Napier City Council Annual Report 2007/2008 by Napier City Council

ISSN 1170-9847

Napier City Council Annual Report 1 July 2007 to 30 June 2008

Adopted 15 October 2008

Contents Mayor and Councillors as at 30 June 2008 .......................................................................................................................... 2 Mayor and Chief Executiveâ&#x20AC;&#x2122;s Message ................................................................................................................................ 3 Financial Summary ............................................................................................................................................................... 4 Key Statistics ........................................................................................................................................................................ 5 Community Outcomes .......................................................................................................................................................... 6 Statement of Compliance and Responsibility ....................................................................................................................... 9 Financial Statements .......................................................................................................................................................... 13 Statement of Financial Performance ............................................................................................................................ 14 Statement of Changes in Equity .................................................................................................................................. 14 Statement of Financial Position .................................................................................................................................... 15 Statement of Cash Flows .............................................................................................................................................. 16 Notes to the Financial Statements ................................................................................................................................ 17 1. Statement of Accounting Policies for the year ended 30 June 2008 ....................................................................... 17 2. Explanation of major variances against budget ...................................................................................................... 25 3. Summary cost of services ....................................................................................................................................... 26 4. Rates revenue ......................................................................................................................................................... 27 5. Other revenue ......................................................................................................................................................... 28 6. Gains/(losses) ......................................................................................................................................................... 28 7. Employee benefit expenses .................................................................................................................................... 29 8. Other expenses ....................................................................................................................................................... 29 9. Finance income and finance costs .......................................................................................................................... 29 10. Tax........................................................................................................................................................................... 30 11. Cash and cash equivalents ..................................................................................................................................... 30 12. Debtors and other receivables ................................................................................................................................ 31 13. Inventories............................................................................................................................................................... 32 14. Biological assets ..................................................................................................................................................... 32 15. Other financial assets.............................................................................................................................................. 33 16. Non-current assets held for sale ............................................................................................................................. 33 17. Property plant and equipment ................................................................................................................................. 34 18. Intangible assets ..................................................................................................................................................... 36 19. Investment Property ................................................................................................................................................ 37 20. Investments in associates ....................................................................................................................................... 38 21. Creditors and other payables .................................................................................................................................. 38 22. Employee benefit liabilities ...................................................................................................................................... 39 23. Borrowings .............................................................................................................................................................. 39 24. Provisions................................................................................................................................................................ 41 25. Equity ...................................................................................................................................................................... 42 26. Capital Management ............................................................................................................................................... 43 27. Capital commitments and operating leases ............................................................................................................ 44 28. Contingencies ......................................................................................................................................................... 45 29. Reconciliation of net surplus after tax to net cash flow from operating activities .................................................... 45 30. Remuneration.......................................................................................................................................................... 46 31. Severance Payments .............................................................................................................................................. 46 32. Events after the balance sheet date........................................................................................................................ 46 33. Financial Instrument Risks ...................................................................................................................................... 47 34. Derivative Financial Instruments ............................................................................................................................. 51 35. Related Party Transactions ..................................................................................................................................... 51 36. Joint Venture ........................................................................................................................................................... 52 Council Controlled Organisations ....................................................................................................................................... 53 Maori Contribution to Decision-Making Process................................................................................................................. 54 Statement of Service Performance for Activity Groups ...................................................................................................... 55 Democracy and Governance .............................................................................................................................................. 56 Recreation .......................................................................................................................................................................... 58 Social and Cultural ............................................................................................................................................................. 63 City Promotion .................................................................................................................................................................... 71 Planning and Regulatory .................................................................................................................................................... 76 Roading .............................................................................................................................................................................. 81 Water and Wastes .............................................................................................................................................................. 84 Property Assets .................................................................................................................................................................. 90 Support Services ................................................................................................................................................................ 93 Glossary of Terms............................................................................................................................................................... 94 Napier City Council Annual Report 2007/08

Page 1

Mayor and Councillors as at 30 June 2008 Mayor

Barbara Arnott

Councillors

Maxine Boag

John Cocking

Bill Dalton

Kathie Furlong

Mark Herbert

Tony Jeffery JP

Harry Lawson

Rob Lutter

Dave Pipe

Keith Price

Faye White

Tania Wright

MISSION STATEMENT To provide the Facilities and Services and the Environment, Leadership, Encouragement and Economic Opportunity TO MAKE NAPIER THE BEST PROVINCIAL CITY IN NEW ZEALAND in which to live, work, raise a family, and enjoy a safe and satisfying life.

Page 2

Napier City Council Annual Report 2007/08

Mayor and Chief Executive’s Message Napier ranks at the top of provincial cities in New Zealand and although nearly all of our residents think that the city spends rates well, are happy with the city environment, services and facilities and the opportunities here – this only means we’ll try harder to improve and respond to communities needs. Where and how we live, work and play is important to all of us and managing and planning for our changing city is vital. All of our gains are a result of working in partnership with our communities and your interaction with us means efficient delivery of high quality services. Our thanks to Councillors, our valued managers and staff and our forthright, positive Napier community. The Annual Report is one measure of how we’ve delivered on our work programme for the year and you can be confident in the Council’s ongoing excellent financial management. This means a reduced level of debt and affordable, sustainable rates. Roading, sewage and refuse still consume the lions share of the funding but those facilities that bring us pleasure are not far behind – libraries, reserves and sportsgrounds. During the year the community made decisions about the Botanical Gardens and the Art Gallery & Museum. In both cases the Council went back to the drawing board after the consultation process and the results are a reflection of the community input. Economic Development is a large factor in the sustainability of our city and the workforce so tourism and our bid to attract skilled workers was at the forefront of our work in this area. Council’s partnership with the Rotary Pathway Trust has brought enormous benefits to those who enjoy the environment and a healthy lifestyle. Over 10 kilometres have been constructed this year. The city treasures its heritage and Art Deco is the heart of this. We now rank in the Government’s list as the preferred cultural site for World Heritage. Investigation of this process and the requirements has begun. We’ve worked with the region on many issues, wastewater, urban growth, airport, civil defence, our museum collections, the ongoing operation of Pettigrew Green Arena and many other issues. Napier is a unique city and balances well our affordability issues with the provision of amenities and protection for our fabulous natural environment. The commitment to quality and community from all of us serves Napier well.

Neil Taylor CHIEF EXECUTIVE

Napier City Council Annual Report 2007/08

Barbara Arnott MAYOR

Page 3

Financial Summary Financial condition indicators Actual 2007/08 $000

Budget 2007/08 $000

Actual 2006/07 $000

Rates Revenue

39,708

39,253

38,333

Net Surplus

18,491

14,475

20,407

Working Capital

32,248

30,308

30,762

Public Debt

11,627

42,794

18,814

Total Assets

1,287,915

1,221,740

1,144,837

Proportion of rates revenue to total revenue (%)

43.94%

45.22%

44.17%

Public debt as a percentage of total assets

0.90%

3.50%

1.64%

Proportion of rates revenue applied to service debt (%)

8.71%

13.51%

8.46%

The financial performance measures reflect positively on Council's overall performance and financial position at 30 June 2008. In addition public debt and working capital both show favourable variances due to timing variations and the carry forward of capital projects, and the application of internal borrowing instead of raising public debt. Explanations of major budget variations are outlined in note 2 of the Financial Statements.

How rates were spent The chart shows the split of rates expenditure between Council's activities. A negative percentage indicates a contribution to rates.

Roading Wastewater (Sewerage) Solid Waste (Refuse) Libraries Reserves Democracy & Governance Sportsgrounds Water Supply Stormwater Napier Aquatic Centre HBMAG Planning Policy Community Development Public Toilets City Promotion Development Control City & Business Promotion Aquarium Environmental Health Civil Defence Marineland Building Consents Napier i-Site Halls Cemeteries Safety Watch Animal Control Municipal Theatre War Memorial Centre Safer Community Marine Parade Pools Inner Harbour Par 2 Golf Retirement & Rental Housing Kennedy Park Property Holdings -10.0%

Page 4

13.8% 9.7% 7.6% 8.7% 8.2% 8.0% 7.5% 6.8% 5.5% 4.1% 4.0% 3.3% 3.2% 2.5% 2.5% 2.3% 2.1% 1.8% 1.1% 1.1% 1.1% 1.1% 1.1% 1.0% 0.9% 0.9% 0.9% 0.8% 0.6% 0.4% 0.1% 0.1% -0.4% -1.9% -4.7% -5.9% -5.0%

0.0%

5.0%

10.0%

15.0%

Napier City Council Annual Report 2007/08

Key Statistics 30 June 2008

30 June 2007

Area (ha)

10,364

Population (2006 Census)

57,100

56,900

24,061

23,635

352

346

9,459,156,200

9,257,526,200

Nett capital value (i.e. Capital Value of rateable property)

9,011,393,450

8,813,921,950

Gross land value

4,514,224,550

4,464,873,770

Nett land value (i.e. land value of rateable property)

4,329,006,600

4,279,692,320

2008

2005

Total rates struck (incl. GST)

43,319,540

42,688,307

System of rating

Land Value

11,562,300

18,570,250

Area and population

Valuation Rateable properties, no. of Non-rateable properties, no. of Gross capital value

Date of last revision of values

Rates and rating

Public debt Public debt outstanding (excluding finance leases) Loan redemption reserves Unexercised loan authorities

2,223,612

3,408,784

58,625,000

46,411,000

142,092,037

149,330,502

71,162,583

84,049,462

1989

Building consents Value of consents for year Value of consents for residential Properties

Date of constitution of city Average Residential Rates

1,337 1,292

Timaru Hamilton

1,455 1,350

Napier

1,467 1,432

Invercargill

1,476 1,369

Palmerston North

1,484 1,412 1,529 1,449

Hastings Tauranga

1,569 1,533

Rotorua

1,570 1,502 1,612

Whangarei

1,430 1,500 1,419

AVERAGE 2007/08

Napier City Council Annual Report 2007/08

2006/07

Page 5

Community Outcomes The five Hawke’s Bay Councils - Hastings District Council, Napier City Council, Central Hawke’s Bay District Council, Wairoa District Council and the Hawke’s Bay Regional Council worked together to identify a long term vision for the future and community outcomes for the Hawke's Bay region for inclusion in the 2004 LTCCP. National Research Bureau was commissioned in February 2005 to undertake a survey of residents in the region to obtain the views of residents on economic wellbeing, social and cultural wellbeing, and environmental wellbeing. This information gives a baseline for reporting on Council's progress towards achievement of the community outcomes. Results from this survey were reported in Council's 2004/05 Annual Report. Work is continuing on monitoring and reporting on the community outcomes collaboratively with the other Councils. A Regional Strategic Coordination Group (RSGC) has been formed comprising 14 member organisation, Councils and non Government organisations. This group will coordinate the monitoring and reporting of Community Outcomes. The first report is expected to be produced early 2009. The Council considers that meeting its service level targets constitutes its major role as a contributor to the progress of Community Outcomes for the 2007/08 year. The contributions of Council's activities to the community outcomes are as follows:

Business Facilitation: The Council’s economic development work is directly concerned with increasing the overall economic well-being of the Napier community. The Council does this in association with community agencies and central government. Marineland of New Zealand: Assists in Napier being a leading commercial and tourist centre. National Aquarium of New Zealand: Attracts visitors to Napier. Napier i-SITE: Provides increased information about Napier to visitors to promote visitor spend. Kennedy Park: Provides access for a wide range of visitors and contributes to local employment opportunities and support to national and regional sports events.

Outcome - Transport, infrastructure and services that are safe, effective and integrated War Memorial Conference Centre: A quality facility is maintained. Retirement and Rental Housing: The use of rental properties is maximised and tenants have affordable rents. Public Toilets: Provides and maintains suitably located and adequate number of public toilets throughout the city.

Outcome - A strong prosperous and thriving economy

City Development Planning: Actively supports the adopted retail strategy and strategic plan ensuring the district plan and bylaws are effective in managing planning issues and changes such as: Port noise, Businesses of prostitution, Business Parks, Retail Strategy, Non-complying activities, Financial Contributions.

Governance: Through Governance Council provides the infrastructure and services that promote economic growth.

Animal Control: Services that are effective in reducing registration costs. Consistent application of the principles of equity and fairness.

Sportsgrounds: Sports events bring competitors and supporters to the city.

Parking Services: Provide accessible quality transportation amenities.

Marine Parade Pool Complex: The complex provides well presented and modern aquatic facilities and local business opportunities.

Roading: Roads and footpaths are provided to satisfy public expectations.

Economic Wellbeing

Par 2 MiniGolf: Promotes tourism. Inner Harbour: Facilitates the fishing industry by maximising berth facilities. War Memorial Conference Centre: The facility and Napier are promoted as a conference destination and it maintains the Marine Parade Precinct. Municipal Theatre: Provides a facility to accommodate large conferences and events and ticketing services to a range of venues for local, national and international events. Emergency Management: Identifies hazards and risks and plans for the management and response to a civil defence emergency. Regulatory Consents: District Plan provisions which allow a flexible approach to a range of development opportunities.

Solid Waste: Ease of access through improved facilities (eg. an increased number of recycling stations and entranceway improvements at the Redclyffe Transfer Station). Stormwater: Maintains pumping stations and the open drains to a standard that will maximise the pumping capacity. Wastewater: Provides and maintains a wastewater system with adequate wastewater capacity. Water: The system is flushed and cleaned. Capacity and storage improvements are made.

Social and Cultural Wellbeing Outcome - Strong regional leadership and a sense of belonging

Parking Services: Facilitates economic development in CBD and contributes to active marketing of CBD.

Governance: Governance contributes to co-ordinated regional leadership to achieve economic, social, cultural and environmental wellbeing of our communities, a democratic environment where all people are able to participate in the life of their communities and achieve a sense of belonging.

Property Holdings: Provides leasehold land for commercial and industrial use and letable space in commercial buildings.

Community Development: Provides appropriate training, advice and information services to the various community groups, organisations and agencies.

Building Consents: Provides for a range of development opportunities.

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Napier City Council Annual Report 2007/08

Community Outcomes Youth Development: The coordination of 6 youth forums per year provides an opportunity for youth participation and partnerships with local government and the community. Safer Napier: Provides and encourages coordination, facilitation and liaison between the community groups that contribute to crime prevention, mitigation and safety. Business Facilitation: The Council’s economic development work, in particular, its small business facilitation and employment services, also has important social impacts that contribute to the overall social and cultural well-being of the Napier community. An important part of the Council’s economic development work continues to involve working with local community and Maori groups and interests, to improve business and employment outcomes for these sectors.

Outcome - Supportive, caring and inclusive communities Library Services: The library service maintains a community information database listing a minimum of 350 community organisations which is electronically available, a Books-onWheels Service for the housebound and reading programmes for children and teens. Napier Aquatic Centre: Opportunities are provided to exercise, learn, relax and have fun in a healthy and supportive environment which assists in the health and rehabilitation of individuals and groups. Retirement and Rental Housing: Applies the principles of equity and fairness to ratepayers. Halls: Provides communities with a place to come together for meetings and activities. Community Development: Administrative support and liaison services provided to community based groups and committees. Agreed financial assistance and resources provided to community groups, social service organisations and agencies in the city. Monitor and report on social and related conditions in Napier. Youth Development: Access to resources for young people to pursue cultural and sporting opportunities within their community provided. Ensure community services and young people are connected through access to information and partnerships. Safer Napier: Provides and encourages coordination, facilitation and liaison between the community groups that contribute to crime prevention, mitigation and safety. Emergency Management: Formulates community networks and communication systems to respond effectively to a civil defence emergency. Environmental Health Services: Improved quality of suburban environment is provided through services such as noise control. Animal Control: A more co-ordinated approach to social service delivery to provide, secure and more satisfying social environment.

Outcome - Safe and accessible recreational facilities Library Services: The libraries are open to the public 100 hours per week. There are a variety of resources available, including books, magazines, audio visual materials and electronic resources. Staff members are available at multiple service points to assist the public with obtaining the material they need. The library is used by a wide variety of people. Sportsgrounds: A full range of attractive facilities for organised outdoor sports is provided for use by citizens and visitors. The multiple uses of facilities is promoted in order to use grounds and buildings to capacity. Napier Aquatic Centre: A safe and well presented aquatic centre is provided whilst the standards are recognised to the highest national standards. Pool water quality is provided that is safe for users and meets or exceeds national standards. Pride is installed in the centre by its users and users are assisted in a positive recreational experience. Passive Recreation Facilities: Public gardens are provided for the pleasure and quiet relaxation of citizens and visitors. A network of open space reserves is provided which subdivides the city into manageable suburban areas. Local community areas are provided for general outdoor recreation for the use of the local residents, especially children. Par 2 MiniGolf: Provides an attractive and relaxed leisure environment. Inner Harbour: Safe accessible water-based recreational opportunities are provided. Halls: Provides communities with a place to come together for meetings and activities. Municipal Theatre: Allows residents to enjoy a range of theatrical, cultural and artistic experiences. War Memorial Conference Centre: Provides a facility for community and commercial hire. National Aquarium of New Zealand: Provides opportunity for a range of visitor experiences. Kennedy Park: Provides facilities for young people and families.

Outcome - Communities that value and promote their unique culture and heritage Library Services: The library service maintains five collections of resources reflecting and enhancing the culture of the city; Art Deco, Maori, Hawke’s Bay Heritage, Robson Collection on Restorative Justice and the Irene Lister Taradale Archive. The library service indexes all family notices and important local news stories published in the main local journal(s) of record to acceptable library standards and make them electronically accessible to all library users. Cultural Services: Actively promotes the region’s heritage and helps to preserve cultural facilities. Par 2 MiniGolf: Providing culturally themed aspects to Par 2 MiniGolf.

Property Holdings: Provides leasehold land for residential use and enabling residential leaseholders to own their own properties.

War Memorial Conference Centre: The Centre values and protects a place of historical significance by housing and maintaining the eternal flame memorial.

Kennedy Park: Provides support to local sports organisations.

Municipal Theatre: Maintains the Art Deco heritage and is an integral part of the Napier Art Deco experience.

Napier City Council Annual Report 2007/08

Page 7

Community Outcomes Community Development: By undertaking ongoing liaison with community groups, social services, key organisations and government agencies. City Development Planning: Actively participates in preserving the heritage of the city identifying the heritage value of the city as a whole through adding to the heritage inventory and Commissioning appropriate Heritage studies. Supports and promotes cultural diversity by encouraging all relevant stakeholders to have the opportunity to comment prior to formal notification of District Plan modifications. Marineland of New Zealand: Increases community pride in regional museums and exhibitions. National Aquarium of NZ: Provides cultural experience which adds to the intrinsic value of the community.

Building Consents: Planning and City heritage provide for safe and secure communities. Environmental Health Services: Inspections of registered premises are carried out. Parking Services: Contributes to a safe inner city. Property Holdings: Ensuring Council buildings are well maintained and meet current standards and safety requirements. Roading: Road surfaces provide a comfortable and smooth ride. Roads are safe - number of injury crashes are minimised in accordance with Land Transport NZ (LTNZ) Strategy to 2010.

Napier i-SITE: Increases knowledge of the local area and what it has to offer.

Solid Waste: Safeguards environment and community health.

Environmental Wellbeing

Stormwater: Minimising the adverse effects of surface water on human health, infrastructure, property and the environment.

Outcome - A lifetime of good health and wellbeing

Wastewater: Protect Public Health by means of collection, conveyance and disposal of wastewater from urban areas.

Napier Aquatic Centre: Swimming and other programmes are presented as life skills for individuals to develop to their full potential. Affordable access to high quality activities and educational programmes are provided. This access is for individuals, as well as groups and school users.

Water: Provides water for domestic use, industrial and commercial purposes, and for fire fighting and other emergencies.

Marine Parade Pool Complex: An alternative recreation facility which encourages and promotes fitness of residents. Retirement and Rental Housing: Assistance is available to tenants and they are visited on a regular basis. Halls: Provides and maintains an appropriate number and range of community facilities. Public Toilets: The closure time of public toilets due to cleaning or repair and maintenance is minimised.

Outcome - An environment that is appreciated, protected and sustained for future generations Passive Recreation Facilities: Reserves are sustainably managed and developed as a natural recreational resource for the enjoyment of the inhabitants of and the visitors to Napier. Burial and Cremation Services: A well maintained and aesthetically pleasing environment for all cemetery users.

Environmental Health Services: A water sampling programme is carried out in excess of the National Drinking Water Standard requirements.

City Development Planning: Practices and supports sustainable urban development by developing planning frameworks for identified city growth and development areas such as Greenfield growth areas. Ensures an adequate supply of commercial and industrial zoned land. Creates imaginative, interlinked urban public places and clearly and effectively communicates planning and resource management processes to the public.

Marineland of New Zealand: Provides education services and opportunities and environmental enhancement.

Regulatory Consents: Planning and City heritage protect and sustain the environment.

Water: Provides water suitable for human consumption.

Roading: Renewal work is undertaken when due.

Outcome - Safe and secure communities

Solid Waste: Protects resources by reducing waste generated and producer pays for disposal to reflect true cost of waste.

Youth Development: Provides safe choices that are alcohol and drug free and promote health and wellbeing of youth in our community.

Inner Harbour: The Inner Harbour environment allows safe access to the amenities. Retirement and Rental Housing: Provides a safe environment for the tenants and ensures tenants comply with the conditions of the Tenancy Agreement and with maintenance and improvements identified. Safer Napier: Develops and implements community based crime reduction activities that mitigate the effects of crime consistent with the Governments crime Reduction Strategy and its seven key goals. Promotes safety in the community that emphasises situational crime. Community Safety: Security patrols are provided in the inner city.

Page 8

Marineland of New Zealand: Provides education services and opportunities. National Aquarium of NZ: Raises environmental awareness in the community through increased understanding of marine life and conservation and environmental issues. Stormwater: Compliance with requirements of resource consents for discharging stormwater. Wastewater: Protect the environment from adverse effects of wastewater. Water: Actively promotes water conservation to help ensure efficient use of water from the Heretaunga Plains aquifer.

Napier City Council Annual Report 2007/08

Statement of Compliance and Responsibility Compliance The Council and management of the Napier City Council confirm that all the statutory requirements in relation with the Annual Report have been complied with in accordance with clause 20 of schedule 10 of the Local Government Act 2002.

The Napier City Council and its management accept responsibility for establishing and maintaining a system of internal control designed to provide reasonable assurance as to the integrity and reliability of financial reporting.

Responsibility

In the opinion of the Napier City Council and its management the annual Financial Statements for the year ended 30 June 2008 fairly reflect the financial position and operations of Napier City Council.

The Napier City Council and its management accept responsibility for the preparation of the annual Financial Statements and the judgements used in them.

Neil Taylor CHIEF EXECUTIVE 15 October 2008

Napier City Council Annual Report 2007/08

Barbara Arnott MAYOR 15 October 2008

Page 9

AUDIT REPORT TO THE READERS OF NAPIER CITY COUNCIL’S FINANCIAL STATEMENTS AND PERFORMANCE INFORMATION FOR THE YEAR ENDED 30 JUNE 2008 The Auditor-General is the auditor of Napier City Council (the City Council). The Auditor-General has appointed me, Mark Maloney, using the staff and resources of Audit New Zealand, to carry out an audit on his behalf. The audit covers the City Council’s compliance with the requirements of Schedule 10 of the Local Government Act 2002 that apply to the annual report of the City Council for the year ended 30 June 2008, including the financial statements. Unqualified Opinion In our opinion: 

The financial statements of the City Council on pages 14 to 93: 



comply with generally accepted accounting practice in New Zealand; and -

fairly reflect :

•

the City Council’s financial position as at 30 June 2008; and

•

the results of its operations and cash flows for the year ended on that date.



The service provision information of the City Council on pages 55 to 93 fairly reflects the levels of service provision as measured against the intended levels of service provision adopted, as well as the reasons for any significant variances, for the year ended on that date; and



The Council has complied with the other requirements of Schedule 10 of the Local Government Act 2002 that apply to the annual report (the “other requirements”).

The audit was completed on 15 October 2008, and is the date at which our opinion is expressed. The basis of our opinion is explained below. In addition, we outline the responsibilities of the Council and the Auditor, and explain our independence. Basis of Opinion We carried out the audit in accordance with the Auditor-General’s Auditing Standards, which incorporate the New Zealand Auditing Standards. We planned and performed the audit to obtain all the information and explanations we considered necessary in order to obtain reasonable assurance that the financial statements, performance information and the other requirements did not have material misstatements, whether caused by fraud or error. Page 10

Napier City Council Annual Report 2007/08

Audit Report

Material misstatements are differences or omissions of amounts and disclosures that would affect a reader’s overall understanding of the financial statements, performance information and the other requirements. If we had found material misstatements that were not corrected, we would have referred to them in our opinion. The audit involved performing procedures to test the information presented in the financial statements, performance information and the other requirements. We assessed the results of those procedures in forming our opinion. Audit procedures generally include: 

determining whether significant financial and management controls are working and can be relied on to produce complete and accurate data;



verifying samples of transactions and account balances;



performing analyses to identify anomalies in the reported data;



reviewing significant estimates and judgements made by the Council;



confirming year-end balances;



determining whether accounting policies are appropriate and consistently applied; and



determining whether all required disclosures are adequate.

We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements, performance information and the other requirements. We evaluated the overall adequacy of the presentation of information in the financial statements, performance information and the other requirements. We obtained all the information and explanations we required to support our opinion above. Responsibilities of the Council and the Auditor The Council is responsible for preparing financial statements in accordance with generally accepted accounting practice in New Zealand. The financial statements must fairly reflect the financial position of the City Council as at 30 June 2008. They must also fairly reflect the results of its operations and cash flows and the levels of service provision for the year ended on that date. The Council is also responsible for meeting the other requirements of Schedule 10 and including that information in the annual report. The Council’s responsibilities arise from Section 98 and Schedule 10 of the Local Government Act 2002. We are responsible for expressing an independent opinion on the financial statements, performance information and the other requirements and reporting that opinion to you. This responsibility arises from section 15 of the Public Audit Act 2001 and section 99 of the Local Government Act 2002.

Napier City Council Annual Report 2007/08

Page 11

Audit Report

Independence When carrying out the audit we followed the independence requirements of the Auditor-General, which incorporate the independence requirements of the Institute of Chartered Accountants of New Zealand. Other than the audit and in conducting the audit of Long Term Council Community Plan, we have no relationship with or interests in the City Council.

Mark Maloney Audit New Zealand On behalf of the Auditor-General Palmerston North, New Zealand

Matters Relating to the Electronic Presentation of the Audited Financial Statements, Performance Information and the Other Requirements This audit report relates to the financial statements, performance information and the other requirements of Napier City Council for the year ended 30 June 2008 included on Napier City Council’s website. The Napier City Council’s Council is responsible for the maintenance and integrity of Napier City Council’s website. We have not been engaged to report on the integrity of Napier City Council’s website. We accept no responsibility for any changes that may have occurred to the financial statements, performance information and the other requirements since they were initially presented on the website. The audit report refers only to the financial statements, performance information and the other requirements named above. It does not provide an opinion on any other information which may have been hyperlinked to or from the financial statements, performance information and the other requirements. If readers of this report are concerned with the inherent risks arising from electronic data communication they should refer to the published hard copy of the audited financial statements, performance information and the other requirements as well as the related audit report dated 15 October 2008 to confirm the information included in the audited summary annual presented on this website. Legislation in New Zealand governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

Page 12

Napier City Council Annual Report 2007/08

Financial Statements for the year ended 30 June 2008

Napier City Council Annual Report 2007/08

Page 13

Statement of Financial Performance

Note

Actual 2008 $000

Budget 2008 $000

Actual 2007 $000

Rates revenue

39,708

39,253

38,333

Finance income

3,661

1,797

1,892

Other revenue

46,023

45,757

43,476

Other gains/(losses)

982

2,366

90,374

86,807

86,067

22,005

20,331

20,727

17, 18

16,131

16,047

14,734

Other expenses

32,678

31,755

28,927

Finance costs

Income

Total income Expenditure Employee benefit expenses Depreciation and amortisation

1,236

4,199

1,430

Total operating expenditure

72,050

72,332

65,818

Operating surplus/(deficit) before tax

18,324

14,475

20,249

167

158

18,491

14,475

20,407

18,491

14,475

20,407

Actual 2008 $000

Budget 2008 $000

Actual 2007 $000

1,113,013

1,103,142

1,092,568

Share of associate surplus/(deficit)

Surplus/(deficit) before tax Income tax expense

Surplus/(deficit) after tax

Statement of Changes in Equity for the year ended 30 June 2008

Note

Balance at 1 July Property, plant and equipment Revaluation gains/(losses) taken to equity

Gain on property valuations

129,013

50,701

129,045

50,701

18,491

14,475

20,407

147,536

65,176

20,445

1,260,549

1,168,318

1,113,013

Financial assets at fair value through equity Valuation gains/(losses) taken to equity Net income/(expense) recognised directly in equity Surplus/(deficit) for the year Total recognised income/(expense) for the year ended 30 June Balance at 30 June

The accompanying notes form part of and should be read in conjunction with these financial statements. Page 14

Napier City Council Annual Report 2007/08

Statement of Financial Position as at 30 June 2008 Note

Actual 2008 $000

Budget 2008 $000

Actual 2007 $000

Cash and cash equivalents

3,468

25,759

9,305

Debtors and other receivables

9,921

10,035

6,881

Inventories

5,410

8,590

7,754

Biological assets

189

229

Other financial assets

30,203

22,907

Non current assets held for sale

1,311

49,191

44,384

48,387

Assets Current assets

Total current assets Non-current assets Property, plant and equipment

1,180,461

1,174,168

1,046,221

Intangible assets

172

159

Investment property

44,928

44,426

Investment in associates

3,771

1,163

3,565

Other financial assets

9,392

2,025

2,079

Total non-current assets

1,238,724

1,177,356

1,096,450

Total assets

1,287,915

1,221,740

1,144,837

9,764

6,680

8,169

Liabilities Current liabilities Creditors and other payables

Employee benefit liabilities

2,620

2,000

2,269

Borrowings

4,559

5,396

7,187

16,943

14,076

17,625

1,548

360

914

Total current liabilities Non-current liabilities Provisions

Employee benefit liabilities

1,807

1,510

1,658

Borrowings

7,068

37,476

11,627

Total non-current liabilities

10,423

39,346

14,199

Total liabilities

27,366

53,422

31,824

Equity Retained earnings

655,305

399,383

630,253

Other reserves

605,244

768,935

482,760

1,260,549

1,168,318

1,113,013

Total public equity

Note: The 2008 budget values have been reclassified in accordance with NZ IFRS where possible.

The accompanying notes form part of and should be read in conjunction with these financial statements. Napier City Council Annual Report 2007/08

Page 15

Statement of Cash Flows for the year ended 30 June 2008 Note

Actual 2008 $000

Budget 2008 $000

Actual 2007 $000

39,590

39,253

38,169

2,917

1,797

1,525

Cash flows from operating activities Receipts from rates revenue Interest received Dividends received Receipts from other revenue Goods and services tax (net)

41,996

40,550

46,463

(339)

(10)

(50,042)

(52,248)

(48,871)

(1,289)

(4,199)

(1,483)

32,852

25,153

35,793

Proceeds from sale of property, plant and equipment

1,320

2,170

2,408

Proceeds from sale of non-current assets held for sale

1,325

Payments to suppliers and employees Interest paid Net cash from operating activities

Cash flows from investing activities

Proceeds from withdrawal of investments

43,953

1,973

49,130

(19,482)

(30,122)

(22,492)

(98)

(76)

Acquisition of investments

(58,519)

(1,387)

(66,140)

Net cash from investing activities

(31,501)

(27,366)

(37,170)

Purchase of property, plant and equipment Purchase intangible assets

Cash flows from financing activities Proceeds from borrowings

9,031

2,000

Repayment of borrowings

(7,008)

(3,142)

(6,270)

(180)

(299)

Net cash from financing activities

(7,188)

5,889

(4,569)

Net (decrease)/increase in cash, cash equivalents and bank overdrafts

(5,837)

3,676

(5,946)

Cash, cash equivalents and bank overdrafts at the beginning of the year

9,305

22,083

15,251

Cash, cash equivalents and bank overdrafts at the end of the year

3,468

25,759

9,305

Payment of finance lease liabilities

The GST (net) component of operating activities reflects the net GST paid and received with the Inland Revenue Department. The GST (net) component has been presented on a net basis, as the gross amounts do not provide meaningful information for financial statement purposes.

The accompanying notes form part of and should be read in conjunction with these financial statements. Page 16

Napier City Council Annual Report 2007/08

Notes to the Financial Statements Year Ended 30 June 2008 1.

Statement of Accounting Policies for the year ended 30 June 2008

1.1 Reporting Entity Napier City Council is a New Zealand Council and is governed by the Local Authorities Act 2002. The accounting policies adopted for preparation of the 2007/08 financial statements comply with the New Zealand equivalents to International Reporting Standards (NZ IFRS) and are set out below. These policies have been consistently applied to the year presented, unless otherwise stated. The financial statements include separate financial statements for Napier City Council (the Council) as an individual entity and its 26% equity share of its associate Hawke’s Bay Airport Authority which is equity accounted The primary objective of Napier City Council is to provide goods and services for the community or social benefit rather than making a financial return. Accordingly, Napier City Council has designated itself as a public benefit entity for the purposes of New Zealand equivalents to NZ IFRS. Although Napier City Council’s associate company (Hawke’s Bay Airport Authority) is not classified as a public benefit entity the Napier City Council is considered a public benefit entity for the purposes of New Zealand equivalents to NZ IFRS. The financial statements of Napier City Council are for the year ended 30 June 2008. The financial statements were authorised for issue by the Napier City Council on 15 October 2008.

prospectively from 1 July 2007. No adjustment has been made to Napier City Council opening retained earnings as all stock held for distribution is recorded at cost. Standards, amendments and interpretations issued that are not yet effective and have not been early adopted and which are relevant to Napier City Council include: •

NZ IAS 1 Presentation of Financial Statements (revised 2007) replaces NZ IAS 1 Presentation of Financial Statements (issued 2004) and is effective for reporting periods beginning on or after 1 January 2009. The revised standard requires information in financial statements to be aggregated on the basis of shared characteristics and introduces a statement of comprehensive income. The statement of comprehensive income will enable readers to analyse changes in equity resulting from non-owner changes separately from transactions with owners. The revised standard gives Napier City Council the option of presenting items of income and expense and components of other comprehensive income either in a single statement of comprehensive income with subtotals or in two separate statements (a separate income statement followed by a statement of comprehensive income). The Napier City Council is required to adopt this standard for the year ending 30 June 2010, and is yet to decide whether it will prepare a single statement of comprehensive income or a separate income statement followed by a statement of comprehensive income.

The financial statements have been prepared in accordance with New Zealand generally accepted accounting practice (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS), and other applicable Financial Reporting Standards, as appropriate for public benefit entities. These financial statements have been prepared in accordance with the requirements of the Local Government Act 2002: Part 6, Section 98 and Part 3 of Schedule 10, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP). The accounting policies set out below have been applied consistently to all periods presented in these financial statements. Napier City Council has also chosen to early adopt NZIAS2.

•

NZ IAS 23 Borrowing Costs (revised 2007) replaces NZ IAS 23 Borrowing Costs (issued 2004) and is effective for reporting periods beginning on or after 1 January 2009. The revised standard requires all borrowing costs to be capitalised if they are directly attributable to the acquisition, construction or production of a qualifying asset. The revised standard will also require borrowing costs to be considered when revaluing property, plant and equipment to fair value based on depreciated replacement cost. Any necessary adjustments to depreciated replacement carrying cost values will have flow on effects to depreciation expense. The Napier City Council is required to adopt this standard for the year ending 30 June 2010 and has not yet quantified the potential impact of the new standard.

1.3 Changes in Accounting Policies There have been no changes in accounting policy during the period except for the application of the amended NZ IAS 2 standard for inventories. Existing policies have also been detailed in the accounting policies to provide additional clarification for readers of the financial statements. The additional accounting policy disclosures are 1.27 Grant Expenditure, 1.31 Budgets and 1.32 Cost Allocation. The amendment to IAS 2 requires public benefit entities to measure inventory held for distribution at cost, adjusted when applicable for any loss of service potential. Prior to the amendment, public benefit entities were required to measure inventories held for distribution at the lower of cost and current replacement cost. Application of the amendment is mandatory for reporting periods beginning on or after 1 January 2008. Napier City Council has elected to adopt the amended NZ IAS 2 early in accordance with transitional provisions, which require Napier City Council to account for the change in accounting policy

•

NZ IFRS 3 Business Combinations (revised 2008) and the amended NZ IAS 27 Consolidated and Separate Financial Statements are effective for reporting periods beginning on or after 1 July 2009 and must be applied prospectively from that date. The main changes the revised NZ IFRS 3 and the amended IAS 27 will make to existing requirements or practice are:

1.2

Basis of Preparation

Napier City Council Annual Report 2007/08

Partial acquisitions – Non-controlling interests are measured either as their proportionate interest in the net identifiable assets (which is the original IFRS 3 requirement) or at fair value.

Step acquisitions – The requirement to measure at fair value every asset and liability at each step for the purposes of calculating a portion of goodwill has been removed. Instead, goodwill is measured as the difference at acquisition date between the fair value of any investment in the business held before the acquisition, the consideration transferred and the net assets acquired. Page 17

Notes to the Financial Statements for the Year Ended 30 June 2008 -

Acquisition-related costs – Acquisition related costs are generally recognised as expenses (rather than included in the cost of acquisition). Contingent consideration – Contingent consideration must be recognised and measured at fair value at the acquisition date. Subsequent changes in fair value are recognised in accordance with other NZ IFRSs, usually in profit or loss (rather than by adjusting the cost of acquisition).

Napier City Council is required to adopt and comply with, the revised NZ IFRS 3 and the amended NZ IAS 27, for the year ended 30 June 2010 if Napier City Council enters into any business combinations on or after 1 July 2009. 1.4

•

Foreign Currency Translation

•

Page 18

Dividend income Dividend income is recognised when the right to receive payment is established.

•

Transactions and Balances

Revenue comprises the fair value for the sale of goods and services, net of rebates and discounts. Revenue is

Interest income Interest income is recognised on a time proportion basis using the effective interest method. When a receivable is impaired, the Council reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

Functional and Presentation Currency

Revenue Recognition

Rental revenue Rental revenue is recognised in the period that it relates to.

The proportionate interests in the assets, liabilities, income and expenses of the jointly controlled assets have been incorporated into the financial statements under the appropriate headings, together with any liabilities incurred.

1.8

Sales of services Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

Joint Ventures

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Financial Performance, except when deferred in equity as qualifying cash flow hedges.

Sales of goods – retail Sales of goods are recognised when a product is sold to the customer. Retail sales are usually in cash or by credit card. The recorded revenue is the gross amount of sale, including credit card fees payable for the transaction. Such fees are included in distribution costs.

Dividends receivable from associates are recognised in the Council’s Statement of Financial Performance.

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in New Zealand dollars, which is the Council’s functional and presentation currency. All values are rounded to the nearest thousand dollars ($’000).

Development and financial contributions Development contributions are recognised when invoiced and are no longer refundable.

•

1.7

Licences and permits Revenue derived from licences and permits are recognised on application.

Principles of Consolidation

Jointly controlled assets

Traffic and parking infringements Traffic and parking infringements are recognised when tickets are issued.

Associates are all entities over which the Council has significant influence but not control, generally evidenced by holding of between 20% and 50% of the voting rights. Investments in associates are accounted for in the Council financial statements using the equity method of accounting.

1.6

Residential developments Sales of sections in residential developments are recognised when contracts for sale are unconditional.

Associates

•

Rates Rates are recognised when levied. Penalties and discounts relating to rates are included where applicable.

Historical Cost Convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available for sale financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property, plant and equipment, investment property and biological assets subject to agricultural activity. 1.5

recognised as follows:

Donated, subsidised or vested assets Where a physical asset is acquired for nil or nominal consideration the fair value of the asset received is recognised as revenue.

•

Grants and subsidies Grants and subsidies received in relation to the provision of services are recognised on a percentage of completion basis. Other grants and subsidies are recognised when receivable. Napier City Council receives the majority of grants and subsidies income from Land Transport New Zealand (LTNZ) which subsidises part of Napier City Councils costs in maintaining the local road infrastructure.

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008 1.9

Income Tax

The Council is exempt from income tax except on interest or other income received from certain trading activities. The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity. 1.10

Goods and Services Tax (GST)

The Statement of Financial Performance has been prepared so that all components are stated exclusive of GST. All items in the Statement of Financial Position are stated net of GST, with the exception of receivables and payables, which include GST invoiced. Commitments and contingencies are disclosed exclusive of GST. 1.11

Leases

The Council is the Lessee Leases of property, plant and equipment where the Council has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other long term payables. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The interest element of the finance cost is charged to the Statement of Financial Performance over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under Napier City Council Annual Report 2007/08

finance leases are depreciated over the shorter of the asset’s useful life and the lease term. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the Statement of Financial Performance on a straight line basis over the period of the lease. The Council is the Lessor Assets leased to third parties under operating leases are included in property, plant and equipment in the Statement of Financial Position. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognised on a straight line basis over the lease term. 1.12

Impairment of Assets

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Where the future economic benefits of an asset are not primarily dependent on the asset’s ability to generate net cash inflows, and where the Council would, if deprived of the asset, replace its remaining future economic benefits, value in use is determined as the depreciated replacement cost of the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). 1.13

Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the Statement of Financial Position. 1.14

Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than [150] days from the date of recognition for land development and resale debtors, and no more than [30] days for other debtors. Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the Council will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Statement of Financial Performance. Page 19

Notes to the Financial Statements for the Year Ended 30 June 2008 1.15

Inventories

Raw Materials and Stores, Work in Progress and Finished Goods Raw materials and stores, and finished goods are stated at the lower of cost and net realisable value costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Inventory held for distribution Inventories held for distribution are measured either at cost or at cost adjusted where applicable for any loss of service potential. These assets are held for distribution at no charge in the ordinary course of the Group’s operations. 1.16

Non current assets held for sale

Non current assets are classified as held for sale and stated at the lower of their carrying amount and fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. An impairment loss is recognised for any initial or subsequent write down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non current asset is recognised at the date of derecognition. Non current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the Statement of Financial Position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Statement of Financial Position. 1.17

Investments and other financial assets

Financial assets at fair value through profit or loss This category has two sub categories: financial assets held for trading, and those designated at fair value through profit or loss on initial recognition. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. The policy of management is to designate a financial asset if there exists the possibility it will be sold in the short term and the asset is subject to frequent changes in fair value. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the Statement of Financial Position date. Loans and receivables Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Council provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after Page 20

the Statement of Financial Position date which are classified as non current assets. Loans and receivables are included in receivables in the Statement of Financial Position. Held to maturity investments Held to maturity investments are non derivative financial assets with fixed or determinable payments and fixed maturities that the Council’s management has the positive intention and ability to hold to maturity. Available for sale financial assets and fair value through equity Available for sale financial assets, comprising principally marketable equity securities, are non derivatives that are either designated in this category or not classified in any of the other categories. They are included in non current assets unless management intends to dispose of the investment within 12 months of the Statement of Financial Position date. Purchases and sales of investments are recognised on trade date the date on which the Council commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Council has transferred substantially all the risks and rewards of ownership. Available for sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the financial assets at fair value through profit or loss category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non monetary securities classified as available for sale are recognised in equity in the available for sale investments revaluation reserve. When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments are included in the Statement of Financial Performance as gains and losses from investment securities. The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Council establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. The Council assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available for sale financial assets, the cumulative loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss is removed from equity and recognised in the Statement of Financial Performance. Impairment losses Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008 recognised in the Statement of Financial Performance on equity instruments are not reversed through the Statement of Financial Performance. 1.18

Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Council designates certain derivatives as either; (1) hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of highly probable forecast transactions (cash flow hedges). The Council documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. The Council also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items. Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Statement of Financial Performance, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the hedging reserve. The gain or loss relating to the ineffective portion is recognised immediately in the Statement of Financial Performance. Amounts accumulated in equity are recycled in the Statement of Financial Performance in the periods when the hedged item will affect profit or loss (for instance when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non financial asset (for example, plant) or a non financial liability, the gains and losses previously deferred in equity are transferred from equity and included in the measurement of the initial cost or carrying amount of the asset or liability. When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Statement of Financial Performance. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the Statement of Financial Performance. Derivatives that do not qualify for hedge accounting Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the Statement of Financial Performance. 1.19 Fair value estimation The fair value of financial assets and financial liabilities Napier City Council Annual Report 2007/08

must be estimated for recognition and measurement or for disclosure purposes. The fair value of forward exchange contracts is determined using forward exchange market rates at the Statement of Financial Position date. The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Council for similar financial instruments. 1.20 Property, plant and equipment Items of property, plant and equipment are initially recognised at cost, which includes purchase price plus directly attributable costs of bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Where a physical asset is acquired for nil or nominal consideration the fair value of the asset received is recognised as revenue. Land and buildings (except for investment properties) are shown at fair value (which is based on periodic valuations by external independent valuers that are performed with sufficient regularity to ensure that the carrying value does not differ materially from fair value) less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. All other property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost may also include transfers from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Subsequent costs are included in the assetâ&#x20AC;&#x2122;s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Council and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Statement of Financial Performance during the financial period in which they are incurred. Increases in the carrying amounts arising on revalued assets are credited to a revaluation reserve in public equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit and loss. Decreases that reverse previous increases of the same asset are first charged against revaluation reserve directly in equity to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the Statement of Financial Performance. Depreciation of property, plant and equipment other than land is calculated on a straight line basis at rates that will write off the cost or valuation, less estimated residual value, over their expected useful economic lives. The following rates have been applied: Buildings and structural improvements 2 to 10% Fixed plant and equipment 5 to 20% Mobile plant and equipment 5 to 50% Motor vehicles 10 to 33.33% Furniture and fittings 4 to 20% Office equipment 8 to 66.67% Library bookstock 7 to 25% Page 21

Notes to the Financial Statements for the Year Ended 30 June 2008 Depreciation of infrastructural and restricted assets is calculated on a straight line basis at rates that will write off their cost or valuation over their expected useful economic lives.

Valuation of this class of asset is performed on an annual basis (see also note 1.21). Library collections

Valued at depreciated replacement cost in accordance with the guidelines released by the New Zealand Library Association and the National Library in May 2002 for general collections and replacement cost for the Heritage Collection. Library valuations are performed Dr Robin Watt MA (Hons.) PhD of R J Watt & Associates. The last valuation was performed in June 2008.

Land under roads

Land under roads were valued based on fair value of adjacent land determined by M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2005. Under NZ IFRS Napier City Council has elected to use fair value of land under roads at 30 June 2005 as deemed cost. Land under roads are no longer revalued.

Land and buildings

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2008 using fair value. Land and buildings are revalued on a three yearly valuation cycle. The carrying values are also reviewed at each balance date to ensure that those values are not materially different to fair value.

Infrastructural assets

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2008 at fair value using depreciated replacement cost method. Infrastructural assets are revalued on a three yearly valuation cycle. The carrying values are also reviewed at each balance date to ensure that those values are not materially different to fair value. If there is a material difference, then the off-cycle asset classes are revalued. All infrastructural asset classes carried at valuation were valued.

Restricted assets

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2008 using depreciated replacement cost method.

Plant and equipment

Valued in 1994 using market value. Additions are at cost.

Omarunui Landfill

Landfill assets comprise of land, plant and equipment and motor vehicles. All assets are valued at cost less depreciation.

The expected lives, in years, of major classes of infrastructural and restricted assets are as follows: Roading

Years

Base course

Surfacings

Concrete pavers

Footpaths and pathways /walkways

15-80

Drainage

14-80

Bridges and structures

20-100

Road lighting

4-50

Traffic services and safety

10-25

Water Reticulation

56-107

Reservoirs

100

Pump stations

25-80

Stormwater Reticulation

100

Pump stations

15-75

Sewerage Reticulation

Pump stations

15-80

Milliscreen

10-80

Outfall

Others Grandstands, community and sports halls Sportsgrounds, parks and reserves

improvements

10-50

Buildings on reserves

10-50

Pools

10-50

Inner harbour

20-50

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Statement of Financial Position date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1.12). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Financial Performance. When revalued assets are sold, it is Council’s policy to transfer the amounts included in other reserves in respect of those assets to retained earnings. Valuation of property plant and equipment As at 30 June 2008, Council’s Property and Equipment are valued as follows: Description

Method of valuation

Investment property

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2008 using fair value.

Page 22

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008 1.21

Investment property

Investment property is held for long term rental yields and capital appreciation and is not occupied by the Council or held to meet service delivery objectives. Properties leased to third parties under operating leases will generally be classified as investment property unless: • the property is held to meet service delivery objectives, rather than to earn rentals or for capital appreciation • the occupants provide services that are integral to the operation of the owner’s business and/or these services could not be provided efficiently and effectively by the lessee in another location • the property is being held for future delivery of services • the lessor uses services of the owner and those services are integral to the reasons for their occupancy of the property. Investment property is carried at fair value, representing open market value determined annually by external valuers. Changes in fair values are recorded in the Statement of Financial Performance as part of other gains/(losses). 1.22

Intangible assets

1.25

Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred. 1.26

Provisions

Provisions are recognised when the Council has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. An increase in the provision due to the passage of time is recognised as an interest expense.

Trademarks and licences

1.27

Trademarks and licences have a finite useful life and are carried at cost less accumulated amortisation and impairment losses. Amortisation is calculated using the straight line method to allocate the cost of trademarks and licences over their estimated useful lives, which vary from 3 to 5 years.

Non-discretionary grants are those grants that are awarded if the grant application meets the specified criteria and are recognised as expenditure when an application that meets the specified criteria for the grant has been received.

Computer software Acquired computer software and software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised over their estimates useful lives of 3 to 5 years. Cost associated with developing or maintaining computer software are recognised as an expense as incurred. Costs that are directly associated with the production of identifiable and unique software products controlled by the Council, and that will generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the software development employee costs and an appropriate portion of relevant overheads. Computer software development costs recognised as assets are amortised over their estimated useful lives not exceeding 3 years. 1.23

Trade and other payables

These amounts represent liabilities for goods and services provided to the Council prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within [30] days of recognition. 1.24

Borrowings

Grant expenditure

Discretionary grants are those grants where Napier City Council has no obligation to award on receipt of the grant application and are recognised as expenditure when a successful applicant has been notified of Napier City Councils decision. 1.28

Employee benefits

Wages and salaries, annual leave and sick leave Liabilities for wages and salaries, including non monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable. Long service leave and gratuities The liability for long service leave and gratuities is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Statement of Financial Performance over the period of the borrowings using the effective interest method.

Retirement benefit obligations

Borrowings are classified as current liabilities unless the Council has an unconditional right to defer settlement of the liability for at least 12 months after the Statement of Financial Position date.

Current and former employees of the Council are entitled to benefits on retirement, disability or death from the Council’s multi-employer benefit scheme. The scheme manager, National Provident Fund, have advised council that is no

Napier City Council Annual Report 2007/08

Page 23

Notes to the Financial Statements for the Year Ended 30 June 2008 consistent and reliable basis for allocating the obligation scheme assets and cost of the multiemployer defined benefit scheme to individual participating employers. As a result the scheme is accounted for as a defined contribution plan and contributions are recognised as an expense as they become payable. Prepaid contributions are recognised as an asset if a cash refund or a reduction in the future payments is available. Bonus plans The Council recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation. 1.29

Biological assets

Livestock Livestock are measured at their fair value less estimated point-of-sale costs. The fair value of livestock is determined based on market prices of livestock of similar age, breed and genetic merit. 1.30

Equity

Equity is the community’s interest in Napier City Council and is measured as the difference between total assets and total liabilities. Equity is disaggregated and classified into a number of reserves. The components of equity are: - Retained earnings - Restricted reserves - Fair value and hedging reserves - Asset revaluation reserves

Direct costs are charged directly to significant activities. Indirect costs are charged to significant activities using appropriate cost drivers such as actual usage, staff numbers and floor area. 1.33

Landfill aftercare provision Note 24 discloses an analysis of the exposure of Napier City Council in relation to the estimates and uncertainties surrounding the landfill aftercare provision. Infrastructural assets There are a number of assumptions and estimates used when performing depreciated replacement cost valuations over infrastructural assets. These include: •

the physical deterioration and condition of an asset, for example the Council could be carrying an asset at an amount that does not reflect its actual condition. This is particularly so for those assets which are underground such as stormwater, wastewater and water supply pipes. This risk is minimised by Council performing a combination off physical inspections and condition modelling assessments of underground assets;

•

estimating any obsolescence or surplus capacity of an asset; and

•

estimating the remaining useful lives over which the asset will be depreciated. These estimates can be impacted by the local conditions, for example weather patterns and traffic growth. If useful lives do not reflect the actual consumption of the benefits of the asset, then Napier City Council could be over or under estimating the annual depreciation charge recognised as an expense in the statement of financial performance. To minimise this risk Napier City Councils infrastructural asset useful lives have been determined with reference to the NZ Infrastructural Asset Valuation and Depreciation Guidelines published by the National Asset Management Steering Group, and have been adjusted for local conditions based on past experience. Asset inspections and deterioration and condition modelling are also carried out regularly as part of the Napier City Council asset management planning activities, which gives Napier City Council further assurance over its useful life estimates.

Restricted and Council created reserves Restricted reserves are a component of equity generally representing a particular use to which various parts of equity have been assigned. Reserves may be legally restricted or created by Napier City Council. Restricted reserves are those subject to specific conditions accepted as binding by Napier City Council and which may not be revised by Napier City Council without reference to the Courts or a third party. Transfers from these reserves may be made only for certain specified purposes or when certain specified conditions are met. Also included in restricted reserves are reserves restricted by Council decision. The Council may alter them without references to any third party or the Courts. Transfers to and from these reserves are at the discretion of the Council. Napier City Council’s objectives, policies and processes for managing capital are described in note 26. 1.31

Budget figures

The budget figures are those approved by the Council and adopted as a part of the Council’s Long Term Financial Plan (LTCCP) or as revised and approved by Council prior to the commencement of the year in the Annual Plan. The budget figures have been prepared in accordance with NZ GAAP, using accounting policies that are consistent with those adopted by Napier City Council for the preparation of the financial statements. 1.32

Cost Allocation

Direct costs are those costs directly attributable to a significant activity. Indirect costs are those costs, which cannot be identified in an economically feasible manner, with a significant activity. Page 24

Critical accounting estimates and assumptions

In preparing these financial statements Napier City Council has made estimates and assumptions concerning the future. These estimates and assumptions may differ from the subsequent actual results. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations or future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed as follows:

Experienced independent valuers perform the Council’s infrastructural asset revaluations. Critical judgements in applying Napier City Council’s accounting policies Management has exercised the following critical judgements in applying the Napier City Council’s accounting policies for the period ended 30 June 2008: Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008 Classification of property Napier City Council owns a number of leasehold land and rental properties. The receipt of market-based rentals from these properties is incidental to the holding of these properties. In the case of residential leasehold properties there are legal restrictions applying to how council can

manage these properties and in the case of rental properties these are held as part of Napier City Councils social housing policy or to secure the ability to undertake long term city development projects. As these properties are held for service delivery objectives they have been accounted for as property, plant and equipment.

Explanation of major variances against budget

Explanations for major variations from Napier City Councilâ&#x20AC;&#x2122;s estimated figures in the 2007/08 Annual Plan are as follows: Statement of financial performance Income a) Finance income was above budget $1.9m. This was the result of both higher than budget interest rates received on funds invested +$0.8m and higher than budget average funds invested for the year +$1.1m. Expenditure a) Employee benefit expenses were impacted by the additional week leave from 1 April 2007. Year ended 30 June 2008 was the first complete financial year of impact. Holiday pay cost increases were $0.5m above prior year. Wage and salary increases negotiated after budget preparation account for the balance of the variance of actual against budget expenditure. b) Finance costs below budget due to lower average loans for the year (Actual $1.2m Budget $4.2m) Statement of financial position Current assets a) Cash and cash equivalents were significantly lower than budget for the period as cash funds held were on deposit for greater than 90 days and are classified as other financial assets. b) Inventories are lower than budget due to Parklands subdivision development. Resource consent for the next stage of development was in progress at year end whereas the inventory calculation for budget purposes anticipated that stage 2 land would be included in inventory at year end 2008. c) Other financial assets classified as cash and cash equivalents for budget. Cash and other financial assets (current and non- current) above budget mainly due to lower than budget capital expenditure for year -$12m (due to deferrals and timing variances). Non current assets a) Budget property plant and equipment value includes investment property and intangible assets. These assets are seperately disclosed in the actual results. In addition 2007/08 revaluation total for property plant and equipment was +$129m against +$51m for budget. b) Investment in associates is higher than budget as budget was prepared for parent accounts only. Actual results include investment in associates on an equity accounted basis. c) Other financial assets (current and non-current) are above budget mainly due to lower than budget capital expenditure for year -$12m (arising from expenditure timing variances). Non current liabilities Borrowings are $30m lower than budget for the period. This is the result of deferral of Advanced Wastewater Treatment project $10m, loan funds not drawn on specific projects yet to be completed such as the overland drain project $2.0m, Museum building redevelopment $5m, Taradale Library extension $1.8m and CBD and Taradale Redevelopment (Roads) $3m. The remaining variance is a result of a combination of a budget assumption that all council approved loan authorities will be taken up before the commencement of the budget period and internal treasury practiceto fund projects by internal loan when cashflow requirements permit. Retained earnings and other reserves Actual retained earnings includes $196m transfer of asset revaluation reserve (related to land under roads) from other reserves. This transfer arising from the IFRS deemed cost election for Land under Roads was not included in equity at the date of budget preparation. Statement of movements in equity The major budget variation in movements in equity is due to above budget increase in revaluation of Council assets (+$78m) along with higher than budget income (+$4m) as outlined above under statement of financial performance income.

Napier City Council Annual Report 2007/08

Page 25

Notes to the Financial Statements for the Year Ended 30 June 2008

Summary cost of services Actual 2008 $000

Budget 2008 $000

Actual 2007 $000

Income Recreation

1,752

1,284

2,287

Social and Cultural

5,849

4,024

5,701

City Promotion

6,335

5,725

5,936

Planning and Regulatory

3,909

3,703

3,767

Roading

4,026

3,540

2,773

Water and Wastes

14,407

12,937

13,672

Property Assets

11,781

12,420

11,435

Total activity income

48,059

43,633

45,571

Non targeted rates

28,685

28,411

27,749

Other income

13,630

14,763

12,747

Total income

90,374

86,807

86,067

1,907

1,919

1,681

Expenditure Democracy and Governance Recreation Social and Cultural

8,035

8,288

7,875

12,880

10,745

12,458

City Promotion

7,593

7,620

7,459

Planning and Regulatory

5,127

4,747

5,031

Roading

12,607

13,288

11,875

Water and Wastes

16,355

15,622

14,415

8,098

9,004

6,650

72,602

71,233

67,444

(1,231)

(2,013)

679

1,099

387

72,050

72,332

65,818

Property Assets

Less internal expenditure Other expenses Total operating expenditure

Page 26

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

Rates revenue

Non targeted rates

Actual 2008 $000

Actual 2007 $000

28,685

27,749

2,973

2,767

Targeted rates attributable to activities Water Sewerage

6,387

6,217

Refuse and sanitation

1,336

1,267

Roading

175

181

Marketing

152

Total revenue from rates

39,708

38,333

Total rates revenue

39,708

38,333

460

567

39,248

37,766

Rates remissions Rates revenue net of remissions

In accordance with the Local Government (Rating) Act 2002, rates remitted under the Councilâ&#x20AC;&#x2122;s Rate Remission Policies are recorded as expenditure and are also included under rates revenue as paid on behalf of the ratepayer.

Napier City Council Annual Report 2007/08

Page 27

Notes to the Financial Statements for the Year Ended 30 June 2008

Other revenue Actual 2008 $000

Actual 2007 $000

User charges

4,514

4,182

Land Transport NZ and other government grants

4,103

3,020

Regulatory revenue

2,402

2,301

Rental income from investment properties

1,008

345

Other rental income

3,689

3,820

711

622

Infringements and fines Rendering of services

2,060

1,866

Retail and product sales

8,233

8,140

Omarunui Landfill joint-venture

1,407

1,370

Sales residential development

8,782

9,493

Other income

199

133

Grants and donations

765

1,294

Petrol tax

422

416

Parklands Residential Development

2,274

1,368

Vested assets - other

2,082

2,085

Financial and development contributions - other

3,353

3,021

46,023

43,476

Actual 2008 $000

Actual 2007 $000

Gain on revaluation of library bookstock

173

Gain on revaluation of investment properties

502

2,334

Dividend income Total other revenue Interest Revenue is included in Note 9 for 2007/08 in accordance with NZ IFRS 7.20(b).

Gains/(losses)

Non-financial instruments

Gain on sale of assets

423

492

(231)

(487)

Fair value gain/(loss) on livestock

(33)

Fair value gain/loss on shares

Total non-financial instruments gains/(losses)

982

2,366

Total gains/(losses)

982

2,366

Loss on disposal of assets

Page 28

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

Employee benefit expenses

Salaries and wages Employer contributions to multi-employer defined benefit plans Increase/(decrease) in employee benefit liabilities Total employee benefit expenses

Actual 2008 $000

Actual 2007 $000

21,819

20,476

116

135

22,005

20,727

Actual 2008 $000

Actual 2007 $000

Other expenses

Audit fees - financial statement audit

102

108

Audit fees - LTCCP audit

Audit fees - IFRS audit

182

167

Other operating expenses

32,369

28,610

Total other expenses

32,678

28,927

Actual 2008 $000

Actual 2007 $000

2,912

1,306

685

507

3,661

1,892

1,231

1,412

Donations Bad debts written off Rental expense on operating leases

Finance income and finance costs

Finance income Interest income: - term deposits and call accounts - local authority stock - sinking fund Total finance income Finance costs Interest expense: - interest on borrowings - discount unwind on provisions

Total finance costs

- finance charges on leased assets

1,236

1,430

Net finance income

2,425

462

Napier City Council Annual Report 2007/08

Page 29

Notes to the Financial Statements for the Year Ended 30 June 2008

10. Tax Relationship between tax expense and accounting profit

Surplus/(deficit) before tax Tax at 33% Non-taxable income Tax expense

Actual 2008 $000

Actual 2007 $000

18,324

20,407

6,047

6,734

(6,047)

(6,734)

Additional disclosures A deferred tax asset has not been recognised in relation to unused tax losses of $666,218 (2007: $551,831).

11. Cash and cash equivalents

Cash at bank and in hand Short term deposits maturing three months or less from date of acquision Omarunui Landfill Total cash and cash equivalents

Actual 2008 $000

Actual 2007 $000

2,931

5,922

2,500

537

883

3,468

9,305

The carrying value of short-term deposits with maturity dates of three months or less approximates their fair value. There are no restrictions on the use of part or all of the cash. Cash include the following for the purposes of the cash flow statement:

Cash at bank and in hand Short term deposits maturing within three months Omarunui Landfill

Page 30

Actual 2008 $000

Actual 2007 $000

2,931

5,922

2,500

537

883

3,468

9,305

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

12. Debtors and other receivables

Rates receivables

Actual 2008 $000

Actual 2007 $000

814

780

Other receivables

4,010

2,099

Parklands - unconditional contracts subdivision sales

3,844

3,202

Transfund NZ subsidy claims

1,177

773

Prepayments Total debtors and other receivables

9,921

6,881

There is no concentration of credit risk with respect to receivables outside the group, as the group has a large number of customers. Napier City Council does not provide for any impairment on rates receivable as it has various powers under the Local Government (Rating) Act 2002 to recover any outstanding debts. Ratepayers can apply for payment plan options in special circumstances. Where such payment plans are in place, debts are discounted to the present value of future repayments. These powers allow Napier City Council to commence legal proceedings to recover any rates that remain unpaid after the due date for payment. If payment has not been made after the Courtâ&#x20AC;&#x2122;s judgment, then Napier City Council can apply to the Registrar of the High Court to have the judgment enforced by sale or lease of the rating unit. The age of rates receivable overdue, whose payment terms have been renegotiated is $106,200 (2007: $236,000). Napier City Council holds no collateral as security or other credit enhancements over receivables that are past due. Other receivables have been assessed for impairment at year end and no impairment has been provided for. The status of receivables as at 30 June 2008 and 2007 are detailed below:

Current

Actual 2008 $000

Actual 2007 $000

8,264

5,693

Past due 30 days

544

454

Past due 60 days

Past due 90 days

1,047

644

9,921

6,881

Napier City Council Annual Report 2007/08

Page 31

Notes to the Financial Statements for the Year Ended 30 June 2008

13. Inventories

Inventory held for distribution Inventory held for resale

Actual 2008 $000

Actual 2007 $000

154

155

205

190

Parklands - work in progress

5,051

7,409

Total inventories

5,410

7,754

Inventory held for distribution increased by 2008: $1,000 (2007: $13,000) due to stocktake adjustments. The carrying amount of inventories pledged as security for liabilities is $nil (2007: $nil).

14. Biological assets Actual 2008 $000

Actual 2007 $000

229

241

Change in value arising from changes in fair value

(33)

Increase in value due to natural increase / (decrease)

Biological assets changes in value Opening value 1 July

Increase in value due to purchases Change in value due to sales Closing value 30 June

102

222

(276)

(252)

189

229

Biological assets comprise 1,403 (2007: 949) sheep largely held for breeding and 208 (2007: 370) cattle largely held for trading.

Page 32

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

15. Other financial assets Actual 2008 $000

Actual 2007 $000

Current portion Short-term deposits with maturities of 4-12 months

30,203

21,984

Sinking fund investments

623

Local authority stock

300

Corporate bonds

30,203

22,907

Sinking fund investments

186

157

Unlisted shares

454

422

8,252

1,500

500

9,392

2,079

Total current portion Non-current portion

Local authority stock Corporate bonds Total non-current portion There were no impairment provisions for other financial assets. The carrying amount of term deposits approximates their fair value.

Local authority stock is classified as held to maturity. The fair value of local authority stock is $8,452,000 (2007 $1,799,000). Fair value has been determined by discounting cash flows from the instruments using a discount rate derived from relevant market inputs. The discount rate is 8.40% (2007 8.30% - 8.43%). The fair value of sinking funds are determined by reference to published price quotations in an active market. Sinking fund investments are restricted in use to the repayment of associated borrowings and are administered by Public Trust Office. Unlisted shares - valuation The fair value of the unlisted shares were determined as follows: - If an active market is present for unlisted shares, the fair value of such shares is determined by their market value. - If an active market is absent for unlisted shares, the fair value of such shares is determined by their redemption value.

16. Non-current assets held for sale The Napier City Council owned building on Dickens Street was presented as held for sale as at 30 June 2007. This property was purchased to enable the extension of the Dickens Street carpark. The portion not required for the carpark was sold in 2008. Actual 2008 $000

Actual 2007 $000

Buildings

668

Land

643

Total non-current asset held for sale

1,311

Non-current held for sale are:

Napier City Council Annual Report 2007/08

Page 33

Page 34

43,498

Buildings

419,097

15,149

Work in progress

1,083,400

169,726

(37,179)

(3,769)

(153)

(614)

(1,432)

(228)

(1,342)

(17,493)

1,046,221

165,957

8,095

9,586

24,449

7,458

116,369

742,070

15,149

419,097

117,668

60,066

47,565

82,525

138,194

187

1,428

7,954

2,274

41,435

19,576

65,340

1 July 2007 $000

Carrying amount

22,241

615

173

436

15,019

1,291

7,670

1,947

1,569

2,514

6,607

114

363

3,047

507

349

2,227

$000

Current year additions

(2,856)

(1,209)

(266)

(91)

(852)

(1,647)

(149)

(628)

(9)

(831)

(30)

$000

Current year disposals cost

37,088

5,609

235

921

2,145

342

1,966

27,825

14,420

3,254

2,813

7,338

3,654

104

493

3,057

$000

Current year accumulated depn and adjustments

$000

Current year impairment charges

(16,046)

(1,965)

(82)

(307)

(718)

(114)

(744)

(10,557)

(5,367)

(1,062)

(1,064)

(3,064)

(3,524)

(363)

(1,525)

(615)

(1,021)

$000

Current year depreciation

93,812

25,420

5,214

304

4,251

1,161

14,490

43,056

3,809

13,262

9,714

16,271

25,336

173

3,747

2,018

19,398

$000

Revaluation surplus

1,195,982

195,761

13,462

10,510

30,305

8,847

132,637

816,429

16,440

419,125

138,200

77,320

60,516

104,828

183,792

301

225

3,357

22,287

2,339

47,585

20,763

86,935

30 June 2008 $000

Cost/ revaluation

Items added to work in progress $4,993,000 (2007 $6,792,000). Completed assets transferred from work in progress $3,588,000 (2007 $3,781,000). The net carrying amount of plant and equipment held under finance leases is $128,000 (2007 $292,000) In accordance with Accounting Policies the revaluation surplus for Library Books has been taken to profit and loss as an offset of losses previously expensed

Total group property plant and equipment

Total restricted assets

8,248

10,200

Swimming pools

Inner harbour

7,686

25,881

Buildings on reserves

117,711

Grandstands and halls

Sportsgrounds

Council restricted assets

759,563

(9,053)

126,721

Roading network

Land under roads

Total infrastructural assets

(2,311)

Drainage network

(1,759)

49,324

62,377

Water system

(4,370)

(15,917)

86,895

154,111

(225)

(1,715)

(11,914)

(2,063)

Accumulated depn and impairment charges 1 July 2007 $000

Sewerage system

Council infrastructural assets

Total operational assets

225

187

Landfill post closure

3,143

19,868

Work in progress

Motor vehicles

Plant and equipment

2,274

19,576

Leasehold Land

Library Books

65,340

1 July 2007 $000

Land

Council operation assets

2008

Cost/ revaluation

(15,521)

(124)

(4)

(120)

(225)

(119)

(10)

(96)

(15,172)

(225)

(1,974)

(12,946)

(27)

Accumulated depn and impairment charges 30 June 2008 $000

1,180,461

195,637

13,462

10,510

30,301

8,847

132,517

816,204

16,440

419,125

138,200

77,201

60,506

104,732

168,620

301

1,383

9,341

2,339

47,558

20,763

86,935

30 June 2008 $000

Carrying amount

Notes to the Financial Statements for the Year Ended 30 June 2008

17. Property plant and equipment

Napier City Council Annual Report 2007/08

10,200

Swimming pools

1,063,214

168,345

(23,982)

(1,870)

(71)

(307)

(716)

(114)

(662)

(8,311)

1,039,232

166,475

8,177

9,893

25,104

7,572

115,729

734,751

9,355

418,901

115,234

59,749

47,589

83,923

138,006

238

1,469

7,070

2,218

41,765

21,051

64,195

1 July 2006 $000

Carrying amount

24,258

1,381

1,320

17,219

5,794

196

7,278

1,669

1,095

1,187

5,658

(51)

338

2,437

445

797

1,692

$000

Current year additions

(3,683)

(718)

(164)

(211)

(343)

(2,965)

(191)

(662)

(90)

(1,475)

(547)

$000

Current year disposals cost

1,007

381

137

175

626

158

466

$000

Current year accumulated depn and adjustments

$000

Current year impairment charges

(14,653)

(1,899)

(82)

(307)

(716)

(114)

(680)

(9,563)

(4,844)

(1,257)

(1,045)

(2,417)

(3,191)

(346)

(1,357)

(449)

(1,039)

$000

Current year depreciation

$000

Revaluation surplus

1,083,400

169,726

8,248

10,200

25,881

7,686

117,711

759,563

15,149

419,097

126,721

62,377

49,324

86,895

154,111

187

225

3,143

19,868

2,274

43,498

19,576

65,340

30 June 2007 $000

Cost/ revaluation

Items added to work in progress $6,792,000 (2006 $8,753,000 ) Completed assets transferred from work in progress $3,781,000 (2006 $8,721,000) The net carrying amount of plant and equipment held under finance leases is $292,000 (2006 $587,000) In accordance with Accounting Policies the revaluation surplus for Library Books has been taken to profit and loss as an offset of losses previously expensed

Total group property plant and equipment

Total restricted assets

8,248

25,820

Buildings on reserves

Inner harbour

7,686

116,391

743,062

Grandstands and halls

Sportsgrounds

Council restricted assets

Total infrastructural assets

9,355

Work in progress

(4,209)

119,443

418,901

Roading network

Drainage network

Land under roads

48,440

60,872

Water system

(851)

(1,123)

86,051

(2,128)

(13,801)

(225)

(1,527)

(11,023)

(1,026)

Accumulated depn and impairment charges 1 July 2006 $000

Sewerage system

Council infrastructural assets

151,807

238

Work in progress

Total operational assets

225

2,996

18,093

Landfill post closure

Motor vehicles

Plant and equipment

2,218

42,791

Buildings

Library Books

64,195

21,051

Leasehold Land

1 July 2006 $000

Land

Council operation assets

2007

Cost/ revaluation

(37,179)

(3,769)

(153)

(614)

(1,432)

(228)

(1,342)

(17,493)

(9,053)

(2,311)

(1,759)

(4,370)

(15,917)

(225)

(1,715)

(11,914)

(2,063)

Accumulated depn and impairment charges 30 June 2007 $000

1,046,221

165,957

8,095

9,586

24,449

7,458

116,369

742,070

15,149

419,097

117,668

60,066

47,565

82,525

138,194

187

1,428

7,954

2,274

41,435

19,576

65,340

30 June 2007 $000

Carrying amount

Notes to the Financial Statements for the Year Ended 30 June 2008

Page 35

Page 36

Computer software

2007

Computer software

2008

(1,651)

$000

1,826

1 July 2006

175

$000

1 July 2006

Carrying amount

Accumulated depreciation and impairment charges

Cost/ revaluation

$000

1 July 2007

159

$000

(1,732)

1 July 2007

Carrying amount

1,891

Accumulated depreciation and impairment charges

Cost/ revaluation

$000

Current year additions

$000

Current year additions

(11)

$000

Current year disposals

$000

Current year disposals

(85)

$000

(81)

$000

Current year Current year impairment ammortisation charges

$000

Current year Current year impairment ammortisation charges

$000

Revaluation Surplus

$000

Revaluation Surplus

Accumulated depreciation and impairment charges Carrying amount

Accumulated depreciation and impairment charges

(1,817)

$000

Carrying amount

172

$000

1,891

$000

(1,732)

$000

159

$000

30 June 2007 30 June 2007 30 June 2007

Cost/ revaluation

1,989

$000

30 June 2008 30 June 2008 30 June 2008

Cost/ revaluation

Notes to the Financial Statements for the Year Ended 30 June 2008

18. Intangible assets

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

19. Investment Property Actual 2008 $000

Actual 2007 $000

44,426

42,092

Additions from acqusitions

Disposals

502

2,334

44,928

44,426

Balance 1 July

Fair value gains/(losses) on valuation Balance 30 June

Napier City Councilâ&#x20AC;&#x2122;s investment properties are valued annually at fair value effective 30 June. All investment properties were valued based on open market evidence. The valuation was performed by M. Penrose ANZIV, SNZPI, AAMINZ an independent valuer from Telfer Young (HB) Ltd. Telfer Young are experienced valuers with extensive market knowledge of the types of investment properties owned by Napier City Council.

Rental income from investment property Expenses from investment property generating income

Actual 2008 $000

Actual 2007 $000

1,008

345

Contractual obligations for capital expenditure

Contractual obligations for operating expenditure

Napier City Council Annual Report 2007/08

Page 37

Notes to the Financial Statements for the Year Ended 30 June 2008

20. Investments in associates Napier City Council has a 26.12% interest in Hawkes Bay Airport Authority and its reporting date is 30 June. Hawke’s Bay Airport Authority is an unlisted entity and, accordingly, there are no published price quotations to determine the fair value of this investment. Actual 2008 $000

Actual 2007 $000

3,565

3,407

Movements in the carrying amount of investments in associates Balance at 1 July New investments during year Adjustment due to adoption of IFRS by Hawke’s Bay Airport Authority Disposal of investments during the year Share of total recognised revenues and expenses

192

181

Interest adjustment on appropriation account

(25)

(23)

3,771

3,565

Actual 2008 $000

Actual 2007 $000

Share of dividend Balance at 30 June Summarised financial information of associate entities

Assets

18,415

15,838

Liabilities

2,229

543

Revenues

2,444

2,312

Surplus/(deficit)

736

694

Group’s interest

26.12%

Associated contingencies There are no contingent liabilities arising from the Council’s involvement in the associate.

21. Creditors and other payables Actual 2008 $000

Actual 2007 $000

7,879

6,203

Deposits and bonds

911

851

Accrued interest

194

248

Rates in advance

780

867

9,764

8,169

Trade payables

Total creditors and other payables

Page 38

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

22. Employee benefit liabilities Actual 2008 $000

Actual 2007 $000

Current portion Accrued pay

582

438

Annual leave

2,038

1,831

Sick leave Retirement and long service leave

2,620

2,269

Retirement and long service leave

1,807

1,658

Total non-current portion

1,807

1,658

Total employee entitlement

4,427

3,927

Actual 2008 $000

Actual 2007 $000

4,508

7,008

179

4,559

7,187

7,054

11,562

7,068

11,627

Total current portion Non-current portion

23. Borrowings

Current portion Secured loans Lease liabilities Total current portion Non-current portion Secured loans Lease liabilities Total non-current portion Fixed-rate debt The Council’s secured debt of $11,562,300 (2007: $18,570,250) is issued at fixed rates of interest. The Council has established sinking funds in respect of loans, with a carrying amount of $186,460, maturing in 2009/10. The sinking fund investments, together with accumulated interest, will be sufficient to repay the principal of the associated loans on the due date. The amount held in the sinking funds is shown in note 15 Other Financial Assets. The Council’s loans are secured by a Secured Trust Deed creating a charge over the special rate deemed to be made by the Council upon the value of all rateable property within the City of Napier. Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default. Refinancing The Council manages its borrowings in accordance with its funding and financial policies, which include a Liability Management policy. These policies have been adopted as part of the Council’s Long Term Council Community Plan.

Napier City Council Annual Report 2007/08

Page 39

Notes to the Financial Statements for the Year Ended 30 June 2008

Maturity analysis and effective interest rates The following is a maturity analysis of the Councilâ&#x20AC;&#x2122;s borrowings (excluding finance leases, which are shown separately below). Depending on the conditions attached to the secured loans, there may be early repayment options.

Secured Loans

Actual 2008 $000

Actual 2007 $000

Less than one year

4,508

7,008

6.56%

6.96%

Weighted average effective interest rate Later than one year but not more than five years Weighted average effective interest rate Later than five years

5,034

7,534

6.98%

6.77%

2,020

4,028

7.62%

7.23%

11,562

18,570

Actual 2008 $000

Actual 2007 $000

Not later than one year

185

Later than one year and not later than five years

Total minimum lease payments

251

Future finance charges

(1)

(7)

Present value of minimum lease payments

244

Not later than one year

179

Later than one year and not later than five years

Total

244

Current

179

Non-current

Total

244

Weighted average effective interest rate

Analysis of finance lease liabilities

Total minimum lease payments are payable

Present value of minimum lease payments are payable

Description of material leasing arrangements The Council has entered into finance leases for various items of office equipment. The finance leases can be renewed at the Councilâ&#x20AC;&#x2122;s option, with rents set by reference to current market rates for items of equivalent age and condition. The Council has the option to purchase the asset at the end of the lease. There are no restrictions placed on the Council by any of the finance leasing arrangements.

Page 40

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

24. Provisions Opening balance 2008 $000

Additional provision $000

Unused amounts reversed during the year $000

Closing balance 2008 $000

Financial guarantees

645

(50)

595

Landfill aftercare provision

269

684

953

Total provisions

914

684

(50)

1,548

Provision for financial guarantees The Council is listed as sole guarantor to a number of related authorities and locally incorporated societies for bank facilities. The Council is obligated under the guarantees to make payments in the event the authority or society defaults on a financial arrangement. The exercising of guarantees will be dependent on the financial stability of the authorities and societies, which will vary over time. Provision for landfill aftercare The joint Landfill Committee gained a resource consent in 1985 to operate the Omarunui Landfill. Napier City Council, as 36.32% owner of the Omaranui Landfill, has a joint legal obligation under the resource consent to provide ongoing maintenance and monitoring sevices at the landfill site post closure. The management of the landfill will influence the timing of recognition of some liabilities - for example, the current landfill will operate in four stages. A liability relating to stages two, three and four will only be created when the stage is commissioned and when refuse begins to accumulate in this stage. - The remaining capacity of the site is 4 million cubic metres (refuse, cleanfill and cover). - The estimated remaining life is 40 years. - Estimates of the life have been made by Hastings District Councilâ&#x20AC;&#x2122;s engineers based on historical volume information. The cash outflows for landfill post-closure are expected to occur in two to sixty-nine years time (or between 2008 and 2077). The long term nature of the liability means that there are inherent uncertainties in estimating costs that will be incurred. The provision has been estimated taking into account existing technology and using a discount rate of 7%. The following major assumptions have been made in the calculation of the provision: - Aftercare will be required for 30 years after the closure of each stage. - The annual cost of aftercare for stage one (Valley A) is assessed at $37,500. - Only Napier City Councilâ&#x20AC;&#x2122;s 36.62% share of the provision is included.

Napier City Council Annual Report 2007/08

Page 41

Notes to the Financial Statements for the Year Ended 30 June 2008

25. Equity Actual 2008 $000

Actual 2007 $000

630,253

611,665

(1,642)

(4,972)

(70)

1,747

Retained earnings As at 1 July Transfers to: Restricted reserves Transfers from: Asset revaluation reserve on disposal of property, plant and equipment Restricted reserves

8,273

1,406

18,491

20,407

655,305

630,253

14,916

11,350

(8,273)

(1,406)

Retained earnings

1,642

4,972

As at 30 June

8,285

14,916

Loan redemption reserve

2,224

3,409

Loans funds reserves

(804)

(903)

597

323

Advanced Waste Water Treatment Fund (HBRC)

4,630

4,258

Other restricted reserves

1,638

7,829

As at 1 July

467,775

469,522

Revaluation gains/(losses)

129,013

(1,747)

596,858

467,775

Land

66,077

46,705

Leasehold land

18,973

17,586

Buildings

29,235

21,597

198

203

Surplus/(deficit) for the year As at 30 June Restricted reserves As at 1 July Transfers to: Retained earnings Transfers from:

Restricted reserves consist of:

Trusts and bequests

Asset revaluation reserves

Transfer of revaluation reserve to retained earnings on disposal of property, plant and equipment As at 30 June Asset revaluation reserves consist of: Operational assets

Plant & Equipment

Page 42

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

Actual 2008 $000

Actual 2007 $000

Sewerage system

90,994

68,254

Water system

43,357

30,928

Infrastructural Assets

Drainage network

54,355

38,094

Roading network

170,059

151,830

98,980

82,522

Grandstands and halls

2,607

1,103

Buildings on reserves

8,092

1,696

Swimming pools

3,637

2,412

10,294

4,845

As at 1 July

Valuation gains/(losses) on unlisted shares taken to equity

101

605,244

482,760

Restricted Reserves Sportsgrounds

Inner harbour Fair value through equity reserve

As at 30 June Total other reserves

26. Capital Management The Council’s capital is its equity (or Ratepayers’ Funds), which comprise retained earnings and reserves. Equity is represented by net assets. The Local Government Act 2002 (the Act) requires Council to manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community. Ratepayers’ Funds are managed largely as a by-product of managing revenues, expenses, assets, liabilities, investments, and general financial dealings. The objective of managing these items is to achieve intergenerational equity, which is a principle promoted in the Act and applied by the Council. Intergenerational equity requires today’s ratepayers to meet the costs of utilising the Council’s assets but does not expect them to meet the full cost of long-term assets that will benefit ratepayers in future generations. Additionally, the Council has Asset Management Plans in place for major classes of assets, detailing renewal and maintenance programmes to ensure that future generations of ratepayers are not required to meet the costs of deferred renewals and maintenance. The Act requires the Council to make adequate and effective provision in its Long Term Council Community Plan (LTCCP) and in its Annual Plan (where applicable)

Napier City Council Annual Report 2007/08

to meet the expenditure needs identified in those plans. The Act sets out the factors that the Council is required to consider when determining the most appropriate sources of funding for each of its activities. The sources and levels of funding are set out in the funding and financial policies in the Council’s LTCCP. Napier City Council has the following Council created reserves: • reserves for different areas of benefit; • self-insurance reserves; and • trust and bequest reserves. Reserves for different areas of benefit are used where there is a discrete set of rate or levy payers as distinct from the general rate. Any surpluses or deficits relating to these separate areas of benefit are applied to the specific reserves. Self-insurance reserves are built up annually from general rates and are made available for specific unforeseen events. The release of these funds can generally be approved only by Council. Trust and bequest reserves are set up where the Council is donated funds that are restricted for particular purposes. Interest is added to trust and bequest reserves where applicable, and deductions are made where funds have been used for the purposes for which they were donated.

Page 43

Notes to the Financial Statements for the Year Ended 30 June 2008

27. Capital commitments and operating leases Actual 2008 $000

Actual 2007 $000

4,519

3,304

Capital commitments Capital expenditure contracted for at balance date but not yet incurred for property, plant and equipment Operating leases as lessee Napier City Council leases the following two properties in the normal course of its business: 1. Napier Community House The Council subleases all of the Community House building to several organisations and groups to provide community services and support to Napier, Hastings and the wider Hawke’s Bay region. 2. Tourism House The Tourism Services business unit operates from a section in this building. The Council subleases 80% of this building to Hawke’s Bay Incorporated, Hawke’s Bay Wine Country Tourism Association and Napier Inner City Marketing. These leases have a non-cancellable term of a minimum of 36 months. The future aggregate minimum lease payments to be paid by the Council under non-cancellable operating leases are as follows: Actual 2008 $000

Actual 2007 $000

Not later than one year

141

144

Later than one year and not later than five years

154

295

197

Non-cancellable operating leases as lessee

Later than five years Total non-cancellable operating leases

The total minimum future sublease payments expected to be received under non-cancellable subleases at balance sheet date is $284,335 (2007: $183,086) Leases can be renewed at the Council’s option, with rents set by reference to current market rates for items of equivalent age and condition. There are no restrictions placed on the Council by any of the leasing arrangements. Operating leases as lessor The Council leases excess building space under operating leases. The future aggregate minimum lease payments to be collected by the Council under non-cancellable operating leases are as follows: Actual 2008 $000

Actual 2007 $000

417

381

1,298

400

315

2,030

781

Non-cancellable operating leases as lessor Not later than one year Later than one year and not later than five years Later than five years Total non-cancellable operating leases

Page 44

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

28. Contingencies Actual 2008 $000

Actual 2007 $000

Financial guarantees

285

852

Total contingent liabilities

285

852

Contingent liabilities

Financial guarantees The value of guarantees disclosed as contingent liabilities reflects the Council’s assessment of the undiscounted portion of financial guarantees that are not recognised in the statement of financial position. Refer to note 24 Provisions for information on recognised financial guarantees. Unquantified claims In 2007/08, there are four claims against Council which have been notified to Council’s Insurers. Because of the uncertainty associated with the claims, an estimate of the financial effect cannot be made. These matters were not recognised in the financial statements because of the uncertainty associated with the outcomes. Other contingencies At 30 June 2008, Napier City Council held 7 (2007: 27) conditional contracts for sale of residential development sections. The contracted revenue of $1,390,000 (GST exclusive) from these sales has not been included in the 30 June 2008 financial statements and deposits received (2008: $66,000, 2007: $869,600) in conjunction with these contracts are held in trade and other payables until these contracts become unconditional. The contract terms require consent under S222 of the Resource Management Act (completion of infrastructure works) to become unconditional contracts for sale. In the event consent is not obtained deposits held are refundable. Napier City Council is a participating employer in a Defined Benefit Plan Contributors Scheme (“the scheme”) which is a multiemployer defined benefit scheme. If the other participating employers ceased to participate in the scheme, Napier City Council could be responsible for the entire deficit of the scheme. Simarily, if a number of employees ceased to participate in the scheme, Napier City Council could be responsible for an increased share of the deficit.

29. Reconciliation of net surplus after tax to net cash flow from operating activities Actual 2008 $000

Actual 2007 $000

18,491

20,407

(167)

(158)

Depreciation and amortisation expense

16,131

14,734

Vested assets

Surplus/(deficit) after tax Add/(less) non-cash items: Share of associate surplus/(deficit)

(2,082)

(2,085)

(Gains)/losses in fair value of investment property

(501)

(2,334)

Gains on library bookstock

(173)

(60)

(11)

(65)

(191)

(5)

(3,040)

3,154

2,344

1,284

Other non-cash Items Add/(less) items classified as investing or financing activities: (Gains)/losses on disposal of property plant and equipment Add/(less) movements in working capital items: Accounts receivable Inventories Biological assets

Accounts payable

877

883

Provisions

634

(40)

Employee benefits Net cash inflow/(outflow) from operating activities Napier City Council Annual Report 2007/08

500

32,852

35,793 Page 45

Notes to the Financial Statements for the Year Ended 30 June 2008

30. Remuneration Chief Executive The Chief Executive of Napier City Council, appointed under section 42 of the Local Government Act 2002, received a salary of $240,265 (2007: $219,700). In terms of his contract, the Chief Executive also received the following additional benefits: Cost During the Financial Year

Subscriptions

2008 $

2007 $

536

200

For the year ended 30 June 2008, the total annual cost including Fringe Benefit Tax to Napier City Council of the remuneration package being received by the Chief Executive is calculated at $240,801 (2007: $219,900) Elected Representatives Total remuneration 2008 $000

2007 $000

John Cocking

Kathie Furlong

Robin Gwynn

Mark Herbert

Tony Jeffery

Deane Jessep

Harry Lawson

Rob Lutter

Dave Pipe

Tony Reid

Faye White

Tania Wright

Keith Price

Maxine Boag

Bill Dalton

Mayor Barbara Arnott Councillors

Mayorâ&#x20AC;&#x2122;s vehicle allowance of $5,000 is included in the total remuneration (2007: $11,000).

31. Severance Payments For the year ended 30 June 2008, Napier City Council made three severance payments to employees totalling $20,880. The value of each of the severance payments was $13,250, $5,167 and $2,463.

32. Events after the balance sheet date There have been no significant events since balance date.

Page 46

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

33. Financial Instrument Risks Actual 2008 ($000)

Actual 2007 ($000)

Cash and Cash Equivalents (see Note 1 below)

3,468

9,305

Debtors and Other Receivables

9,921

6,881

Term Deposits

30,203

21,984

Total Loans & Receivables

43,592

38,170

Financial Instrument Categories Financial Assets Loans and receivables

Other Financial Assets

Held to maturity Other Financial Assets Local Authority Stock (see Note 2. below)

8,252

1,800

Sinking Fund Investments

186

780

Corporate Bonds

500

8,938

2,580

Unlisted Shares

454

422

Total Fair Value Through Equity

454

422

Total Held to Maturity Fair Value Through Equity

Financial Liabilities Financial Liabilities at Amortised Cost Creditors and Other Payables Secured Loans Finance Leases

9,764

8,169

11,562

18,570

244

21,391

26,983

Financial Instrument Risks Napier City Council has a series of policies to manage the risks associated with financial instruments. Napier City Council is riskaverse and therefore seeks to minimise risk exposure from its treasury activities through adherence to its approved Investment Management Policy and Liability Management Policy. These policies do not allow transactions of a speculative nature.

Market Risk Price risk Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market prices. Napier City Council is exposed to equity securities price risk on its investments, which are classified as financial assets held at fair value through equity. This price risk arises due to market movements in listed securities. This price risk is managed by diversification of Napier City Councilâ&#x20AC;&#x2122;s investment portfolio in accordance with the limits set out in Napier City Councilâ&#x20AC;&#x2122;s Investment Management Policy. Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. Napier City Council purchases plant and equipment associated with the construction of certain infrastructural assets as well as library book assets, from overseas. These transactions require Napier City to enter into transactions denominated in foreign currencies. As a result of these activities, exposure to currency risk arises. It is Napier City Councilâ&#x20AC;&#x2122;s policy to manage foreign currency risks arising from contractual commitments and liabilities that are significant values by entering into forward foreign exchange contracts to hedge the foreign currency risk exposure. This means Napier City Council is able to fix the New Zealand dollar amount payable prior to delivery of the plant and equipment from overseas. (2008: nil, 2007: $885,000) Fair value interest rate risk Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Borrowings and investments issued at fixed rates of interest expose the Napier City Council to fair value interest rate risk. Napier City Council Annual Report 2007/08

Page 47

Notes to the Financial Statements for the Year Ended 30 June 2008 Napier City Council’s Liability Management policy is to stay within a minimum and maximum percentage of its borrowings in fixed-rate instruments. Fixed to floating interest rate swaps can be entered into to hedge the fair value interest rate risk arising where Napier City Council’s fixed rates borrowings are in excess of the target range. Cash flow interest rate risk Cash flow interest rate risk is the risk that the cash flows from a financial instrument will fluctuate because of changes in market interest rates. Borrowings and investments issued at variable interest rates expose Napier City Council to cash flow interest rate risk. In order to manage the cash flow interest rate risk, under its Liability Management Policy Napier City Council has the ability to raise long-term borrowings at floating rates, then later swap them to fixed rates using interest rate swaps. Credit risk Credit risk is the risk that a third party will default on its obligation to Napier City Council, causing Napier City Council to incur a loss. Due to the timing of its cash inflows and outflows, the Napier City Council invests surplus cash into term deposits and local authority stock, which gives rise to credit risk. Napier City Council’s Investment Management Policy limits the amount of credit exposure to any one financial institution or organisation. Investments in other Local Authorities are generally secured by charges over rates. Other than other local authorities, Napier City Council invests funds only with entities that have a Standard and Poor’s credit rating of at least A-1 for short-term investments, and at least A+ for long-term investments. Napier City Council has no collateral or other credit enhancements for financial instruments that give rise to credit risk. Maximum Exposure to Credit Risk Napier City Council’s maximum credit exposure for each class of financial instrument is as follows: Actual 2008 ($000)

Actual 2007 ($000)

Cash at Bank

3,453

9,290

Term Deposits

30,203

21,984

Sinking Fund Investments

186

780

Local Authority Stock

8,252

1,800

Financial Guarantees

880

1,497

42,974

35,351

Total Credit Risk Credit Quality of Financial Assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to Standard and Poor’s credit ratings (if available) or to historical information about counterparty default rates:

Counterparties With Credit Ratings

Actual 2008 ($000)

Actual 2007 ($000)

3,453

9,290

3,453

9,290

22,703

15,984

Cash at Bank AA (Others) AA- (Kiwibank) Term Deposits AA (Others) AA- (Kiwibank)

7,500

6,000

30,203

21,984

Counterparties Without Credit Ratings Local Authority Stock

8,252

1,800

Sinking Fund Investments

186

780

Financial Guarantees

880

1,497

9,318

4,077

Debtors and other receivables mainly arise from Napier City Council’s statutory functions. Therefore there are no procedures in place to monitor or report the credit quality of debtors and other receivables with reference to internal or external credit ratings. The Council has no significant concentrations of credit risk in relation to debtors and other receivable, as it has a large number of credit customers, mainly ratepayers, and has powers under the Local Government (Rating) Act 2002 to recover outstanding debts from ratepayers. Page 48

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008 Liquidity Risk Management of Liquidity Risk Liquidity risk is the risk that Napier City Council will encounter difficulty raising liquid funds to meet commitments as they fall due. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Napier City Council aims to maintain flexibility in funding by keeping committed credit lines available. In meeting its liquidity requirements, Napier City Council maintains a target level of investments that must mature within the next 12 months. The Council manages its borrowings in accordance with its funding and financial policies, which include a Liability Management Policy. These policies have been adopted as part of Napier City Council’s Long Term Council Community Plan. Napier City Council has an overdraft facility of $300,000 (2007: $300,000), and there are no restrictions on the use of this facility. Contractural Maturity Analysis of Financial Liabilities The table below analyses Napier City Council’s financial liabilities into relevant maturity groupings based on the remaining period at the balance date to the contractual maturity date. Future interest payments on floating rate debt is based on the floating rate on the instrument at the balance date. The amounts disclosed are the contractual undiscounted cash flows. Carrying Amount

Contractural Cash Flow

Less Than 1 year

1-2 years

2-5 years

More than 5 years

2008 Creditors & Other Payables Secured Loans Finance Leases Financial Guarantees Total

9,764

11,562

13,931

5,264

1,472

5,022

2,173

880

22,271

24,641

15,960

1,486

5,022

2,173

8,169

18,570

22,030

8,251

5,264

4,198

4,317

2007 Creditors & Other Payables Secured Loans Finance Leases Financial Guarantees Total

244

251

185

1,497

28,480

31,947

18,102

5,316

4,212

4,317

Contractural Maturity Analysis of Financial Assets The table below analyses Napier City Council’s financial assets into relevant maturity groupings based on the remaining period at the balance date to the contractual maturity date. Carrying Amount

Contractural Cash Flow

Less Than 1 year

1-2 years

More than 5 years

2-5 years

2008 Cash & Cash Equivalents

3,468

Debtors & Other Receivables

9,921

30,203

8,252

4,000

4,252

Sinking Fund Investments

186

Unlisted Shares

454

Corporate Bonds

500

52,983

44,045

4,186

4,252

500

Other Financial Assets Term Deposits Local Authority Stock

Total

Napier City Council Annual Report 2007/08

Page 49

Notes to the Financial Statements for the Year Ended 30 June 2008 Carrying Amount

Contractural Cash Flow

Less Than 1 year

1-2 years

2-5 years

More than 5 years

Cash & Cash Equivalents

9,305

Debtors & Other Recâ&#x20AC;&#x2122;bles

6,881

21,984

1,800

300

1,500

Sinking Fund Investments

780

623

157

Unlisted Shares

422

41,172

39,515

157

1,500

2007

Other Financial Assets Term Deposits Local Authority Stock

Corporate Bonds Total Sensitivity Analysis

The tables below illustrate the potential profit and loss impact for reasonably possible market movements, with all other variables held constant, based on Napier City Councilâ&#x20AC;&#x2122;s financial instrument exposures at the balance date. 2008 -100bps Other Profit Equity

2007 100bps Other Profit Equity

-100bps Other Profit Equity

100bps Other Profit Equity

Interest Rate Risk Financial Assets Cash & Cash Equivalents

(35)

(93)

(302)

302

(220)

220

(83)

(18)

Other Financial Assets Term Deposits Local Authority Stock Sinking Fund Investments

(2)

(8)

Corporate Bonds

(5)

(427)

427

(339)

339

Financial Liabilities Term Loans - Floating

Explanation of Sensitivity Analysis Cash and Cash Equivalents Cash and cash equivalents include offset bank balances and deposits at call totalling $3,468 (2007 $9,306) which are at a floating interest rate. A movement in that rate of plus or minus 1.0% has an effect on interest income of $35 (2007 $93). Term Deposits A total of $2,462,000 (2007 $1,767,000) of investments in local authority stock are classified at fair value through equity. A movement in interest rates of plus or minus 1.0% has an effect of $56,000 (2007 $101,000) on the fair value through equity reserve. A total of $30,203 (2007 $21,983) of investments in term deposits are classified as held to maturity. A movement in interest rates of plus or minus 1.0% has an effect of $302 (2007 $220) on interest income. Local Authority Stock A total of $8,252 (2007 $1,800) of investments in local authority stock are classified as held to maturity. A movement in interest rates of plus or minus 1.0% has an effect of $83 (2007 $18) on interest income. Sinking Fund Investments Sinking Fund Investments totalling $186 (2007 $780) are invested at a floating interest rate. A movement in that rate of plus or minus 1.0% has an effect on interest income of $2 (2007 $8). Corporate Bonds A total of $500 (2007 $0) of investments in corporate bonds are classified as held to maturity. A movement in interest rates of plus or minus 1.0% has an effect of $5 (2007 $0) on interest income. Term Loans At 30 June 2008 Napier City Council had $0 of floating rate debt (2007 $0). A movement in interest rates of plus or minus 1.0% therefore has no effect on interest income. Page 50

Napier City Council Annual Report 2007/08

Notes to the Financial Statements for the Year Ended 30 June 2008

34. Derivative Financial Instruments As at 30 June 2008, Napier City Council’s current and non-current investments and borrowings have all been negotiated at fixed interest rates for fixed terms. Accordingly, the Council holds no derivative financial instruments (2007: $nil).

35. Related Party Transactions Napier City Council has significant influence over Hawke’s Bay Cultural Trust and Hawke’s Bay Incorporated. Napier City Council also has a 36.32% share in the Omarunui Landfill joint venture and has significant influence over Hawke’s Bay Airport Authority due to its 26.12% ownership. Hawke’s Bay Cultural Trust The Trust is a council-controlled organisation as three of the five member Board are Napier City Council and Hastings District Council nominees. Hawke’s Bay Incorporated This is a council-controlled organisation as the three funding Councils comprising Napier City Council, Hastings District Council and Hawke’s Bay Regional Council, have the right to appoint 50% of the Trustees of this organisation. Actual 2008 $000

Actual 2007 $000

Hawke’s Bay Cultural Trust (HBCT) Grants paid to HBCT

262

850

Book purchases paid to HBCT

Conferences expenses paid to HBCT

Services provided to HBCT Accounts receivable from HBCT Accounts payable to HBCT

536

276

400

1,265

1,276

Hawke’s Bay Incorporated (HBI) Advertising expenses paid to HBI Grant paid to HBI Services provided to HBI Hawke’s Bay Airport Authority (HBAA) Services provided to HBAA Omaruni Landfill Landfill fees paid to Hasting District Council Key management personnel During the year, Councillors and key management, as part of a normal customer relationship, were involved in minor transactions with Napier City Council (such as payment of rates, Council fees and charges etc). Amounts shown below are exclusive of GST where GST is applicable. During the year, the Council purchased goods and services from East Pier, in which Mark Herbert, a Councillor, has an equity interest. These services cost $350 (2007: $1,642) and were supplied on normal commercial terms. The Council received revenue of $1,978 (2007: $750) from East Pier. This revenue was for advertising displays at Napier i-Site Visitor Centre and issuance of licences related to East Pier Bar and Restaurant. During the year, the Council received revenue of $1,047 from Thirsty Whale Bar and Restaurant Limited, in which Keith Price, a Councillor, has an equity interest. This revenue was for issuance of licences to Thirsty Whale Bar and Restaurant. During the year, the Council also purchased services from Something Different Limited, which is owned by John Cocking, a Councillor. The services cost $7,722 (2007: $15,693) and were supplied on normal commercial terms. No provision has been required, nor any expense recognised for impairment of receivables for any loans or other receivables to related parties (2007: $nil).

Napier City Council Annual Report 2007/08

Page 51

Notes to the Financial Statements for the Year Ended 30 June 2008 Key Management Personnel Compensation

Salaries and other short-term employee benefits

Actual 2008 $000

Actual 2007 $000

1,618

1,463

Post-employment benefits

Other long-term benefits

Termination benefits

Key management personnel include the Mayor, Councillors, Chief Executive and other senior management.

36. Joint Venture Napier City Councilâ&#x20AC;&#x2122;s interest in the Omarunui Landfill is accounted for as a jointly controlled operation. Napier City Councilâ&#x20AC;&#x2122;s interests in the jointly controlled operation are as follows: Actual 2008 $000

Current assets

Actual 2007 $000

537

883

4,605

3,169

953

269

Income

1,866

1,990

Income (Napier City Council sales eliminated)

(460)

(464)

659

881

Non-current assets Non-current liabilities

Expenses

Joint venture commitments and contingencies There are no capital commitments and contingent liabilities arising from involvement in the joint venture.

Page 52

Napier City Council Annual Report 2007/08

Council Controlled Organisations This part of the Annual Report reports the performance of the Council-Controlled organisations as required in Clause 16 of Schedule 10 of the Local Government Act 2002.

b. Nature and Scope of Activities The Objectives of the Trust are: •

To hold and protect the regional collection for the people of Hawke’s Bay and to provide storage and protection for the collection

•

To advance and promote the Arts in New Zealand and particularly in Hawke’s Bay

•

To promote a sense of history and an awareness of the importance of the nation’s heritage in New Zealand and particularly in Hawke’s Bay

•

To provide an exhibition policy and to oversee the maintenance, risk management and quality of the regional collection through a contract for services with the Napier City Council

•

To regulate and approve the disposal of collection items

•

To administer the bequests held by the Hawke’s Bay Cultural Trust.

Hawke’s Bay Airport Authority a. Policies and Objectives Regarding Ownership and Control This is a joint venture between Government, Hastings District Council and Napier City Council, in which Napier City Council has a 26% shareholding. The Authority produces separate annual accounts. No payments are made by Napier City Council to the Authority and there is no financial provision included in Council budgets. The Napier City Council share of the Authority is included in its annual financial statements as an investment, valued using the equity method of accounting. Council’s policies and objectives have been met in full. b. Nature and Scope of Activities The nature and scope of the activities of the Authority is to operate the airport facilities appropriate for Hawke’s Bay that fully comply with Civil Aviation Authority and other regulatory requirements, and the management of other related commercial activities on airport land. There has been no change between the intended and actual nature and scope of activities delivered. c. Performance Targets The key performance targets and performance results (as reflected in the Authority’s Annual Report for 2007/08) are: Target

Earnings before Interest, tax and depreciation % to Revenue Return on Funds Employed Profit for period as % of total equity Landing Charges to Other Income

Actual

The Nature and Scope of Activities to be undertaken for the regional collection are: The provision of: •

Care – To ensure conservation standards are met and conservation practice is ongoing

•

Development – To grow in accordance with Collection Policies

•

Housing – To ensure proper storage/protection of collection items

•

Exhibition/Display – To present the collection in line with the Management agreement with Hawke’s Bay Museum & Art Gallery and other associated entities

•

Access to the collection – To ensure appropriate access to the collection is maintained at all times

•

A collection that reflects the history of Hawke’s Bay.

61.7% 57.0% 4.4%

4.6%

4.1%

4.5%

51.49 47.53

Bird Strikes - per 000 aircraft movements Safety & Security - accidents on airport

0.5

0.7

nil

CAA Rule 139 - non-compliance with rule

nil

c. Performance Targets As noted above, there was no Council accepted Statement of Intent for the Trust for 2007/08 and therefore no performance targets were in place. A Statement of Intent, with measurable performance targets, has been prepared for 2008/09.

Hawke’s Bay Incorporated (HB Inc) a. Policies and Objectives Regarding Ownership and Control

Hawke’s Bay Cultural Trust a. Policies and Objectives Regarding Ownership and Control The Trust is a Council Controlled Organisation as three of the five-member Board are Council nominees. This is in accordance with the revised Constitution and Rules adopted 30 October 2006, which were amended to reflect the change in role to that of owner and guardian of the regional collection. As a new Board had not been appointed at the time a draft Statement of Intent would have been presented to shareholders, in accordance with the Act, there was no Council accepted Statement of Intent for 2007/08 Napier City Council Annual Report 2007/08

This was a Council-Controlled Organisation as the 3 funding Councils, Napier City Council, Hastings District Council and Hawke’s Bay Regional Council, had the right to appoint 50% of the Trustees of the Trust. The purpose of HB Inc was to foster regional economic development including tourism destination marketing for the Hawke’s Bay region through improving the competitiveness of Hawke’s Bay as a place to visit, live, work, invest and grow business located in the Hawke’s Bay region. b. Nature and Scope of Activities The nature and scope of the activities of HB Inc were: Page 53

Council Controlled Organisations •

•

To provide Central Government and appropriate departments such as NZTE with a single point of reference and connection to the region for tourism, economic development, and business development activities.

capability database enabling collaborative opportunities to be identified, skills matched, and potential realised.

To facilitate economic growth in the Hawke's Bay region through: -

providing the strategic direction for the region through developing, agreeing, and updating as required a strategic plan for the region

providing leadership in the implementation of the plan, working with major stakeholders to ensure opportunities identified are realised

facilitate growth businesses by identifying opportunities and constraints to their growth, and accessing relevant advice and support

actively build a positive relationship with Hastings and Napier economic development staff to help ensure synergy of local and regional activities.

c. Performance Targets The key performance targets (as reflected in the organisation’s 2007/08 Statement of Intent) were:

maximising the region's tourism effectiveness by identifying target markets domestically and internationally, and ensuring individual and regional promotion to these targets is aligned

providing clear direction and support to the region's tourism operators through the establishment and availability of a 'toolbox' of marketing materials ensuring all promotion of the region is consistent

ii. Non-Financial

marketing the region effectively as a competitive place to visit through targeting specific marketing channels including key publications, private and public tourism organisations, and joint marketing opportunities establishing and managing processes and relationships to attract inward investment and favourable immigration assisting growth businesses located in Hawke's Bay to realise their potential through the establishment of a broad ranging business

Financial To operate within budget and remain solvent at all times.

•

To have in place a fully staffed organisation structure.

•

To complete and implement the Business Plan in agreement with the Stakeholders.

•

To meet performance targets and measures specified by the Trust.

Hawke's Bay Inc has met its broad key financial and non financial performance targets. Full details are outlined in the Annual Report for HB Inc for 2007/08. Hawke's Bay Inc functions transferred to the Hawke's Bay Regional Council during 2007/08, and with effect from 1 July 2008 ceased to be a Council Controlled Organisation.

Maori Contribution to Decision-Making Process Clause 21 of Schedule 10 of the Local Government Act 2002 requires that this Annual Report includes a report on opportunities provided for Maori to contribute to the decisionmaking process of Council. Liaison with the Maori community is undertaken in the first instance through the Maori Consultative Committee. The Maori Consultative Committee makes recommendations to Council on agenda items already included on the

Page 54

Community Development, Environmental Management and Corporate Business Standing Committee agendas. It also makes recommendations to the appropriate Standing Committee or Council on any other matters relevant to Council as it considers necessary. It meets six weekly, one week prior to the Council meeting. Committee members may attend Council seminars/ workshops as appropriate.

Napier City Council Annual Report 2007/08

Statement of Service Performance for Activity Groups Activity Reporting

NRB Customer Satisfaction Survey

The Statement of Services and Performance describes the Activities within each group, progress on Key Issues identified in the 2007/08 Annual Plan and the financial and non-financial performance targets and results. Where applicable comparisons to budgets and last year's actuals are provided.

Customer satisfaction targets are measured by the NRB Customer Satisfaction Survey. Interviews were carried out in July 2008 with 455 residents of Napier, throughout the City. Weightings were applied to the sample data to reflect the actual male/female/age/ethnic proportions in the area as determined by the Department of Statistics Census data. The Communitrak Survey is a scientifically prepared service based on a random probability sample. For the sample size of 455 the margin of error is plus or minus 6.5%.

The HB Museum and Art Gallery activity includes the LTCCP Cultural Services activity. The LTCCP Safer Community activity has been renamed Safer Napier.

Napier City Council Annual Report 2007/08

Page 55

DEMOCRACY AND GOVERNANCE Activities

Key Issues

The Democracy and Governance Group comprises:

Council Elections

Democracy and Governance

The election for the Council was held in October 2007 in accordance with the decision of the representation review with six councillors representing the city at large and six councillors representing the four newly formed wards, Ahuriri (1 representative), Onekawa-Tamatea (1), Nelson Park (2) and Taradale (2).

• • •

Meeting Cycle 6 weeks Standing and Specialist Committees 8 Elections Last Held 2 November 2007

Through Democracy and Governance Council provides a democratic and consultative system for decision making. The Council, consisting of a Mayor and twelve Councillors, is elected three yearly. Through its structure of Committees, Sub-Committees, Working Parties and Forums Council carries out the requirements of the Local Government Act and other related legislation.

Two additional Standing Committees, LTCCP and Annual Plan and Tourism and Economic Development, have been added to the governance structure. The Hearings Committee has been replaced by the Resource Management Hearings Committee and the Licensing and Permits Hearings Committee.

Performance Measures for 2007/08 Measures and Targets

Results

Democracy and Governance 1. Number of Council Meetings Cycles Target:

7 cycles

7 meeting cycles were held in 2007/08 with the following number of Council and Standing Committee Meetings: Council (inc. Extraordinary Council) Strategic Planning Environmental Management Community Development Corporate Business Maori Consultative Tourism and Economic Development LTCCP and Annual Plan

2. Percentage of residents satisfied with the “Sufficiency of Public Information” in the NRB Public Opinion Survey Target:

65%

3. Carry out all processes for Council Elections Target:

Page 56

No specific target for 2007/08

9 2 7 5 6 7 2 3

The NRB Survey carried out in July 2008 showed 70% public satisfaction for “Sufficiency of the Information Supplied”. More than enough Enough Not Enough Nowhere near enough Don’t Know / Not Sure

8% 62% 20% 4% 6%

Elections were held on 13 October 2007 and the new Council was installed on 2 November 2007.

Napier City Council Annual Report 2007/08

Democracy and Governance

Financial Summary Budget 07/08 $000

Activity

Operating

Actual 07/08 - $000 Interest Total

Depn

Income

Net Cost of Service

Actual 06/07 $000

1,919

Democracy and Governance

1,907

1,681

1,919

Total net operating

1,907

1,681

1,907

1,681

1,919

Capital Expenditure Funding Required Funded by

1,919

Non Targeted Rates

1,907

1,681

1,919

Total

1,907

1,681

Napier City Council Annual Report 2007/08

Page 57

RECREATION Activities

Key Issues

The Recreation Group comprises:

Botanical Gardens Restoration Project

Sportsgrounds

Council carried out a public consultation process for the restoration of the Botanical Gardens. As a result an independent archeological assessment of the gardens was carried out.

• •

13 sports parks (167 hectares) Major facilities - McLean Park Complex, Park Island, Nelson Park and Tareha Park

Sportsgrounds are provided throughout the City to cater for a range of recreational and sporting needs. Napier Aquatic Centre •

Indoor facilities (heated) - 5-lane 25m pool, 6-lane 25m pool, 15m learner’s pool, 2 toddlers pools, 2 spa pools, 2 waterslides

The aquatic facility provides a learn to swim school plus fitness, recreational and holiday programmes. Marine Parade Pools •

4 heated outdoor pools, 5 spa pools

The restoration plan will be used as a guide only for future work in the Napier Botanical Gardens. The fence will be removed and a gate installed at the lower Spencer Road entrance. The water reticulation works and water conservation measures will be undertaken after the necessary approvals are obtained from the Historic Places Trust. Remaining funds of $336,000 for the Botanical Gardens Restoration Capital project are be spent in the 2008/09 year Napier Aquatic Centre In April 2008 the Napier City Council decided that the Olympic pool and dive well at the Napier Aquatic Centre would be closed as they were no longer viable to operate and maintain.

A complex with a range of heated salt water pools and spas managed under contract.

Significant Acquisitions or Replacement of Assets

Reserves

•

McLean Park Redevelopment

35 neighbourhood parks, 45 greenbelt reserves, 22km pathways, 22 playgrounds, 7 foreshore reserves and 6 public gardens. 72.2 m2 recreational reserves per residential lot

The redevelopment encompasses an upgrade of the lighting, the construction of the Graeme Lowe Stand, which is to replace the existing McKenzie Stand, and the upgrading of user requirements.

A range of passive recreation facilities providing an open space network and formal gardens of a high standard throughout the City.

Expenditure incurred in 2007/08 was for the design of the new stand and lighting. Unspent budget will be carried forward for the completion of the project.

•

Inner Harbour •

95 berths

An area of wharves and catwalks in Ahuriri providing berths for commercial and recreational vessels and popular for recreational fishing.

Page 58

•

Whakarire Ave Breakwater The addition of a Groyne in the vicinity of Whakarire Avenue is part of the erosion mitigation measures planned for Westshore Beach. Expenditure for 2007/08 relates to professional fees and assessment of the environmental effect of the proposed breakwater. Unspent budget will be carried forward for the completion of the project subject to obtaining a resource consent.

Napier City Council Annual Report 2007/08

Recreation

Performance Measures for 2007/08 Performance Measures

Results

Sportsgrounds

1. Residents satisfied with ‘Sportsgrounds/fields’ in the NRB Public Opinion Survey

Target:

90%

2. Sportsground area per 1,000 residents

Target:

3.129 Ha

3. International Events

Target:

4. National/Inter-regional Events

Target:

The NRB Survey carried out in July 2008 showed 93% resident satisfaction with Parks and Sportsfields. Very Satisfied Fairly Satisfied Not Very Satisfied Don’t Know

55% 38% 3% 4%

Sportsground area per 1,000 residents = 2.919 Ha. The target (not achieved) is a long term average and the result is dependent on the timing of development of sportsgrounds. International events = 3. The target was not achieved. National/Inter-regional events = 74. The target was not achieved.

Napier Aquatic Centre

1. Users per Year.

Target:

230,000

Casual users Concessions Aerobics Learn to swim Holiday Programme Clubs Facility Hires (Groups) Non Paying users Total Users

65,255 15,324 8,092 21,888 3,567 14,420 35,821 18,379 182,746

The target was not achieved. 2. Percentage of Facilities ‘Poolsafe’

Target:

3. Customer Satisfaction in the NRB Public Opinion Survey

Target:

80%

4. Programmes Operating Per Year.

Target:

Very Satisfied Fairly Satisfied Not Very Satisfied Don’t Know The target was not achieved.

26% 29% 18% 27%

2007/08 = 7

Adherence average = 95%

At least 85% of the water test results comply with NZ Standards

6. Number of Learn To Swim Users per Year.

Target:

The NRB Survey carried out in July 2008 showed 55% resident satisfaction with Swimming Pools.

5. Adherence rate to Water Quality Meeting NZ Standards.

Target:

100% compliance with PoolSafe requirements

100%

25,000

Learn to swim participants = 21,888. The target was not achieved.

Note: Performance results for the Napier Aquatic Centre have been adversely effected by the closure of the Olympic pool and dive well. Napier City Council Annual Report 2007/08

Page 59

Recreation Performance Measures

Results

Marine Parade Pools

No performance measures

Reserves

1. Residents Satisfied with ‘Public Gardens and Street Beds’ in the NRB Public Opinion Survey

Target:

90%

Very Satisfied Fairly Satisfied Not Very Satisfied Don’t Know

2. Number of annuals propagated and planted throughout the city

Target:

60% 37% 3% 0%

Annuals for 2007/08 = 177,340 The target was not achieved.

180,000

3. Area of Recreational Land Per Residential Lot

Target:

The NRB Survey carried out in July 2008 showed 97% resident satisfaction with Public Gardens and Street Beds.

75m

Area per lot = 72.2m2. The target (not achieved) is a long term average and the result is dependent on the timing of development of greenfield reserves and the acquisition of suitable reserve areas to counter infill development.

Inner Harbour 1. Percentage of vessels berthed that are Commercial

Target:

30%

2. Time between Dredges of the Inner Harbour

Target:

3 years

3. Number of Permanent Berths

Target:

Page 60

30% of vessels berthed were commercial for 2007/08

Planned dredging during 2007/08 not undertaken so that dredging could coincide with Port of Napier dredging requirement to minimise cost. Dredging to be undertaken in second half of 2008, 4½ years from last dredging. The target was not achieved. 95 permanent berths for 2007/08

Napier City Council Annual Report 2007/08

Recreation

Financial Summary Budget 07/08 $000

2,631 1,112 140 2,900 221

Activity

Operating

Actual 07/08 - $000 Interest Total

Depn

Income [1]

Net Cost of Service

Actual 06/07 $000

Sportsgrounds

2,155

594

127

2,876

839

2,037

1,382

Napier Aquatic Centre

1,552

202

1,767

589

1,178

1,236

148

230

180

134

2,440

221

174

2,835

108

2,727

2,666

227

327

166

161

170

6,444

1,247

344

8,035

1,752

6,283

5,588

610

1,394

6,893

6,982

5,700

6,045

Marine Parade Pools Reserves Inner Harbour

7,004

Total net operating

5,763

Capital Expenditure [2]

12,767

Funding Required

5,850

Non Targeted Rates

4,802

Special Funds

729

549

274

Vested Assets

Funded by

1,414 427 12,767

Loans Non Funded Depn Total

400

388

6,893

6,982

[1] Summary of Income Actual 07/08 $000

Land Transport NZ & other Government Grants Regulatory Revenue Retail & Product Sales

1,275 32 407

Other Income

Grants & Donations

Vested Assets - Parklands Residential Development Total Income

Napier City Council Annual Report 2007/08

3 1,752

Page 61

Recreation [2] Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Sportsgrounds 3,496 111 139

McLean Park Redevelopment Tareha Sportsground Construct Shower/Change Facilities

175 -

Sportsgrounds Minor Capital

Sportsgrounds Renewals

Napier Aquatic Centre -

Redevelop Reception and Office

Napier Aquatic Centre Renewals

Reserves 1,314 100 60 -

Whakarire Ave Breakwater Beach Reprofiling

Upgrade Skatebowl Facility

Reserves Minor Capital Reserves Renewals

274

Reserves Vested Assets

Page 62

Tree Planting Programme

231 5,763

Capital Expenditure

16 154 610

Napier City Council Annual Report 2007/08

SOCIAL AND CULTURAL Activities

Safety Watch

The Social and Cultural Group comprises:

•

Libraries • •

2 Libraries - Napier and Taradale 39,859 members

Libraries offer free-to-all services and a stimulating and pleasant environment. Services include recreational, educational, historical, genealogical, cultural and current affairs material together with on-line facilities, reading and outreach programmes. War Memorial Conference Centre A multi-functional facility located on the beach front along Marine Parade, consisting of a ballroom, an exhibition hall, a gallery and three breakout rooms. This venue is highly suitable for conferences, exhibitions, weddings and other functions. The facility also houses an eternal flame as a memorial to Napier citizens who served and died in the conflicts of the 20th century. Napier Municipal Theatre The Art Deco heritage building in Tennyson Street provides modern theatre facilities for local, national and international live theatre, performing arts, exhibitions, and other community functions. The auditorium has a seating capacity of 993, and a ticketing Agency, selling 77,000 tickets annually, is situated in the front foyer. HB Museum and Art Gallery Hawke’s Bay Museum and Art Gallery is located at the corner of Marine Parade and Tennyson Street in Napier. Key parts were designed by prominent architect Louis Hay and built in the 1930s with significant additions including the Century Theatre designed by Natusch Shattky & Co in the late 1970s. It is a purpose-build art gallery and an iconic Art Deco building in Napier. The buildings house a combined museum and art gallery and a theatre/cinema complex. Hawke’s Bay Museum and Art Gallery is also responsible for overseeing the operation of the Faraday Centre, Technical Museum and Science Centre, located in Faraday Street, Napier.

Inner City Patrol at least five nights per week - 8pm to 5am.

The Safety Watch patrol acts as extra eyes and ears for the Police in the inner city area. The aim of the programme is to reduce violence and encourage sensible social behaviour. Halls •

7 casual hire facilities, 2 leased facilities

Council provides a range of facilities with a good geographic spread for recreational, community or leisure activities at affordable prices. Retirement and Rental Housing • •

303 retirement flats in 9 villages - all one bedroom 70 rental flats in 3 villages - mostly 2 bedrooms

Flats are provided for people with special housing needs, low assets, and low income, with the emphasis on providing for the welfare of the tenants. Council flats are in high demand with the average occupancy rate exceeding 97% with the remainder a very tight down time for cleaning and maintenance. Cemeteries •

6 cemeteries - 4 operational and 2 historic

Comprehensive areas for burials, ash interments, and ash scattering. The recently restored historic cemeteries ensure the historical and cultural significance is preserved. Records are available for genealogical enquiries. Note the crematorium for the Hawke’s Bay region, located in Hastings, is owned and operated by Hastings District Council. Public Toilets •

42 toilet facilities free of charge (of 43 total)

Public toilets are provided in key areas generally related to tourism, recreation and shopping activities. Facilities are cleaned and inspected daily with the emphasis on hygiene, safety and mitigation of graffiti.

Community Development Community facilitation, administration of community grants, and youth development are the main components of community advice. Community facilitation and grants support and encourage voluntary and community based organisations to address social issues in the city through self-help processes. Youth development supports and fosters the role of young people in our community, providing opportunities for young people to participate and engage in decision making.

Emergency Management • •

1 Emergency Management Operations Centre 9 Civil Defence Centres

Emergency Management combines Council staff, volunteers, other organisations and agencies to facilitate a planned response to emergencies in Napier. Integration of policies and planning as a region is coordinated by the Hawke’s Bay Civil Defence Emergency Management Group.

Safer Napier The purpose of this activity is to develop Crime Reduction projects that promote safety in the community, and provide coordination and liaison between community groups and organisations. The Safer Napier Board, formerly the Safer Community Council, was established as a Central Government initiative - subsidised by the Ministry of Justice Crime Prevention Unit. Napier City Council Annual Report 2007/08

Page 63

Social and Cultural

Key Issues Community Development In November 2007 the Napier City Council finalised the purchase of four shops to facilitate the rejuvenation of the Maraenui Shopping Centre. Two shops were on-sold to the EIT which has gone on to develop an Education Centre in the community. The remaining shops were renovated and leased to organisations to provide community based services. In August 2007, in response to a petition from young people, the Napier City Council resolved to carry out an upgrade of the Anderson Park Skatepark. This upgrade was completed in July 2008.

Significant Acquisitions or Replacement of Assets •

Purchase of bookstock to renew, revitalise and add to the Library Collections. There is no effective way to separate renewal from new capital as most items are not exact replacements but new material on existing subjects. Unspent budget will be carried forward. •

HB Museum and Art Gallery Funding of the costs of maintaining the regional collection has been agreed between Napier City Council and Hastings District Council to be shared equally. The regional collection is held by the Hawke’s Bay Cultural Trust, a Council Controlled Organisation.

Projects resulting from the Review of Library Services Napier libraries have implemented many of the strategies and recommendations arising from the review of library services adopted by the Napier City Council in August 2007. The redevelopment of the Taradale Library is scheduled to start in September 2008

The Pukemokimoki urban Marae was completed and officially opened in October 2007. The Skatezone wall facing Marine Parade was upgraded to include viewing panels in September 2007.

Library Bookstock

•

Redevelop HB Museum and Art Gallery Buildings Major redevelopment of the Hawke’s Bay Museum and Art Gallery building is proposed. This includes the demolition of the Lilliput and Discovery Centre buildings, the creation of a new HB Museum and Art Gallery building which links through to the existing Century Theatre and Museum buildings and the restoration of the Louis Hay Museum to its original Art Deco character. Architects have been employed to prepare working drawings. This project is behind schedule due to delays caused through the design concept needing to be reworked after initial consultation and design considerations. Budget for this project was originally included in the 2006 LTCCP and 2007/08 Annual Plan in the Property Assets activity group as the project was identified prior to the transfer of the HB Museum and Art Gallery from the HB Cultural Trust to the Napier City Council.

Page 64

Napier City Council Annual Report 2007/08

Social and Cultural

Performance Targets for 2007/08 Performance Measures

Results

Libraries 1. Number of issues of Specialist Collections

Target:

1,500

2. Number of Users (Door and Virtual)

Target: 500,000 (door and web) 420,000 (door only) 3. Bookstock Refreshment Rate

Target:

Refreshment Rate = 376

Number of Items issued = 750,305

740,000 Number members at 30 June 2008 = 39,859 (35,010 Napier resident members)

5. Number of members

Target:

33,000

6. Users of Community Information Database

Target:

160

7. Books on Wheels users

Target:

Number of Users = 716 Better use of website after it was upgraded and combined with the Council Website. Number of Users = 101

100

8. Number of children’s programmes

Target:

Number of users 2007/08: Door and Web = 505,178 Door only = 428,092

250

4. Number of Items issued

Target:

Number of Issues = 9,133 Increased issues resulted from improved displays and marking (OCTA project).

150

Number of Programmes = 223 Target set lower for closure of Taradale Library which is now scheduled for 2008/09.

Note: The measure "Number of users of Indexes" included in the LTCCP was not included in the 2008/09 Annual Plan as the statistic is not able to be measured accurately with current systems.

War Memorial Centre 1. Days Eternal Flame Memorial maintained

Target:

Usage Rate for 2007/08 = 290 days

2. Usage Rate

Target:

Flame memorial maintained for 366 days in 2007/08

365

252 days

3. Customer Satisfaction

Customer satisfaction for 2007/08 = 94%

Target: 90% 4. Number of “Full Service” Conferences

Target:

Total Delegates Conferences Average delegates

2,700 18 150

Napier City Council Annual Report 2007/08

Number of "Full Services" conferences for 2007/08 Total Delegates Conferences Average delegates

3,653 22 166

Page 65

Social and Cultural Performance Measures

Results

Municipal Theatre 1. Number of Performance Days

Target:

154

2. Reviews of Building Maintenance and Standard of Art Deco Presentation

Target:

4. Number of Tickets sold

Target:

1 review achieved in 2007/08

1 per year

3. Number of ‘Other’ Hire Days

Target:

Number of Performance Days 2007/08 = 118. The target was not achieved. Less touring shows this last year and increased venue competition

'Other' Hire Days 2007/08 = 43. The target was not achieved. Lower overall level of activity/ timing of bookings Tickets sold 2007/08 = 77,939

56,000

Note: The trend of more tickets sold over the internet, quality of touring shows available in the regions and regional competition saw ticketing drop. The target was reduced from the LTCCP target of 74,000.

HB Museum and Art Gallery From 1 July 2006 the activities previously managed by the HB Cultural Trust reported through the Tourism Services department of Napier City Council. Performance measures for the HB Museum and Art Gallery are currently being developed for inclusion in the 2008/09 LTCCP.

Community Development 1. Community Services Grants Allocated By the Designated Process and Time Frame

Target:

100%

2. Community Services Property Grants Allocated By the Designated Process and Time Frame

Target:

100%

4. Percent of Service Agreements and Purchase Contracts Meeting Reporting Requirements

Target:

90%

5. Number of Napier Community Network Meetings Coordinated Each Year

Target:

6. Number of community organisations receiving information by way of mail-out and e-mail four times per year

Target:

Page 66

The target was achieved with a total of $25,355 allocated as approved at Council meeting on 19 September 2007.

100%

3. Percent of Community Development Funding Distributed to Support Community Development Initiatives Each Year

Target:

The target was achieved with a total of $57,200 allocated to 39 community organisations, approved at Council meeting on 8 August 2007.

The target was achieved with $189,500 distributed or allocated to support community development initiatives. • Maraenui Shopping Centre Revitalisation • sPACIFICally Pacific Youth Expo 2007 $2,000 • HB Elderly Directory $5,000 • Maraenui Shop Purchases $179,000 • Xmas Parade 2007 $3,500. The following organisations have either a service agreement or purchase contract with Council: • Creative Napier • Napier Citizens Advice Bureau • Neighbourhood Support • Sport Hawke’s Bay • Surf Life Saving 90% reporting requirements met in 2007/08 4 community network meetings held in 2007/08 • 25 September 2007 • 13 November 2007 • 26 February 2008 • 27 May 2008 120 community organisations received information via community network meetings, newsletters, email groups, community projects and on the Council website.

100

Napier City Council Annual Report 2007/08

Social and Cultural Performance Measures

Results

Youth Development 1. Number of Youth Forums Coordinated Per Year

Target:

2. Number of Scholarships Awarded For the Youth Development Fund

Target:

4. Number of Alcohol and Drug Free Events and Activities

Target:

10 Scholarships awarded for 2007/08.

3. Number of Youth Service Providers Receiving Information Mail-outs Quarterly

Target:

19 Youth Forums coordinated in 2007/08.

248 Youth Services providers received quarterly information mail-outs in 2007/08. (10 different mail-outs to Youth Workers Collective) 10 events held in 2007/08: • 3 x Live Concerts • ‘Take It On’ – Spac Pac Hip Hop Comp • Kidz Fest • Maraenui Family Fun Day • Hawkes Bay Youth Awards • Pool Party with Napier Aquatic Centre • Hip Hop Concert • Free Fun Day @ Sk8 Zone

Safer Napier 1. Crime Reduction Strategies

Target:

•

• • • •

•

Continued implementation of Maraenui Urban Renewal Plan Ka Hao Te Rangatahi youth programme currently running. A further funding application has been made to the Ministry of Youth Development Ahuriri survey finialised Maraenui Survey completed Napier alcohol Liaison Group continues to meet As part of the Curbing Alcohol Related Violence project a draft Alcohol Strategy was completed and is ready for the first consultation Draft civic pride action plan is completed and ready for consultation. Targets wilful damage

Safety Watch 1. Nights Safety Watch Patrol Inner City Per Year

Target:

260

Patrolled 254 nights for 2007/08. The target was not achieved.

Note: The measures "Total Incidents Recorded" and "Total Recorded Crime in CBD" included in the LTCCP were not included in the 2007/08 Annual Plan as they do not reflect the actual performance of the Safety Watch Patrol. They are primarily influenced by variables beyond the control of Council.

Halls 1. Total Proportion of Users That Are Community and Rehabilitation Hires

Target:

75%

2. Total Hours Hired in Greenmeadows East, Memorial Square and Library Seminar Room

Target:

Greenmeadows Memorial Square Library Seminar

1,250 1,600 700

3. Customer Satisfaction Rate

Target:

89% for 2007/08. The target was not achieved.

Hours Hired 2007/08: Greenmeadows 1,782 Memorial Square 1,927 Library Seminar Room 608 The Library Seminar Room target was not achieved. Customer Satisfaction Rate for 2007/08 = 96%

80%

Napier City Council Annual Report 2007/08

Page 67

Social and Cultural Performance Measures

Results

Retirement and Rental Housing 1. Number of flats inspected

Target:

100%

2. Occupancy Rate - Rental Flats

Target:

Arrears 2007/08 $899.80 = 0.07% of rentals

0.16% of rentals

5. Maximum Rent Arrears - Retirement Flats

Target:

Occupancy rate for 2007/08 = 96.8%

96.7%

4. Maximum Rent Arrears - Rental Flats

Target:

Occupancy rate for 2007/08 = 97.1%

96.7%

3. Occupancy Rate - Retirement Flats

Target:

94% of flats inspected in 2007/08. The target was not achieved. Flats are not inspected if the tenant is not able to be present for the inspection.

Arrears 2007/08 $844.80 = 0.16% of rentals

0.16% of rentals

Cemeteries The subject of death and burials is a sensitive issue so it is not practical to survey users directly. There are no performance targets set, but the number of burials is recorded and included in this Annual Report. 1. Record the number of burials and ash interments for the year.

Burials for 2007/08 Ash interments for 2007/08

175 191

Public Toilets 1. Public satisfaction rate in the NRB Public Opinion Survey

Target:

80%

2. Daily inspections and cleaning of all Toilets

Target:

100%

The NRB Survey carried out in July 2008 showed 69% resident satisfaction with Public Toilets. Very Satisfied 27% Fairly Satisfied 42% Not Very Satisfied 12% Donâ&#x20AC;&#x2122;t Know 19% The target of 80% is optimistic and has not been achieved in past years. This year the percentage has also been adversely effected by an increase in "don't know's". 100 % of toilets were inspected and cleaned daily in 2007/08

Emergency Management 1. Radio Communications operative during weekly checks

Target:

95%

2. Emergency Operations Centre training activities

Target:

58%

6. National Warnings responded to within 30 minutes

Target: Page 68

50 Civil Defence Community Networks

5. Percentage of residents satisfied with Civil Defence Activity in the NRB Public Opinion Survey

Target:

9 Civil Defence Centres

4. Number of Civil Defence Community Networks (Volunteers)

Target:

38 training activities in 2007/08

3. Number of Civil Defence Centres

Target:

100% of radios operative during weekly checks. Twelve of the weekly checks were not carried out due to annual leave and other commitments. The radios are in daily use by the parking department and Napier Aquatic Centre.

95%

The NRB Survey carried out in July 2008 showed 58% resident satisfaction with Civil Defence. Very Satisfied Fairly Satisfied Not Very Satisfied Donâ&#x20AC;&#x2122;t Know

19% 39% 4% 38%

100% of warnings, where required, were responded to within 30 minutes Napier City Council Annual Report 2007/08

Social and Cultural

Financial Summary Budget 07/08 $000

Activity

2,598

Operating

Actual 07/08 - $000 Interest Total

Depn

Income [1]

Net Cost of Service

Actual 06/07 $000

Libraries

2,267

696

2,977

252

2,725

2,428

235

War Memorial Centre

1,245

1,344

1,112

232

255

486

Municipal Theatre

614

257

890

440

450

478

781

HB Museum and Art Gallery

2,435

2,490

1,482

1,008

1,174

821

Community Development

1,118

1,120

310

810

888

105

Safer Napier

292

161

131

337

Safety Watch

219

220

237

208

Halls

272

323

273

202

(38)

Retirement and Rental Housing

1,215

463

130

1,808

1,805

(21)

290

Cemeteries

421

456

212

244

206

607

Public Toilets

603

646

633

568

291

Emergency Management

278

314

302

271

10,979

1,706

195

12,880

5,849

7,031

6,757

6,721

Total net operating

2,780

Capital Expenditure [2]

1,526

1,390

9,501

Funding Required

8,557

8,147

7,338

6,783

Funded by 6,245

Non Targeted Rates

920

Special Funds

666

503

Vested Assets

465

Loans

164

Non Funded Depn

389

396

8,557

8,147

1,939 397 9,501

Total

[1] Summary of Income Actual 07/08 $000

User Charges Land Transport NZ & other Govt Grants

1,069 398

Rental Income - Other

1,956

Retail & Product Sales

2,115

Other Income Grants & Donations Total Income

Napier City Council Annual Report 2007/08

25 286 5,849

Page 69

Social and Cultural [2] Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Libraries 553

Library Stock

498

939

Projects resulting from the Review of Library Services

162

10 -

Verna Corbett Bequest

Self Checking Equipment

Libraries Minor Capital

War Memorial Centre 16

War Memorial Centre Minor Capital

Municipal Theatre 25

Municipal Theatre Minor Capital

HB Museum and Art Gallery 1,000

Redevelop HB Museum and Art Gallery Buildings

305

HB Museum and Art Gallery Minor Capital

Safety Watch -

Crime prevention through environmental design

Halls -

Halls Minor Capital

Retirement and Rental Housing 80

Retirement Housing Minor Capital

Rental Housing Minor Capital

16 1

Cemeteries 47

Infrastructure Asset Renewal

Public Toilets 90

Infrastructure Asset Renewal

121

Emergency Management -

Civic Building Generator

Emergency Management Minor Capital

2,780

66 4

Capital Expenditure

1,526

Note (*): see page 64 for comments on Redevelopment of HB Museum and Art Gallery Buildings

Page 70

Napier City Council Annual Report 2007/08

CITY PROMOTION Activities The City Promotion Group comprises: City and Business Promotion • • •

Business advisory and facilitation services Business re-focus “Be Your Own Boss” programme

The Enterprise Unit facilitates and assists existing and new businesses in the City to develop, expand and create employment. •

Time of Your Life campaign

Council promotes Napier via the “Time of Your Life” city marketing programme - an ongoing major media advertising programme aimed at informing national and international audiences about Napier to attract migrants and visitors to Hawke’s Bay. •

Sister City relations

Napier City Council has formal sister city relationships with Tomakomai in Japan and Lianyungang in China. Council also has friendly city relationships with Xuzhou in China, Victoria in British Columbia, Canada and has servicing relationships with the Chatham Islands.

National Aquarium of NZ The National Aquarium of New Zealand on Marine Parade houses sharks, stingray, hundreds of fish species, reptiles and kiwi. There are shows and tours daily, diving and photograph facilities, a themed souvenir shop and a café. The aquarium regularly hosts school groups, tour groups, birthday parties, sleepovers, and many other functions. Napier i-SITE Visitor Centre Napier i-Site Visitor Centre on Marine Parade is part of the i-SITE New Zealand network and offers information and booking services including accommodation and travel, attractions and activities, itinerary planning and advice, gifts, souvenirs, stamps and phone cards, local events and entertainment information, maps, guides and books, locally and New Zealand wide. Par 2 MiniGolf Two 18 hole miniature golf courses situated next to the Napier i-SITE Visitor Centre on Marine Parade providing entertainment for all ages. Services include group rates, coaching for schools, Big Day Out Programme incorporating Marine Parade Heritage Features, and corporate business house competitions. Kennedy Park

City Promotion Grants •

Grants to key local tourism organisations

Council assists with the economic development of the region via its contracts for service to Hawke’s Bay Inc. Art Deco is an important tourism feature of the City and Council assists the Art Deco Trust and Bertie in its promotion of Art Deco in Napier by way of a contract for service. Council also provides assistance for the marketing of the Central Business District. Marineland of NZ New Zealand’s only marine zoo located on Marine Parade houses seals, sea lions, penguins and other birds. Until the death of the remaining dolphin, Kelly, on 11 September 2008 Marineland ran shows and behind the scenes tours daily and provided bicycles and wet suits for hire. The zoo also provides an animal rehabilitation centre for sick, injured and orphaned marine animals. Education programmes and workshops are available for schools.

Napier City Council Annual Report 2007/08

Kennedy Park Top 10 Resort is one of the busiest holiday parks in New Zealand set in spacious park like surroundings. Facilities include 91 rooms, 170 powered and non-powered sites, as well as a restaurant, bar, conference facility, children’s playground, commercial laundry, service buildings, shop and a pool complex.

Key Issues Marineland In accordance with Council's 2 July 2008 resolution, when the remaining dolphin Kelly died, Marineland was closed to the public and at the same time the strategy identified in 2001 was put in place. Redevelopment options will continue to be investigated in consultation with the community.

Page 71

City Promotion

Performance Targets for 2007/08 Performance Measures

Results

City and Business Promotion 1. Number of Economic Monitoring Reports produced

Target:

2. ‘Be Your Own Boss’ clients served

Target:

100

3. Public Satisfaction rating in the NRB Public Opinion Survey

Target:

70% excluding don't know

Economic Monitoring Reports produced 2007/08 = 3 • Business Survey - September 2007 • Economic Monitor Report - November 2007 and March 2008 The target was not achieved. 95 clients in 2007/08 The target was not achieved. The NRB Survey carried out in July 2008 showed 85% resident satisfaction with Council’s policies to promote job opportunities excluding "don't know".

City Promotion Grants There are no non financial performance measures.

Marineland of New Zealand 1. Attendances

Target:

46,500

2. Range of visitor experience options

Target:

4,400

4. Number of rehabilitated animals and birds

Target:

Educational programme attendees for 2007/08 = 4,300 The target was not achieved Rehabilitated animals and birds 2007/08 = 56

5. Work experience and skill enhancement volunteers

Target:

Visitor experience options for 2007/08 = 7

3. Number of educational programme attendees

Target:

Attendances for 2007/08 = 47,711 (This does not include the 5,000 attendees at open day November 2007.

45 volunteers in 2007/08

Napier i-Site Visitor Centre 1. Visitor numbers through Centre

Target:

350,000

326,444 visitors for 2007/08. The target was not achieved due to a change in international visitor mix and a slight drop in overall visitor numbers to Napier.

Note: Projected growth in visitor number through the centre in the LTCCP have not eventuated. The target was reduced in the 2007/08 Annual Plan. 2. New and renewal paid operator displays

Target:

120

3. Number of information packs distributed

Target:

1,200

425 new and renewal paid operator displays for 2007/08. New lay out of building has allowed for further paid advertising spaces. 3,119 information packs distributed in 2007/08. Information packs held in association with i-Site familiarisation has impacted this year on information pack numbers.

Note: The number of visitor information packs target was reduced from the LTCCP to reflect the greater levels of information now available online and able to be printed by consumers on demand at home.

Page 72

Napier City Council Annual Report 2007/08

City Promotion Performance Measures

Results

Par 2 MiniGolf 1. Admission numbers

Target:

50,280

2. Customer satisfaction ratings

Target:

53,270 admissions for 2007/08

Customer satisfaction for 2007/08 = 91%

80%

National Aquarium of New Zealand 1. Number of school visits

Target:

2. Number of school children

Target:

113,147

6. Number of function attendees

Target:

1,620

7. Number of sleepover attendees

Target:

1,571 function attendees in 2007/08. The target was not achieved due to lower function numbers offset by higher sleepover attendees. Functions and sleepovers cannot be run on the same night. 1,139 sleepover attendees in 2007/08

4 major cultural exhibit(s) in 2007/08

9. Number of Friends of the Aquarium

Target:

102,814 visitors in 2007/08. The target was not achieved due to a downturn in visitor numbers with high fuel prices hit home in the final quarter of the 2008 year.

860

8. Number of major cultural exhibits

Target:

5 environmental projects in 2007/08

5. Number of visitors

Target:

4 environmental exhibitions in 2007/08

4. Number of environmental projects

Target:

7,769 school children in 2007/08

7,322

3. Number of environmental exhibitions

Target:

200 school visits in 2007/08

1,374 friends of the Aquarium in 2007/08

850

Kennedy Park 1. Overall Room Nights Booked

Target:

36,141

34,523 room nights booked for 2007/08, target not achieved. Emphasis was successfully placed on yield. Profitability was improved from lower occupancy.

1. Room nights booked for sport groups Target: 1,527

2,120 room nights booked for sport groups for 2007/08

2. Percentage of users who have young children in family groups Target: 21%

26% of users with young children in family groups in 2007/08

Note: the target was revised from the LTCCP as new computer software has enabled more accurate recording of families with young children staying at the park. Previously it was total children numbers as a percentage of total guests.

Napier City Council Annual Report 2007/08

Page 73

City Promotion

Financial Summary Budget 07/08 $000

Activity

Operating

Actual 07/08 - $000 Interest Total

Depn

Income [1]

Net Cost of Service

Actual 06/07 $000

477

City and Business Promotion

532

497

471

617

City Promotion Grants

751

152

599

606

370

Marineland of NZ

642

National Aquarium of NZ

288

737

778

694

274

1,621

334

232

2,187

1,428

759

665

Napier i-SITE Visitor Centre

881

916

614

302

251

(40)

Par 2 MiniGolf

244

252

331

(79)

(80)

(459)

Kennedy Park

1,953

207

2,177

3,081

(904)

(664)

1,895

Total net operating

6,719

620

254

7,593

6,335

1,258

1,523

201

136

1,459

1,659

Non Targeted Rates

1,064

1,029

Special Funds

(225)

247 2,142

Capital Expenditure [2] Funding Required Funded by

1,259 247 636 2,142

Non Funded Depn Total

620

630

1,459

1,659

[1] Summary of Income Actual 07/08 $000 Uniform Annual Charges User Charges

Land Transport NZ & other Govt Grants

Rental Income - Other

Retail & Product Sales

5,765

Other Income Grants & Donations Total Income

Page 74

152

19 277 6,335

Napier City Council Annual Report 2007/08

City Promotion [2] Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Marineland of NZ 6

Marineland Minor Capital

National Aquarium of NZ 13

Aquarium Minor Capital

Aquarium Capital Items

Napier i-SITE Visitor Centre 11

i-Site Upgrade/Refurbishment i-SITE Minor Capital

23 -

Par 2 MiniGolf 6

Par 2 MiniGolf Minor Capital

Kennedy Park 104 77 247

Kennedy Park Minor Capital Kennedy Park Renewals Capital Expenditure

Napier City Council Annual Report 2007/08

88 8 201

Page 75

PLANNING AND REGULATORY Activities These activities are legislative requirements except parking. The Planning and Regulatory Group comprises: City Development Planning City Development Planning manages the development of the natural and built environment of Napier, via the District Plan, under the Resource Management Act 1991 in a sustainable manner, ensuring the quality and quantity of the City’s resources are maintained and enhanced. Regulatory Consents Council ensures that development of the City is within the Resource Management Act 1991 and the policies of the District Plan through Regulatory Consents. This includes processing non-notified Resource Consents and Land Information Memorandum, preparing resource applications for land sub-divisions and an annual environmental programme to gauge the effectiveness of Council’s environmental management policies. Also covered is enforcement work to ensure compliance with Resource Consent approvals and the operative District Plans. Building Consents The Council ensures that building development within the City is in accordance with the Building Act 2004 through the process of the Building Consents. Services include counter advisory service, processing building consent applications, providing codes of compliance and building warrants of fitness, and investigating complaints. Environmental Health Council deals with the environmental problems of noise, smoke, smell and refuse pollution through its Environmental Health Services through investigation and enforcement under a range of Acts. Licences are processed and premises inspected for food premises, hairdressers, offensive trades, camping grounds, skin piercing, mobile shops, funeral directors and street occupation. Also covered is the administration of matters relating to the Sale of Liquor Act, monitoring compliance with household swimming pool regulations, and investigations and advice on environmental and any other health matters and nuisances such as vermin, pests and fire hazards.

Page 76

Animal Control Animal Control ensures that all animals within the city are under proper control. Dogs are the primary animal and these must all be registered. Emphasis is placed on responsible dog ownership, education and classification of dogs and owners in line with the provisions of the Dog Control Act 1996. Parking •

Public Parking Spaces: CBD - 3,159, Taradale - 728

Parking areas are provided in the Central Business District and Taradale Shopping Centre as well as the smaller commercial areas of the City with long and short term spaces providing parking to meet reasonable public expectations. In addition to fees from parking meters, car park ticket machines and leased spaces, parking is funded through a levy on rates on commercial and retail properties in Napier and Taradale and other smaller suburban shopping and commercial areas. Monitoring and enforcement of parking bylaws ensures equitable use.

Key Issues Significant Acquisitions or Replacement of Assets •

New Offstreet Carpark Taradale Preliminary investigation work is still being carried out. Unspent budget will be carried forward.

•

Taradale Redevelopment The 2006 LTCCP included a Taradale shopping centre renewal upgrade budget of $2.3 million in the 2006/07 and 2007/08 years. Planned works include street works ($1.8m) and cross linkages ($0.5m). To date a cross link from the Lee road car park into the shopping centre has been completed at a cost of $352,000.

•

Additional CBD Parking Providing additional CBD parking is ongoing and in 2007/08 Council purchased a property adjoining the Herschell Street car park.

Napier City Council Annual Report 2007/08

Planning and Regulatory

Performance Targets for 2007/08 Performance Measures

Results

City Development Planning 1. Review Council’s Strategic Policy Documents

Target:

Report as required

• • • • •

2. Process any District Plan modifications within legislative requirements

Target:

100% within 2 years

3. Residents Satisfaction rating in the NRB Public Opinion Survey

Target:

60%

4. Report any additions to heritage inventory of heritage studies completed

Target:

Report as required

Four separate plan modifications have been notified over the last year but have not yet been referred to Council for decisions on submissions: • Business park • Large Format Retail Zone • Mobile footpath signs • Residential activities in industrial Zones 2007/08 is the first of the two years. The NRB Survey carried out in July 2008 showed 61% resident satisfaction with Town Planning. Very Satisfied 14% Fairly Satisfied 47% Not Very Satisfied 8% Don’t Know 31% • • •

• • 5. Report on consultation for District Plan modifications who was consulted and on what issues prior to formal notification

Target:

•

Report as required •

•

6. Positive Outcomes in the state of the Environment report for Napier City

Target:

Report as required

Napier City Council Annual Report 2007/08

Situation Analysis Report (April 2008) has been completed on the Urban Growth Strategy. Urban design assessment has been completed on the British American Tobacco Site, Ahuriri Te Awa Structure Plan Scoping Study is underway. Taradale Town Centre alleyway enhancement project has been completed. A review of inner city signage is underway.

Heritage assessments on inner city heritage buildings are currently underway. A conservation plan for the National Tobacco Company Ltd has been completed. Heritage assessments of all bond stores and offices on the British American Tobacco Company site in Ahuriri (Parts I & II) have been completed. Heritage assessment of the Paxie Building has been completed. Cultural Heritage Assessment on the Former Soldiers Club 39 marine parade has been completed. Te Awa Structure Plan has involved consultation with statutory authorities, network utility operators, landowners, developers and adjacent residents on all infrastructural issues associated with developing a structure plan for the Te Awa area. Inner City Signage review has involved consultation with a wide range of stakeholders including, NZHPT, Art Deco Trust, Inner City Marketing, Sign writers Association, property owners and all inner city businesses on options for managing inner city signage. Urban Growth Review involved consultation with real estate industry, valuers, and large residential property developers on residential trends since 1999 and likely future trends.

No specific state of the Environment reporting has occurred over the last year although all plan changes require a Section 32 (cost/benefit) analysis to be undertaken which involves comparative analysis between the existing situation and options for change.

Page 77

Planning and Regulatory Performance Measures

Results

City Development Planning (continued) 7. Consistency with other regional/territorial plans

Target:

Report as required

Council’s submissions on HBRC Coastal Plan have been presented to the HBRC’s Hearing Committee for consideration and decisions are expected within the next month. Plan changes to the Hastings District Plan are monitored as and when they are notified to ensure no inconsistencies or cross boundary issues arise.

Note: The measure "Reduce the number of resource consent applications" included in the LTCCP was not included in the 2007/08 Annual Plan as it does not reflect the actual performance of Council. The number of consents is primarily influenced by variables beyond the control of Council.

Regulatory Consents 1. Percentage of Non-notified and Subdivision Consents processed within 20 working days

Target:

100%

2. Percentage of Notified Consents processed within 70 working days

Target:

100%

3. Percentage of Land Information Memoranda processed within 10 working days

Target:

Not achieved. nil% (none of 3 applications) processed within 70 working days. Timeframes were overrun due to difficulties in scheduling hearings at a time mutually agreed by applicants and Council. 100% processed within 10 working days.

100%

4. Residents Satisfaction rating in the Planning Customer Satisfaction Survey

Target:

Not achieved. 89% (272 out of a total of 306) processed within 20 working days.

60%

The Planning Customer Satisfaction Survey is not an annual survey and was not carried out in 2007/08. Results for NRB survey are included above for City Development Planning.

Building Consents 1. Percentage of Building Consents processed within 20 working days

Target:

100%

2. Number of Building Warrant of Fitness (WOF) audited

Target:

99% (1,310 of 1,323) processed within 20 working days. The target was not achieved.

20%

The target was not achieved. nil% of Building WOFs audited in 2007/08. It is not a legal requirement to audit Building WOF and the target will not be included in future LTCCPs.

Note: The measure "Percentage of Building Consents processed within 10 working days" included in the LTCCP was not included in the 2007/08 Annual Plan as it is no longer applicable.

Environmental Health Services 1. Food and Non-Food Premises inspected

Target:

2. Number of water samples taken (national standard 100%)

Target:

Page 78

Number of samples taken = 179% of national standard.

165%

3. Residents satisfied with Noise Control in the NRB Public Opinion Survey

Target:

100% inspected in 2007/08

100%

75%

The NRB Survey carried out in July 2008 showed 81% satisfaction for Noise Control. Very Satisfied 33% Fairly Satisfied 48% Not Very Satisfied 10% Don’t Know 9% Napier City Council Annual Report 2007/08

Planning and Regulatory Performance Measures

Results

Animal Control 1. Number of registered dogs

Target:

2. Complaints actioned within 5 working days

Target:

100%

3. Resident satisfaction for Dog Control in the NRB public opinion survey

Target:

6,164 registered dogs as at 30 June 2008 (gross)

6,090

60%

99.25% of complaints actioned within 5 working days in 2007/08. The target was not achieved. The NRB Survey carried out in July 2008 showed 71% satisfaction for Dog Control. Very Satisfied 28% Fairly Satisfied 43% Not Very Satisfied 25% Don’t Know 4%

Parking Services 1. Occupancy of CBD Off street parking areas

Target:

85%

2. Occupancy of Taradale Off street parking areas

Target:

85%

3. Occupancy of CBD On street parking areas

Target:

85%

4. Occupancy of Taradale On street parking areas

Target:

85%

48% average over 6 days, 8 am to 4 pm (excluding leased parks). An occupancy rate lower than target is an improvement on the target. Additional parking has been provided in the CBD. 68% average over 5 days, 9 am to 5 pm. An occupancy rate lower than target is an improvement on the target. 61% average over 6 days, 8 am – 4 pm. An occupancy rate lower than target is an improvement on the target. Additional parking has been provided in the CBD. 82% (Symons/Gloucester) average over 5 days, 9 am to 5 pm. An occupancy rate lower than target is an improvement on the target.

Note: The targets for the above measures are the upper limit of acceptable occupancy rates. 5. Residents Satisfaction with ‘Parking in the City Centre’ in the NRB Public Opinion Survey

Target:

60%

6. Residents Satisfaction with ‘Parking in the Suburbs’ in the NRB Public Opinion Survey

Target:

75%

Napier City Council Annual Report 2007/08

The NRB Survey carried out in July 2008 showed 60% satisfaction for Parking in the City Centre. Very Satisfied 17% Fairly Satisfied 43% Not Very Satisfied 34% Don’t Know 6% The NRB Survey carried out in July 2008 showed 81% satisfaction for Parking in the Suburbs. Very Satisfied 33% Fairly Satisfied 48% Not Very Satisfied 10% Don’t Know 9%

Page 79

Planning and Regulatory

Financial Summary Budget 07/08 $000

Activity

592

City Development Planning

556

Regulatory Consents

350

Building Consents

287 158

Operating

862

Actual 07/08 - $000 Interest Total

Depn

Income [1]

Net Cost of Service

Actual 06/07 $000

867

865

858

841

842

288

554

566

1,130

1,131

871

260

222

Environmental Health

458

459

191

268

347

Animal Control

565

581

426

155

207

(899)

Parking Enforcement

1,129

1,247

2,131

(884)

(936)

1,044

Total net operating

4,985

110

5,127

3,909

1,218

1,264

374

4,448

1,592

5,712

620 1,664

Capital Expenditure [2] Funding Required Funded by

1,946

Non Targeted Rates

2,078

2,194

(434)

Special Funds

(588)

3,368

152 1,664

Loans Non Funded Depn Total

102

1,592

5,712

[1] Summary of Income Actual 07/08 $000

User Charges Regulatory Revenue

5 2,350

Rental Income - Other

Infringements & Fines

711

Rendering of Services

810

Retail & Product Sales

Other Income

Total Income

3,909

[2] Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Parking 500

New Off-Street Carpark Taradale

100

Parking Equipment Replacement

20 620

Page 80

Parking Minor Capital

Additional CBD Parking

311

Capital Expenditure

374

Napier City Council Annual Report 2007/08

ROADING Activities

•

Prebensen Drive 4 Laning was identified in the Heretaunga Plains Transportation Study 2004 and the extension of Ford Road has been identified as an essential part of this project. Project investigations are continuing and are currently held up by Transit NZ requirements. Unspent budget will be carried forward.

The Roading Group comprises: Roading • • • • • •

360 km of roads (100% sealed) 302.5 km Urban Standard Roads (approx. 10% not constructed to Council’s current urban standards) 57.5 km Rural Roads (72% requiring widening to cope with current traffic volumes) 37 km State Highways 5,416 sumps and manholes to be cleaned 468 km of kerb and channel to be swept

The city’s road network provides accessibility to Napier residents and visitors within a safe, clean and aesthetic environment. The services cover the installation and maintenance of the physical components; carriageways, footpaths, steps, ramps, traffic and pedestrian bridges and structures, road and amenity lighting, drainage, traffic services and safety (e.g. street furniture, traffic lights, signage), as well as the planning, management, and amenity and safety maintenance to ensure the system is clean, safe and able to cope with future needs.

Transport Study Projects - Prebensen Drive Project

•

CBD Development The CBD redevelopment is a mixture of works for transportation capacity reasons and environmental improvements. The aim is to enlarge the core CBD area to encourage wider pedestrian, shopper and business friendly environment. In 2007/08 Stage I of Dickens St was completed and Stage II started. Unspent budget, including budget included in prior years and Council approved budget from outturn surplus, will be carried forward.

•

Pathway Project

Key Issues

The project of a long distance city circuit pathway is progressing. It incorporates the coastal Rotary Pathway and new pathways to link the existing network around the periphery of the urban area on river banks and on the Taradale Hills. The project is in partnership with the Rotary Pathway Trust and is expected to have a timeframe of at least ten years.

Significant Acquisitions or Replacement of Assets

The project is funded from external budget from Rotary Pathways Trust and Subsidy.

•

Roading Capital Projects (Bulk Funded) Major works for 2007/08 were Battery Rd, Hill Rd, Chilton Rd, Angus Place, Willis Toomey Service Lane, Hastings / Tennyson Intersection, Dolbel St, Anderson Rd. Work was slower than anticipated, plus some projects were split over two financial years to maximise subsidy. Unspent budget will be carried forward.

•

Roading Renewals In 2007/08 all works were completed within allocated budget.

•

Roading Vested Assets Assets vested in Council in 2007/08 were in new development areas such as Te Awa and Parklands.

Taradale Shops Upgrade Whilst most of the infrastructure of the Taradale Shopping Centre was sound and only about 25 years old its style, materials and form were outdated. Work completed in 2007/08 was in Taradale “Light Lane” only. Funding options for remaining work are still being considered. Unspent budget will be carried forward.

Napier City Council Annual Report 2007/08

Page 81

Roading

Performance Targets for 2007/08 Performance Measures

Results

Roading 1. Residents Satisfaction with ‘Footpaths’ in the NRB Public Opinion Survey

Target:

75%

2. Residents Satisfaction with ‘Roads’ in the NRB Public Opinion Survey

Target:

85%

3. Number of Injury Crashes in Napier City

Target:

140

4. Average Roughness of Sealed Urban Roads

Target:

100 National Association of Australian State Road Authorities (NAASRA) counts per km

5. Maximum deferred capital works

Target:

Page 82

The NRB Survey carried out in July 2008 showed 81% satisfaction for Footpaths. Very Satisfied 30% Fairly Satisfied 51% Not Very Satisfied 17% Don’t Know 2% The NRB Survey carried out in July 2008 showed 87% satisfaction for Roads. Very Satisfied 31% Fairly Satisfied 56% Not Very Satisfied 12% Don’t Know 1% 166 injury crashes in Napier City. The target was not achieved. Average roughness of sealed urban roads = 104 NAASRA counts per km. The target was not achieved.

Deferred capital works = $42 million

$42 million

Napier City Council Annual Report 2007/08

Roading

Financial Summary Budget 07/08 $000

Activity

Operating

Depn

Actual 07/08 - $000 Interest Total

Income [1]

Net Cost of Service

Actual 06/07 $000

9,748

Roading

5,867

5,372

1,368

12,607

4,026

8,581

9,102

9,748

Total net operating

5,867

5,372

1,368

12,607

4,026

8,581

9,102

11,020

Capital Expenditure [2]

20,768

Funding Required

8,950

7,969

17,531

17,071

Funded by 8,493

Non Targeted Rates

12,495

12,247

5,775

Special Funds

1,074

1,859

3,672

Vested Assets

1,789

1,498

1,402

Loans

758

359

1,426 20,768

Non Funded Depn Total

1,415

1,108

17,531

17,071

[1] Summary of Income Actual 07/08 $000

Uniform Annual Charges User Charges Land Transport NZ & other Govt Grants Regulatory Revenue Rendering of Services Grants & Donations Total Income

174 24 3,619 19 12 178 4,026

[2] Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Roading 1,598

Roading Capital Projects (Bulk Funded)

966

1,150

Taradale Shops Upgrade

351

425

Transportation Proposals

600

Transport Study Projects

CBD Development

Cycleway Project

617

Meeanee Road Widening

317

Roading Minor Capital

1,127

105

3,575

Roading Renewals

3,587

3,672

Roading Vested Assets

1,789

Capital Expenditure

8,950

11,020

Napier City Council Annual Report 2007/08

Page 83

WATER AND WASTES Activities The Solid Waste Group comprises: Solid Waste Council provides a domestic refuse collection service for both residential and commercial properties within the city as follows: • • •

Residential Properties - once per week Commercial - Suburban Shops - twice per week Commercial - Central Business District - three times per week

A kerbside recycling service for residential properties is provided fortnightly. Litter bins and drums are located throughout the City and serviced on a regular basis. Council’s Refuse Transfer Station, including the greenwaste operation, at Redclyffe accepts most domestic, garden and building waste. Currently Napier disposes of approximately 28,000 tonnes of refuse annually at the landfill from domestic collection, litter bins and the Transfer Station. Omarunui Landfill is the final disposal point for waste generated by the combined populations of Hastings District and Napier City. It is jointly owned by both the Hastings District and Napier City Councils and is managed on a day to day basis by the Hastings District Council. Stormwater • • •

208 km Stormwater Mains 58 km Open Drains 11 Pump Stations (Napier City Council and Hawke’s Bay Regional Council managed)

Council provides and maintains a stormwater disposal system for the 13 separate drainage areas or catchments in

Page 84

the city with the aim to minimise the effects of flooding. The system, serving approximately 97% of the city population, consists of open drains, stormwater mains and pump stations with about 75% of the city reliant on pumped systems for stormwater drainage. Wastewater • • • • •

44 Pump Stations 363 km Wastewater Mains Milliscreen Plant (Awatoto) 1,607 m Marine Outfall 93% of Napier’s Population Serviced By Reticulation System

Council provides a safe domestic and industrial sewage collection, screening and disposal system to maintain the community’s health. Properties are currently connecting to Stage 1 of the Bay View system. Water Supply • • • • • • •

9.7 million m3 Water Consumed Annually 10 Wells 10 Ground Water and 8 Booster Pump Stations 8 Reservoir Sites 28 million litres Storage Facilities 453 km Mains 95.5% of Napier’s Population Serviced By Reticulation System

Council provides a Water Supply system for the supply of potable water as well as for fire fighting purposes. Water is drawn from the Heretaunga Plains aquifer, is free from harmful contamination and no water treatment is required, and reticulated to the Napier urban area and to Bay View. Council has a programme in place to manage the usage of water, a precious natural resource, to minimise wastage and shortages.

Napier City Council Annual Report 2007/08

Water and Waste

Key Issues

•

Assets vested in Council in 2007/08 were in new development areas such as Te Awa and Parklands.

Significant Acquisitions or Replacement of Assets •

Omarunui Valley D

•

Work completed in 2007/08 was the construction of the portion of the pipeline under the Cross Country Drain and preliminary design costs for the scheme. Unspent budget will be carried forward. •

Stormwater Vested Assets

Expenditure was incurred for an extension to the industrial effluent scheme, construction of a Biological Trickling Filter Plant, professional services costs and monitoring costs related to the preparation of a resource consent application to discharge BTF treated effluent. Unspent budget will be carried forward.

Upgrading Stormwater Catchments In 2007/08 the major upgrading works were Anderson Road, Dunlop St, Battery / Hyderabad / Nurses

•

Cross Country Drain and Pumping Station Construction of the Cross Country Drain and Pump Station. Costs incurred in 2007/08 relate to purchase of materials and construction of the pump station.

•

Wastewater Renewals The major renewal works for 2007/08 were Battery Road, Dickens Street Stage 1 and Pandora Road. Unspent budget is carried forward for future works.

Napier City Council Annual Report 2007/08

Advanced Wastewater Treatment The Advanced Wastewater Treatment project, with an estimated total budget of over $26 million, has been in planning and development for many years.

Assets vested in Council in 2007/08 were in new development areas such as Te Awa and Parklands. •

Taradale Road Sewage Pump Station and Main The Taradale Road Pump Station and Main will provide emergency backup for the principal wastewater pumping stations at Latham Street and Greenmeadows. It will also cater for growth in the North Western part of the City.

The development of the Omarunui Regional Landfill is on ongoing project and a key component of the City’s Waste Management Plan. Development of Valley D Stage 1 is complete and Stage 2 is under construction. Substantial progress was made with the installation of a gas collection system. A new flare was also commissioned. This amount represents Napier City Council’s share (36.32%) of the year’s capital investment at Omarunui Landfill.

Wasterwater Vested Assets

•

Water Supply Pipe Renewal The major Water renewal works for 2007/08 were Anderson Road water main replacement, Battery Road 150mm water main replacement and Herschell Street 100mm water main replacement. Unspent budget is carried forward for future works.

Page 85

Water and Wastes

Performance Targets for 2007/08 Performance Measures

Results

Solid Waste 1. Total waste to landfill

Target:

30,000 tonnes

2. Waste to landfill per capita

Target:

523 Kg

3. Refuse diversion rate

Target:

18.8% diversion rate for 2007/08

100% compliance for 2007/08

100%

5. Number of recycling stations

Target:

486 Kg per capita for 2007/08. A reduction to the target is an improvement on the target.

17%

4. Compliance with requirements of resource consents

Target:

27,825 tonnes for 2007/08. A reduction to the target is an improvement on the target.

2 recycling stations

Stormwater 1. Residents Satisfaction with ‘Stormwater’ in the NRB Public Opinion Survey

Target:

85%

2. Compliance with requirements of resource consents

Target:

100% compliance for 2007/08

100%

3. Pumping capacity available

Target:

The NRB Survey carried out in July 2008 showed 90% resident satisfaction with Stormwater. Very Satisfied 34% Fairly Satisfied 56% Not Very Satisfied 7% Don’t Know 3%

99.9% pumping capacity available

95%

Wastewater 1. Percentage of urban main residential and rural settlement population served by reticulated system

Target:

Reticulated system - 93.3% Main Res and Rural - 96.9%

2. Residents Satisfaction with ‘Wastewater’ in the NRB Public Opinion Survey

Target:

75%

3. Compliance with requirements of resource consents

Target:

Page 86

Reticulated system - 93.3% Main Res and Rural - 96.9%

The NRB Survey carried out in July 2008 showed 89% resident satisfaction with Wastewater. Very Satisfied 35% Fairly Satisfied 54% Not Very Satisfied 5% Don’t Know 6% 100% compliance for 2007/08

100%

Napier City Council Annual Report 2007/08

Water and Wastes Performance Measures

Results

1. Residents Satisfaction with Water Supply in the NRB Public Opinion Survey

The NRB Survey carried out in July 2008 showed 94% resident satisfaction with Water Supply. Very Satisfied 49% Fairly Satisfied 45% Not Very Satisfied 3% Donâ&#x20AC;&#x2122;t Know 3%

Water Supply

Target:

90%

2. Compliance with Resource Consent requirements

Target:

100%

3. Compliance with Drinking Water standards

Target:

100%

4. Percentage Distribution Mains Cleaned

Target:

20%

Napier City Council Annual Report 2007/08

Target not achieved. Although the total water take for Napier was well within consented limits the weekly water take at the Riverside Park pump station exceeded the consented take by up to 7% for a period of 6 months. 100% compliance for 2007/08. A transgression occurred in the Taradale distribution zone during the first quarter but this was within the parameters of the Drinking Water standards which require 95% compliance 95% of the time. 29% of mains cleaned in 2007/08. More than 20% was cleaned to offset the 2006/07 financial yearâ&#x20AC;&#x2122;s shortfall.

Page 87

Water and Wastes

Financial Summary Budget 07/08 $000

Activity

Operating

Actual 07/08 - $000 Interest Total

Depn

Income [1]

Net Cost of Service

Actual 06/07 $000

748

Solid Waste

4,661

4,798

3,935

863

(108)

2,854

Stormwater

1,146

1,072

213

2,431

2,393

2,512

(916)

Wastewater

2,466

3,068

283

5,817

6,846

(1,029)

(1,648)

Water Supply

2,116

1,079

114

3,309

3,588

(279)

(13)

10,389

5,261

705

16,355

14,407

1,948

743

9,480

8,746

11,428

9,489

(1) 2,685

Total net operating

12,918

Capital Expenditure [2]

15,603

Funding Required Funded by

2,235

Non Targeted Rates

2,111

1,894

7,371

Special Funds

6,707

3,416

1,261

Vested Assets

2,567

1,491

4,541

Loans

2,645

11,428

9,489

195 15,603

Non Funded Depn Total

[1] Summary of Income Actual 07/08 $000

Uniform Annual Charges User Charges Rental Income - Other Omarunui Landfill Joint Venture Other Income Financial & Development Contributions - other Total Income

Page 88

10,696 2,018 59 1,407 11 216 14,407

Napier City Council Annual Report 2007/08

Water and Wastes [2] Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Solid Waste -

Omarunui Regional Landfill Site Development Valley A

104

Omarunui Regional Landfill Site Development Valley B

1,304

Omarunui Regional Landfill Site Development Valley D

1,683

319 66

Omarunui Dev Gas to Energy Minor Capital Items Solid Waste Renewals

1 45

Stormwater 2,820

Cross Country Drain and Pumping Station

2,194

770

Upgrading Stormwater Catchments

119

Saltwater Creek Culvert Dupln

Dalton St Pump Replacement

Georges Drive Drain

Stormwater Minor Capital

336

Stormwater Renewals

453

Stormwater Vested Assets

832

2 52 1,190

Wastewater 1,181 58 2,564 -

Taradale Rd Sewage Pump Station and Main Western Pumping Main Advanced Wastewater Treatment Wastewataer Minor Capital

83 1 289 3

857

Wastewater Renewals

511

219

Milliscreen Replacement Programme

148

198

Wastewater Pumping Equipment Renewals

330

586

Wastewater Vested Assets

885

Water Supply -

Trunk Main Ulyatt Road to Bledisloe Avenue

258

Water Supply Minor Capital

103

IAR Pipes

174

520 69

IAR Pump Stations

IAR Water Meters

105

Capital Upgrade Associated wit

222

Water Supply Vested Assets

12,918

Capital Expenditure

Napier City Council Annual Report 2007/08

2 492 9,480

Page 89

PROPERTY ASSETS Activities

Key Issues

The Property Assets Group comprises:

Parklands

Lagoon Farm

The overall Parklands project is ahead of schedule. The slowing economy will impact on the rate of development in the coming year.

The 350 hectare farm is situated on the south side of the Ahuriri Estuary. It currently runs cattle, sheep, and has some Kiwi Fruit plantings and cropping leases. A quarter acts as a flood ponding area during unusual and extreme weather events. The area of farm has been reduced for the development of Parklands and the extension of Prebensen Drive. Parklands Residential Development The Council’s Parklands Residential Development on 120 hectares of former Lagoon Farm land will provide up to 800 residential sections and includes land for sportsgrounds. Property Holdings Leasehold Properties: • •

Commercial Residential

83 72

This business unit is responsible for the management of leases and licences which have been established for parks, reserves, commercial, industrial and residential properties. The majority of leases are perpetually renewable. It is also responsible for the management, including maintenance and renewal, of all Council buildings not specifically allocated to other activities.

Page 90

Napier City Council Annual Report 2007/08

Property Assets

Performance Targets for 2007/08 Performance Measures

Results

Lagoon Farm Performance measures not set as this activity is not providing a public service.

Parklands Residential Development 1. Number of new lots created

Target:

66 new lots created 2007/08. The target was not achieved. An additional sixteen lots are awaiting title.

Property Holdings 1. Leases renewed within the statutory time frame as specified in the individual registered lease documents

Target:

100%

2. Occupancy rate of Council owned commercial buildings subject to availability of letable space and market demand and conditions

Target:

All buildings maintained and comply with Building Act and Health and Safety Act.

100%

4. Freeholding of leasehold properties facilitated in accordance with Councilâ&#x20AC;&#x2122;s freeholding policy

Target:

All buildings occupied.

100%

3. Buildings maintained to a satisfactory level and complying with the Building Act and Health and Safety Act

Target:

Five leases fell due for renewal during 2007/08. One has been renewed and four are under action with the proposed rental in dispute. The target was not achieved.

Six freeholding in 2007/08, all in accordance with Council freeholding policy.

100%

Napier City Council Annual Report 2007/08

Page 91

Property Assets

Financial Summary Budget 07/08 $000

Activity

Operating

Lagoon Farm

Actual 07/08 - $000 Interest Total

Depn

Income [1]

Net Cost of Service

Actual 06/07 $000

498

518

540

(22)

210

7,701

7,702

8,791

(1,089)

(3,599)

(2,297)

Parklands Residential Development *

(1,193)

Property Holdings

(728)

345

262

(121)

2,450

(2,571)

(1,396)

(3,415)

Total net operating

7,471

366

262

8,099

11,781

(3,682)

(4,785)

220

(3,650)

(4,565)

Non Targeted Rates

(1,190)

(935)

Special Funds

(2,613)

(3,993)

100 (3,315)

Capital Expenditure [2] Funding Required Funded by

(770) (2,653) 108 (3,315)

Loans * Non Funded Depn Total

220

153

143

(3,650)

(4,565)

[1] Summary of Income Actual 07/08 $000

User Charges

Rental Income - Investment Property

1,008

Rental Income - Other

1,074

Retail & Product Sales

290

Sales Residential Development

8,782

Other Income

Fair value Gain/Loss on revaluation of investment properties

501

Fair value gain/loss on livestock

Total Income

11,781

[2] Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Parklands Residential Development -

Parklands Residential Development

Property Holdings 100 100 Notes (*):

Civic Building and Library Air Conditioning

Civic Building Minor Capital

Capital Expenditure

Net cost of service for Parklands reflects lower section sales. See page 64 for comments on Redevelopment of HB Museum and Art Gallery Buildings

Page 92

Napier City Council Annual Report 2007/08

SUPPORT SERVICES Council has a number of Cost Centres of a corporate or support nature. These cost centres provide the technical and support services necessary for the function of Council’s activities. Costs of the support services are reallocated to activities either as overheads based on the support each activity receives, or recharged direct on a usage basis. Support Units includes the Services Depot units which provide the support for the Utilities and Reserves divisions including a store and mechanical workshop. Design Services provides scientific and technical services to other Council departments ensuring the community receives engineering services of maximum quality and safety.

Significant Acquisitions or Replacement of Assets •

Replacement of Mobile Plant and Vehicle Council’s annual plant and vehicle renewal programme. 2007/08 expenditure includes expenditure committed in 2006/07, advanced replacement of under performing tractors and delayed replacement of plant to maximise useful life. Renewals are based on the condition of the Plant as assessed at the time of replacement. Funding for plant and vehicle renewals is by special fund so it is not necessary to carry forward unspent budget.

Capital Expenditure Budget 07/08 $000

Actual 07/08 $000

Support Units Minor New and Replacement Capital - General Provision

153

406

Replacement of Mobile Plant and Vehicle

901

410

Technology Equipment Renewals

Establish Security on Depot Gates and CCTV

Software Replacements and Upgrades

PC and Printer Replacement

Corporate IT Network

1,007

Capital Expenditure

1,205

Napier City Council Annual Report 2007/08

Page 93

Glossary of Terms Activities and Activity Groups

Infrastructural Assets

The main elements of the Council’s services offered to the Napier community are divided into Activities. These Activities are described in detail in the Activity Groups section of the Plan including the performance measures and targets and the financial budgets for 2007/08.

Stationary systems forming a network and serving whole communities, where the system as a whole is intended to be maintained indefinitely at a particular level of service potential by the continuing replacement and refurbishment of its components. The network may include normally recognised ordinary assets as components. These include roads, water, sewerage and stormwater systems.

Allocation of Overheads The Council’s support units provide “internal” or “support” services to the service delivery business units. The costs of these internal services are allocated across the other business units either as “overheads” based on the support each output receives or recharged directly on a usage basis. This ensures that the true cost of providing specific services to the public is reflected in all budget figures.

Infrastructural Asset Renewal A statutory requirement to provide for maintenance of infrastructural assets in serviceable condition in perpetuity. The amount required is calculated from asset management plans, and “smoothed” to provide a relatively even flow of funds from year to year.

Carrying Amount

Levels of Service

The net amount at which an asset or liability is recognised in the balance sheet.

A measure of the quality and quantity of services delivered. They are determined by customer expectations, legislative requirements and affordability.

Community Outcomes These are goals determined by the community that it believes are important for its present and future economic, social, cultural and environmental well-being. Council Controlled Organisations Organisations in which one or more local authorities control 50 per cent or more of the voting rights or have the right to appoint 50 per cent or more of the directors. Derecognition When an asset value is no longer recorded in the balance sheet it has been derecognised e.g. when an asset is sold it is no longer recorded on the balance sheet as from the date of the sale. Derivative

Non Targeted Rate Rates other than targeted rates. These are general rates and Uniform Annual General Charges. These fund a wide range of activities that are considered to be of general benefit to the community. NRB Customer Satisfaction Survey (CommunitrakTM) A wide ranging customer satisfaction survey prepared for the Napier City Council by the National Research Bureau Ltd. The survey is of public perceptions and interpretations of Council services and representation with comparisons to National and Peer Group averages. Prospective Financial Statements Refers to future-oriented financial statements.

A financial instrument that has the effect of transferring between two or more parties to the instrument one or more risks inherent in an underlying asset. The value of the derivative is determined by fluctuations in the underlying asset. The most common underlying assets include currencies, interest rates, shares, bonds, commodities and market indexes.

Restricted Assets

Financial Contributions

A rate set under section 16 or 19 of the Local Government (Rating) Act 2002 to fund a specific function or service provided. It may be charged as a fixed dollar amount per rating unit, a fixed charge per factor, such as property value, or a differential charge per factor.

The share of the cost of new developments and subdivisions met by developers. Impairment

Those assets which cannot be disposed of because of legal or other restrictions and that provide a benefit or service to the community. These include reserves vested under the Reserves Act and endowments or other property held in trust for specific purposes. Targeted Rate

The amount by which the carrying amount of an asset exceeds its recoverable amount.

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Napier City Council Annual Report 2007/08