Pre Election Report 2013

7/27/2019 Pre Election Report 2013

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July 2013

ISBN 978-1-877548-00-5 (print)ISBN 978-1-877548-64-2 (online)

Pre-Election ReportPorirua City Council


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www.pcc.govt.nz

PRE-ELECTION REPORT July 2013

Contents

From the Chief Executive...........................................................................................................................................................................................................1Our Council ..............................................................................................................................................................................................................................2

Our Priorities ...........................................................................................................................................................................................................................2

Governance and Decision Making at Porirua City Council...................................................................................................................................... 3

Our Priority Spending..........................................................................................................................................................................................................4

Our Long Term Financial Strategy..................................................................................................................................................................................4

Financial Performance and Forecasts ................................................................................................................................................................................6

Basis of Preparation .............................................................................................................................................................................................................6

Financial Commentary .......................................................................................................................................................................................................6

Prospective Statement of Comprehensive Income ................................................................................................................................................8

Prospective Statement of Summary Financial Position.......................................................................................................................................9

Prospective Statement of Cashows ..........................................................................................................................................................................10

Prospective Funding Impact Statement .................................................................................................................................................................... 11

Major Projects...............................................................................................................................................................................................................................12

Transmission Gully Motorway Link Roads ................................................................................................................................................................12

Civic Administration Building ........................................................................................................................................................................................13

City Centre Revitalisation..................................................................................................................................................................................................13

Key Issues .......................................................................................................................................................................................................................................14

Condition of the Councils Infrastructural Assets................................................................................................................................................. 14

Condition of the Councils Building Assets.............................................................................................................................................................. 14

Provision of Water Services Capacity Infrastructure Services Proposal................................................................................................... 14

Information relating to the proposal which will be nalised in August 2013 is available from the

Council Efciency and Effectiveness Review ........................................................................................................................................................... 14

Regional Governance..........................................................................................................................................................................................................15

Building Compliance Liabilities .....................................................................................................................................................................................15

Insurance Issues Local Authority Protection Programme (LAPP) Fund.....................................................................................................15

Economic Update .......................................................................................................................................................................................................................16

Population ..............................................................................................................................................................................................................................16

Earnings...................................................................................................................................................................................................................................16

Housing....................................................................................................................................................................................................................................16

Economy..................................................................................................................................................................................................................................16

Industries ................................................................................................................................................................................................................................16

Workforce................................................................................................................................................................................................................................16

Business...................................................................................................................................................................................................................................16

Porirua at a Glance.....................................................................................................................................................................................................................17Glossary of Terms.................................................................................................................................................................................................................19

Helpful Links..................................................................................................................................................................................................................................21


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From the Chief Executive

Tena Koe, Greetings and welcome

I am pleased to present the following Pre-Election Report

which is my view as Chief Executive, of the performance

of the Council and will highlight potential major issues I

expect the new Council will be facing during their term

together. This report is based on the best of my knowledge

at the time of writing however past experience shows that

there will be other issues that will arise over the next three

years that will challenge us all.

This report arises from amendments made to the Local

Government Act in 2012 in a bid to make New Zealandlocal authorities more effective, efcient and accountable

to their communities. Among the amendments to the

Act was a requirement for Council chief executives to

prepare a report to their community in the lead up to local

government elections.

The information contained in these reports is intended to

be useful for people considering standing in the Council

elections and for electors considering which issues they

would like to hear candidates positions on. It also provides

another opportunity for the general public to be kept

informed about the work of the Council on their behalf.

I am pleased to present to you, Porirua City Councils 2013

Pre-Election Report.

Warm Regards,

Gary SimpsonCHIEF EECTIE


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Our PriOrities

Following consultation with the Porirua community,the Council adopted the Long Term Plan 2012-2022(LTP), including four Strategic Priorities:

city of villages connected and distinctive villages, ableto have their respective spaces and characters shaped by

the people who live in them.

A healthy & protected harbour at the heart of our city

of villages, providing recreational, economic and culturalopportunities, now and in the future.

A growing city prosperity, growth and betteropportunities for all Porirua residents through the city

centre revitalisation.

A great city experience quality, affordable and efcientservices at every point enabling residents, businesses and

visitors to make the most of their city experience.

The Councils work aligns to these four strategic priorities.

Our COunCil

From the October 2013 election, Porirua City Council will

be changing the composition of its governing body from aMayor and 13 Councillors to a Mayor and 10 Councillors.

The Mayor will be elected by the whole Porirua City

community, four Councillors will each represent the

Northern Ward and the Eastern Ward and two Councillors

will represent the smaller Western Ward.

The Council represents the Porirua community and focuses

on big picture governance issues, making City-wide

strategic decisions as well as required decisions on local

policies, functions and facilities. It determines the policy

direction of the Council and prioritises and monitors theperformance of the Council.

The Council employs a chief executive, who is responsible

for implementing the decisions of the Council and who

provides advice to the Council to enable the Council to

function effectively. The Chief Executive is responsible for

the employment of all staff, for negotiating their terms of

employment and for providing leadership for the staff.


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Governance and Decision Making at Porirua City CouncilPorirua City Council has a governing body consisting of

a mayor, elected by the Porirua City community, and 10Councillors elected from three wards. The governing body

holds the decision-making responsibilities of Porirua City

Council. The governing body, representing the Porirua

community8, focuses on the big picture, making city-

wide strategic decisions as well as decisions on local

issues, activities and facilities. The Council sets the policy

direction for the Council and monitors the performance of

the Council.

The Council deliberates and makes its decisions through

meetings of the main Council Committee called Te Komiti,and a number of sub-committees. All decisions made

at these meetings are then ratied or vetoed by the full

Council which meets every month.

Porirua City Council delivers services through the Chief

Executive and the Council organisation. The Chief

Executive is the only person who may lawfully give

instructions to the staff. The diagram below illustrates

this structure.

GEIG BD

(Council & Committees e.g. Te Komiti, Auditand isk Management Sub- Committee)

(Mayor and 10 Councillors)

CHIEF EXECUTIE

Implement DecisionsSupport and advice

EXECUTIE MAAGEMET TEAM

PIUA CIT CUCILGAISATI

Policy, Planning and Service Delivery


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6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%2010/11

Average increase in rates Quantifed rates limit

Average ates versus Quantied limits

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

As part of Councils Liability Management Policy, the

Council monitors the amount of interest expense (interestpaid on monies borrowed) to the level of cash revenue, to

ensure it can continue to operate in what is considered a

prudent manner. The graph below shows that Council is

forecasting to be well below the policy limit during the

next term of ofce.

The graph below is another Liability Management Policy

measure to ensure that Council is operating prudently. It

measures the level of debt to cash operating revenue, and

it shows that Council is again well within its policy limits.

In line with its Long Term Financial Strategy, the Counciluses loans to fund long term infrastructure expenditure,

such as water pipeline replacements, as one way of

achieving inter-generational equity. The inter-generational

equity principle ensures that each generation pays for

its fair share of the cost of Council services. For example,

the Transmission Gully Motorway link roads will last for

many decades and the cost of their construction will be

loan funded for 25 years. Repaying the loan will take place

over that period, meaning the cost will be spread over a

generation rather than the current ratepayers having to

pay the full cost of the link roads now.

There are limits as to how much the Council can prudently

borrow and use for funding capital expenditure. The limits

are governed by the Councils Liability Management Policy.

The following graphs show that the Council has been

conservative in its use of borrowing and is well within its

policy limits.

The LTP 2012-22 is forecasting debt levels to peak at

$77million in 2018/19 and then steadily decrease to

$52.5million by 2021/22. During the next Council term,

debt is forecasted to rise to $69 million in 2016/17 as shownin the above graph. The increase in debt funding will be

used to fund infrastructural projects such as Transmission

Gully Motorway and pipeline renewals etc. Councils

current debt level is $48.8 million, approximately $2,711 per

rateable property.

100

90

80

70

6050

40

30

20

10

02010/11

Actual Forecast Policy Limit

Debt Levels

2011/12 2012/13 2013/14 2014/15 2015/16

16.0%

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%2010/11


Interest Expense / perating evenue

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

1.4

1.2

1

0.8

0.6

0.4

0.2

02010/11


Debt / perating evenue atio

2011/12 2012/13 2013/14 2014/15 2015/16 2016/17

2016/17


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FinanCial COmmentaryPorirua City Council is a Council that has a higher than

average dependency on income from rates, as much as 72%

of its cash revenue is from rates while the national average

for Councils is 61%2. This means the Council is very sensitive

to any changes in expenditure and its related funding as

shown in the graphs below.

Funding Sources3

A movement in rate funded expenditure of $50,000 adds

0.1% onto the rate increase for that year. Every year Council

has to decide how best to fund the Activities of Counciland balance the needs of the current generation with that

of future generations, by deciding whether to use rate

funding, loan funding or other means e.g. fees and charges

or reserves.

For every dollar rate funding that the Council receives, it

is spent in providing for Activities to the community as

shown in the graph below. It is the Councils role to decide

how to appropriately fund these Activities going forward.

Financial Performance and Forecasts

Statement of Comprehensive Income (2010/11, 2011/12and est. 2012/13 and 2014/15, 2015/16 and 2016/17 from

the LTP)

Summary Balance Sheets (2010/11, 2011/12 and est.

2012/13 and 2014/15, 2015/16 and 2016/17 from the LTP)

Statement of Cashows (2010/11, 2011/12 and est . 2012/13)

Funding Impact Statements (2012/13 and 2014/15,

2015/16 and 2016/17 from the LTP)

Basis OF PreParatiOn

This pre-election report has not been audited. Informationfor this report has been taken from the Long Term Plan

2012-221, Annual Plan 2013/14 and Annual Report 2011/121.

Information that has not been audited includes:

The report on compliance with the debt limits and

quantied rate increases as contained in the nancial

strategy

The estimated nancial information for the 2012/13

nancial year

The nancial information for the 2013/14 nancial year

(as per the Annual Plan 2013-14).

As this report has been completed prior to the nancial

information for the 2012/13 year being nalised informed

estimates have been used to prepare the 2012/13 gures for

the Statement of Comprehensive Income, Balance Sheet

and Funding Impact Statement. Council is still resolving

issues around the storm event in late June 2013 and this

may have an impact upon the nal nancial result for

the year ended 30th June 2013. These estimates have been

prepared on the best available information at the time.

There are likely to be variances between this information

and the Annual Report 2012/13. The timing changes to theTransmission Gully Motorway Link Roads project included

in the Annual Plan 2013/14 and outlined on page 14 of this

report will impact upon the Long Term Plan gures within

this report.

1 These Reports were audited by Council auditors, Ernst & Young.2 Local Government New Zealand website, Local Government Funding

source (2009) 3 2013/14 Annual Plan

User Charges22%

Rates Income 72%

DevelopmentContributions 1%

InvestmentIncome 1%

Grants &Subsidies4%


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Capital Expenditure by Activity6

The above graph shows the allocation of capital

expenditure to the various Activities that Council

undertakes. Every year the Council has to decide how best

to fund the capital expenditure and balance the needs of

the current generation with that of future generations,

by deciding whether to use rate funding, loan funding or

other means e.g. Development Contributions or reserves.

The Statement of Financial Position is also known as

the Balance Sheet and the major components of this

statement are current assets which are made up ofcash, investments and debtors. Non current assets are

dominated by the large value of Council assets such as its

roading network, infrastructural assets (water, wastewater

and stormwater) as well as its reserves and property

(investment properties, Arena, pools and library).

Current liabilities consist of trade creditors, accruals and

public debt that is repayable within the next nancial year.

Non-current liabilities consists of long term public debt,

provision for the closure of the landll (30 years of post-

closure costs) and Development Contribution levies for

work not yet completed.

The Statement o Cashows identies the source and

application of cash that it receives from three main

sources, cash from operating activities, from investing

activities and from nancing activities.

The Funding Impact Statement provides more detail on

the source of funds and how they are applied. The major

source of funds being rates and the major application of

funds is to payments for staff and suppliers.

ate Funding of Activities4

The Council has a wide range of Activities and a wide

range of expenditure types to deliver these Activities.

The Councils main operating expenditure falls into 3

major categories, Staff costs, Contracted Services and

Depreciation. Changes in levels of service are likely to affect

these categories. The graph below highlights the major

operating expenditure of Council.

perating Expenditure by category5

4 2013/14 Annual plan5 2013/14 Annual Plan6 2013/14 Annual Plan

Sta Costs29%

Consulting &Proessional

Fees 3%

ContractedServices

20%

Depreciation26%

Fuel, Power& Gas 3%

Insurance2%

Other 8%

Purchase oMaterials2%

Repairs &Maintenance2%

Interest 5%

Stormwater 5%

Community& Leisure

33%

DemocraticProcess

7%

EnvironmentalManagement

5%

Strategy &Planning 12%

Solid WasteServices 4%

Transport11%

WaterServices11%

Wastewater12%

Strategy & Planning12%

Stormwater 3%

Wastewater 16%

WaterSupply

7%

Transport8%

Community &Leisure 16%

Environment & Regulatory 0%

LandfllManagement2%

DemocraticProcess14%

OrganisationalPerormance9%

Wastewater

Treatment Plant 14%


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statement OF COmPrehensive inCOme

For the Year Ended 30 June

Actual2010/11$'000's

Actual2011/12$'000's

Estimated2012/13$'000's

Annual Plan2013/14$'000's

LTP2014/15$'000's

LTP2015/16$'000's

LTP2016/17$'000's

Income

Rate revenue 42,402 44,887 46,621 48,210 49,749 52,033 54,318

Fees and charges 14,421 13,343 13,002 15,137 16,779 17,658 18,901

Income from vested assets 4,076 6,746 5,738 2,070 2,072 2,073 2,074

Other income 4,546 4,135 5,657 3,967 4,589 4,616 6,374

Total Income 65,445 69,111 71,018 69,384 73,189 76,380 81,667

Expenditure

Personnel costs 21,282 21,817 21,703 22,460 22,348 22,851 23,012

Interest expense 3,137 3,527 3,475 3,956 3,757 4,285 4,734

Depreciation andamortisation

16,050 16,659 17,874 19,142 21,079 21,496 22,185

Other expenses 28,291 30,251 26,593 27,435 28,569 29,037 29,317

Total Expenditure 68,760 72,254 69,645 72,993 75,753 77,669 79,248

et Surplus/(Decit) (3,315) (3,143) 1,373 (3,609) (2,564) (1,289) 2,419

ther Comprehensive Income

Revaluation of Property, Plantand Equipment

(10,611) 13,245 4,039 45,349 45,697 25,553 64,884

Total Comprehensive Income (13,926) 10,102 5,412 41,740 43,133 24,264 67,303

(a) The gures for Actual 2010/11 and 2011/12 are the actuals gures from Councils 2012 Annual Report

(b) The gures for Estimated 2012/13 are the Councils estimated gures for the 2012/13 nancial year.

(c) The gures for Annual Plan 2013/14 are the budgeted gures from Councils 2013/14 Annual Plan

(d) The gures for LTP 2014/15 to LTP 2016/17 are the budgeted gures from Councils 2012-22 Long Term Plan


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statement OF FinanCial POsitiOn


Actual2010/11$'000's

Actual2011/12$'000's



LTP2014/15$'000's

LTP2015/16$'000's

LTP2016/17$'000's

Total Equity 1,083,993 1,094,095 1,099,507 1,184,400 1,221,115 1,245,379 1,312,682

Total Current Assets 17,638 20,415 18,604 26,672 28,034 29,807 30,779

Total Non-Current Assets 1,129,563 1,147,762 1,153,928 1,244,703 1,277,300 1,302,817 1,377,211

Total Assets 1,147,201 1,168,177 1,172,532 1,271,375 1,305,334 1,332,624 1,407,990

Current Liabilities

Current Liabilities 13,441 15,398 13,945 16,801 12,965 13,804 15,616

Current Portion of Public Debt 274 10,491 12,919 884 14 ,540 8,040 13,800

Total Current Liabiliities 13,715 25,889 26,864 17,685 27,505 21,844 29,416

on-Current Liabilities

Non-Current Liabilities -excluding Public Debt 9,529 9,866 10,642 9,950 10,675 11,402 10,693

Public Debt 39,965 38,327 35,519 59,340 46,039 53,999 55,199

Total on-Current Liabiliities 49,494 48,193 46,161 69,290 56,714 65,401 65,892

Total Liabilities 63,209 74,082 73,025 86,975 84,219 87,245 95,308

et Assets 1,083,993 1,094,095 1,099,507 1,184,400 1,221,115 1,245,379 1,312,682






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statement OF CashFlOws


Actual2010/11$'000's

Actual2011/12$'000's



LTP2014/15$'000's

LTP2015/16$'000's

LTP2016/17$'000's

Net Increase in Cash fromOperating Activities

10,516 7,791 8,982 12,946 16,038 17,909 23,792

Net (Decrease) in Cash fromInvesting Activities

(6,594) (13,460) (13,221) (22,696) (15,972) (19,420) (30,804)

Net Increase in Cash fromFinancing Activities

(3,607) 10,437 81 9,915 188 2,198 7,896

et Increase / (Decrease) in cash 315 4,768 (4,158) 165 254 687 884

Cash Resources at the beginningof the year

8,361 8,676 13,444 18,983 5,309 5,563 6,250

Cash esources at the end ofthe year

8,676 13,444 9,286 19,148 5,563 6,250 7,135






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Funding imPaCt statement




LTP2014/15$000's

LTP2015/16$000's

LTP2016/17$000's

Source of perating Funding:

General Rates 36,674 37,804 38,543 40,262 42,167

Targeted Rates - Non Water 5,435 5,660 6,124 6,660 7,044

Targeted Rates - Water 4,512 4,746 5,083 5,112 5,107

Subsidies for operating purposes 1,543 1,345 1,471 1,513 1,540

Fees & Changes 9,037 10,717 11,178 11,754 12,489Internal charges recovered 0 0 0 0 0

Interest and Dividends from Investments 337 742 791 840 777

Other Operating 545 450 301 315 331

Total perating Funding (A) 58,083 61,463 63,488 66,456 69,455

Application of perating Funding:

Payments to staff and suppliers 46,002 47,689 47,400 48,247 48,541

Finance Costs 3,254 3,698 3,482 3,976 4,433

Other operating funding Applications

Total Applications f perating Funding (B) 49,256 51,387 50,881 52,222 52,974

Surplus/(Decit) of perating Funding 8,827 10,076 12,607 14,234 16,481

Sources f Capital Funding

Subsidies for Capital Expenditure 1,551 734 1,195 899 2,447

Development and Financial Contributions 128 462 728 738 936

Increase / (Decrease) in Debt 2,229 8,454 (118) 5,624 10,749

Total Sources of Capital Funding 3,908 9,650 1,806 7,261 14,131

Application f Capital Funding

Capital Expenditure

- to meet additional demand 1,934 2,713 604 5,160 10,729

- to improve the level of Service 2,878 5,455 2,549 4,064 5,621

- to replace existing assets 8,013 10,607 8,480 8,148 10,879

Movement in Reserves (90) 951 2,280 3,124 3,383

Movement in Investments 0 0 500 1,000 0

Total Application of Capital Funding 12,735 19,726 14,413 21,495 30,612

Surplus / (Decit) of Capital Funding (8,827) (10,076) (12,607) (14,234) (16,481)

Funding Balance 0 0 0 0 0


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Major Projects

Every year the Council undertakes a number of projects to further the Councils goals ormaintain levels of service. There are too many Council projects to give a summary outline oneach one here, but this section outlines the major projects the current Council is proposing toundertake over the next three years:

transmissiOn gully mOtOrway link rOads

LTP 2014/15 2015/16 2016/17 - $35,320,000 (broughtforward by Annual Plan 2013/14)

This project involves the design and construction of two

Link Roads to the Transmission Gully Motorway (TGM) from

Waitangirua and Whitby.

The construction of the TGM was approved by the

Environmental Protection Agency in June 2012 and

was initially expected to start in 2016. The New Zealand

Governments decision to design and build the TGM using

a public-private partnership (PPP) model has brought

the start of construction forward by one year. This has

meant that the Council has proposed to bring forward itsallocated expenditure for the project by two years (to be

completed by 2018).

The Transmission Gully project is one of six projects

that form the Wellington Northern Corridor, the 110-km

route from Levin to Wellington Airport. The New Zealand

Transport Agency proposes two platforms of works for

the project.

a) The Transmission Gully Main Alignment (TG) is a two-

lane (in each direction) restricted access highway, which

will run 27km from Linden to McKays Crossing. The TG

main alignment package of works also includes the

Kenepuru link road connecting the main alignment

to western Porirua, between Kenepuru Drive and

Kenepuru interchange. The New Zealand Transport

Agency is the consent holder and funder for both the

main alignment and the Kenepuru Link Road, to be

procured using a Public Private Partnership.

b) The Porirua Link Roads (Whitby and Waitangirua)

are one-lane (in each direction) roads connecting the

main alignment at the James Cook interchange to

the existing eastern Porirua road network. PoriruaCity Council is the consent holder for this project

component. The funding responsibility for the project

will be shared between the Porirua City Council and

the New Zealand Transport Agency. The New Zealand

Transport Agency will construct and fund the James

Cook interchange that connects the Porirua Link Roads

to the main alignment.

The New Zealand Transport Agency has issued a request

for formal bids for the Transmission Gully Project two

shortlisted consortia. Porirua City is party to the NZTA

request. The bidders are required to provide a price for

the design and construction of the Link Road to Porirua

City Council. The planned date for awarding the contract is

mid-2014.


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CiviC administratiOn Building

LTP 2014/15 2015/16 2016/17 - $491,000

The Councils Civic Administration Building (Civic Building)

was built in 1967, and since that time there have been a

number of legislative changes which have impacted on

design and materials standards. The Building Act (2004)

has placed a legal requirement on all councils to have

in place, an Earthquake Prone Buildings Policy which

expresses the Governments objective for earthquake-

prone buildings to be strengthened to the appropriate

seismic level.

Initially, the Civic Administration Building was assessed

as being potentially earthquake-prone if it had to houseactivities that were essential to post-disaster recovery.

However, as it is possible for this work to be undertaken

elsewhere, the need for the building to be strengthened so

it remains fully functioning after an earthquake may not

be necessary.

As a responsible building owner, however, the Council

has commissioned a detailed engineering assessment to

ascertain what strengthening work might be necessary

to ensure the safety for the public and staff. Once this

assessment has been obtained, the Council will have

to make decisions around the level of earthquakestrengthening that may be appropriate for the use that

the building is put to.

City Centre revitalisatiOn

LTP 2014/15 2015/16 2016/17 - $11,520,000 (broughtforward by Annual Plan 2013/14)

Porirua City Council has embarked on a project to revitalise

the city centre in partnership with the private sector.

This means the Council will invest in critical changes

to elements of city centre infrastructure, changingthe regulatory environment, providing incentives for

investment and working with local businesses to develop

a positive, on-going events programme. The role of the

private sector will be to help create the overall experience

by bringing in new operators and businesses, investing in

the design and construction of new buildings, refurbishing

or outtting new retail/hospitality premises/apartments

and nding new tenants for these premises.

The Council has committed over $18m in funding for

infrastructure and public spaces as part of this project over

the next 10 years. The Annual Plan 2013/14 accelerates the

project by bringing forward all of the capital expenditure byone year until the end of the project.


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Key Issues

COnditiOn OF the COunCilsinFrastruCtural assets

The condition, strategies, renewal and risk to service of

infrastructural assets are set out in the Asset

Management Plans.

The Asset Management Plans contain the history and the

maintenance strategies for each asset class and explore

the available options for their replacement. These options

take account of predicted population and household

growth in the city, as well as any change in technology

which may impact on the best long term solution. The

Asset Management Plans look at the remaining life ofthe assets, which may be greater than the life of the Long

Term Plan. The Council has considered the condition

of its infrastructural assets against three risk criteria:

high, medium and low. It has adopted what it considers

appropriate risk criteria for each asset class. Those risk

categories will be revaluated when the Asset Management

Plans are next reviewed, as part of the preparation of the

Long Term Plan 2015 - 25.

The remaining life of assets has been established by a

combination of asset condition assessments, theoretical

modelling, eld sampling and material analysis. External

consultants have assisted in the more complex areas of

assessment, particularly in relation to the underground

assets. The output from these studies has been peer

reviewed and included in the Asset Management Plans.

The Asset Management Plans include a comprehensive

evaluation of risk to service delivery as well as the likely

impact of unplanned events on the Councils nancial and

statuary obligations.

The Asset Management Plans also review the level of

service being delivered against customer expectations.

These service reviews are conducted through feedback

from Councillor Clinics, customer phone calls, emails

and letters and annual surveys. In general, customers

are reasonably satised with the current level of service

provided.

COnditiOn OF the COunCils Building assetsTo manage costs, the Council decided to take a high-risk

approach in the management of the Councils building

assets, meaning that spending on maintenance has been

kept to basic levels. A recent reassessment of the Councils

building portfolio has identied some signicant high-risk

remedial work is necessary. Subsequent events have caused

some reconsideration of that assessment and the Annual

Plan 2013-14 includes an additional $500,000 for remedial

building maintenance each year for the next three years.

PrOvisiOn OF water serviCes CaPaCity

inFrastruCture serviCes PrOPOsalPorirua City Councils Long Term Plan 2012-2022 and Annual

Plan 2013-14 outline discussions between the Council

and Capacity Infrastructure Services a water services

provider owned by the Wellington and Hutt City Councils,

that explore the possibility of Porirua City purchasing an

ownership share in Capacity and for Capacity to manage

Poriruas three waters on the Councils behalf.

The proposal being considered is for Capacity to provide

asset management services for water supply, waste water

and stormwater. Capacity would be a council-controlled

organisation (CCO) owned by and delivering water servicesfor Porirua, Wellington, Hutt and pper Hutt City Councils.

Information relating to the proposal which will be nalised

in August 2013 is available from the Council

eFFiCienCy and eFFeCtiveness review

Annual Plan 2013-14 - $100,000

The Council has agreed to conduct a review of Council

expenditure, revenue and some aspects of service delivery.

Grant Thornton New Zealand Limited has been engaged

to undertake the review and will report to the Council in

September 2013. The primary purpose of the review is todevelop a sound information base on which future budget

decisions can be made.


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regiOnal gOvernanCeAnnual Plan 2013-14 - $50,000

In 2012, Porirua City Council joined a Wellington Region

Governance Working Party (also comprising Greater

Wellington City Council, Wellington City Council and Kapiti

Coast District Council) to consider possible changes to the

local governance structure of the Wellington region. At

the time of writing the public consultation process on the

Working partys recommendations had concluded and an

application to the Local Government Commission had been

made by Greater Wellington Regional Council. Porirua

City Council submitted a response to this application,supporting the Greater Wellington Regional Council

position on the governance of the metropolitan area of the

region (i.e. excluding Wairarapa). The funding attached

to this initiative will be required to enable the Council to

continue to engage our community in discussions on the

topic.

Building COmPlianCe liaBilities

As time progresses, there are fewer claims relating to

weathertight (leaky) homes being made. In the late 90s

to the early 2000s there was a systematic failure of the

national building compliance system that allowed somehomes to be built that allowed the ingress of water and

were termed leaky. At this time, Porirua was experiencing

a boom period of building construction and consequently

the Council, as a building consenting authority, has been

named in legal claims for compensation as having some

liability for the remediation of the leaky building. There

is a ten year liability period for the Council which means

that its exposure to further claims will reduce as more

stringent building controls to remedy the causes of the

leaky homes were introduced in 2004. At present, there are

18 claims lodged with the Weathertight Homes Resolution

Service for homes in Porirua. A nancial contingency hasbeen made to handle any successful claims made against

the Council.

Recently, the Courts in a precedent setting decision

have also decided that councils have a duty of care for

commercial building owners during the consenting

process and are, therefore, potentially liable for claims

relating to buildings that have building defects. Whilst

the Council has not had any claims of this nature, there

is a possibility that they may arise in the future and the

claims may be substantial. This is an additional risk that

the nancial contingency needed to settle any claims and

drawn from rates funding will need to cover.

insuranCe issues lOCal authOrityPrOteCtiOn PrOgramme (laPP) Fund

Annual Plan 2013-14 - $225,000

As a result of the Canterbury earthquakes of 2010 and

2011, the Local Authority Protection Programme (LAPP

fund), of which the Porirua City Council is a member,

had its nancial resources depleted. The LAPP fund is

now in the process of being built back up, as part of that

process, the excess on the insurance policies that this

scheme provides for has increased. In order to ensure that

Council has sufcient resources available, should an event

occur, Council is in the process of increasing its Insuranceand Indemnity Reserve by an increase of 0.5% of rates

($225,000) over a 7 year period is required, starting in

2013/14, to enable the Council to build up reserves to cover

the increased excess of $2.5 million.


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www.pcc.govt.nz


The industries in which Porirua City has the largest

comparative advantages are building construction, education

and training, and health care and social assistance.

wOrkFOrCe

The unemployment rate in Porirua City was 7.5% in March

2013, compared with 6.9% for the Wellington region and

6.2% for New Zealand.

In March 2012 total employment in Porirua City averaged

16,866 and employment growth averaged 1.8% per annum,

compared with 1.2% for the Wellington region and 1.7% for

the national economy.

In 2012 Education and Training was the largest employer in

Porirua City, accounting for 16% of total employment. The

second largest employer was Retail Trade (13.6%) followed

by Health Care and Social Assistance (13.1%). Togetherthe three largest employers account for 42.7% of total

employment.

Wholesale Trade made the largest contribution to

employment growth in Porirua City between 2011 and

2012, followed by Accommodation and Food Services, and

Administrative and Support Services.

Business

Porirua City currently has over 3,950 businesses and just

over 55% of total businesses in the city are home-based

businesses.

Growth in the number of businesses in Porirua City hasaveraged 2.7% per annum since 2000, compared with

1.6% for the Wellington region and 1.8% for New Zealand.

Growth in the number of businesses in Porirua grew by 2%

from 2011.

Economic pdate1

POPulatiOnThe citys latest population estimate is 53,000, which is

about 10% of the Wellington region population and 1.2%

of the New Zealand population. Statistics New Zealand

continues to project the population of Porirua to increase

0.6 per cent per annum (average change). Over the last year

(2011-2012) the population growth in Porirua City increased

by 0.6%, compared with 0.5% for the Wellington region.

earnings

As at March 2006 personal income (median) for Porirua

City was $26,300, compared with $28,000 for the

Wellington region and $24,400 for New Zealand. As forhousehold income, Porirua City median income was

$62,400, compared with $59,700 for the Wellington region

and $51,400.for New Zealand.

In the year to March 2011, the median annual earnings in

Porirua City were $47,300, compared with $56,260 for the

Wellington region and $49,900 for New Zealand.

hOusing

According to 2006 Census 52.7% of households own their

dwellings with or without mortgage, compared with 55.1%

for the Wellington region and 54.5% for New Zealand. The

average household size is 3.1 people, compared 2.6 people

for the Wellington region and 2.7 people for all of New

Zealand.

The median house price in Porirua City was $383,000 in

2012, compared with $385,000 for the Wellington region

and $357,000 for New Zealand.

eCOnOmy

The total annual output of the Porirua economy is

estimated at about $1 billion and over the past 10 years has

performed above the national average in employment and

GDP per capita growth.Over the last year (2011-2012) Porirua Citys GDP (gross

domestic product) increased by 0.4%, compared with 0.2%

for Wellington region and 2.3% for New Zealand.

industries

Health Care and Social Assistance was the largest industry

in Porirua City in 2012 accounting for 12% of GDP. The

second largest industry was Retail Trade (9.4%) followed

by Building and Construction (8.8%). Together the three

largest industries account for 30.2% of total GDP.

Wholesale Trade made the largest contribution to overalleconomic growth in Porirua City between 2011 and 2012,

followed by Rental, Hiring and Real Estate Services, and

Transport, Postal and Warehousing.

1 This economic update information is sourced and supplied fromStatistics New Zealand and Infometrics Ltd


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Porirua City At A GlanceA summary report on the latest data available as at March 2012, supplied by Infometrics Ltd.

($m)


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www.pcc.govt.nz



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glOssary OF terms

Activity: services provided by the Council.

Annual Plan: a one year plan that focuses on the work

to be carried out in a relevant year of the Councils Long

Term Plan (LTP) and also highlights any variations and

amendments to the LTP. The Council must consult their

community on the Annual Plan.

Annual eport: a one year report on the performance

of the Council against the Annual Plan including

explanations for signicant deviations from the Annual

Plan.

Asset: an item of value, usually of a physical nature, thatthe Council owns on behalf of the community that

has a useful life of more than 12 months and creates

future economic benets over a period of time, such as

roads, drains, parks and buildings. See both ested and

Infrastructure Assets.

Capital Expenditure: spending on works required for a new

asset; and works which upgrade and enhance a signicant

part of an asset, beyond its original design capacity and

estimated life.

Capital Costs: transactions that have an effect on thelonger term (i.e. more than 12 months) nancial position of

the Council. Items include the repayment of loan principal,

transfer of funds to reserve accounts and the purchase or

construction of assets.

Capital Financing: transactions that have an effect on the

longer term nancial position of the Council. Items include

the raising of loan funds and transfers from reserve

accounts.

Current Assets: assets which can be readily converted to

cash, or will be used up during the year. These include cash,stock, debtors and operational investments.

Current Liabilities: creditors and other liabilities due

for payment within the nancial year. Public Debt to be

renanced within the nancial year is excluded.

Debt: the value of outstanding obligations owed by the

Council to external third parties.

Depreciation: assets lose their value over time as a

result of wear and tear, age, or obsolescence, and must

be replaced once the end of their useful life is reached.

Depreciation is an accounting method to spread the

replacement cost of assets such as infrastructure assets

property, plant and equipment over their useful lives as

an operating expense.

Development Contributions: fees paid by developers who

subdivide or build. These fees cover the cost of upgrading

the services (e.g. water supply) provided to those newsections / buildings. The setting of the development

contributions is governed by the Development

Contributions Policy and applied under the Local

Government Act 2002.

Expenditure:the outow of resources (usually cash) in

return for goods and/or services.

Financial Contributions: fees paid by developers who

sub-divide or build. These fees cover the development of

public facilities. (e.g. open spaces and parks). The setting

of the nancial contributions (or recreation and civiclevies) is governed by the District Plan and applied under

the Resource Management Act 1991.

Group of Activities: the Council groups all its services

into nine main categories of activities (which equate to

groups of activities in the Local Government Act 2002).

Infrastructure Assets: stationary systems forming a

network and serving whole communities (e.g. roads,

waste, sewerage and storm water systems). The system

as a whole is intended to be maintained indenitely

at a particular level of service. This is achieved bythe continual replacement and refurbishment of its

components.


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Interest: interest payable on bank overdrafts and debt.

Loan funding: paying for capital costs by raising loans.

Local government: there are two types of local authority

regional councils and territorial authorities. These are

autonomous and are accountable to the communities

that they serve. They provide a vast range of services

funded largely by rates and regulated by a series of local

government acts. Territorial authorities such as Porirua

City Council deal with day-to-day issues that contribute to

the well-being of the people that live in their community,

such as:

community well-being and development;

environmental health and safety (including building

control, civil defence, and environmental health

matters);

infrastructural services (wastewater, water, stormwater,

roading and transport);

recreation and culture;

resource management, including land-use planning

and development control.

Local Government Act 2002 (LGA): the Local Government

Act 2002 is the primary legislation governing the Councilsoperations and actions. The LGA denes the regulations

and responsibilities for local authorities.

Long Term Plan (LTP): a ten-year plan which sets the

strategic direction for the Council over the next 10

years. The LTP outlines the Councils response to shared

Community Outcomes and how the Council will manage

its nances and the communitys resources. The LTP is a

requirement of the Local Government Act 2002 and it is

formally reviewed and updated every three years.

perating Expenditure: spending for the normal day-to-day services of the Council (e.g. personnel costs & suppliers).

This also includes depreciation and interest on loans. All

these items are consumed within the nancial year.

perating evenue: money earned through the activities

in return for a service provided, or by way of a grant or

subsidy to ensure particular services or goods are provided.

(e.g. Transit New Zealand subsidies, rental income, permits

and consent fees).

perating Surplus (Decit): the expressions operating

surplus and operating decit are accounting terms

meaning the excess of income over expenditure and

excess expenditure over income respectively. It includes

non-cash items such as income and expenditure owing

but not paid (Debtors and Creditors) and depreciation. It

excludes capital items such as the receipt or repayment of

loans, the cost of capital works and transfers to and from

reserves.

Private Benet: this occurs when individuals who benet

from a service can be clearly identied and therefore

charged for that service. (e.g. the use of the Arena facilities)

Public Benet: this relates to spending which benets

the community in general and for which no individual

beneciaries can be clearly identied. Both Private and

Public Benet are considered when developing the

Revenue and Financing Policy.

ates: a property tax to fund local government activities.

The amount of rates varies between properties as rates

are based on capital values, and differences in services

provided for residential, rural and commercial properties.

Property valuation changes, which the Council has no

control over, will also affect the rates paid. See also

Regional Rates.

ate funding: paying for capital or operating costs

from rates.

evenue: income received by the Council to fund its

services. Revenue sources include: rates, fees and charges

for using a particular service, penalties and nes such asparking nes, and grants and subsidies.


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Helpful Links

For further information and links to the variousreports mentioned in this Pre-Election Report:

2013 / 14 Annual Plan www.pcc.govt.nz/Publications/Annual-Plan

2012 / 22 Long Term Plan www.pcc.govt.nz/Publications/Long-Term-Plan-2012-22

2011 / 12 Annual eport www.pcc.govt.nz/Publications/Annual-Report

For more information about the governance of Porirua City Council see

www.pcc.govt.nz/Your-Council/Local-Governance

For further information aboutlocal governance in ew Zealand seewww.lgnz.co.nz

For more information about Wellington egional Governance eform see

www.regionalreform.org.nz

For more information about the Society of Local Government Managers,

an organisation that supports and develops local government professionals, see

www.solgm.org.nz

For more information about Porirua City Councils assets:

Buildings, Leisure Assets, Spicer alley Landll, Stormwater, Transport,

Wastewater, Water Supply see

www.pcc.govt.nz/Publications/Asset-Management-Plans

For more information about the Transmission Gully Project see

www.nzta.govt.nz/projects/transmission-gully and http://www.pcc.govt.nz/News---Events/

Latest-News/Transmission-Gully-and-Link-Roads


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Pre Election Report 2013

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