 119F, an Equal Employment Opportunities Programme means a programme that is aimed at the identification and elimination of all aspects of policies, procedures and other institutional barriers that cause or perpetuate, or tend to cause or perpetuate, inequality in respect of the employment of any persons or group of persons. In addition Section 119H provides for appointments on merit in that any person making the appointment to any position with the Local Authority, shall give preference to the person who is best suited to the position.
EMPLOYMENT PROFILE
The 1995/1996 Management Plan required that the employment profile of the Council be reported on. In November 1996 the Committee completed a Salaried Staff Gender Profile. A profile for waged staff is to be prepared in 1997. Data on gender was gathered from managers via a survey in October 1996 and from interview/selection forms and Personnel records. The report has been separately circulated to Councillors with the agenda for the present meeting.
The Executive Summary of the report is as follows:
1.1 Gender Profile Summary
Women comprise almost half of the workforce at the City Council, yet they continue to be under represented in senior positions.
Although women are applying for and being appointed to positions at the CCC and comprise almost half the employees, they are under represented at middle management and senior levels.
Many more women than men work part-time at the CCC, and part-time positions are almost exclusively limited to the lower grades.
The types of positions held by women and men at the CCC tend to confirm to gender stereotypes, with woman dominating in administration, libraries and the social service positions, and men in the technical and planning areas.
1.2 Potential Barriers for Women
There are a number of gender issues that may potentially contribute to this profile, including:
(a) Lack of information, awareness and analysis of CCC Gender Profile.
(b) Child/elder/community care responsibilities.
(c) Hours of work.
(d) Networking.
(e) Confidence.
(f) Traditional and cultural attitudes and stereotypes.
(g) Recruitment practices.
(h) Lack of positive role models.
It will be noted that in terms of 1.2 "Potential Barriers to Women", the EEO Consultative Committee has indicated that the extent to which these may apply to the Christchurch City Council needs to be discussed by staff. The EEO Consultative Committee has arranged for three Salaried Women's Forums to be held to discuss these matters with staff.
When responses are received from these forums they will be considered by the Committee as a whole and the relevant recommendations made as to what further action should be taken.
EMPLOYMENT OPPORTUNITIES FOR MAORI
There has been a persistent difficulty finding suitably qualified Maori to fill positions particularly in the professional areas of the Council such as planning, engineering and the like.
Clause D5 of the Statement of Strategic Objectives in the 1997/1998 Draft Annual Plan provides for the Council "to be a good employerÖ". Section 119F of the Local Government Act defines a `good employer' as one who operates a personnel policy containing provisions generally accepted as necessary for the fair and proper treatment of employees in all aspects of their employment, including provisions requiring:
"(d) Recognition of:
(i) The aims and aspirations of Maori people; and
(ii) The employment requirements of Maori people; and
(iii) The need for greater involvement of Maori people in local government employment; and Ö"
To assist in meeting our objectives of being a good employer and to encourage suitably qualified Maori appointees into the above areas, it is proposed to set up two scholarships within the Council to provide assistance with the cost of education/training. These scholarships to be known as the "Christchurch City Council Maori Scholarship". In the initial stages the intention would be to provide these at an initial cost of $5,000 each.
Applications would be called for in the local newspapers and also from local iwi inviting young Maori people to apply to the Council asking them to indicate how they would be able to use the scholarship and in what area they would like to study in and how this will be of benefit in terms of employment opportunities within the Christchurch City Council. Individuals who satisfactorily complete their studies would be given priority for employment at the Council when a vacancy arises. Where possible, vacation employment would be offered.
The Committee discussed at some length the ways in which it could be more effective in achieving a balanced workforce.
Recommendation:
1. That a further report be prepared on the employment profile after the three salaried women's forums have been held.
2. That scholarship and training opportunities be used to obtain a balanced workforce.
3. That, in 1997, consideration be given to offering two Christchurch City Council scholarships to the value of $5,000 each for Maori.
4. That the Council consult with Maori Liaison Sub-Committee on this issue.
5. PROPOSAL TO AMALGAMATE BANKS PENINSULA DISTRICT COUNCIL WITH CHRISTCHURCH CITY COUNCIL RR 5469
| Officer responsible | Author |
| City Manager | Mike Richardson |
| Corporate Plan Output: Corporate Advice 4.1.2 |
The purpose of this report is to update Councillors on the progress of the petition by Banks Peninsula residents and to outline what should happen next in terms of the process of its consideration.
THE PETITION
I am informed that a petition was lodged with the Banks Peninsula District Council on 10 June. The petition has in excess of 2000 signatures, 1500 being necessary to initiate the proposal. At the time of writing the Banks Peninsula District Council will be checking and certifying the signatures.
The petition is worded as follows:
"The proposal is to abolish the Banks Peninsula District Council and have its complete region amalgamated with Christchurch City Council. All the functions, duties and powers presently exercised by the Banks Peninsula District Council will be transferred to the Christchurch City Council.
Representation
The proposers request that consideration be given to Banks Peninsula becoming a separate ward with a similar elected member representation to Christchurch City Council. The proposers additionally request two community boards be established for Banks Peninsula.
Service Centres
Continued at Lyttelton, Akaroa and Little River.
Rating
The City presently has a particular rating system. The proposers request that this same rating system and sector differentials be applied uniformly over Banks Peninsula.
Proposers
The Lyttelton Harbour Residents Association Inc. AND a number of individual proposers:
Stewart Bould of Governors Bay
David Bundy of Allandale
Murray Thacker of Okains Bay
Valentine McClimont, Beth Kempen, Stanley Hemsley, Susan Stewart,
John Cleaver and Graeme Young, all of Lyttelton"
PROCESS AND LIKELY TIME SCALE
I am advised by the Local Government Commission that the process of dealing with this petition is likely to take at least a year, possibly significantly longer. The initiative will rest with the Local Government Commission throughout the process.
The first part of the process will be for the Local Government Commission to initiate a consultation process in which it shall seek and consider the view of:
"a. Every Local Authority the Commission considers to be affected by the proposal;
b. The proposers of the proposal;
c. The controller and Auditor General, etc;
d. Such other persons or organisations as the Commission considers appropriate." (Section 37ZZQB)
Following this consultation phase the Commission has three choices as to what it can do with the proposal:
1. Issue a draft scheme either as proposed or with some amendment;
2. Refer proposal back to the proposers if it considers it does not comply with the necessary criteria in the Act;
3. Undertake a review of affected districts with the intention of development of an alternative proposal which might meet the needs of the proposers and other parties.
Consultation with the Christchurch City and Banks Peninsula District Councils and other affected parties is likely to take place during the month of July. It is on the basis of this consultation that the Local Government Commission will decide which of the alternative paths to follow in responding to the proposal. I have asked the Local Government Commission to advise as early as possible the nature of the questions which they will be putting to the Christchurch City Council at that time. For practical reasons I believe it would be prudent for the Strategy and Resources Committee to have the delegated authority from Council to identify principles to be used in responding to those questions.
I believe it is likely that the City Council will be asked what issues it sees as significant in considering the proposal. I am not clear whether the City Council will be asked whether it supports or opposes the proposal at this stage.
FORMULATING THE CITY COUNCIL'S POSITION
I would recommend that there are two levels at which we should consider issues arising from this proposal.
The first level would be "big picture". Questions such as, the Council's view of the role and future of Local Government; the nature of the relationship between the community and Government which is possible in different size of territorial Council; issues associated with urban development options for Christchurch and the extent to which such options are desirably catered for within the City boundary; and issues such as community interest and sense of identity.
The second is a range of more detailed issues which would consider the potential impact of the proposed amalgamation or other possible options. At the present time the rating systems in Christchurch City and Banks Peninsula are entirely different. (A comparative analysis of the rating systems has been circulated to Councillors.) Review of possibilities with regard to funding policy would be appropriate. It would also be appropriate to consider the issues of representation and number and location of offices, these issues being specifically referred to in the petition.
In addition, I believe it would be important that we set up working parties to review the major service delivery areas on the Peninsula, such as: roads, water, sewerage, waste, libraries and community facilities, resource management and regulatory functions. The main purpose of these reviews would be to establish the extent to which service standards differ in the City and on the Peninsula and to achieve some indication of the cost of altering service standards in the event of this becoming an issue.
I believe it is important to have some understanding of differences in service standards. In so far as they do differ, any new Council might well regard it as desirable, or if not would come under considerable pressure to do so, that standards for some services at least become equalised across the new city area. I would advise that we understand in "ball park" terms the possible implications of this.
Councillors will be aware that the provisional reorganisation scheme for local government in 1989 included the Lyttelton Harbour Basin within the proposed boundaries for Christchurch City. At that time it was considered that the criteria in the Local Government Act would enable a strong case to be developed for the inclusion of this area within the City; the case for the balance of Banks Peninsula being included was considered to be less strong at that time. In my view this raises the possibility of the Christchurch City Council asking the Local Government Commission to undertake a wider review covering not simply Banks Peninsula, but also the area of Selwyn District Council, with the possibility in mind of the current Banks Peninsula District Council being divided between its two neighbours.
I would recommend that the Christchurch City Council would want a considerably greater amount of information than it has at the present time before it could develop a firm position with regard to the proposal or any alternatives. Further, there is much merit in requesting that Selwyn District Council be joined as a party so that a range of alternatives can be considered.
If this line of logic is accepted then it would seem to point strongly to the desirability of the Christchurch City Council requesting that the Local Government Commission set up a review, following the consultation phase, which would have relatively wide terms of reference and which would provide a framework for joint working between the appropriate Council organisations. Such an approach would mean that the City Council at this time would focus its efforts on securing a decision from the Local Government Commission to set up a review, the terms of reference of which would be considerably wider than the proposal as set out in the petition.
Recommendation:
1. That a Council seminar be held at the earliest opportunity to discuss all the issues associated with the possible amalgamation of Banks Peninsula District Council and the Christchurch City Council.
2. That the Strategy and Resources Committee prepare a framework for responding to the Local Government Commission's questions on behalf of the City Council for approval by the Council.
6. SOUTH ISLAND POWER DIFFERENTIAL RR 5478
The Director of Finance, in a supplementary report to the Committee, reported on the recent announcements by ECNZ and Contact Energy regarding the abolition of the South Island power price differential.
In noting that the final decision on the future of the differential rested with the Government and that there was still an opportunity to influence this decision, the Committee unanimously agreed that the Council should convene meetings of South Island local authorities, South Island Members of Parliament and appropriate interest groups with a view to making representations to the Government on this issue.
Subsequent to the Committee meeting, the following meetings were arranged to progress this matter:
1. South Island Members of Parliament were briefed on the latest information to support the South Island case for the retention of the differential at a meeting hosted by the Canterbury Development Corporation on Friday 20 June 1997.
2. An invitation was forwarded to all South Island local authorities to attend a meeting in the Civic Offices on Tuesday 24 June 1997 to co-ordinate a united approach to the Government on this matter.
A supplementary report updating the Council on the above meetings will be tabled at this afternoon's meeting.
Recommendation: That the action taken by the Committee be confirmed.
7. ORDERS FOR SUPPLIES EXCEEDING
50% OF DELEGATED AUTHORITY RR 5421
A schedule listing the orders for supplies and works approved under delegated authority and exceeding 50% of that authority is tabled.
Recommendation: That the information be received.
(Note: Councillor Freeman declared an interest in the above item and abstained from the voting and discussion thereon.)
8. CONVENTION AND ENTERTAINMENT FACILITIES -
FORMATION OF A PROPERTY HOLDING AND OPERATING COMPANY - CHRISTCHURCH CITY FACILITIES LTD RR 5432
| Officer responsible | Author |
| Director of Finance | Ian Hay |
| Corporate Plan Output: Convention and Entertainment
Facilities |
The purpose of this report is to recommend the setting up of a company to hold and operate the venues associated with the NCC management contract. The Council has invested a considerable sum of money in the facilities and has recognised the commercial and operational advantages of employing NCC with international experience and expertise to manage them on the Council's behalf.
IMPACT OF DEPRECIATION
From investigations carried out it is clear there are worthwhile benefits to the Council in grouping the venues managed by NCC under a separate company structure.
LONG TERM POTENTIAL ON OPERATING COSTS
Long Term Profitability
By setting up a company which will be financially self sufficient there is an opportunity to initially reduce and ultimately eliminate the Council operating subsidy and ongoing capital requirements for the three venues.
PURPOSE/BENEFITS
The purpose of the property company is to:
Ensure accountability for the results of the three venues under contract management.
Provide management focus on the property holdings involved with the contract venue managers to ensure Council objectives are met.
Acknowledge that these are purpose built specialist facilities.
Enable the facilities to be branded separately from the Council.
Assist management of the cash inflows and outflows to best advantage.
Arrange management by NCC to ensure profitability in the shorter term.
STRUCTURE OUTLINE
A diagram is tabled showing the funding flows and reporting structures. The structure has been developed to ensure the Council gains maximum commercial and operational benefit from the facilities and from the management contract.
It is proposed that a wholly owned subsidiary of the Council be set up called Christchurch City Facilities Ltd.
A Statement of Corporate Intent between the Council and CCFL would define the reporting responsibilities to ensure Council is fully informed of operations.
The Board would meet infrequently, probably only two or three times a year, as funding and cash flows will still be part of the annual plan process. Additional meetings may be required during the set up phase.
Because of the reporting relationships currently in existence and proposed to continue it is suggested the Board comprise the Chairman of the Community Services Committee, the Chairman of the Projects and Property Committee, Denis Sheard from Buddle Findlay who has been involved with all the contracts relating to the facilities and also the management contract with NCC, and a tax specialist from our external advisers Ernst & Young. Support would be provided by the Associate Director of Finance who already has the overview role of NCC. It is intended that the current monitoring of the NCC management contract by the Community Services Committee would continue as at present and illustrated in the flow diagram.
It is envisaged that the Property Unit would be contracted by the company to oversee the properties and ensure they are maintained to acceptable standards.
FINANCIAL STRUCTURE
Ownership
The Council will purchase the fully paid ordinary shares in the company by formally transferring the ownership of the Convention Centre to the wholly owned company. This will involve an exchange of cheques only with no need for any new funding or interest consideration as the funds have already been borrowed by the Council. When the Sport and Entertainment Centre is completed the same process will be used to transfer the asset to the company. The company will also need to enter into a lease arrangement with the Council for the Town Hall and assume responsibility for the Council obligations relating to the ground lease at Addington.
CONCLUSION
The Council has a considerable amount of money invested in the facility assets. By forming the company there is an opportunity to manage the business of these facilities to minimise future subsidies both operational and capital and to provide a reasonable operating return to the Council in the future. The proposed structure ensures the wider Council objectives relating to cultural and environmental issues are also effectively monitored by the current Council committee process.
The draft constitution is tabled.
The Committee's recommendation, together with further information on cost projections and depreciation issues are contained in the public excluded section of this report.
PART B - REPORTS FOR INFORMATION
9. DEPUTATIONS BY APPOINTMENT
CANTERBURY DIALOGUES SEMINARS: FUNDING ASSISTANCE
Ms Nicky Wagner addressed the Committee on behalf of the organisers of the above seminars in support of their application for funding assistance.
10. REVIEW OF STRATEGIC OBJECTIVES RR 5219
The Director of Policy reported on the outcome of the review of the strategic objectives in the areas of Social Well-being and Community Development, Housing Provision and the City Economy, undertaken by the Community Services Committee at its May meeting.
The revised objectives were referred to the Strategy and Resources Committee for consideration for incorporation into the 1997 or 1998 Council Plan.
As the 1997 draft plan has been released for public comment the Committee decided that the revised strategic objectives be considered for inclusion in the 1998 Council Plan.
11. TRAMWAY PROJECT: NATIONAL AWARD RR 5465
The Principal Policy Analyst reported, advising that at the annual conference of the National Federation of Rail Societies the Federation's Cup for Excellence was jointly awarded to the Christchurch City Council and the Tramway Historical Society for their mutual co-operation in working together in planning, constructing and facilitating the operation of the Christchurch Tramway.
The Committee decided to request the Mayor to write, on behalf of the Council, to the National Federation of Rail Societies thanking them for the award, and to the Tramway Historical Society and Christchurch Tramway Limited thanking them for their contribution to the project.
12. 1ST NATIONAL COMMUNITY BOARDS CONFERENCE RR 4849
The Community Manager, Burwood/Pegasus, reported on the recent highly successful Community Boards Conference, hosted by the Council, and held at the Christchurch Town Hall from 13 to 16 March 1997.
The Committee resolved that the organisers, and Mr Francis in particular, be congratulated on the success of the conference.
13. ENERGY EFFICIENCY PROGRAMME FOR 1997/98 RR 5382
The Committee received a report from the Energy Manager on the next stages of the Energy Efficiency Programme covering the period from June 1997 to December 1998. The aims of the new programme are as follows:
1 1. To maintain the achieved efficiencies.
2. To achieve better efficiencies through the introduction of progressive technologies.
3. To consider strategies for increasing the share of renewable energy sources.
4. To develop an Urban Energy Strategy for a wider community with the main goal of reducing city pollution through better energy efficiency.
PART C - REPORT ON DELEGATED DECISIONS
TAKEN BY THE COMMITTEE
14. SUPPLEMENTARY REPORT SOUTH ISLAND POWER DIFFERENTIAL RR 5478
The Chairman sought the approval of the Committee to introduce a supplementary report on the above topic. The reasons why the report had not been included on the main agenda and why the report could not wait for the next meeting of the Committee were explained to the Committee.
It was resolved that the report be received and considered at the present meeting.
15. RESOLUTION TO EXCLUDE THE PUBLIC
The Committee resolved that the draft resolution to exclude the public set out on page 24 of the agenda be adopted.
CONSIDERED THIS 25TH DAY OF JUNE 1997
MAYOR