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7/27/2019 Pre Election Report 2013
1/24
July 2013
ISBN 978-1-877548-00-5 (print)ISBN 978-1-877548-64-2 (online)
Pre-Election ReportPorirua City Council
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www.pcc.govt.nz
PRE-ELECTION REPORT July 2013
Contents
From the Chief Executive...........................................................................................................................................................................................................1Our Council ..............................................................................................................................................................................................................................2
Our Priorities ...........................................................................................................................................................................................................................2
Governance and Decision Making at Porirua City Council...................................................................................................................................... 3
Our Priority Spending..........................................................................................................................................................................................................4
Our Long Term Financial Strategy..................................................................................................................................................................................4
Financial Performance and Forecasts ................................................................................................................................................................................6
Basis of Preparation .............................................................................................................................................................................................................6
Financial Commentary .......................................................................................................................................................................................................6
Prospective Statement of Comprehensive Income ................................................................................................................................................8
Prospective Statement of Summary Financial Position.......................................................................................................................................9
Prospective Statement of Cashows ..........................................................................................................................................................................10
Prospective Funding Impact Statement .................................................................................................................................................................... 11
Major Projects...............................................................................................................................................................................................................................12
Transmission Gully Motorway Link Roads ................................................................................................................................................................12
Civic Administration Building ........................................................................................................................................................................................13
City Centre Revitalisation..................................................................................................................................................................................................13
Key Issues .......................................................................................................................................................................................................................................14
Condition of the Councils Infrastructural Assets................................................................................................................................................. 14
Condition of the Councils Building Assets.............................................................................................................................................................. 14
Provision of Water Services Capacity Infrastructure Services Proposal................................................................................................... 14
Information relating to the proposal which will be nalised in August 2013 is available from the
Council Efciency and Effectiveness Review ........................................................................................................................................................... 14
Regional Governance..........................................................................................................................................................................................................15
Building Compliance Liabilities .....................................................................................................................................................................................15
Insurance Issues Local Authority Protection Programme (LAPP) Fund.....................................................................................................15
Economic Update .......................................................................................................................................................................................................................16
Population ..............................................................................................................................................................................................................................16
Earnings...................................................................................................................................................................................................................................16
Housing....................................................................................................................................................................................................................................16
Economy..................................................................................................................................................................................................................................16
Industries ................................................................................................................................................................................................................................16
Workforce................................................................................................................................................................................................................................16
Business...................................................................................................................................................................................................................................16
Porirua at a Glance.....................................................................................................................................................................................................................17Glossary of Terms.................................................................................................................................................................................................................19
Helpful Links..................................................................................................................................................................................................................................21
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PRE-ELECTION REPORT July 2013
From the Chief Executive
Tena Koe, Greetings and welcome
I am pleased to present the following Pre-Election Report
which is my view as Chief Executive, of the performance
of the Council and will highlight potential major issues I
expect the new Council will be facing during their term
together. This report is based on the best of my knowledge
at the time of writing however past experience shows that
there will be other issues that will arise over the next three
years that will challenge us all.
This report arises from amendments made to the Local
Government Act in 2012 in a bid to make New Zealandlocal authorities more effective, efcient and accountable
to their communities. Among the amendments to the
Act was a requirement for Council chief executives to
prepare a report to their community in the lead up to local
government elections.
The information contained in these reports is intended to
be useful for people considering standing in the Council
elections and for electors considering which issues they
would like to hear candidates positions on. It also provides
another opportunity for the general public to be kept
informed about the work of the Council on their behalf.
I am pleased to present to you, Porirua City Councils 2013
Pre-Election Report.
Warm Regards,
Gary SimpsonCHIEF EECTIE
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PRE-ELECTION REPORT July 2013
Our PriOrities
Following consultation with the Porirua community,the Council adopted the Long Term Plan 2012-2022(LTP), including four Strategic Priorities:
city of villages connected and distinctive villages, ableto have their respective spaces and characters shaped by
the people who live in them.
A healthy & protected harbour at the heart of our city
of villages, providing recreational, economic and culturalopportunities, now and in the future.
A growing city prosperity, growth and betteropportunities for all Porirua residents through the city
centre revitalisation.
A great city experience quality, affordable and efcientservices at every point enabling residents, businesses and
visitors to make the most of their city experience.
The Councils work aligns to these four strategic priorities.
Our COunCil
From the October 2013 election, Porirua City Council will
be changing the composition of its governing body from aMayor and 13 Councillors to a Mayor and 10 Councillors.
The Mayor will be elected by the whole Porirua City
community, four Councillors will each represent the
Northern Ward and the Eastern Ward and two Councillors
will represent the smaller Western Ward.
The Council represents the Porirua community and focuses
on big picture governance issues, making City-wide
strategic decisions as well as required decisions on local
policies, functions and facilities. It determines the policy
direction of the Council and prioritises and monitors theperformance of the Council.
The Council employs a chief executive, who is responsible
for implementing the decisions of the Council and who
provides advice to the Council to enable the Council to
function effectively. The Chief Executive is responsible for
the employment of all staff, for negotiating their terms of
employment and for providing leadership for the staff.
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PRE-ELECTION REPORT July 2013
Governance and Decision Making at Porirua City CouncilPorirua City Council has a governing body consisting of
a mayor, elected by the Porirua City community, and 10Councillors elected from three wards. The governing body
holds the decision-making responsibilities of Porirua City
Council. The governing body, representing the Porirua
community8, focuses on the big picture, making city-
wide strategic decisions as well as decisions on local
issues, activities and facilities. The Council sets the policy
direction for the Council and monitors the performance of
the Council.
The Council deliberates and makes its decisions through
meetings of the main Council Committee called Te Komiti,and a number of sub-committees. All decisions made
at these meetings are then ratied or vetoed by the full
Council which meets every month.
Porirua City Council delivers services through the Chief
Executive and the Council organisation. The Chief
Executive is the only person who may lawfully give
instructions to the staff. The diagram below illustrates
this structure.
GEIG BD
(Council & Committees e.g. Te Komiti, Auditand isk Management Sub- Committee)
(Mayor and 10 Councillors)
CHIEF EXECUTIE
Implement DecisionsSupport and advice
EXECUTIE MAAGEMET TEAM
PIUA CIT CUCILGAISATI
Policy, Planning and Service Delivery
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PRE-ELECTION REPORT July 2013
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%2010/11
Average increase in rates Quantifed rates limit
Average ates versus Quantied limits
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
As part of Councils Liability Management Policy, the
Council monitors the amount of interest expense (interestpaid on monies borrowed) to the level of cash revenue, to
ensure it can continue to operate in what is considered a
prudent manner. The graph below shows that Council is
forecasting to be well below the policy limit during the
next term of ofce.
The graph below is another Liability Management Policy
measure to ensure that Council is operating prudently. It
measures the level of debt to cash operating revenue, and
it shows that Council is again well within its policy limits.
In line with its Long Term Financial Strategy, the Counciluses loans to fund long term infrastructure expenditure,
such as water pipeline replacements, as one way of
achieving inter-generational equity. The inter-generational
equity principle ensures that each generation pays for
its fair share of the cost of Council services. For example,
the Transmission Gully Motorway link roads will last for
many decades and the cost of their construction will be
loan funded for 25 years. Repaying the loan will take place
over that period, meaning the cost will be spread over a
generation rather than the current ratepayers having to
pay the full cost of the link roads now.
There are limits as to how much the Council can prudently
borrow and use for funding capital expenditure. The limits
are governed by the Councils Liability Management Policy.
The following graphs show that the Council has been
conservative in its use of borrowing and is well within its
policy limits.
The LTP 2012-22 is forecasting debt levels to peak at
$77million in 2018/19 and then steadily decrease to
$52.5million by 2021/22. During the next Council term,
debt is forecasted to rise to $69 million in 2016/17 as shownin the above graph. The increase in debt funding will be
used to fund infrastructural projects such as Transmission
Gully Motorway and pipeline renewals etc. Councils
current debt level is $48.8 million, approximately $2,711 per
rateable property.
100
90
80
70
6050
40
30
20
10
02010/11
Actual Forecast Policy Limit
Debt Levels
2011/12 2012/13 2013/14 2014/15 2015/16
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%2010/11
Actual Forecast Policy Limit
Interest Expense / perating evenue
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
1.4
1.2
1
0.8
0.6
0.4
0.2
02010/11
Actual Forecast Policy Limit
Debt / perating evenue atio
2011/12 2012/13 2013/14 2014/15 2015/16 2016/17
2016/17
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PRE-ELECTION REPORT July 2013
FinanCial COmmentaryPorirua City Council is a Council that has a higher than
average dependency on income from rates, as much as 72%
of its cash revenue is from rates while the national average
for Councils is 61%2. This means the Council is very sensitive
to any changes in expenditure and its related funding as
shown in the graphs below.
Funding Sources3
A movement in rate funded expenditure of $50,000 adds
0.1% onto the rate increase for that year. Every year Council
has to decide how best to fund the Activities of Counciland balance the needs of the current generation with that
of future generations, by deciding whether to use rate
funding, loan funding or other means e.g. fees and charges
or reserves.
For every dollar rate funding that the Council receives, it
is spent in providing for Activities to the community as
shown in the graph below. It is the Councils role to decide
how to appropriately fund these Activities going forward.
Financial Performance and Forecasts
Statement of Comprehensive Income (2010/11, 2011/12and est. 2012/13 and 2014/15, 2015/16 and 2016/17 from
the LTP)
Summary Balance Sheets (2010/11, 2011/12 and est.
2012/13 and 2014/15, 2015/16 and 2016/17 from the LTP)
Statement of Cashows (2010/11, 2011/12 and est . 2012/13)
Funding Impact Statements (2012/13 and 2014/15,
2015/16 and 2016/17 from the LTP)
Basis OF PreParatiOn
This pre-election report has not been audited. Informationfor this report has been taken from the Long Term Plan
2012-221, Annual Plan 2013/14 and Annual Report 2011/121.
Information that has not been audited includes:
The report on compliance with the debt limits and
quantied rate increases as contained in the nancial
strategy
The estimated nancial information for the 2012/13
nancial year
The nancial information for the 2013/14 nancial year
(as per the Annual Plan 2013-14).
As this report has been completed prior to the nancial
information for the 2012/13 year being nalised informed
estimates have been used to prepare the 2012/13 gures for
the Statement of Comprehensive Income, Balance Sheet
and Funding Impact Statement. Council is still resolving
issues around the storm event in late June 2013 and this
may have an impact upon the nal nancial result for
the year ended 30th June 2013. These estimates have been
prepared on the best available information at the time.
There are likely to be variances between this information
and the Annual Report 2012/13. The timing changes to theTransmission Gully Motorway Link Roads project included
in the Annual Plan 2013/14 and outlined on page 14 of this
report will impact upon the Long Term Plan gures within
this report.
1 These Reports were audited by Council auditors, Ernst & Young.2 Local Government New Zealand website, Local Government Funding
source (2009) 3 2013/14 Annual Plan
User Charges22%
Rates Income 72%
DevelopmentContributions 1%
InvestmentIncome 1%
Grants &Subsidies4%
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Capital Expenditure by Activity6
The above graph shows the allocation of capital
expenditure to the various Activities that Council
undertakes. Every year the Council has to decide how best
to fund the capital expenditure and balance the needs of
the current generation with that of future generations,
by deciding whether to use rate funding, loan funding or
other means e.g. Development Contributions or reserves.
The Statement of Financial Position is also known as
the Balance Sheet and the major components of this
statement are current assets which are made up ofcash, investments and debtors. Non current assets are
dominated by the large value of Council assets such as its
roading network, infrastructural assets (water, wastewater
and stormwater) as well as its reserves and property
(investment properties, Arena, pools and library).
Current liabilities consist of trade creditors, accruals and
public debt that is repayable within the next nancial year.
Non-current liabilities consists of long term public debt,
provision for the closure of the landll (30 years of post-
closure costs) and Development Contribution levies for
work not yet completed.
The Statement o Cashows identies the source and
application of cash that it receives from three main
sources, cash from operating activities, from investing
activities and from nancing activities.
The Funding Impact Statement provides more detail on
the source of funds and how they are applied. The major
source of funds being rates and the major application of
funds is to payments for staff and suppliers.
ate Funding of Activities4
The Council has a wide range of Activities and a wide
range of expenditure types to deliver these Activities.
The Councils main operating expenditure falls into 3
major categories, Staff costs, Contracted Services and
Depreciation. Changes in levels of service are likely to affect
these categories. The graph below highlights the major
operating expenditure of Council.
perating Expenditure by category5
4 2013/14 Annual plan5 2013/14 Annual Plan6 2013/14 Annual Plan
Sta Costs29%
Consulting &Proessional
Fees 3%
ContractedServices
20%
Depreciation26%
Fuel, Power& Gas 3%
Insurance2%
Other 8%
Purchase oMaterials2%
Repairs &Maintenance2%
Interest 5%
Stormwater 5%
Community& Leisure
33%
DemocraticProcess
7%
EnvironmentalManagement
5%
Strategy &Planning 12%
Solid WasteServices 4%
Transport11%
WaterServices11%
Wastewater12%
Strategy & Planning12%
Stormwater 3%
Wastewater 16%
WaterSupply
7%
Transport8%
Community &Leisure 16%
Environment & Regulatory 0%
LandfllManagement2%
DemocraticProcess14%
OrganisationalPerormance9%
Wastewater
Treatment Plant 14%
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PRE-ELECTION REPORT July 2013
statement OF COmPrehensive inCOme
For the Year Ended 30 June
Actual2010/11$'000's
Actual2011/12$'000's
Estimated2012/13$'000's
Annual Plan2013/14$'000's
LTP2014/15$'000's
LTP2015/16$'000's
LTP2016/17$'000's
Income
Rate revenue 42,402 44,887 46,621 48,210 49,749 52,033 54,318
Fees and charges 14,421 13,343 13,002 15,137 16,779 17,658 18,901
Income from vested assets 4,076 6,746 5,738 2,070 2,072 2,073 2,074
Other income 4,546 4,135 5,657 3,967 4,589 4,616 6,374
Total Income 65,445 69,111 71,018 69,384 73,189 76,380 81,667
Expenditure
Personnel costs 21,282 21,817 21,703 22,460 22,348 22,851 23,012
Interest expense 3,137 3,527 3,475 3,956 3,757 4,285 4,734
Depreciation andamortisation
16,050 16,659 17,874 19,142 21,079 21,496 22,185
Other expenses 28,291 30,251 26,593 27,435 28,569 29,037 29,317
Total Expenditure 68,760 72,254 69,645 72,993 75,753 77,669 79,248
et Surplus/(Decit) (3,315) (3,143) 1,373 (3,609) (2,564) (1,289) 2,419
ther Comprehensive Income
Revaluation of Property, Plantand Equipment
(10,611) 13,245 4,039 45,349 45,697 25,553 64,884
Total Comprehensive Income (13,926) 10,102 5,412 41,740 43,133 24,264 67,303
(a) The gures for Actual 2010/11 and 2011/12 are the actuals gures from Councils 2012 Annual Report
(b) The gures for Estimated 2012/13 are the Councils estimated gures for the 2012/13 nancial year.
(c) The gures for Annual Plan 2013/14 are the budgeted gures from Councils 2013/14 Annual Plan
(d) The gures for LTP 2014/15 to LTP 2016/17 are the budgeted gures from Councils 2012-22 Long Term Plan
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statement OF FinanCial POsitiOn
For the Year Ended 30 June
Actual2010/11$'000's
Actual2011/12$'000's
Estimated2012/13$'000's
Annual Plan2013/14$'000's
LTP2014/15$'000's
LTP2015/16$'000's
LTP2016/17$'000's
Total Equity 1,083,993 1,094,095 1,099,507 1,184,400 1,221,115 1,245,379 1,312,682
Total Current Assets 17,638 20,415 18,604 26,672 28,034 29,807 30,779
Total Non-Current Assets 1,129,563 1,147,762 1,153,928 1,244,703 1,277,300 1,302,817 1,377,211
Total Assets 1,147,201 1,168,177 1,172,532 1,271,375 1,305,334 1,332,624 1,407,990
Current Liabilities
Current Liabilities 13,441 15,398 13,945 16,801 12,965 13,804 15,616
Current Portion of Public Debt 274 10,491 12,919 884 14 ,540 8,040 13,800
Total Current Liabiliities 13,715 25,889 26,864 17,685 27,505 21,844 29,416
on-Current Liabilities
Non-Current Liabilities -excluding Public Debt 9,529 9,866 10,642 9,950 10,675 11,402 10,693
Public Debt 39,965 38,327 35,519 59,340 46,039 53,999 55,199
Total on-Current Liabiliities 49,494 48,193 46,161 69,290 56,714 65,401 65,892
Total Liabilities 63,209 74,082 73,025 86,975 84,219 87,245 95,308
et Assets 1,083,993 1,094,095 1,099,507 1,184,400 1,221,115 1,245,379 1,312,682
(a) The gures for Actual 2010/11 and 2011/12 are the actuals gures from Councils 2012 Annual Report
(b) The gures for Estimated 2012/13 are the Councils estimated gures for the 2012/13 nancial year.
(c) The gures for Annual Plan 2013/14 are the budgeted gures from Councils 2013/14 Annual Plan
(d) The gures for LTP 2014/15 to LTP 2016/17 are the budgeted gures from Councils 2012-22 Long Term Plan
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PRE-ELECTION REPORT July 2013
statement OF CashFlOws
For the Year Ended 30 June
Actual2010/11$'000's
Actual2011/12$'000's
Estimated2012/13$'000's
Annual Plan2013/14$'000's
LTP2014/15$'000's
LTP2015/16$'000's
LTP2016/17$'000's
Net Increase in Cash fromOperating Activities
10,516 7,791 8,982 12,946 16,038 17,909 23,792
Net (Decrease) in Cash fromInvesting Activities
(6,594) (13,460) (13,221) (22,696) (15,972) (19,420) (30,804)
Net Increase in Cash fromFinancing Activities
(3,607) 10,437 81 9,915 188 2,198 7,896
et Increase / (Decrease) in cash 315 4,768 (4,158) 165 254 687 884
Cash Resources at the beginningof the year
8,361 8,676 13,444 18,983 5,309 5,563 6,250
Cash esources at the end ofthe year
8,676 13,444 9,286 19,148 5,563 6,250 7,135
(a) The gures for Actual 2010/11 and 2011/12 are the actuals gures from Councils 2012 Annual Report
(b) The gures for Estimated 2012/13 are the Councils estimated gures for the 2012/13 nancial year.
(c) The gures for Annual Plan 2013/14 are the budgeted gures from Councils 2013/14 Annual Plan
(d) The gures for LTP 2014/15 to LTP 2016/17 are the budgeted gures from Councils 2012-22 Long Term Plan
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Funding imPaCt statement
For the Year Ended 30 June
Estimated2012/13$'000's
Annual Plan2013/14$'000's
LTP2014/15$000's
LTP2015/16$000's
LTP2016/17$000's
Source of perating Funding:
General Rates 36,674 37,804 38,543 40,262 42,167
Targeted Rates - Non Water 5,435 5,660 6,124 6,660 7,044
Targeted Rates - Water 4,512 4,746 5,083 5,112 5,107
Subsidies for operating purposes 1,543 1,345 1,471 1,513 1,540
Fees & Changes 9,037 10,717 11,178 11,754 12,489Internal charges recovered 0 0 0 0 0
Interest and Dividends from Investments 337 742 791 840 777
Other Operating 545 450 301 315 331
Total perating Funding (A) 58,083 61,463 63,488 66,456 69,455
Application of perating Funding:
Payments to staff and suppliers 46,002 47,689 47,400 48,247 48,541
Finance Costs 3,254 3,698 3,482 3,976 4,433
Other operating funding Applications
Total Applications f perating Funding (B) 49,256 51,387 50,881 52,222 52,974
Surplus/(Decit) of perating Funding 8,827 10,076 12,607 14,234 16,481
Sources f Capital Funding
Subsidies for Capital Expenditure 1,551 734 1,195 899 2,447
Development and Financial Contributions 128 462 728 738 936
Increase / (Decrease) in Debt 2,229 8,454 (118) 5,624 10,749
Total Sources of Capital Funding 3,908 9,650 1,806 7,261 14,131
Application f Capital Funding
Capital Expenditure
- to meet additional demand 1,934 2,713 604 5,160 10,729
- to improve the level of Service 2,878 5,455 2,549 4,064 5,621
- to replace existing assets 8,013 10,607 8,480 8,148 10,879
Movement in Reserves (90) 951 2,280 3,124 3,383
Movement in Investments 0 0 500 1,000 0
Total Application of Capital Funding 12,735 19,726 14,413 21,495 30,612
Surplus / (Decit) of Capital Funding (8,827) (10,076) (12,607) (14,234) (16,481)
Funding Balance 0 0 0 0 0
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PRE-ELECTION REPORT July 2013
Major Projects
Every year the Council undertakes a number of projects to further the Councils goals ormaintain levels of service. There are too many Council projects to give a summary outline oneach one here, but this section outlines the major projects the current Council is proposing toundertake over the next three years:
transmissiOn gully mOtOrway link rOads
LTP 2014/15 2015/16 2016/17 - $35,320,000 (broughtforward by Annual Plan 2013/14)
This project involves the design and construction of two
Link Roads to the Transmission Gully Motorway (TGM) from
Waitangirua and Whitby.
The construction of the TGM was approved by the
Environmental Protection Agency in June 2012 and
was initially expected to start in 2016. The New Zealand
Governments decision to design and build the TGM using
a public-private partnership (PPP) model has brought
the start of construction forward by one year. This has
meant that the Council has proposed to bring forward itsallocated expenditure for the project by two years (to be
completed by 2018).
The Transmission Gully project is one of six projects
that form the Wellington Northern Corridor, the 110-km
route from Levin to Wellington Airport. The New Zealand
Transport Agency proposes two platforms of works for
the project.
a) The Transmission Gully Main Alignment (TG) is a two-
lane (in each direction) restricted access highway, which
will run 27km from Linden to McKays Crossing. The TG
main alignment package of works also includes the
Kenepuru link road connecting the main alignment
to western Porirua, between Kenepuru Drive and
Kenepuru interchange. The New Zealand Transport
Agency is the consent holder and funder for both the
main alignment and the Kenepuru Link Road, to be
procured using a Public Private Partnership.
b) The Porirua Link Roads (Whitby and Waitangirua)
are one-lane (in each direction) roads connecting the
main alignment at the James Cook interchange to
the existing eastern Porirua road network. PoriruaCity Council is the consent holder for this project
component. The funding responsibility for the project
will be shared between the Porirua City Council and
the New Zealand Transport Agency. The New Zealand
Transport Agency will construct and fund the James
Cook interchange that connects the Porirua Link Roads
to the main alignment.
The New Zealand Transport Agency has issued a request
for formal bids for the Transmission Gully Project two
shortlisted consortia. Porirua City is party to the NZTA
request. The bidders are required to provide a price for
the design and construction of the Link Road to Porirua
City Council. The planned date for awarding the contract is
mid-2014.
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CiviC administratiOn Building
LTP 2014/15 2015/16 2016/17 - $491,000
The Councils Civic Administration Building (Civic Building)
was built in 1967, and since that time there have been a
number of legislative changes which have impacted on
design and materials standards. The Building Act (2004)
has placed a legal requirement on all councils to have
in place, an Earthquake Prone Buildings Policy which
expresses the Governments objective for earthquake-
prone buildings to be strengthened to the appropriate
seismic level.
Initially, the Civic Administration Building was assessed
as being potentially earthquake-prone if it had to houseactivities that were essential to post-disaster recovery.
However, as it is possible for this work to be undertaken
elsewhere, the need for the building to be strengthened so
it remains fully functioning after an earthquake may not
be necessary.
As a responsible building owner, however, the Council
has commissioned a detailed engineering assessment to
ascertain what strengthening work might be necessary
to ensure the safety for the public and staff. Once this
assessment has been obtained, the Council will have
to make decisions around the level of earthquakestrengthening that may be appropriate for the use that
the building is put to.
City Centre revitalisatiOn
LTP 2014/15 2015/16 2016/17 - $11,520,000 (broughtforward by Annual Plan 2013/14)
Porirua City Council has embarked on a project to revitalise
the city centre in partnership with the private sector.
This means the Council will invest in critical changes
to elements of city centre infrastructure, changingthe regulatory environment, providing incentives for
investment and working with local businesses to develop
a positive, on-going events programme. The role of the
private sector will be to help create the overall experience
by bringing in new operators and businesses, investing in
the design and construction of new buildings, refurbishing
or outtting new retail/hospitality premises/apartments
and nding new tenants for these premises.
The Council has committed over $18m in funding for
infrastructure and public spaces as part of this project over
the next 10 years. The Annual Plan 2013/14 accelerates the
project by bringing forward all of the capital expenditure byone year until the end of the project.
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PRE-ELECTION REPORT July 2013
Key Issues
COnditiOn OF the COunCilsinFrastruCtural assets
The condition, strategies, renewal and risk to service of
infrastructural assets are set out in the Asset
Management Plans.
The Asset Management Plans contain the history and the
maintenance strategies for each asset class and explore
the available options for their replacement. These options
take account of predicted population and household
growth in the city, as well as any change in technology
which may impact on the best long term solution. The
Asset Management Plans look at the remaining life ofthe assets, which may be greater than the life of the Long
Term Plan. The Council has considered the condition
of its infrastructural assets against three risk criteria:
high, medium and low. It has adopted what it considers
appropriate risk criteria for each asset class. Those risk
categories will be revaluated when the Asset Management
Plans are next reviewed, as part of the preparation of the
Long Term Plan 2015 - 25.
The remaining life of assets has been established by a
combination of asset condition assessments, theoretical
modelling, eld sampling and material analysis. External
consultants have assisted in the more complex areas of
assessment, particularly in relation to the underground
assets. The output from these studies has been peer
reviewed and included in the Asset Management Plans.
The Asset Management Plans include a comprehensive
evaluation of risk to service delivery as well as the likely
impact of unplanned events on the Councils nancial and
statuary obligations.
The Asset Management Plans also review the level of
service being delivered against customer expectations.
These service reviews are conducted through feedback
from Councillor Clinics, customer phone calls, emails
and letters and annual surveys. In general, customers
are reasonably satised with the current level of service
provided.
COnditiOn OF the COunCils Building assetsTo manage costs, the Council decided to take a high-risk
approach in the management of the Councils building
assets, meaning that spending on maintenance has been
kept to basic levels. A recent reassessment of the Councils
building portfolio has identied some signicant high-risk
remedial work is necessary. Subsequent events have caused
some reconsideration of that assessment and the Annual
Plan 2013-14 includes an additional $500,000 for remedial
building maintenance each year for the next three years.
PrOvisiOn OF water serviCes CaPaCity
inFrastruCture serviCes PrOPOsalPorirua City Councils Long Term Plan 2012-2022 and Annual
Plan 2013-14 outline discussions between the Council
and Capacity Infrastructure Services a water services
provider owned by the Wellington and Hutt City Councils,
that explore the possibility of Porirua City purchasing an
ownership share in Capacity and for Capacity to manage
Poriruas three waters on the Councils behalf.
The proposal being considered is for Capacity to provide
asset management services for water supply, waste water
and stormwater. Capacity would be a council-controlled
organisation (CCO) owned by and delivering water servicesfor Porirua, Wellington, Hutt and pper Hutt City Councils.
Information relating to the proposal which will be nalised
in August 2013 is available from the Council
eFFiCienCy and eFFeCtiveness review
Annual Plan 2013-14 - $100,000
The Council has agreed to conduct a review of Council
expenditure, revenue and some aspects of service delivery.
Grant Thornton New Zealand Limited has been engaged
to undertake the review and will report to the Council in
September 2013. The primary purpose of the review is todevelop a sound information base on which future budget
decisions can be made.
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regiOnal gOvernanCeAnnual Plan 2013-14 - $50,000
In 2012, Porirua City Council joined a Wellington Region
Governance Working Party (also comprising Greater
Wellington City Council, Wellington City Council and Kapiti
Coast District Council) to consider possible changes to the
local governance structure of the Wellington region. At
the time of writing the public consultation process on the
Working partys recommendations had concluded and an
application to the Local Government Commission had been
made by Greater Wellington Regional Council. Porirua
City Council submitted a response to this application,supporting the Greater Wellington Regional Council
position on the governance of the metropolitan area of the
region (i.e. excluding Wairarapa). The funding attached
to this initiative will be required to enable the Council to
continue to engage our community in discussions on the
topic.
Building COmPlianCe liaBilities
As time progresses, there are fewer claims relating to
weathertight (leaky) homes being made. In the late 90s
to the early 2000s there was a systematic failure of the
national building compliance system that allowed somehomes to be built that allowed the ingress of water and
were termed leaky. At this time, Porirua was experiencing
a boom period of building construction and consequently
the Council, as a building consenting authority, has been
named in legal claims for compensation as having some
liability for the remediation of the leaky building. There
is a ten year liability period for the Council which means
that its exposure to further claims will reduce as more
stringent building controls to remedy the causes of the
leaky homes were introduced in 2004. At present, there are
18 claims lodged with the Weathertight Homes Resolution
Service for homes in Porirua. A nancial contingency hasbeen made to handle any successful claims made against
the Council.
Recently, the Courts in a precedent setting decision
have also decided that councils have a duty of care for
commercial building owners during the consenting
process and are, therefore, potentially liable for claims
relating to buildings that have building defects. Whilst
the Council has not had any claims of this nature, there
is a possibility that they may arise in the future and the
claims may be substantial. This is an additional risk that
the nancial contingency needed to settle any claims and
drawn from rates funding will need to cover.
insuranCe issues lOCal authOrityPrOteCtiOn PrOgramme (laPP) Fund
Annual Plan 2013-14 - $225,000
As a result of the Canterbury earthquakes of 2010 and
2011, the Local Authority Protection Programme (LAPP
fund), of which the Porirua City Council is a member,
had its nancial resources depleted. The LAPP fund is
now in the process of being built back up, as part of that
process, the excess on the insurance policies that this
scheme provides for has increased. In order to ensure that
Council has sufcient resources available, should an event
occur, Council is in the process of increasing its Insuranceand Indemnity Reserve by an increase of 0.5% of rates
($225,000) over a 7 year period is required, starting in
2013/14, to enable the Council to build up reserves to cover
the increased excess of $2.5 million.
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The industries in which Porirua City has the largest
comparative advantages are building construction, education
and training, and health care and social assistance.
wOrkFOrCe
The unemployment rate in Porirua City was 7.5% in March
2013, compared with 6.9% for the Wellington region and
6.2% for New Zealand.
In March 2012 total employment in Porirua City averaged
16,866 and employment growth averaged 1.8% per annum,
compared with 1.2% for the Wellington region and 1.7% for
the national economy.
In 2012 Education and Training was the largest employer in
Porirua City, accounting for 16% of total employment. The
second largest employer was Retail Trade (13.6%) followed
by Health Care and Social Assistance (13.1%). Togetherthe three largest employers account for 42.7% of total
employment.
Wholesale Trade made the largest contribution to
employment growth in Porirua City between 2011 and
2012, followed by Accommodation and Food Services, and
Administrative and Support Services.
Business
Porirua City currently has over 3,950 businesses and just
over 55% of total businesses in the city are home-based
businesses.
Growth in the number of businesses in Porirua City hasaveraged 2.7% per annum since 2000, compared with
1.6% for the Wellington region and 1.8% for New Zealand.
Growth in the number of businesses in Porirua grew by 2%
from 2011.
Economic pdate1
POPulatiOnThe citys latest population estimate is 53,000, which is
about 10% of the Wellington region population and 1.2%
of the New Zealand population. Statistics New Zealand
continues to project the population of Porirua to increase
0.6 per cent per annum (average change). Over the last year
(2011-2012) the population growth in Porirua City increased
by 0.6%, compared with 0.5% for the Wellington region.
earnings
As at March 2006 personal income (median) for Porirua
City was $26,300, compared with $28,000 for the
Wellington region and $24,400 for New Zealand. As forhousehold income, Porirua City median income was
$62,400, compared with $59,700 for the Wellington region
and $51,400.for New Zealand.
In the year to March 2011, the median annual earnings in
Porirua City were $47,300, compared with $56,260 for the
Wellington region and $49,900 for New Zealand.
hOusing
According to 2006 Census 52.7% of households own their
dwellings with or without mortgage, compared with 55.1%
for the Wellington region and 54.5% for New Zealand. The
average household size is 3.1 people, compared 2.6 people
for the Wellington region and 2.7 people for all of New
Zealand.
The median house price in Porirua City was $383,000 in
2012, compared with $385,000 for the Wellington region
and $357,000 for New Zealand.
eCOnOmy
The total annual output of the Porirua economy is
estimated at about $1 billion and over the past 10 years has
performed above the national average in employment and
GDP per capita growth.Over the last year (2011-2012) Porirua Citys GDP (gross
domestic product) increased by 0.4%, compared with 0.2%
for Wellington region and 2.3% for New Zealand.
industries
Health Care and Social Assistance was the largest industry
in Porirua City in 2012 accounting for 12% of GDP. The
second largest industry was Retail Trade (9.4%) followed
by Building and Construction (8.8%). Together the three
largest industries account for 30.2% of total GDP.
Wholesale Trade made the largest contribution to overalleconomic growth in Porirua City between 2011 and 2012,
followed by Rental, Hiring and Real Estate Services, and
Transport, Postal and Warehousing.
1 This economic update information is sourced and supplied fromStatistics New Zealand and Infometrics Ltd
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Porirua City At A GlanceA summary report on the latest data available as at March 2012, supplied by Infometrics Ltd.
($m)
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glOssary OF terms
Activity: services provided by the Council.
Annual Plan: a one year plan that focuses on the work
to be carried out in a relevant year of the Councils Long
Term Plan (LTP) and also highlights any variations and
amendments to the LTP. The Council must consult their
community on the Annual Plan.
Annual eport: a one year report on the performance
of the Council against the Annual Plan including
explanations for signicant deviations from the Annual
Plan.
Asset: an item of value, usually of a physical nature, thatthe Council owns on behalf of the community that
has a useful life of more than 12 months and creates
future economic benets over a period of time, such as
roads, drains, parks and buildings. See both ested and
Infrastructure Assets.
Capital Expenditure: spending on works required for a new
asset; and works which upgrade and enhance a signicant
part of an asset, beyond its original design capacity and
estimated life.
Capital Costs: transactions that have an effect on thelonger term (i.e. more than 12 months) nancial position of
the Council. Items include the repayment of loan principal,
transfer of funds to reserve accounts and the purchase or
construction of assets.
Capital Financing: transactions that have an effect on the
longer term nancial position of the Council. Items include
the raising of loan funds and transfers from reserve
accounts.
Current Assets: assets which can be readily converted to
cash, or will be used up during the year. These include cash,stock, debtors and operational investments.
Current Liabilities: creditors and other liabilities due
for payment within the nancial year. Public Debt to be
renanced within the nancial year is excluded.
Debt: the value of outstanding obligations owed by the
Council to external third parties.
Depreciation: assets lose their value over time as a
result of wear and tear, age, or obsolescence, and must
be replaced once the end of their useful life is reached.
Depreciation is an accounting method to spread the
replacement cost of assets such as infrastructure assets
property, plant and equipment over their useful lives as
an operating expense.
Development Contributions: fees paid by developers who
subdivide or build. These fees cover the cost of upgrading
the services (e.g. water supply) provided to those newsections / buildings. The setting of the development
contributions is governed by the Development
Contributions Policy and applied under the Local
Government Act 2002.
Expenditure:the outow of resources (usually cash) in
return for goods and/or services.
Financial Contributions: fees paid by developers who
sub-divide or build. These fees cover the development of
public facilities. (e.g. open spaces and parks). The setting
of the nancial contributions (or recreation and civiclevies) is governed by the District Plan and applied under
the Resource Management Act 1991.
Group of Activities: the Council groups all its services
into nine main categories of activities (which equate to
groups of activities in the Local Government Act 2002).
Infrastructure Assets: stationary systems forming a
network and serving whole communities (e.g. roads,
waste, sewerage and storm water systems). The system
as a whole is intended to be maintained indenitely
at a particular level of service. This is achieved bythe continual replacement and refurbishment of its
components.
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Interest: interest payable on bank overdrafts and debt.
Loan funding: paying for capital costs by raising loans.
Local government: there are two types of local authority
regional councils and territorial authorities. These are
autonomous and are accountable to the communities
that they serve. They provide a vast range of services
funded largely by rates and regulated by a series of local
government acts. Territorial authorities such as Porirua
City Council deal with day-to-day issues that contribute to
the well-being of the people that live in their community,
such as:
community well-being and development;
environmental health and safety (including building
control, civil defence, and environmental health
matters);
infrastructural services (wastewater, water, stormwater,
roading and transport);
recreation and culture;
resource management, including land-use planning
and development control.
Local Government Act 2002 (LGA): the Local Government
Act 2002 is the primary legislation governing the Councilsoperations and actions. The LGA denes the regulations
and responsibilities for local authorities.
Long Term Plan (LTP): a ten-year plan which sets the
strategic direction for the Council over the next 10
years. The LTP outlines the Councils response to shared
Community Outcomes and how the Council will manage
its nances and the communitys resources. The LTP is a
requirement of the Local Government Act 2002 and it is
formally reviewed and updated every three years.
perating Expenditure: spending for the normal day-to-day services of the Council (e.g. personnel costs & suppliers).
This also includes depreciation and interest on loans. All
these items are consumed within the nancial year.
perating evenue: money earned through the activities
in return for a service provided, or by way of a grant or
subsidy to ensure particular services or goods are provided.
(e.g. Transit New Zealand subsidies, rental income, permits
and consent fees).
perating Surplus (Decit): the expressions operating
surplus and operating decit are accounting terms
meaning the excess of income over expenditure and
excess expenditure over income respectively. It includes
non-cash items such as income and expenditure owing
but not paid (Debtors and Creditors) and depreciation. It
excludes capital items such as the receipt or repayment of
loans, the cost of capital works and transfers to and from
reserves.
Private Benet: this occurs when individuals who benet
from a service can be clearly identied and therefore
charged for that service. (e.g. the use of the Arena facilities)
Public Benet: this relates to spending which benets
the community in general and for which no individual
beneciaries can be clearly identied. Both Private and
Public Benet are considered when developing the
Revenue and Financing Policy.
ates: a property tax to fund local government activities.
The amount of rates varies between properties as rates
are based on capital values, and differences in services
provided for residential, rural and commercial properties.
Property valuation changes, which the Council has no
control over, will also affect the rates paid. See also
Regional Rates.
ate funding: paying for capital or operating costs
from rates.
evenue: income received by the Council to fund its
services. Revenue sources include: rates, fees and charges
for using a particular service, penalties and nes such asparking nes, and grants and subsidies.
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Helpful Links
For further information and links to the variousreports mentioned in this Pre-Election Report:
2013 / 14 Annual Plan www.pcc.govt.nz/Publications/Annual-Plan
2012 / 22 Long Term Plan www.pcc.govt.nz/Publications/Long-Term-Plan-2012-22
2011 / 12 Annual eport www.pcc.govt.nz/Publications/Annual-Report
For more information about the governance of Porirua City Council see
www.pcc.govt.nz/Your-Council/Local-Governance
For further information aboutlocal governance in ew Zealand seewww.lgnz.co.nz
For more information about Wellington egional Governance eform see
www.regionalreform.org.nz
For more information about the Society of Local Government Managers,
an organisation that supports and develops local government professionals, see
www.solgm.org.nz
For more information about Porirua City Councils assets:
Buildings, Leisure Assets, Spicer alley Landll, Stormwater, Transport,
Wastewater, Water Supply see
www.pcc.govt.nz/Publications/Asset-Management-Plans
For more information about the Transmission Gully Project see
www.nzta.govt.nz/projects/transmission-gully and http://www.pcc.govt.nz/News---Events/
Latest-News/Transmission-Gully-and-Link-Roads
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