Agenda of Ordinary Te Miromiro - Assurance, Risk and Finance Committee Meeting

Ordinary Te Miromiro - Assurance, Risk and Finance Committee Meeting Agenda

22 February 2023

5.1 Council Financial Report for the Period Ending 31 December 2022

File Number: A4062275

Author: Ajay Kumar, Acting Manager Accounting Services

Authoriser: Janice Smith, General Manager - Corporate Services

TE TAKE PŪRONGO / Purpose of the Report

To provide an overview and information on the current financial position and performance of the Far North District Council as at 31 December 2022.

TE WHAKARĀPOPOTO MATUA / Executive SummarY

This report provides a summary overview, Statement of Financial Performance, Capital Performance and Borrowing and Investment reports.

NGĀ TŪTOHUNGA / Recommendation

That the Te Miromiro - Assurance, Risk and Finance Committee

a) receive the report Council Financial Report for the Period Ending 31 December 2022.

b) authorise to receive a quarterly financial report going forward as per the formal calendar.

c) authorise to receive a monthly financial report through a briefing paper outside the quarterly report.

TE tĀHUHU KŌRERO / Background

This report provides financial information as at quarter ending 31 December 2022.

TE MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

The report is for information only.

NGĀ PĀNGA PŪTEA ME NGĀ WĀHANGA TAHUA / Financial Implications and Budgetary Provision

There are no financial implications or budgetary provisions required as a result of this report.

ngĀ Āpitihanga / Attachments

1. Council Financial Report Dec 2022 (Pd6) FINAL - A4065410 ⇩

Ordinary Te Miromiro - Assurance, Risk and Finance Committee Meeting Agenda

22 February 2023

6 Information Reports

6.1 People and Capability Quarterly Update: 1 October - 31 December 2022

File Number: A4064275

Author: Mia Haywood, People and Capability Data and Systems Specialist

Authoriser: Jill Coyle, Chief People Officer

TAKE PŪRONGO / Purpose of the Report

The purpose of this report is to present the Audit, Risk and Finance Committee with the quarterly update for People and Capability.

WHAKARĀPOPOTO MATUA / Executive SummarY

Included in the report is information on:

- Staff Turnover.

- Exit Interviews and Analysis.

- Personal Grievances; and

- Disciplinary Actions and Costs.

TŪTOHUNGA / Recommendation

That the Te Miromiro - Assurance, Risk and Finance Committee receive the report People and Capability Quarterly Update: 1 October - 31 December 2022

tĀHUHU KŌRERO / Background

This report will be presented to the Audit, Risk and Finance Committee on a quarterly basis.

MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

This report is Information only.

Āpitihanga / Attachments

1. People Capability Turnover Report 1 October - 31 December 2022 - A4064269 ⇩

Ordinary Te Miromiro - Assurance, Risk and Finance Committee Meeting Agenda

22 February 2023

6.2 Revenue recovery report

File Number: A4070190

Author: Margriet Veenstra, Manager - Transaction Services

Authoriser: Janice Smith, General Manager - Corporate Services

TAKE PŪRONGO / Purpose of the Report

The purpose of this report is to provide quarterly reporting to the Far North District Council Assurance, Risk, and Finance Committee.

WHAKARĀPOPOTO MATUA / Executive SummarY

This is the first report for the financial year 2022-23 and provides information on action taken to collect the arrears balances for rates, water and sundry debt this year, and to provide information on how collection is tracking against targets.

TŪTOHUNGA / Recommendation

That the Te Miromiro - Assurance, Risk and Finance Committee receive the report Revenue recovery report.

tĀHUHU KŌRERO / Background

This document has been prepared to outline the arrears balances for rates, water and Sundry debt as of 31 December 2022 and the actions taken by the debt management team for the collection of the General Title rates and water, and sundry debt.

This information is part of the standing items reported to the Committee on a regular basis.

MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

The data provided is for General Title and Māori Freehold Land rates and water accounts with sundry debtors shown in a separate table. Since the 1^st of July 2022, the General Title rates total arrears balance has been reduced by 21.4% and water rates by 39.7%.

General Title rates and water debt

Key actions since the last report:

· Legal services team sent application to the courts for financial assessment for 10 properties where owners reside at the property, and no payments have been received since council received judgment. One of the properties has since been sold and another to be sold in February.

· Legal services team served statutory demand against one business and owner of many properties for overdue rates totalling $211,312.70. Payment arrangement now in place and debt to be cleared by end of March 2023. A further business paid before statutory demand was served. A statutory demand is notice demanding payment from a debtor where there is no reasonable dispute about the amount of the debt, or the fact that it is due. The debtor can either apply to set the demand aside, pay or come to an arrangement, if not the company is presumed insolvent and liquidation proceedings may be filed by the creditor.

· Mortgage demand reporting and reviews of accounts completed. Pre-mortgage demand calling commenced for small financial institutions.

· Recruitment to replace two revenue recovery officers who moved to other positions in council at the start of the rating year. One new officer started 9 January and interviews for second officer to be completed by the end of January.

Next actions:

· Prepare and pass a further list of businesses with rates arrears to Legal Services team to serve statutory demand.

· Commence pre-mortgage demand calling 16 January 2023, one bank per week over a 5-week period, finishing 17 February 2023. Mortgage demand will be issued to the relevant bank at the end of each week.

For the total number of General Title rates accounts marked as ‘Debt recovery action to commence’:

· These are properties where there is no mortgage, and we do not have a payment arrangement or direct debit set up on the account.

· 46% of properties only have last year’s rates in arrears and 22% have 2 years of arrears. Debt management will be contacting these owners by phone, email, or letter. Any water arrears will be picked up at the same time.

· 30% of these accounts have arrears of 3 or more rating years. Debt management will start the final demand process for these which can result in referral to Council’s legal services team to commence legal proceedings.

Comparing Q2 last year to this year, arrears collection was up this quarter compared to the previous year, but we have seen a drop of current rates collected, similar to Q1 of this year. The number of properties receiving penalty notices this quarter increased by 15% compared to last year. Revenue recovery did make post instalment due date calls in November to owners who had not paid Q1 and Q2 instalments and majority had forgotten and subsequently paid. There appeared to be several businesses in the tourism sector with unpaid rates and we successfully trialled issuing statutory demand which we will continue with this year. We will continue to monitor rates accounts for businesses within the tourism sector for the next couple instalments, as it has been widely publicised that the industry is facing challenges due to staff shortage and recent bad weather events.

Maori Freehold Land rates and water debt

The rates debt has reduced by 2.08% since the start of the year of which 25% was for write-offs for properties which are non-rateable since the introduction of the Whenua Māori rating amendment law came in to affect. The water rates were reduced by 2.98% since the start of the year.

Sundry debtors debt

The total sundry debtors aged debt balance has increased since the start of the year due to a delay in payment for Ministry of Business, Innovation and Employment sundry invoices for which payment is expected by the end of January 2023.

The resource consent and building debt have remained at the same balance since 30 June 2022. The revenue recovery team continue to work with both teams to reduce this.

PĀNGA PŪTEA ME NGĀ WĀHANGA TAHUA / Financial Implications and Budgetary Provision

Provision is made annually for doubtful debts in relation to the arrears owed to council. A higher provision for Maori Freehold land rates and water is made in comparison to General Title rates and water due to the difference in collection options available to Council.

Āpitihanga / Attachments

1. 31 December 2022 ARF Revenue recovery Report attachment - A4070132 ⇩

Ordinary Te Miromiro - Assurance, Risk and Finance Committee Meeting Agenda

22 February 2023

6.3 Mayoral Discretionary Fund

File Number: A4072810

Author: Rhonda-May Whiu, Democracy Advisor

Authoriser: Jacine Warmington, Manager - Community and Customer Services

TAKE PŪRONGO / Purpose of the Report

For Te Miromiro - Assurance, Risk and Finance Committee to note the quarterly expenditure from the Mayoral Discretionary Fund.

WHAKARĀPOPOTO MATUA / Executive SummarY

Council policy requires the reporting from the Mayoral Discretionary Fund to the Committee. This report covers the quarterly period of 1 October to 31 December 2022.

TŪTOHUNGA / Recommendation

That the Te Miromiro - Assurance, Risk and Finance Committee receive the report Mayoral Discretionary Fund.

tĀHUHU KŌRERO / Background

The Mayoral Discretionary Fund was established as a response to ongoing requests for financial assistance that are not eligible under existing funding avenues within Council, or are of an emergency assistance nature.

All decisions on funding are at the discretion of the Mayor.

In the interests of transparency for ratepayers, Council policy requires that the grants made are reported publicly.

MATAPAKI ME NGĀ KŌWHIRINGA / Discussion and Next Steps

This report is for information only.

PĀNGA PŪTEA ME NGĀ WĀHANGA TAHUA / Financial Implications and Budgetary Provision

The total fund is in the amount of $20,000 excluding GST. The fund is to be included as a recurrent item in Council’s annual operational budget.

Āpitihanga / Attachments

1. Mayoral Discretionary Fund 1 October -31 December 2022 - A4077976 ⇩

Ordinary Te Miromiro - Assurance, Risk and Finance Committee Meeting Agenda

22 February 2023

6.4 FNHL Reports 2022 – Finance, Health & Safety and Risk

File Number: A4087258

Author: Julia Lee, Senior Financial Accountant

Authoriser: Janice Smith, Group Manager - Corporate Services

Take Pūrongo / Purpose of the Report

To present the Far North Holdings Limited (FNHL) first quarter financial report, Risk Report Nov 2022 and H&S Quarterly Report 4^th quarter 2022

WhakarĀpopoto matua / Executive Summary

· These reports are for the first quarter for the financial year 2022/23.

tŪtohunga / Recommendation

That the Te Miromiro - Assurance, Risk and Finance Committee receive the reports for FNHL Reports 2022 – Finance, Health & Safety and Risk.

i) Management accounts.

ii) Risk report.

iii) H&S quarterly report.

1) TĀhuhu kŌrero / Background

The September 2022 first quarter financial report is the first report received for the current financial year.

The Risk and H&S quarterly reports are the first to be received by Council, in line with Letter of Expectation dated Dec 2021 and outlined in Statement of Intent 2022-25.

2) matapaki me NgĀ KŌwhiringa / Discussion and Options

Commentary on first quarter management accounts:

FNHL’s financial performance is below budget primarily from the ongoing impacts of the global economy and resulting rapid rise of inflation and interest rates.

This is seen in the interest rate cover ratio. This ratio represents how many times the company can pay its obligations using earnings – it declined from 3.59 at 30 September 2021 to 1.45 at 30 September 2022, minimum ratio being 1.1.

Further, equity/asset ratio illustrates how the company pays for its assets, so the lower it is, the more debt the company has used to pay for them – it deteriorated slightly from 54.28% at 30 September 2021 to 53.4% as at 30 September 2022, permissible ratio of 50%.

Covid continues to hinder tourism in Northland, so rent relief is still being provided to the effected tenants, and further support is expected to be provided to those tenants that continue to be affected.

Building continues to progress well with the Ngawha Innovation and Enterprise Park, with:

· NorthTec internal linings currently at 75% complete, estimated completion is mid-December.

· Regent internal fit-out is 95%, with the inside of the building due to be completed mid-October, and external works expected end of September.

· Innovation Hub is progressing well, and is currently on schedule, with some external works having commenced.

· Corrections site has two building platforms completed, with slab construction due to start early October.

Community Housing Projects are progressing well, with three units having been completed and delivered to site at Te Hau Ora a Ngapuhi Kaikohe and framing for the next six units has commenced. At Ranfurly Street, Dargaville, resource consent has been lodged for stage one.

The Kaitaia Masterplan is due to be finalised and presented to Kaitaia Business Association and community Board in mid-November.

Other projects include the Merlin Labs Hangar at Kerikeri Airport to provide a new facility for an aviation software company.

Operating loss is double what was originally budgeted for, with $365k loss actual versus $123k budget. This is due to:

· Increase in Goods Sold, $390k actual versus $345k budget, an increase in 13% - due to higher-than-expected sales for fuel and boatyard operations.

· Increase in Inventories, $378k actual versus $326k budget, 16% - due to increased fuel costs, but this offsets the increase in Goods Sold above.

· Honey income is lower than expected $14k actual versus $$22k, 35% decrease – reflects the wind down of the business due to ongoing adverse performance.

· Rental income is performing well against budget, $1,030k actual versus $904k budget, 14% increase – reflects increases in CPI adjustments to commercial properties, together with the Kamo Road property which has exceeded budgeted estimate.

· Employee benefit expenses are lower than budgeted, $1,009k versus $1,046k, 4% decrease - due to capitalisation of staff costs related to development projects, together with the current tight employment market causing difficulty in securing staff.

· Corporate overheads are significantly above budget, $216k versus $51k, 320% increase - multiple expenses being incurred during the first quarter which should level out throughout the year. These include Health & Safety, reflecting ongoing commitment to improving the work environment for staff and the public, Consulting and Computer costs due to structural and tax advice, and the pending relocation to Ngawha Innovation Park.

· Direct expenses from investment property, $724k versus $522k, 39% increase - primarily due to recruiting a temporary airport manager and 30% increase in insurance costs, and delays for repairs & maintenance from last year have now begun to catch up.

· Finance expenses, $565k versus $733k, 23% decrease – reflects delayed drawdown of financing facilities related to the Corrections and RSA projects. These will increase significantly as progress is made with these projects and the drawdown facilities utilised.

3) PĀnga PŪtea me ngĀ wĀhanga tahua / Financial Implications and Budgetary Provision

The are no financial implications arising from these reports, they are information only reports.

Āpitihanga / Attachments

1. FNHL First Quarter Report 22.23 - A4087240 ⇩

2. FNHL HS Qtrly Report 4th qtr 2022 draft v01 - A4087292 ⇩

3. FNHL Risk Report Nov 22 - A4087291 ⇩

Hōtaka Take Ōkawa / Compliance Schedule:

Full consideration has been given to the provisions of the Local Government Act 2002 S77 in relation to decision making, in particular:

1. A Local authority must, in the course of the decision-making process,

a) Seek to identify all reasonably practicable options for the achievement of the objective of a decision; and

b) Assess the options in terms of their advantages and disadvantages; and

c) If any of the options identified under paragraph (a) involves a significant decision in relation to land or a body of water, take into account the relationship of Māori and their culture and traditions with their ancestral land, water sites, waahi tapu, valued flora and fauna and other taonga.

2. This section is subject to Section 79 - Compliance with procedures in relation to decisions.

He Take Ōkawa / Compliance Requirement	Aromatawai Kaimahi / Staff Assessment
State the level of significance (high or low) of the issue or proposal as determined by the Council’s Significance and Engagement Policy	Not significant
State the relevant Council policies (external or internal), legislation, and/or community outcomes (as stated in the LTP) that relate to this decision.	Schedule 8 (3) of Local Government Act 2002
State whether this issue or proposal has a District wide relevance and, if not, the ways in which the appropriate Community Board’s views have been sought.	NA
State the possible implications for Māori and how Māori have been provided with an opportunity to contribute to decision making if this decision is significant and relates to land and/or any body of water. State the possible implications and how this report aligns with Te Tiriti o Waitangi / The Treaty of Waitangi.	NA
Identify persons likely to be affected by or have an interest in the matter, and how you have given consideration to their views or preferences (for example – youth, the aged and those with disabilities).	NA
State the financial implications and where budgetary provisions have been made to support this decision.	NA
Chief Financial Officer review.	CFO has reviewed these reports.