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26. 11. 97
STRATEGY AND RESOURCES COMMITTEE
17 NOVEMBER 1997
A meeting of the Strategy and Resources Committee
was held on Monday 17 November 1997 at 4.00 pm
| PRESENT: | Councillor David Close (Chairman), Councillors Oscar Alpers, Carole Evans, Gordon Freeman, Pat Harrow, Ian Howell, Alister James, Garry Moore, Margaret Murray, Denis O'Rourke and Ron Wright. |
| IN ATTENDANCE: | Councillor Barbara Stewart. |
| APOLOGIES: | Apologies for early departure from the meeting were received and accepted from Councillors Evans & Murray. |
| Councillor Murray retired at 5.55 pm and was present for clauses 1, 2, 3, part of clause 5, 9.1 and 9.2. | |
| Councillor Evans retired at 6.10 pm and was present for clauses 1, 2, 3, part of clause 5, 9.1, 9.2 and 11. | |
| Councillors James and Moore were absent from the meeting from 6.30 pm to 6.45 pm and were present for clauses 1, 2, 3, part of clause 5, 9.1, 9.2 and 11. | |
| Councillors Harrow, Howell and Wright retired at 7.15 pm during the discussion on clause 5 and were present for all other clauses. | |
| Councillor O'Rourke retired at 7.30 pm during the discussion on clause 5 and was present for all other clauses. |
The Committee reports that:
PART A - MATTERS REQUIRING A COUNCIL DECISION
| 1. | CANTERBURY HOCKEY ASSOCIATION - EXTENSION OF LOAN GUARANTEE | RR 6500 |
| Officer responsible | Author |
| Funds and Planning Manager | Paul Melton and Lyall Matchett |
| Corporate Plan Output: Loan System Management, Volume I Page 5.2.4 | |
The purpose of this report is to seek Council approval for extending its Loan Guarantee to the Canterbury Hockey Association (CHA) for a further period of two years.
BACKGROUND
On 1 October 1996 the CHA received from Trust Bank Community Trust a $100,000 interest free loan repayable over two years. When this loan was drawn down, $50,000 was used to pay outstanding creditors and the remaining $50,000 was credited against a Trust Bank Canterbury Loan. The credit reduced the Trust Bank Canterbury Loan from $250,000 to $200,000.
The CHA loan indebtedness at 1 October 1996 was as follows:
| (a) | Trust Bank Canterbury | 200,000 |
| (b) | Trust Bank Community Trust | 100,000 |
| ---------- | ||
| $300,000 | ||
| ====== |
The Christchurch City Council acted as guarantor for both loans, with the Deed of Guarantee to expire on 30 November 1998.
Since that time the CHA has been able to meet interest payments and reduce the term loans to the following balances:
| (a) | WestpacTrust (formerly Trust Bank Canterbury) | 140,000 |
| (b) | Trust Bank Community Trust | 75,000 |
| ---------- | ||
| $215,000 | ||
| ====== |
Unfortunately the CHA is now having difficulties in meeting its loan repayment commitments.
To help fund the loan repayments the CHA levied individual clubs for contributions to the artificial surface. Some clubs have struggled to meet their commitments and $40,000 is still owing to the CHA.
The CHA's fundraising has also not been as successful as first envisaged.
REMEDIAL ACTION
In recognising these difficulties the CHA has taken the following steps:
Has successfully negotiated with WestpacTrust (formerly Trust Bank Canterbury) and Trust Bank Community Trust for a two year extension to its bank loans. (Based on its previous repayment history and projected cash flows, this is a far more achievable period for repaying its debt.)
Has obtained commitments from those clubs with outstanding levies.
Has agreed that all outstanding levies are to be applied to the outstanding loans.
Is actively considering proposals fundraising/sponsorship for the upcoming year. (By the end of 1998 it is planned to have in place and individual or group to manage the CHA's sponsorship and form a strategy for the next three years.)
Has advised that no expenditure will be made on Stages II and III of the Porritt Park Development Project until all Stage I debt is cleared.
NEW REPAYMENT SCHEDULES
The revised repayment programme which has been negotiated with the WestpacTrust and Trust Bank Community Trust is as follows:
| (a) | WestpacTrust | |
| 30 November 1998 | 40,000 | |
| 30 November 1999 | 40,000 | |
| 30 September 2000 | 60,000 | |
| ---------- | ||
| Total | $140,000 | |
| ====== |
| (b) | Trust Bank Community Trust | |
| November 1997 | 7,500 | |
| November 1998 | 20,000 | |
| November 1999 | 20,000 | |
| November 2000 | 27,500 | |
| --------- | ||
| Total | $75,000 | |
| ===== |
The CHA has provided cash flow projections which indicate that repayment of the loans can be undertaken in the renegotiated period.
| Recommendation: | That the Canterbury Hockey Association's
request to the Council to extend its Loan Guarantee for
loans to the WestpacTrust and Trust Bank Community Trust
be extended for a further two years to 31 December 2000,
subject to:
|
(Note: Councillor Howell declared an interest in the above clause and abstained from the discussion and voting thereon.)
| 2. | STATUTORY DEMAND UNDER SECTION 289 OF THE COMPANIES ACT 1993 | RR 6501 |
| Officer responsible | Author |
| Funds and Planning Manager | Lindsay Lamont |
| Corporate Plan Output: Accounts Receivable, Volume I Page 5.2.5 | |
The purpose of this report is to seek Council approval to issue a Statutory Demand pursuant to Section 289 of the Companies Act 1993.
Roger Reiher Contracting Limited is indebted to the Council for $3,138.52. This debt relates to sealing of trenches and supplies of asphalt plus associated sundry charges. The debt goes back to 1991 although the bulk of the debt relates to the period March and April 1996.
The Company was served with an Order of Examination following the issue of a Notice of Proceeding and Entry of Judgement. Mr Reiher as Company Director appeared before the Court in August 1996 and the Company was ordered to pay $30.00 per week to clear the debt. Only five payments totalling $150.00 have been received.
In view of the payment history of the Company and the previous efforts by Accounts Receivable staff to secure payment, the legal remedy available to the Council is to issue a Statutory Demand under Section 289 of the Companies Act 1993.
Section 289 requires the company to:
"Ö pay the debt, or enter into a compromise Ö or otherwise compound with the creditor, or give a charge over its property to secure payment of the debt, to the reasonable satisfaction of the creditor, within 15 working days of the date of service, or such longer period as the Court may order."
| Recommendation: | That Roger Reiher Contracting Limited be issued with a Statutory Demand under Section 289 of the Companies Act 1993. |
| 3. | CANTERBURY TECHNOLOGY PARK JOINT VENTURE - REPRESENTATION | RR 6528 |
| Officer responsible | Author |
| Director of Finance | Bob Lineham |
| Corporate Plan Output: Public Accountability - Trading Activities Monitoring | |
The purpose of this report is to seek approval for a change in the representation on the Board of the joint venture which overviews the Canterbury Technology Park subdivision.
Christchurch City Council is a one third partner in the Canterbury Technology Park Joint Venture which is responsible for the disposal of the land in the Canterbury Technology Park. The other two partners in the joint venture are Westpac Trust and Aoraki Corporation.
Since May 1992 the Director of Finance has been the Council's representative on the Canterbury Technology Park Board. Because of the pressure of work on more important issues it is proposed that Ian Hay, the Accounting Services Manager, replace the Director of Finance as Council representative at Board meetings.
The issues discussed by the Board relate entirely to strategy relating to land sales and approval of agreements for land sales. The Board is making good progress with the disposal of the remainder of the Park and it is anticipated that land holdings in the park could be completely disposed of within the next 12 to 18 months.
In December 1992 the Council resolved pursuant to Section 572(3) of the Local Government Act 1974 to progressively sell its interest in the land in the Canterbury Technology Park as purchasers become available.
It also resolved that authority be delegated to the Group Manager Finance (now Director of Finance) to approve the terms of sale in the Technology Park. In view of the change of designation, it would be appropriate to reconfirm these decisions as part of this report.
The Committee requested staff to report back to a future meeting on the extent of the Council's investment in the Canterbury Technology Park, progress on the sale of land and the reasons why the building design standards for the park have not been maintained.
| Recommendation: |
|
4. EMERGENCY MANAGEMENT RR 6587
| Officer responsible | Author |
| Director of Operations | Jim Williamson |
| Corporate Plan Output: Civil Defence | |
The purpose of this report is to update Councillors regarding progress on a review of Civil Defence being conducted by the Ministry of Internal Affairs on behalf of Government, and the likely outcome. The key executive summary from the Local Government's Emergency Management draft document is attached. A paper to the Emergency Services Review Official's Committee from the Local Government Association is tabled for information, as are some comments from the Mayor of Hurunui, John Chaffey.
GENERAL
This review has been a long time in the making, and there have been discussions mainly at staff level, occurring over many months. In response to publications from the Ministry of Internal Affairs and prompted by requests from the Local Government of New Zealand for advice as to what submissions should be prepared, the Canterbury Regional Council has acted to co-ordinate a series of meetings of local authorities in Canterbury which have been attended by Jim Williamson in his role as the senior staff member responsible for Civil Defence for the Christchurch City Council. The essence of proposals emanating from the Ministry of Internal Affairs as a result of the review, is as follows:
The above relates to our present situation in the following ways:
The details of the current structure and the proposed structure are tabled.
The proposals have caused some concern amongst the smaller local authorities as they see control passing to a more centrally based structure. Emergency declarations for example, are proposed to be made by the EMPC rather than the local Mayor. While there may be subsidiary control structures for the response phase scattered about the Emergency Management area, the focus is on the single Emergency Response Controller responsible through the Emergency Management Group to the EMPC. While these reservations are understandable, the moves proposed should significantly raise both the level of expertise applied to Emergency Management, and the extent and range of planning applied to the four phases of Emergency Management.
Furthermore, disasters do not confine themselves to territorial authority boundaries, and the whole idea of a declaration of emergency is that the point has been reached that the local first tier authorities are unable to cope and need assistance from a wider area.
While noting the above comments and Mayor Chaffey's fax, the LGA paper does seem an appropriate response to the Department of Internal Affairs' proposals, and was developed from extensive national consultation.
| Recommendation: | That the Council support the draft Local Government Emergency Management paper, subject to local mayors retaining the right to declare a state of emergency for a local emergency. |
5. CAPITAL SMOOTHING RR 6559
| Officer responsible | Authors |
| Community Manager, Sockburn | Tony Gemmill/Julie Sadler |
| Corporate Plan Output: Annual Plan Vol 1 5.1.5 | |
The purpose of this report is to present the results of the capital smoothing project and to seek the Council's approval for project and programme changes to achieve the required reduction in the capital works programme.
WORK TO DATE
Two stages of prioritisation were undertaken as follows:
Stage I
Units prioritised the existing (1997 Annual Plan) five year programme to create a `pool' of discretionary projects. This prioritisation reflected the need to meet legislative requirements and commitments (priority 1), core asset management projects (priority 2) and projects with a high level of community expectation (priority 3). The projects that did not meet any of these criteria were scheduled and forwarded to the appropriate Committee or Community Board.
Stage II
Relevant Standing Committees, and all Community Boards, were provided with schedules of discretionary projects and requested to prioritise and/or smooth the programmes for forwarding to the Strategy and Resources Committee.
All Boards met during the week 28/31 October and five of the Boards offered "smoothing" outcomes. The remaining Board provided a prioritised schedule for the Committee's consideration.
The reports on these meetings are contained elsewhere in this agenda.
ART GALLERY
The City Services Committee recommended to this Committee that the Art Gallery project be smoothed over the 1999/2000, 2000/01 and 2001/02 years. The net effect, however, was a nil saving over this period. At the Committee meeting the consultants to the project presented an options paper which contained three expenditure profiles for progressing this project, providing for a range of cost efficiencies.
After a lengthy debate on this issue the Committee concluded: firstly, that the project expenditure profile should be redesigned to achieve the most efficient profile and a 2002/03 completion date and, secondly, that the current car parking provision should be reassessed.
REVIEW OF WORK OF COMMUNITY BOARDS AND STANDING COMMITTEES
The Committee gave consideration to the following schedules:
Apart from two late adjustments sought by City Streets staff for the Burwood/Woolston expressway and street lighting, the project smoothing and deletions proposed by Community Boards and Standing Committees were accepted by the Committee.
In endorsing these recommendations, the members paid tribute to the co-operative and responsible way in which Community Boards and Standing Committees had approached this task. The Committee wishes to record its appreciation to the Boards and Committees for their positive response to the Council's request for a substantial reduction in the five year capital programme.
With regard to the prioritisation schedule, the Committee deferred four Fendalton/Waimairi Community Board priority 5, 6 and 7 projects for 2/3 years and referred the balance of the schedule to staff to report to the present meeting on the possible smoothing of those projects which have been accorded a lower priority.
COMMERCIAL PROPERTY
In the course of reviewing the Commercial Property capital projects the Committee noted that substantial provision had been made for the structural strengthening of the Shirley Community Centre. The Committee has requested the Property Manager to report back to a future meeting on the strengthening requirements for this building.
CONCLUSION
A schedule covering all outcomes to date is attached for the Council's approval.
The project has resulted in savings totalling $19.36M being identified. The smoothings/deletions have been factored into the financial model and the results are shown in the attached schedule.
| Recommendation: |
|
(Note: Councillor Murray requested that her vote against recommendation 2 be recorded.)
Subsequent to the Committee meeting, staff reviewed the projects in the prioritisation schedule and noted that only the Hagley/Ferrymead Community Board list required further attention. City Streets staff recommend that these projects be treated in the same way as the Fendalton/Waimairi Community Board projects, ie priority 5 projects be deferred for two years and priority 6 and 7 projects be put back three years.
There are two priority 5 projects and one priority 6 project in Hagley/Ferrymead, namely Shakespeare Road, kerb and channelling enhancement (5) and Dorset/Victoria Streets (5) and Surrey/Worcester Streets (6), Neighbourhood Improvement Works. A schedule listing these projects is also attached.
| Chairman's Recommendation: | That the Council adopt the changes to the capital works programme recommended by the Strategy and Resources Committee on the advice of Standing Committees, Community Boards and staff. |
6. 1992 INCOME TAX ASSESSMENT RR 6561
| Officer responsible | Author |
| Director of Finance | Bob Lineham |
| Corporate Plan Output: Corporate Expenses and Revenues | |
The purpose of this report is to seek authority from the Council to take legal action through the Courts if necessary in respect of the 1992 Income Tax Assessment for the Council.
BACKGROUND
Over a year ago the inland Revenue completed a review of this Council's tax returns for 1992 and as a result has taken issue with the tax treatment of some of the Council's revenues. Additional tax of $185,996 has been assessed.
The additional tax assessed relates to some technical issues surrounding the way in which the Council financed the purchase of its shareholding in Christchurch Transport limited (CTL).
The Council raised a loan to purchase the shares in CTL and the IRD contend that the loan was not linked to the purchase. The actual loan money was raised for the purchase one day before the settlement for the shares took place and temporarily invested and the Council (because it had sufficient in its bank account the following day from other sources) did not need to break the temporary investment immediately to effect settlement. The IRD now contend that the interest on the loan cannot be deducted against the revenue received from the company saying that the loan was not for the purpose of buying the shares. This is in spite of the fact the loan had been part of the planned financing arrangements for the transaction for at least six months and the loan was utilised by being transferred to the general bank account in due course.
THE DISPUTE
The Council has sought extensive specialist tax and legal advice on this matter and considers that it has a good case to object to the additional tax assessment. The Council has objected to the IRD and sought various remedies available under tax law.
A review was requested of the proposed assessment using a new disputes procedure but the IRD Adjudication Unit declined to act on the matter and referred it back to the tax inspector who had originally raised the matter. Because statutory time was running out the inspector issued a formal tax assessment within a few days and it is hard to believe that appropriate review took place.
The Council's legal advisers believe that there is a good case which can be taken against the IRD based on the fact that the amended assessment was made without full consideration of the facts and that the Council's rights for its objection to be heard through a proper process were not allowed.
OPTIONS AVAILABLE
There are three options available to the Council:
It is intended to lodge a claim with the Taxation Review Authority to protect the position of the Council. This claim will be made without prejudice to the Council's rights to pursue judicial review.
CONCLUSION
This is a complex matter and the amount of tax involved is significant. It is considered likely that judicial review could be necessary and this will require Council approval. Approval is sought for such action to be taken if it is considered to be necessary.
| Recommendation: | That the Director of Finance, on advice from legal counsel, be authorised to approve whatever legal action is appropriate, including judicial review in the High Court if this is deemed to be necessary. |
7. MEETINGS SCHEDULE FOR 1998 RR 4310
| Officer responsible | Author |
| Council Secretary | Councillor David Close |
| Corporate Plan Output: Elected Member Representation | |
The purpose of this report is to submit for approval the meetings schedule for the remainder of the current Council term.
The 1998 meetings schedule is attached.
The schedule reflects the time constraints the Council will have to work under early in 1998. The 1998 Edition of the Council Plan must be adopted by 30 June 1998 (a month earlier than this year) and must incorporate the Council's funding policy. This means that the Council will have to keep strictly to the meeting timetable.
As the time allocated to some Standing Committees to consider budgets this year was inadequate a full day has been allocated in the first week in February for the draft plan meetings for the City Services, Community Services, Parks and Recreation and Strategy and Resources Committees.
Because of the workload the draft plan meetings and/or Council Plan monitoring meetings will impose on Councillors, no Standing Committee seminar meetings have been scheduled in February, June or September.
The Strategy and Resources Committee will hold a series of seminar meetings in the last week in January to commence work on the development of the draft funding policy following the consideration of public submissions. During the same week information seminars on the funding policy process and legislation will be held for Councillors who are not members of the Strategy and Resources Committee. It is proposed to hold two seminars to ensure as many Councillors can participate.
The first draft of the policy will be presented to a Council seminar on 18 February 1998. The purpose of this seminar is to brief Councillors on the Committee's proposals and to identify the areas Councillors wish to consider further. The final draft will be presented to a second Council seminar on 2 March. This seminar will provide Councillors with the opportunity to preview the draft policy prior to it being referred to the Council for final approval.
Recommendation: That the 1998 meetings schedule be approved.
| 8. | ORDERS FOR SUPPLIES EXCEEDING 50% OF DELEGATED AUTHORITY | RR 6503 |
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.
PART B - REPORTS FOR INFORMATION
9. ITEMS DEFERRED
The Committee deferred consideration of the following clauses:
9.1 Draft Consultation Policy RR 6450
This clause was held over to the next meeting of the Committee to enable the Legal Services Manager to comment on the proposed policy.
9.2 Remission of Rates - Kohanga Reo Language Nests RR 6360
This clause was referred back to the Rates Manager with the request that more information be provided on the groups which currently enjoy rates for remissions and for confirmation that the subject properties are not being used for residential purposes.
PART C - REPORT ON DELEGATED DECISIONS TAKEN BY THE COMMITTEE
| 10. | SUPPLEMENTARY ITEM EMERGENCY MANAGEMENT | RR 6587 |
The Chairman sought the approval of the Committee to introduce a supplementary report from the Director of Operations on the above topic. The reasons why the above item was not on the agenda and whey it could not wait for the next meeting were explained to the Committee.
It was resolved that the report be received and considered at the present meeting.
| 11. | THE SUPPLY, INSTALLATION AND SUPPORT OF CONVENIENCE COPYING AND PRINTING EQUIPMENT | RR 6508 |
The Inventory Manager submitted a report seeking the Committee's approval to enter into an agreement for the supply of convenience photocopiers.
During discussion on this clause the Committee requested the Inventory Manager to report back on the terms of the leasing option for photocopying equipment.
The Committee resolved:
12. RESOLUTION TO EXCLUDE THE PUBLIC
The Committee resolved that the draft resolution to exclude the public set out on page 15 of the agenda be adopted.
CONSIDERED THIS 26TH DAY OF NOVEMBER 1997
MAYOR