Napier City Council Annual Report 2006/2007

ISSN 1170-9847

Napier City Council Omarunui Landfill

Annual Report

1 July 2006 to 30 June 2007

McLean Park

Cover Photos Parklands Residential Development (Peter Scott) Maraenui Urban Marae Opening McLean Park Omarunui Regional Landfill

Annual Report for the year ended 30 June 2007

Adopted by the Napier City Council on 12 October 2007 Prepared in accordance with the requirements of the Local Government Act 2002 S98

231 Hastings Street Napier 4110 Private Bag 6010 Hawke's Bay Mail Centre Napier 4142 Telephone: (06) 835-7579 Fax: (06) 835-7574

Contents Message from the Mayor.................................................................................................................................................................3 Mayor and Councillors as at 30 June 2007 ........................................................................................................................................4 Financial Summary .........................................................................................................................................................................5 Key Statistics .................................................................................................................................................................................6 Community Outcomes ....................................................................................................................................................................7 Statement of Compliance and Responsibility....................................................................................................................................... 10 Audit Report ................................................................................................................................................................................ 11 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 2007 ............................................................................................. 17 2. Explanation of transition to NZ IFRS ............................................................................................................................................. 23 3. Summary cost of services.............................................................................................................................................................. 27 4. Rates revenue ............................................................................................................................................................................... 28 5. Other revenue ................................................................................................................................................................................ 29 6. Other gains/(losses)....................................................................................................................................................................... 29 7. Employee benefit expenses........................................................................................................................................................... 30 8. Other expenses ............................................................................................................................................................................. 30 9. Finance costs................................................................................................................................................................................. 30 10. Tax ................................................................................................................................................................................................. 31 11. Cash and cash equivalents............................................................................................................................................................ 31 12. Trade and other receivables .......................................................................................................................................................... 32 13. Inventories ..................................................................................................................................................................................... 33 14. Biological assets ............................................................................................................................................................................ 33 15. Other financial assets .................................................................................................................................................................... 34 16. Non-current assets held for sale .................................................................................................................................................... 35 17. Property plant and equipment........................................................................................................................................................ 36 18. Intangible assets ............................................................................................................................................................................ 38 19. Investment Property....................................................................................................................................................................... 39 20. Investments in associates.............................................................................................................................................................. 40 21. Trade and other payables .............................................................................................................................................................. 40 22. Employee benefit liabilities ............................................................................................................................................................ 41 23. Borrowings ..................................................................................................................................................................................... 41 24. Provisions ...................................................................................................................................................................................... 43 25. Equity ............................................................................................................................................................................................. 44 26. Capital Management...................................................................................................................................................................... 45 27. Capital commitments and operating leases ................................................................................................................................... 46 28. Contingencies ................................................................................................................................................................................ 47 29. Reconciliation of net surplus after tax to net cash flow from operating activities ........................................................................... 47 30. Remuneration ................................................................................................................................................................................ 48 31. Severance Payments..................................................................................................................................................................... 49 32. Events after Statement of Financial Position date ......................................................................................................................... 49 33. Financial Instrument Risks............................................................................................................................................................. 49 34. Derivative Financial Instruments.................................................................................................................................................... 50 35. Related Party Transactions............................................................................................................................................................ 51 36. Joint Venture .................................................................................................................................................................................. 52 37. Explanation of major variances against budget ............................................................................................................................. 52 Council Controlled Organisations ................................................................................................................................................... 53 Maori Contribution to Decision-Making Process ............................................................................................................................... 54 Significant Acquisitions or Replacement of Assets ........................................................................................................................... 55 Statement of Services and Performance for Activity Groups...................................................................................................................... 57 Democracy and Governance ............................................................................................................................................................... 58 Recreation ............................................................................................................................................................................................ 59 Social and Cultural ............................................................................................................................................................................... 63 City Promotion...................................................................................................................................................................................... 70 Planning and Regulatory ...................................................................................................................................................................... 74 Roading ................................................................................................................................................................................................ 79 Water and Wastes ................................................................................................................................................................................ 81 Property Assets .................................................................................................................................................................................... 86 Support Services .................................................................................................................................................................................. 89 Glossary of Terms......................................................................................................................................................................... 90

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Napier City Council Annual Report 2006/07

Message from the Mayor This year's stand out issue for Napier citizens, has been excellent financial management resulting in a rate increase which at 2.41%, is one of the lowest in the country. It is important for the people of Napier, in this year, when the Government Rating Review has been in progress that our continuing sound financial status gives confidence that this Council does manage the balance between affordability and amenity very well.

In the 2007 Communitrak Survey, eighty six percent of Napier people are satisfied with how rates are spent in this city and a whopping 96% of residents are happy with the opportunities Napier has to offer, the services and facilities provided and our city environment in general.

Napier City Council wants to keep it this way and extensive consultation and discussions were carried out throughout the year on issues that ranged from the retention of the Bluff Hill Water Tower to the redevelopment of the Taradale Town Centre. The people of Napier actively engage in any and every issue that the City throws up and the results of this interaction make Napier the wonderful City it is today.

Our city is changing and how we plan and manage this change is crucial to retaining the vibrant city and easy lifestyle that is Napier. The past year has seen huge growth in the city and several major projects come to fruition or the investigation and planning completed.

•

Additional parking spaces for the CBD have been provided with the Vautier Street carpark and extensions to Dickens Street South and West carparks are under way

•

The excavation of the cross country drain is substantially complete

•

Community consultation on the use of a Biological trickling filter plant for wastewater commenced in January and the Council was granted a change in resource consent

•

Valley D of the Omarunui Regional Landfill was officially opened on 15th December 2006

•

McLean Park redevelopment is well advanced with a boost of $2.9 million from the Significant Community Based Projects Fund

•

Implementation of the restoration of the Botanical Gardens was started this year but the original decision made in 2001 had waning public support and the council went back to consultation. An archeological assessment of the gardens will be done before pursuing any further work

•

The investigation into library services culminated in July 2007 resulting in a planned extension of the Taradale Library and enhancements to the City library with an upgrade to be signalled in the 2009 long term plan

•

Parklands Estate has been a major factor in growth in the city together with West Quay apartments and strong commercial and industrial growth

•

Napier City Council and Hastings District Council made a joint decision to extend the Hawke’s Bay airport – the corporatisation process is ongoing

•

Consultation on the Taradale town centre continues with the issues centering around the level of development and how to fund the project

•

An architect was contracted to design an extension to the Art Gallery and Museum essential to allow more of our treasures to be exhibited and as a major step to bring history and our stories alive for residents and visitors

•

Napier City and the Rotary Pathway Trust have a partnership which works towards extending the pathways around the city. One path has been constructed in this year the EIT to Guppy Road limestone path but the project will continue to grow with design plans for two stages to be built in the 2007/08 year now completed

Maintenance and capital projects throughout the city have focused on our core infrastructure. Napier City is well situated for growth in the future, we plan carefully and thoughtfully for development in the city. Napier residents regard the lifestyle the city allows as extremely important and we plan to balance growth against the protection of our access to these lifestyle choices.

The year has been successful and prosperous for Napier thanks to the people who live and work in the City. My grateful thanks to the Napier City team of workers who add such value to our City.

Barbara Arnott MAYOR

Napier City Council Annual Report 2006/07

Page 3

Mayor and Councillors as at 30 June 2007

Left to right: Councillors Tania Wright, Deane Jessep, John Cocking, Faye White, Tony Reid, Harry Lawson, Kathie Furlong, Mark Herbert, Robin Gwynn, Mayor Barbara Arnott, Councillors Tony Jeffery, Dave Pipe, Rob Lutter

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Napier City Council Annual Report 2006/07

Financial Summary Financial Indicators Actual 2006/07 $000

Budget 2006/07 $000

Actual 2005/06 $000

Rates revenue

38,333

37,801

36,300

Net surplus

20,407

13,766

17,344

Working capital

30,762

18,276

24,643

Public debt

18,814

54,635

23,383

Total assets

1,144,837

1,162,601

1,127,447

Proportion of rates revenue to total revenue (%)

44.17%

47.85%

46.09%

Public debt as a percentage of total assets

1.64%

4.70%

2.07%

Proportion of rates revenue applied to service debt (%)

8.46%

13.47%

9.73%

The financial performance measures reflect positively on Council's overall performance and financial position at 30 June 2007.

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 37 of the Financial Statements.

How Rates Were Spent The chart shows the split of rates expenditure between the Activity Groups. The Property Assets group contributed $ 1,178,069 to rates.

Governance 6% Water And Wastes 27% Recreation 20%

Roading 17%

Planning And Regulatory 8%

Napier City Council Annual Report 2006/07

Social And Culture 19%

City Promotion 3%

Page 5

Key Statistics 30 June 2007

30 June 2006

10,364 57,210

10,364 57,200

23,635 346 9,257,526,200 8,813,921,950 4,464,873,770 4,279,692,320 2005

23,117 347 9,004,293,200 8,549,933,200 4,404,135,800 4,210,327,600 2005

42,688,307 Land Value

39,919,818 Land Value

Public debt outstanding (excluding finance leases) Loan redemption reserves

18,570,250 3,408,784

22,840,398 4,211,688

Unexercised loan authorities

46,411,000

39,700,000

149,330,502 84,049,462

159,283,365 59,415,423

1989

1989

AREA AND POPULATION Area (ha) Population (2006 Census) VALUATION Rateable properties, no. of Non-rateable properties, no. of Gross capital value Nett capital value (i.e. Capital Value of rateable property) Gross land value Nett land value (i.e. land value of rateable property) Date of last revision of values RATES AND RATING Total rates struck (incl. GST) System of rating PUBLIC DEBT

BUILDING CONSENTS Value of consents for year Value of consents for residential Properties DATE OF CONSTITUTION OF CITY AVERAGE RESIDENTIAL RATES The average residential rate for Napier was calculated by determining the average land value of residential properties and then calculating the rates based on that average land value.

1,475 1,454

Wanganui Tauranga

1,413

1,449 1,366

Hastings

1,432 1,358

Napier Rotorua

1,344

1,502

1,369 1,338

Invercargill

1,412 1,332

Palmerston North

1,350 1,300

Hamilton Whangarei

1,291

Timaru

1,106

1,430

1,292 1,424 1,330

AVERAGE 2006/07

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1,533

2005/06

Napier City Council Annual Report 2006/07

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.

The Council considers that meeting its service level targets constitutes its major role as a contributor to the progress of Community Outcomes for the 2006/07 year. The contributions of Council's activities to the community outcomes are as follows:

Economic Wellbeing Outcome - A strong prosperous and thriving economy Governance: Through Governance Council provides the infrastructure and services that promote economic growth.

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

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

Par 2 Golf Courses: 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.

Building Consents: Provides for a range of development opportunities.

Parking Services: Facilitates economic development in CBD and contributes to active marketing of CBD. Property Holdings: Provides leasehold land for commercial and industrial use and letable space in commercial buildings.

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.

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.

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

Parking Services: Provide accessible quality transportation amenities.

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

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 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.

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

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 Community: Provides and encourages coordination, facilitation and liaison between the community groups that contribute to crime prevention, mitigation and safety.

Marineland of New Zealand: Assists in Napier being a leading commercial and tourist centre.

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.

National Aquarium of New Zealand: Attracts visitors to Napier.

Outcome - Supportive, caring and inclusive communities

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.

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.

Napier City Council Annual Report 2006/07

Library Services: The library service maintains a community information database listing a minimum of 350 community organisations which is electronically available, a Books-on-Wheels Service for the housebound and reading programmes for children and teens.

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Community Outcomes ...

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 Community: 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.

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

Kennedy Park: Provides support to local sports organisations.

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 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 Golf Courses: 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.

Municipal Theatre: Allows residents to enjoy a range of theatrical, cultural and artistic experiences.

Page 8

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 Golf Courses: Providing culturally themed aspects to Par 2 MiniGolf.

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

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

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.

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

Environmental Wellbeing Outcome - A lifetime of good health and wellbeing 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.

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.

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

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

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

Water: Provides water suitable for human consumption.

Napier City Council Annual Report 2006/07

Community Outcomes ...

Outcome - Safe and secure communities 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 Community: 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.

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.

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.

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.

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

Roading: Renewal work is undertaken when due.

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

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.

Solid Waste: Safeguards environment and community health.

Stormwater: Compliance with requirements of resource consents for discharging stormwater.

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

Wastewater: Protect the environment from adverse effects of wastewater.

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

Water: Actively promotes water conservation to help ensure efficient use of water from the Heretaunga Plains aquifer.

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

Napier City Council Annual Report 2006/07

Page 9

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.

2.

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

3.

In the opinion of the Napier City Council and its management the annual Financial Statements for the Year Ended 30 June 2007 fairly reflect the financial position and operations of Napier City Council.

1.

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

Chief Executive N. B. TAYLOR 12 October 2007

Page 10

Mayor B. W. ARNOTT 12 October 2007

Napier City Council Annual Report 2006/07

AUDIT REPORT TO THE READERS OF NAPIER CITY COUNCIL’S FINANCIAL STATEMENTS AND PERFORMANCE INFORMATION FOR THE YEAR ENDED 30 JUNE 2007 The Auditor-General is the auditor of Napier City Council (the City Council). The Auditor-General has appointed me, L H Desborough, 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 2007, including the financial statements.

Unqualified Opinion In our opinion:

The financial statements of the City Council on pages 14 to 89:

comply with generally accepted accounting practice in New Zealand; and

fairly reflect : x

the City Council’s financial position as at 30 June 2007; and

x

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 57 to 89 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 12 October 2007, 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.

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.

Napier City Council Annual Report 2006/07

Page 11

Audit Report ...

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. Those financial statements must fairly reflect the financial position of the City Council as at 30 June 2007. 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.

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, we have no relationship with or interests in the City Council.

L H Desborough 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 the City Council for the year ended 30 June 2007 included on the City Council’s web-site. The Council is responsible for the maintenance and integrity of the City Council’s web site. We have not been engaged to report on the integrity of the City Council’s web site. 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 web site.

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 12 October 2007 to confirm the information included in the audited financial statements, performance information and the other requirements presented on this web site.

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 2006/07

Financial Statements for the year ended 30 June 2007

Napier City Council Annual Report 2006/07

Page 13

Statement of Financial Performance for the Year Ended 30 June 2007 Note

Actual 2007 $000

Budget 2007 $000

Actual 2006 $000

4

38,333

37,801

36,300

Other revenue

5

45,368

41,192

40,723

Other gains/(losses)

6

2,366

-

1,130

86,067

78,993

78,153

Income Rates revenue

Total income Expenditure Employee benefit expenses

7

20,727

18,991

18,543

17, 18

14,734

14,569

13,692

Other expenses

8

28,927

27,726

26,830

Finance costs

9

1,430

3,941

1,872

65,818

65,227

60,937

20,249

13,766

17,216

158

-

128

20,407

13,766

17,344

-

-

-

20,407

13,766

17,344

Actual 2007 $000

Budget 2007 $000

Actual 2006 $000

1,092,568

1,082,521

1,075,193

-

68

-

Valuation gains/(losses) taken to equity

38

-

31

Net income/(expense) recognised directly in equity

38

68

31

Surplus/(deficit) for the year

20,407

13,766

17,344

Total recognised income/(expense) for the year ended 30 June

20,445

13,834

17,375

1,113,013

1,096,355

1,092,568

Depreciation and amortisation

Total operating expenditure

Operating surplus/(deficit) before tax Share of associate surplus/(deficit)

20

Surplus/(deficit) before tax Income tax expense

10

Surplus/(deficit) after tax

Statement of Changes in Equity for the Year Ended 30 June 2007 Note

Balance at 1 July

Property, plant and equipment Revaluation gains/(losses) taken to equity

Financial assets at fair value through equity

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 2006/07

Statement of Financial Position as at 30 June 2007 Note

Actual 2007 $000

Budget 2007 $000

Actual 2006 $000

11

9,305

27,906

15,251

Trade and other receivables

12

6,881

5,298

10,035

Inventories

13

7,754

2,506

9,038

Biological assets

14

229

-

241

Other financial assets

15

22,907

-

5,391

Non current assets held for sale

16

1,311

-

-

48,387

35,710

39,956

1,046,221

1,122,399

1,039,232

Assets Current assets Cash and cash equivalents

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

17

Intangible assets

18

159

-

175

Investment property

19

44,426

-

42,092

Investment in associates

20

3,565

1,163

3,407

Other financial assets

15

2,079

3,329

2,585

1,096,450

1,126,891

1,087,491

1,144,837

1,162,601

1,127,447

Total non-current assets Total assets

Liabilities Current liabilities Trade and other payables

21

8,169

7,818

6,829

Employee benefit liabilities

22

2,269

1,947

2,203

Borrowings

23

7,187

7,669

6,281

17,625

17,434

15,313

Total current liabilities Non-current liabilities Provisions

24

914

260

954

Employee benefit liabilities

22

1,658

1,586

1,510

Borrowings

23

11,627

46,966

17,102

14,199

48,812

19,566

31,824

66,246

34,879

Total non-current liabilities Total liabilities

Equity Retained earnings

25

630,253

377,897

611,665

Other reserves

25

482,760

718,458

480,903

1,113,013

1,096,355

1,092,568

Total public equity

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

Napier City Council Annual Report 2006/07

Page 15

Statement of Cash Flows for the Year Ended 30 June 2007 Note

Actual 2007 $000

Budget 2007 $000

Actual 2006 $000

38,169

37,801

36,134

1,525

1,016

1,394

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

-

-

18

46,463

35,421

32,614

(10)

-

304

(48,871)

(42,292)

(46,932)

(1,483)

(3,941)

(1,937)

35,793

28,005

21,595

2,408

-

1,296

49,130

1,737

39,184

Purchase of property, plant and equipment

(22,568)

(33,464)

(17,412)

Acquisition of investments

(66,140)

(1,544)

(40,262)

Net cash from investing activities

(37,170)

(33,271)

(17,194)

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

29

Cash flows from investing activities Proceeds from sale of property, plant and equipment Proceeds from withdrawal of investments

Cash flows from financing activities Proceeds from borrowings

2,000

5,038

2,600

Repayment of borrowings

(6,270)

(2,712)

(6,028)

(299)

-

(232)

Net cash from financing activities

(4,569)

2,326

(3,660)

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

(5,946)

(2,940)

741

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

15,251

30,846

14,510

9,305

27,906

15,251

Repayment of finance lease liabilities

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

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.

During the period, NCC acquired property, plant and equipment totalling $0 (2006: $100,000) by means of finance leases.

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

Page 16

Napier City Council Annual Report 2006/07

Notes to the Financial Statements Year Ended 30 June 2007 1.

1.1

Statement of Accounting Policies for the year ended 30 June 2007 Reporting Entity

Napier City Council is a New Zealand Council and is governed by the Local Government Act 2002.

The accounting policies adopted for preparation of the 2006/07 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 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. The financial statements of Napier City Council are for the year ended 30 June 2007. The financial statements were authorised for issue by the Napier City Council on 12 October 2007.

1.2

Basis of Preparation

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).

This is the first set of financial statements prepared using NZ IFRS and comparatives for the year ended 30 June 2006 have been restated to NZ IFRS accordingly. Reconciliations of equity and net surplus/(deficit) for the year ended 30 June 2006 under NZIFRS to the balances reported in the 30 June 2006 financial statements are detailed in note 2.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing an opening IFRS statement of financial position as at 1 July 2005 for the purposes of the transition to NZ IFRS. There are no standards, interpretations and amendments that have been issued, but are not yet effective, that Napier City Council has not yet applied.

1.3

1.7

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.

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

Napier City Council Annual Report 2006/07

Foreign Currency Translation

Functional and Presentation Currency Items included in the financial statements 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).

Transactions and Balances 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.

1.8

Revenue Recognition

Revenue comprises the fair value for the sale of goods and services, net of rebates and discounts. Revenue is recognised as follows: •

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

•

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

•

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

•

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

•

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

•

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.

•

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.

•

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

•

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

Principles of Consolidation

Associates

Joint Ventures Jointly controlled assets

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.

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

•

Changes in Accounting Policies

There have been no changes in accounting policy during the period.

1.4

1.6

Page 17

Notes to the Financial Statements for the Year Ended 30 June 2007 ... 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.

•

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

•

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).

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.

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 Page 18

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 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 uncollectable 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.

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 Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ... 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 at the lower of cost and current replacement cost. These assets are held for distribution at no charge in the ordinary course of 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 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.

Napier City Council Annual Report 2006/07

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 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.

Page 19

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

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 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 asset’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.

Page 20

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 Fixed plant and equipment Mobile plant and equipment Motor vehicles Furniture and fittings Office equipment Library bookstock

2 to 10% 5 to 20% 5 to 50% 10 to 33.33% 4 to 20% 8 to 66.67% 7 to 25%

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.

The expected lives, in years, of major classes of infrastructural and restricted assets are as follows: Roading Base course Surfacings Concrete pavers Footpaths and pathways /walkways Drainage Bridges and structures Road lighting Traffic services and safety

Years 70 12 70 15-80 14-80 20-100 4-50 10-25

Water Reticulation Reservoirs Pump stations

56-107 100 25-80

Stormwater Reticulation Pump stations

100 15-75

Sewerage Reticulation Pump stations Milliscreen Outfall

80 15-80 10-80 80

Others Grandstands, community and sports halls Sportsgrounds, parks and reserves improvements Buildings on reserves Pools Inner harbour

50 10-50 10-50 10-50 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 8).

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 2007, Council’s Property and Equipment are valued as follows: Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

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 2007 using fair value. Valuation of this class of asset is performed on an annual basis (see also note 1.21.)

Library collections

Land under roads

Land and buildings

Infrastructural assets

Restricted assets

Valued at depreciated replacement cost in accordance with the guidelines released by the New Zealand Library Association and the National Library in May 2002.

Library valuations are performed by the Head Librarian and are not subject to an independent review as there are readily available market prices to determine fair value. The last valuation was performed in June 2007.

Land under roads was 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 is no longer revalued.

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2005 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.

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2005 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.

• •

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

Trademarks and licences 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.

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

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.

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.

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2005 using depreciated replacement cost method.

1.25

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.

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.

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 Napier City Council Annual Report 2006/07

Borrowing costs

Borrowing costs are expensed.

1.26

Provisions

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.

Page 21

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

1.27

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.

Retirement benefit obligations 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 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.

1.28

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.

1.29

Napier City Council’s objectives, policies and processes for managing capital are described in note 26.

1.30.

Cash: Coins, notes, demand deposits, or highly liquid investments, for which there is a recognised ready market and which are unconditionally convertible to coins and notes at the Council's option within no more than two working days. Council regards these as part of its day-to-day cash management.

Operating Activities: Transactions and other events that are not investing or financial activities.

Investing Activities: Activities relating to the acquisition, holding and disposal of property, plant and equipment and of investments, such as securities, not falling within the definition of cash.

Financial Activities: Activities which result in changes in the size and composition of the capital structure of the Council, both equity and debt, not falling within the definition of cash.

1.31

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.

Equity

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.

Page 22

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:

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

Cash Flow Statement

The following definitions have been used for the preparation of the Statement of Cash Flows:

Experienced independent valuers perform the Council’s infrastructural asset revaluations.

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

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 2007: Classification of property Napier City Council owns a number of leasehold land and rental properties. The receipt of market-based rentals from these properties

2.

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 transition to NZ IFRS

First Time Adoption of New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) Background For financial reporting periods commencing on or after 1 January 2007, New Zealand reporting entities are required to apply NZ IFRS. Entities have the option of adopting NZ IFRS early. Napier City Council has decided to ‘early adopt” with effect from 1 July 2006. This has resulted in changes to certain accounting policies and as a result impacted on the financial statements. The following information is disclosed in accordance with NZ FRS-41 Disclosing the Impact of Adopting New Zealand Equivalents to International Financial Reporting Standards.

Key Differences Arising in Accounting Policies Napier City Council is a Public Benefit Entity (PBE) for the purposes of NZ IFRS and has elected to take advantage of certain exemptions within the individual reporting standards. These exemptions have been taken where practicable and necessary with the intention to efficiently and cost effectively manage the transition on the Council for the benefit of Napier ratepayers.

The individual accounting policies policy differences identified are outlined in the explanatory notes section following the tables showing the financial impacts below.

Exemptions from full retrospective application elected by Napier City Council Napier City Council has elected to apply the following optional exemption from full retrospective application: a. Land under roads have been measured at fair value as at 1 July 2005 and the fair value has been taken as deemed cost at that date. b. Napier City Council designated various securities as financial assets at fair value through equity at the date of transition to IFRS. Financial Impact of the First-Time Adoption of NZ IFRS The financial impact of the adoption of NZ IFRS is shown in the following tables: a. A reconciliation of equity, at the beginning of the transition period (1 July 2005) and at the end of the comparative period (30 June 2006), under previous NZ GAAP to equity under NZ IFRS. b. A reconciliation of the surplus reported under previous NZ GAAP for the comparative period ending 30 June 2006 and under NZ IFRS for the same period.

Mandatory Exceptions - Estimates Napier City Council is required to make the following mandatory exception from retrospective application: Estimates under NZ IFRS at 1 July 2005 are consistent with estimates made for the same date under previous NZ GAAP.

Napier City Council Annual Report 2006/07

Page 23

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

Reconciliation of equity

Note

Previous NZ GAAP 1 July 05 $000

Effect of transition to NZ IFRS 1 July 05 $000

3,269

NZ IFRS 1 July 05 $000

Previous NZ GAAP 30 June 06 $000

Effect of transition to NZ IFRS 30 June 06 $000

NZ IFRS 30 June 06 $000

11,241

14,510

3,529

11,722

15,251

ASSETS Current assets Cash and cash equivalents

b

Trade and other receivables

5,298

-

5,298

10,035

-

10,035

e

497

9,270

9,767

539

8,499

9,038

-

193

193

-

241

241

Other financial assets

j

14,075

(10,500)

3,575

16,391

(11,000)

5,391

Non-current assets classified as held for sale

d

2,291

(2,291)

-

5,451

(5,451)

-

25,430

7,913

33,343

35,945

4,011

39,956

1,081,435

(47,686)

1,033,749

1,083,071

(43,839)

1,039,232

Inventories Biological assets

Total current assets Non-current assets Property plant and equipment

a, f, g

Intangible assets

a

-

196

196

-

175

175

Investment property

g

-

40,660

40,660

-

42,092

42,092

3,279

-

3,279

3,407

-

3,407

3,874

(582)

3,292

3,117

(532)

2,585

1,088,588

(7,412)

1,081,176

1,089,595

(2,104)

1,087,491

1,114,018

501

1,114,519

1,125,540

1,907

1,127,447

Investment in associates Other financial assets

j

Total non-current assets TOTAL ASSETS

LIABILITIES Current liabilities Trade and other payables

7,818

-

7,818

6,829

-

6,829

Employee benefit liabilities

1,947

-

1,947

2,203

-

2,203

Borrowings

f

Total current liabilities

6,174

157

6,331

6,171

110

6,281

15,939

157

16,096

15,203

110

15,313

Non-current liabilities Provisions

c

Employee benefit liabilities Borrowings

f

Total non-current liabilities TOTAL LIABILITIES

260

671

931

271

683

954

1,586

-

1,586

1,510

-

1,510

20,580

133

20,713

16,979

123

17,102

22,426

804

23,230

18,760

806

19,566

38,365

961

39,326

33,963

916

34,879

357,194

238,259

595,453

373,909

237,756

611,665

PUBLIC EQUITY Retained earnings Fair value through equity reserve

c,h,i,j,k j

Restricted reserves Asset revaluation reserve TOTAL EQUITY ATTRIBUTABLE TO NAPIER CITY COUNCIL TOTAL EQUITY AND LIABILITIES

Page 24

h,i,k

-

-

-

-

31

31

9,338

-

9,338

11,350

-

11,350

709,121

(238,719)

470,402

706,318

(236,796)

469,522

1,075,653

(460)

1,075,193

1,091,577

991

1,092,568

1,114,018

501

1,114,519

1,125,540

1,907

1,127,447

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

Explanatory notes - Reconciliation of Equity

g. Investment Property Investment property was measured at fair value less the costs of disposal under previous NZ GAAP. NZ IFRS 40 requires investment property to be measured at its fair value. The change in measurement basis of investment property on transition to NZ IFRS has been an increase in the value of investment property.

a. Intangible / Property, Plant and Equipment The Council has identified software that was classified as plant, property and equipment. This has been reclassified as an intangible asset in accordance with NZ IAS 38 - Intangible Assets where such software is not an integral part of the associated hardware. Amortisation of this intangible is consistent with the methodology applied to depreciating this asset under FRS 3 Property, Plant and Equipment. Therefore, there is no additional impact to the statement of financial performance.

h. Revaluation reserve related to investment property Movements in the value of investment property were taken to an investment property revaluation reserve under previous NZ GAAP. NZ IAS 40 requires these movements to be taken to the statement of financial performance. The investment property revaluation reserve has therefore been transferred to retained earnings. The revaluation reserve balance of $34,097,000 at 1 July 2005 was transferred to retained earnings.

b. Cash & Cash Equivalents Cash held in bank accounts and interest bearing deposits has been reclassified in accordance with IAS 1. Term deposits with maturities less than three months have been classified as cash rather than current investments.

i.

c. Financial guarantees Financial guarantees were not required to be recognised under previous NZ GAAP, these were disclosed as a contingent liability in the Notes to the Financial Statements. NZ IAS 39 requires financial guarantees to be recognised at their fair value based on the possibility Napier City Council will be required to reimburse a holder for a loss incurred, discounted to present value. The inclusion of guarantees on the Council’s Statement of Financial Performance does not reflect Council’s rights of recourse to the party benefiting from the guarantee, should the guarantee be called on. d. Disposals & Discontinued Operations Land under development for resale in the next 12 months was identified as Property Intended for resale under NZ GAAP. Property under development for resale whether current or noncurrent is classified under NZ IAS 2 as inventory. e. Inventories Biological assets previously classified as inventory under NZ GAAP are required to be separately disclosed under IAS 2. f.

Leases Lease assets where ownership reverts to the lessor at the end of the lease were generally classified as operating leases under NZ GAAP. NZ IAS 17 requires that where a significant portion of the economic life of an asset is extinguished during the period of the lease, that asset is required to be included in the non current assets of the Council and the liability for future lease payments recorded as a liability of Council. The carrying amount of these assets under previous NZ GAAP was $0 and on transition to NZ IFRS the fair value was $290,000 (30 June 2006: $234,000).

Napier City Council Annual Report 2006/07

Revaluation reserve related to Land under Development Movements in the value of property under development were taken to a land revaluation reserve under previous NZ GAAP. Property under development under IAS 2 is now classified as inventory, accordingly revaluation reserves relating to property under development have been transferred to retained earnings.

The revaluation reserve balance of $6,637,000 at 1 July 2005 (30 June 2006: $4,714,000) was transferred to retained earnings.

j.

Other financial assets Napier City Council’s shares in Zespri Limited, NZ Wool Equities Limited and New Zealand Local Government Insurance Limited were recognised at the lower of cost and net realisable value under previous NZ GAAP. Napier City Council has designated these investments as fair value through equity under NZ IAS 39.

The effect on transition to NZIFRS is an increase in the carrying value of the investments and increase in the value of retained earnings at transition date and fair value through equity reserve at 30 June 2006. The carrying amount of these investments under previous NZ GAAP was $142,000 and on transition to NZ IFRS, the fair value was $353,000. (30 June 2006: $384,000).

k. Deemed cost Napier City Council has applied the deemed cost exemption that is available under NZ IFRS 1, for land under roads. This exemption allows Napier City Council to measure an item of property, plant and equipment at its fair value, and use that fair value as its deemed cost on transition to NZ IFRS. The effect of this change is to transfer revaluation reserves attributed to land under roads of $195,970,000 to retained earnings. There has been no adjustment to the carrying amount to land under roads in applying this exemption under NZ IFRS.

Page 25

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

Reconciliation of surplus for the year ended 30 June 2006

Note

Previous Effect of NZ transition GAAP to NZ IFRS $000 $000

NZ IFRS $000

INCOME Rates revenue

36,300

-

36,300

40,723

-

40,723

(302)

1,432

1,130

76,721

1,432

78,153

Employee benefit expenses

18,543

-

18,543

Depreciation and amortisation

13,692

-

13,692

Other revenue Other gains/(losses)

a

Total operating revenue EXPENSES

Finance costs

1,872

-

1,872

26,818

12

26,830

Total operating expense

60,925

12

60,937

Total operating surplus/(deficit)

15,796

1,420

17,216

128

-

128

15,924

1,420

17,344

-

-

-

15,924

1,420

17,344

Other expenses

Share of associate surplus/(deficit) Net surplus/(deficit) before taxation Income tax credit/(expense) Net surplus/(deficit)

Explanatory notes - Reconciliation of Surplus a. Investment property valuations Investment property valuations movements were debited or credited to the investment property revaluation reserve where there was a credit balance. NZ IFRS requires revaluation movements to be recognised in the statement of financial performance. b. Financial guarantees This represents the unwind of financial guarantee contracts recognised in the statement of financial position.

b

than a net basis and short term deposits with maturities less than 3 months are now included as part of cash and cash equivalents. This change and the reclassification of some term deposits to cash and cash equivalents has impacted on the statement of cash flows for the year ended 30 June 2006. The Cash and Cash Equivalents, including bank overdraft, has decreased from $18,870,000 to $15,251,000.

The net cash from operating activities has reduced from $24,151,000 to $21,614,000 due to reclassification under NZ IFRS of work-inprogress for residential development from Purchase of Property, Plant and Equipment to inventory.

Statement of cash flows

The net cash from investing activities has reduced from $18,422,000 to $17,194,000 due to reclassification under NZ IFRS of deposits with maturities less than 3 months into Cash and Cash Equivalents.

On transition to NZ IFRS the statement of cash flows for the year ended 30 June 2006 presents the increase and decrease in short term deposits with maturities of 4 - 12 months on a gross rather

There have been no other material adjustments to the statement of cash flows for the year ended 30 June 2006 on transition to NZ IFRS.

Page 26

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

3.

Summary cost of services Actual 2007 $000

Budget 2007 $000

Actual 2006 $000

Recreation

2,287

1,257

1,247

Social and Cultural

5,701

3,860

4,018

City Promotion

5,936

5,778

5,662

Planning and Regulatory

3,767

3,605

3,363

Income

Roading

2,773

3,068

4,476

Water and Wastes

13,672

12,806

12,724

Property Assets

11,435

7,492

8,835

Total activity income

45,571

37,866

40,325

Non targeted rates

27,749

27,336

27,001

Other income

12,747

13,791

10,827

Total income

86,067

78,993

78,153

Democracy and Governance

1,681

1,803

1,748

Recreation

7,875

7,820

7,706

12,458

10,151

9,910

7,459

7,330

7,082

Expenditure

Social and Cultural City Promotion Planning and Regulatory

5,031

4,685

4,763

Roading

11,875

12,238

11,299

Water and Wastes

14,415

14,800

13,700

6,650

5,427

4,952

67,444

64,254

61,160

(2,013)

-

(1,845)

387

973

1,505

65,818

65,227

60,820

Property Assets

less internal expenditure Other expenses

Total operating expenditure

Napier City Council Annual Report 2006/07

Page 27

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

4.

Rates revenue

Non targeted rates

Actual 2007 $000

Actual 2006 $000

27,749

26,962

Targeted rates attributable to activities Water

2,767

2,626

Sewerage

6,217

5,176

Refuse and sanitation

1,267

1,228

Roading

181

167

Marketing

152

141

38,333

36,300

Actual 2007 $000

Actual 2006 $000

38,333

36,300

567

623

37,766

35,677

Total revenue from rates

Total rates revenue Rates Remissions

Rates revenue net of remissions

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

Page 28

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

5.

Other revenue Actual 2007 $000

Actual 2006 $000

10,481

8,315

Land Transport NZ and other government grants

3,121

4,136

Regulatory revenue

3,093

3,373

Rental income

4,161

3,829

User charges

Infringements and fines

636

616

Rendering of services

846

780

Retail and product sales

1,453

1,188

Omarunui Landfill joint-venture

1,370

1,551

Sales residential development

9,493

7,078

Other income

1,066

428

Grants and donations

866

17

Petrol tax

416

407

Vested assets - Parklands Residential Development

1,368

2,415

Vested assets - other

2,085

1,442

Financial and development contributions - other

3,021

3,703

Interest

1,892

1,427

-

18

45,368

40,723

Actual 2007 $000

Actual 2006 $000

Dividend income

Total other revenue

6.

Other gains/(losses)

Gain on revaluation of library bookstock Gain on revaluation of investment properties Gain on sale of assets Loss on disposal of assets Fair value gain/(loss) on livestock

Total gains/(losses)

Napier City Council Annual Report 2006/07

60

45

2,334

1,432

492

122

(487)

(533)

(33)

64

2,366

1,130

Page 29

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

7.

Employee benefit expenses Actual 2007 $000

Actual 2006 $000

20,476

18,447

Employer contributions to multi-employer defined benefit plans

116

123

Increase/(decrease) in employee benefit liabilities

135

(27)

20,727

18,543

Actual 2007 $000

Actual 2006 $000

108

101

-

54

Salaries and wages

Total employee benefit expenses

8.

Other expenses

Audit fees - financial statement audit Audit fees - LTCCP audit Audit fees - IFRS audit

25

-

Donations

17

18

Bad debts written off Rental expense on operating leases Other operating expenses

Total other expenses

9.

-

1

167

105

28,610

26,551

28,927

26,830

Actual 2007 $000

Actual 2006 $000

1,412

1,774

-

11

18

87

1,430

1,872

Finance costs

Interest expense Interest on borrowings Provisions: discount unwinding Finance charges on leased assets

Total finance costs

Page 30

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

10. Tax Relationship between tax expense and accounting profit

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

Actual 2007 $000

Actual 2006 $000

20,407

17,344

6,734

5,724

(6,734)

(5,724)

-

-

Additional disclosures A deferred tax asset has not been recognised in relation to unused tax losses of $551,831 (2006: $492,623)

11. Cash and cash equivalents Actual 2007 $000

Actual 2006 $000

Cash at bank and in hand

5,922

3,529

Short term deposits maturing three months or less from date of acquisition

2,500

11,000

883

722

9,305

15,251

Omarunui Landfill

Total cash and cash equivalents

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: Actual 2007 $000

Actual 2006 $000

Cash at bank and in hand

5,922

3,529

Short term deposits maturing within three months

2,500

11,000

883

722

9,305

15,251

Omarunui Landfill

Napier City Council Annual Report 2006/07

Page 31

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

12. Trade and other receivables Actual 2007 $000

Actual 2006 $000

Rates receivables

780

662

Other receivables

2,099

2,824

Parklands - unconditional contracts subdivision sales

3,202

5,753

773

766

27

30

6,881

10,035

Transfund NZ subsidy claims Prepayments

Total trade and other receivables

There is no concentration of credit risk with respect to receivables outside the Council, as the Council 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 Court’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, but not impaired are as follows: Actual 2007 $000

< 3 months 3 to 12 months > 12 months

Carrying amount

56 112 68

236

Napier City Council holds no collateral as security or other credit enhancements over receivables that are past due. The aged rate receivables with negotiated payment terms were not recorded in this format for 2006.

Page 32

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

13. Inventories Actual 2007 $000

Actual 2006 $000

Inventory held for distribution

155

142

Inventory held for resale

190

156

7,409

8,740

7,754

9,038

Parklands - work in progress

Total inventories

Inventory held for distribution increased by 2007: $13,000 (2006: $1,000) due to stocktake adjustments.

The carrying amount of inventories pledged as security for liabilities is $nil (2006 $nil).

14. Biological assets Biological assets changes in value

Actual 2007 $000

Actual 2006 $000

Opening value 1 July

241

193

Change in value arising from changes in fair value

(33)

64

Increase in value due to natural increase / (decrease) Increase in value due to purchases Change in value due to sales

Closing value 30 June

51

66

222

174

(252)

(256)

229

241

Biological assets comprise 949 (2006: 944) sheep largely held for breeding and 370 (2006: 272) cattle largely held for trading.

Napier City Council Annual Report 2006/07

Page 33

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

15. Other financial assets Actual 2007 $000

Actual 2006 $000

21,984

4,341

623

-

300

800

-

250

22,907

5,391

Sinking fund investments

157

1,901

Unlisted shares

422

384

1,500

300

2,079

2,585

Current portion Loans and receivables Short-term deposits with maturities of 4-12 months Fair value through equity Sinking fund investments Held to maturity Local authority stock Corporate bonds

Total current portion

Non-current portion Fair value through equity

Held to maturity Local authority stock

Total non-current portion There were no impairment provisions for other financial assets.

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 the Public Trust Office.

Unlisted shares - valuation The fair value of the unlisted shares were determined as follows: â&#x20AC;˘

Where an active market is present for unlisted shares, the fair value of such shares is determined by their market value.

â&#x20AC;˘

Where an active market is absent for unlisted shares, the fair value of such shares is determined by their redemption value.

Maturity analysis and effective interest rates The maturity dates for all other financial assets with the exception of equity investments are as follows:.

2007

Short term deposits with maturities of 3 months or less (average maturity 66 days)

Short term deposits

Sinking fund investments

Local authority stock

Corporate bonds

2,500

-

-

-

-

-

-

623

300

-

8.09%

6.80%

157

1,500

Weighted average effective interest rate

8.00%

Short term deposits with maturities of 4-12 months (average maturity 141 days)

21,984

Weighted average effective interest rate

8.01%

Other investments maturing within 1 year

-

Weighted average effective interest rate Investments maturing after 1 year but less than 5 years

-

Weighted average effective interest rate More than 5 years

-

8.09%

7.90%

-

-

-

-

24,484

780

1,800

-

Weighted average effective interest rate

Page 34

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

2006 Short term deposits

Sinking fund investments

Local authority stock

Corporate bonds

Short term deposits with maturities of 3 months or less (average maturity 160 days)

11,000

-

-

-

Weighted average effective interest rate

7.59% -

-

-

Short term deposits with maturities of 4-12 months (average maturity 330 days)

Weighted average effective interest rate Other investments maturing within 1 year

4,341

7.60% -

Weighted average effective interest rate Investments maturing after 1 year but less than 5 years

-

Weighted average effective interest rate 15,341

1,241

800

250

7.23%

6.42%

7.50%

660

300

-

7.23%

6.80%

1,901

1,100

250

16. Non-current assets held for sale The Napier City Council owned building on Dickens Street has been presented as held for sale at 30 June 2007. This property was purchased to enable the extension of the Dickens Street carpark. The portion not required for the carpark extension was being actively marketed at 30 June 2007.

Actual 2007 $000

Actual 2006 $000

Buildings

668

-

Land

643

-

1,311

-

Non-current held for sale are:

Total non-current asset held for sale

Napier City Council Annual Report 2006/07

Page 35

Page 36

238

119,443

418,901

9,355

Roading network

Land under roads

Work in progress

(71)

1,063,214

(23,982)

(1,870)

64,195

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

24,258

1,381

-

-

61

-

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

Current year additions

(3,683)

-

-

-

-

-

-

(718)

-

-

-

(164)

(211)

(343)

(2,965)

-

-

(191)

(662)

-

(90)

(1,475)

(547)

1,007

-

-

-

-

-

-

381

-

-

-

69

137

175

626

-

-

158

466

-

2

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(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)

-

-

60

-

-

-

-

-

-

-

-

-

-

-

-

-

60

-

-

-

-

60

-

-

-

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

(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)

-

-

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

Current Current Current year Current year Revaluation Cost/ Accumulated Carrying year year impairment depreciation surplus revaluation depn and amount disposals disposals charges impairment cost accumulated charges depn 30 June 2007 30 June 2007 30 June 2007

The net carrying amount of plant and equipment held under finance leases is $292,000 (2006 $587,000)

Total property plant and equipment

168,345

8,248

Total restricted assets

Inner Harbour

(307)

10,200

(716)

25,820

Buildings on reserves

Swimming pools

(662)

(114)

7,686

116,391

(8,311)

-

-

Grandstands and halls

Sportsgrounds

Council restricted assets

743,062

60,872

Drainage network

Total infrastructural assets

(4,209)

48,440

Water system

(851)

(1,123)

86,051

(2,128)

(13,801)

-

(225)

(1,527)

(11,023)

-

(1,026)

-

-

Sewerage system

Council infrastructural assets

151,807

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

Cost/ Accumulated Carrying revaluation depn and amount impairment charges 1 July 2006 1 July 2006 1 July 2006

Land

Council operation assets

2007

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

17. Property plant and equipment

Napier City Council Annual Report 2006/07

42,451

Buildings

Napier City Council Annual Report 2006/07

11,361

Work in progress

7,722

Inner Harbour

1,045,751

(12,002)

-

-

-

-

-

-

-

-

-

-

-

-

-

(12,002)

-

(210)

(1,425)

(10,367)

-

-

-

-

1,033,749

166,899

7,722

10,200

25,811

7,668

115,498

730,315

11,361

418,722

108,113

59,433

47,572

85,114

136,535

19

15

1,364

5,489

2,067

42,451

21,730

63,400

20,414

1,446

526

9

18

893

13,773

(2,006)

179

11,344

1,631

1,174

1,451

5,195

219

-

479

2,821

445

340

-

891

Current year additions

(2,657)

-

-

-

-

-

-

(1,026)

-

-

(14)

(192)

(306)

(514)

(1,631)

-

-

(272)

(584)

-

-

(679)

(96)

1,283

-

-

-

-

-

-

496

-

-

-

65

178

253

787

-

-

233

554

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

(13,602)

(1,870)

(71)

(307)

(716)

(114)

(662)

(8,807)

-

-

(4,209)

(1,188)

(1,029)

(2,381)

(2,925)

(15)

(335)

(1,210)

(339)

(1,026)

-

-

45

-

-

-

-

-

-

-

-

-

-

-

-

-

45

-

-

-

-

45

-

-

-

1,063,214

168,345

8,248

10,200

25,820

7,686

116,391

743,062

9,355

418,901

119,443

60,872

48,440

86,051

151,807

238

225

2,996

18,093

2,218

42,791

21,051

64,195

(23,982)

(1,870)

(71)

(307)

(716)

(114)

(662)

(8,311)

-

-

(4,209)

(1,123)

(851)

(2,128)

(13,801)

-

(225)

(1,527)

(11,023)

-

(1,026)

-

-

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

Current Current Current year Current year Revaluation Cost/ Accumulated Carrying year impairment depreciation year surplus revaluation depn and amount disposals disposals charges impairment cost accumulated charges depn 30 June 2006 30 June 2006 30 June 2006

The net carrying amount of plant and equipment held under finance leases is $587,000 (2005 $754,000)

Total property plant and equipment

166,899

10,200

Swimming pools

Total restricted assets

7,668

25,811

Buildings on reserves

115,498

Grandstands and halls

Sportsgrounds

Council restricted assets

730,315

418,722

Land under roads

Total infrastructural assets

59,433

108,113

Roading network

47,572

Drainage network

85,114

Water system

148,537

19

225

2,789

15,856

Sewerage system

Council infrastructural assets

Total operational assets

Work in progress

Landfill post closure

Motor vehicles

Plant and equipment

2,067

21,730

Leasehold land

Library books

63,400

Cost/ Accumulated Carrying revaluation depn and amount impairment charges 1 July 2005 1 July 2005 1 July 2005

Land

Council operational assets

2006

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

Page 37

Page 38

Computer software

2006

Computer software

2007

1,757

1 July 05 $000

1,826

1,561

1 July 05 $000

1,651

Cost/ Accum. depn revaluation and impairment charges 1 July 06 1 July 06 $000 $000

196

1 July 05 $000

175

1 July 06 $000

69

$000

76

$000

-

$000

11

$000

-

$000

-

$000

90

$000

81

$000

Carrying Current year Current year Current year Current year amount additions disposals impairment ammortcharges isation

-

$000

-

$000

Revaluation Surplus

1,826

30 June 06 $000

1,891

1,651

30 June 06 $000

1,732

Cost/ Accum. depn revaluation and impairment charges 30 June 07 30 June 07 $000 $000

175

30 June 06 $000

159

30 June 07 $000

Carrying amount

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

18. Intangible assets

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

19. Investment Property

Balance 1 July Additions from acquisitions Disposals Fair value gains/(losses) on valuation

Balance 30 June

Actual 2007 $000

Actual 2006 $000

42,092

40,660

-

-

-

-

2,334

1,432

44,426

42,092

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.

Contractual obligations in relation to investment properties at balance date but not recognised in the financial statements are as follows: Actual 2007 $000

Actual 2006 $000

Contractual obligations for capital expenditure

-

-

Contractual obligations for operating expenditure

-

-

-

-

Napier City Council Annual Report 2006/07

Page 39

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

20. Investments in associates Napier City Council has a 26.12% interest in Hawke's 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 2007 $000

Actual 2006 $000

3,407

3,279

New investments during year

-

-

Disposal of investments during the year

-

-

Movements in the carrying amount of investments in associates Balance at 1 July

Share of total recognised revenues and expenses

181

151

Interest adjustment on appropriation account

(23)

(23)

-

-

3,565

3,407

Summarised financial information of associate entities

Actual 2007 $000

Actual 2006 $000

Assets

15,838

14,934

Share of dividend

Balance at 30 June

Liabilities

543

332

Revenues

2,312

2,091

Surplus/(deficit) Interest

694

577

26.12%

26.12%

Associates contingencies There are no contingent liabilities arising from the Councilâ&#x20AC;&#x2122;s involvement in the associate.

Hawke's Bay Airport Authority are not due to prepare financial statements under NZ IFRS until the financial year ended 30 June 2008. Napier City Council has assessed that the variance in accounting standards used as the basis for financial statements presentation does not have a material impact on Napier City Council results.

21. Trade and other payables

Trade payables

Actual 2007 $000

Actual 2006 $000

6,203

4,958

Deposits and bonds

851

660

Accrued interest

248

299

Rates in advance

867

912

8,169

6,829

Total trade and other payables

Page 40

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

22. Employee benefit liabilities Actual 2007 $000

Actual 2006 $000

Accrued pay

438

570

Annual leave

1,772

1,561

202

208

1,515

1,374

-

-

3,927

3,713

Current

2,269

2,203

Non-current

1,658

1,510

3,927

3,713

Actual 2007 $000

Actual 2006 $000

7,008

6,029

179

252

7,187

6,281

11,562

16,811

65

291

11,627

17,102

Long service leave Retirement gratuities Sick leave

Total employee benefit liabilities

Comprising:

Total employee benefit liabilities

23. Borrowings

Current Secured loans Lease liabilities Total current borrowings Non-current Secured loans Lease liabilities Total current borrowings Fixed-rate debt The Council’s secured debt of $18,570,250 (2006: $22,840,000) is issued at fixed rates of interest.

The Council has established sinking funds in respect of loans, with a carrying amount of $780,000, maturing in 2008 and 2009. 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 Security 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.

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

Napier City Council Annual Report 2006/07

Page 41

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

2007 Less than one year

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

Weighted average effective interest rate Later than five years

Weighted average effective interest rate

Secured Loan

7,008

6.96% 7,534

6.77% 4,028

7.23% 18,570

2006 Less than one year

Secured Loan

6,029

Weighted average effective interest rate

7.53%

Later than one year but not more than five years

14,639

Weighted average effective interest rate

6.86%

Later than five years

Weighted average effective interest rate

2,172

6.68% 22,840

Analysis of finance lease liabilities Actual 2007 $000

Actual 2006 $000

Total minimum lease payments are payable Not later than one year

185

272

66

298

251

570

-7

-27

244

543

179

252

65

291

Total

244

543

Current

179

252

65

291

244

543

Later than one year and not later than five years Total minimum lease payments Future finance charges Present value of minimum lease payments

Present value of minimum lease payments are payable Not later than one year Later than one year and not later than five years

Non-current Total 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 does have the option to purchase the asset at the end of the lease item.

There are no restrictions placed on the Council by any of the finance leasing arrangements.

Page 42

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

24. Provisions Opening balance 2007 $000

Additional provision $000

Unused amounts reversed during the year $000

Closing balance 2007 $000

Financial guarantees

683

-

(38)

645

Landfill aftercare provision

271

18

(20)

269

Total provisions

954

18

(58)

914

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 also listed as a joint guarantor with Hastings District Council to a locally incorporated society 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 Omarunui Landfill, has a joint legal obligation under the resource consent to provide ongoing maintenance and monitoring services 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 Council’s engineers based on historical volume information.

The cash outflows for landfill post-closure are expected to occur in two to seventy two years time (or between 2007 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 Council’s 36.62% share of the provision is included.

Napier City Council Annual Report 2006/07

Page 43

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

25. Equity Actual 2007 $000

Actual 2006 $000

611,665

595,453

(4,972)

(3,357)

1,747 1,406 20,407

880 1,345 17,344

630,253

611,665

Retained earnings As at 1 July Transfers to: Restricted reserves Transfers from: Asset revaluation reserve on disposal of property, plant and equipment Restricted reserves Surplus/(deficit) for the year As at 30 June Restricted reserves As at 1 July Transfers to: Retained earnings Transfers from: Retained earnings

11,350

9,338

(1,406)

(1,345)

4,972

3,357

As at 30 June

14,916

11,350

3,409 (903) 323 4,258 7,829

4,213 (715) 317 3,935 3,600

As at 1 July Revaluation gains/(losses) Transfer of revaluation reserve to retained earnings on disposal of property, plant and equipment

469,522 (1,747)

470,402 (880)

As at 30 June

467,775

469,522

46,705 17,586 21,597 203

46,969 18,741 21,667 203

68,254 30,928 38,094 151,830

68,401 30,977 38,157 151,829

82,522 1,103 1,696 2,412 4,845

82,522 1,103 1,696 2,412 4,845

Restricted reserves consist of: Loan redemption reserve Loans funds reserves Trusts and bequests Advanced Waste Water Treatment Fund (HBRC) Other restricted reserves Asset revaluation reserves

Asset revaluation reserves consist of:

Operational assets Land Leasehold land Buildings Plant & Equipment Infrastructural Assets Sewerage system Water system Drainage network Roading network Restricted Reserves Sportsgrounds Grandstands and halls Buildings on reserves Swimming pools Inner harbour Page 44

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

Actual 2007 $000

Actual 2006 $000

Fair value through equity reserve As at 1 July

31

-

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

38

31

As at 30 June

69

31

482,760

480,903

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 manage 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 make adequate and effective provision in its Long Term Council Community Plan (LTCCP) and in its Annual Plan (where applicable) to meet the expenditure needs identified in those

Napier City Council Annual Report 2006/07

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 45

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

27. Capital commitments and operating leases Actual 2007 $000

Actual 2006 $000

3,304

2,653

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. Community Building The Council subleases all of the Community Building to several organisations and groups to provide community services and support to Napier, Hastings and the wider Hawke’s Bay region.

2. Tourism Services Building The tourism services business unit operates from a section in this building. The Council subleases 85% of this building to Hawke’s Bay Incorporated, Creative Napier, 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: Non-cancellable operating leases as lessee Not later than one year Later than one year and not later than five years Later than five years

Total non-cancellable operating leases

144

163

53

197

-

-

197

360

The total minimum future sublease payments expected to be received under non-cancellable subleases at Statement of Position date is $183,086 (2006: $335,856) 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 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: Non-cancellable operating leases as lessor Not later than one year

381

445

Later than one year and not later than five years

400

774

-

-

781

1,219

Later than five years

Total non-cancellable operating leases

Page 46

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

28. Contingencies Contingent liabilities Actual 2007 $000

Actual 2006 $000

Financial guarantees

852

814

Total contingent liabilities

852

814

Financial guarantees The value of guarantees disclosed as contingent liabilities reflects the Councilâ&#x20AC;&#x2122;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 There are no known unquantified claims outstanding at 30 June 2007.

In 2005/06, there were five claims against Council which had been notified to Councilâ&#x20AC;&#x2122;s Insurers. Because of the uncertainty associated with the claims an estimate of the financial effect could not be made. These matters were not recognised in the financial statements because of the uncertainty associated with the outcomes.

Other contingencies At 30 June, Napier City Council held 27 (2006 :14) conditional contracts for sale of sections in the Parklands residential development. The contracted revenue from these sales has not been included in the 30 June 2007 financial statements and deposits received 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.

29. Reconciliation of net surplus after tax to net cash flow from operating activities

Surplus/(deficit) after tax

Actual 2007 $000

Actual 2006 $000

20,407

17,344

Add/(less) non-cash items: Share of associate surplus/(deficit) Depreciation and amortisation Prior Year Adjustment

(158)

(128)

14,734

13,692

-

627

Vested assets

(2,085)

(3,857)

(Gains)/losses on revaluation of assets

(2,427)

(1,413)

(72)

(292)

(5)

411

Accounts receivable

3,154

(4,737)

Inventories

1,284

729

Other non cash items Add/(less) items classified as investing or financing activities: (Gains)/losses on disposal of assets Add/(less) movements in working capital items:

Biological assets

12

(48)

Accounts payable

883

(989)

Employee benefits

66

256

35,793

21,595

Net cash inflow/(outflow) from operating activities

Napier City Council Annual Report 2006/07

Page 47

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

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 $219,700 (2006: $196,700).

In terms of his contract, the Chief Executive also received the following additional benefits : Cost During the Financial Year

Subscriptions

2007 $000

2006 $000

-

1

For the year ended 30 June 2007, 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 $219,900.

Elected Representatives Total remuneration 2007 $000

2006 $000

Barbara Arnott

84

80

Vehicle allowance

11

11

John Cocking

27

25

Kathie Furlong

41

40

Robin Gwynn

27

25

Mark Herbert

41

38

Tony Jeffery

27

25

Deane Jessep

27

25

Harry Lawson

27

26

Rob Lutter

27

25

Dave Pipe

41

38

Tony Reid

41

40

Faye White

41

38

Tania Wright

27

26

Mayor

Councillors

Page 48

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

31. Severance Payments For the year ended 30 June 2007, Napier City Council made two severance payments to employees totalling $13,500. The value of each severance payment was $9,500 and $4,000.

32. Events after Statement of Financial Position date There were no significant events after the balance date.

33. Financial Instrument Risks Napier City Council has a series of policies to manage the risks associated with financial instruments. Napier City Council is risk averse and seeks to minimise exposure from its treasury activities. The Council has established Council-approved Liability Management and Investment policies, which disallow entry into any 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 because of changes in market prices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market. As at 30 June 2007, Napier City Council does not own any listed securities. Therefore, price risk is not currently applicable to this council.

Currency Risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Napier City Council has foreign exchange exposure through the purchase of foreign-exchange-denominated assets. Napier City Council’s policy requires commitments over NZ$100,000 to be hedged using forward foreign exchange contracts.

The foreign currency forward exchange contract amounts outstanding at 30 June are as follows: Council 2007 $000

Council 2006 $000

885

1,374

Interest Rate Risk The interest rates on Napier City Council’s investments are disclosed in Note 15 and on Napier City Council’s borrowings in Note 23.

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. Borrowing issued at fixed rates exposes Napier City Council to fair value interest rate risk. Napier City Council’s Liability Management policy outlines the level of borrowing that is to be secured using fixed rate instruments. Napier City Council has the option to enter into fixed-to-floating rate swaps to hedge the fair value interest rate risk arising where Napier City Council has borrowed at fixed rates. In addition, investments at fixed interest rates expose Napier City Council to fair value interest rate risk.

If interest rates on investments at 30 June 2007 had fluctuated by plus or minus 0.5%, the effect would have been to decrease/increase the fair value through equity reserve by $90,200 (2006 $34,200).

If interest rates on borrowings at 30 June 2007 had fluctuated by plus or minus 0.5%, the effect would have been to decrease/increase the surplus after tax by $687,100 (2006 $867,900) as a result of higher/lower interest expense on floating rate borrowings.

Napier City Council has an overdraft facility with a limit of $300,000. The current interest rate on the council’s bank overdraft is 9.15%. This is a floating rate set by the bank, recognised at fair value.

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.

Napier City Council has the option of managing its cash flow interest rate risk on borrowings by using floating-to-fixed interest rate swaps. Such interest rate swaps have the economic effect of converting borrowings at floating rates and swapping them into fixed rates that are generally lower than those available if Napier City Council borrows at fixed rates directly.

Credit Risk Credit risk is the risk that a third party will default on its obligation to Napier City Council, causing the Council to incur a loss. Napier City Council has no significant concentrations of credit risk as it has a large number of credit customers, mainly ratepayers, and Napier City Council has powers, under the Local Government (Rating) Act 2002, to recover outstanding debts from ratepayers.

Napier City Council Annual Report 2006/07

Page 49

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

Financial instruments which potentially subject the Napier City Council to credit risk consist principally of bank balances, accounts receivable, shares in companies and a joint committee.

Napier City Council reduces counterparty risk by spreading its investments over Government and Local Authority Stock, and registered New Zealand banks. To limit credit exposure, no more than $10 million of cash investments are held with any one registered New Zealand bank.

There are no major concentrations of credit risk with respect to accounts receivable.

Maximum Credit Risk Exposure

Total investments

2007 $000

2006 $000

27,947

19,508

Investment in Hawke’s Bay Airport Authority

3,565

3,407

Call deposits, cash on hand

5,922

3,529

Accounts receivable

6,881

10,035

44,315

36,479

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 twelve months.

Napier City Council manages its borrowings in accordance with its funding and financial policies, which includes a Liability Management Policy.

The policies have been adopted as part of Napier City Council’s Long Term Council Community Plan.

Napier City Council has a maximum amount that can be drawn down against its overdraft facility of $300,000 (2006 $300,000). There are no restrictions on the use of this facility.

34. Derivative Financial Instruments As at 30 June 2007, 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 (2006: $0).

Page 50

Napier City Council Annual Report 2006/07

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

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 2007 $000

Actual 2006 $000

850

745

Book purchases paid to HBCT

-

1

Conferences expenses paid to HBCT

-

1

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

Services provided to HBCT Accounts receivable from HBCT

5

-

276

-

16

11

400

150

1

4

4

3

1,276

1,350

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 Omarunui Landfill Landfill fees paid to Hastings 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).

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 $1,642 (2006 $1,860) and were supplied on normal commercial terms.

During the year, the Council also made grant payments to and purchased services from Something Different Limited, which is owned by John Cocking, a Councillor. The grant and services cost $15,693 (2006 $16,000) 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 (2006 $nil).

Key Management Personnel Compensation

Salaries and other short-term employee benefits Post-employment benefits Other long-term benefits Termination benefits

Actual 2007 $000

Actual 2006 $000

1,463

1,369

-

-

256

231

-

-

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

Napier City Council Annual Report 2006/07

Page 51

Notes to the Financial Statements for the Year Ended 30 June 2007 ...

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 2007 $000

Current assets Non-current assets Non-current liabilities

Actual 2006 $000

883

722

3,169

2,474

269

271

Income

1,990

2,208

Income (NCC sales eliminated)

(464)

(490)

881

867

Expenses Joint venture commitments and contingencies

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

37. Explanation of major variances against budget Explanations for major variations from Napier City Councilâ&#x20AC;&#x2122;s estimated figures in the 2006/07 Long Term Council Community Plan are as follows: Statement of financial performance

Income a) Other revenue is above budget due to sales above budget for residential development sales in the Parklands subdivision (Actual $9.5m Budget $5.6m) and the amalgamation of museum operating activities into council in the 2006/07 year (Actual $1.4m Budget $0.0m) b) Other gains/(losses) reflects the increase in fair value of investment property (Actual $2.3m Budget $0.0m) Expenditure a) Employee benefit expenses were impacted by the addition of Museum operations for the year (Actual $1.1m Budget $0.0m) b) Other expenses are above budget due to higher cost of sales for residential development - due to above budget sales for the period (Actual $5.9m Budget $4.4m). c) Finance costs below budget due to lower loans for the year (Actual $1.4m Budget $3.9m) 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 significantly higher than budget due to the inclusion of land under subdivision development being included in inventory.

This is a variance from basis of budget preparation.

Non-current assets a) Budget property plant and equipment value includes investment property and intangible assets 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.

Non-current liabilities Borrowings are $35.3m lower than budget for the period. This is the result of loan funds not drawn on specific projects yet to be completed such as the overland drain project $2.0m, Museum building redevelopment $4.0m and CBD redevelopment $2.0m. The remaining $23.0m variance arises from the budget assumption that all council approved loan authorities will be taken up during the budget period and the Napier City Council liability management policy to fund projects by internal loan when cashflow requirements permit.

Retained earnings and other reserves Actual retained earnings includes $196.0m transfer of asset revaluation reserve (related to land under roads) from other reserves. This transfer arising from the IFRS deemed cost election was not included in budget preparation.

Statement of movements in equity The major variation is due to an after tax surplus above budget. This was the result of higher than budget income and lower than budget finance costs as outlined in above for statement of financial performance

Page 52

Napier City Council Annual Report 2006/07

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.

Hawke’s Bay Airport Authority

•

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

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.

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

Council’s policies and objectives have been met in full.

The provision of:

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 2006/07) are:

Earnings before Interest, tax and depreciation % to Revenue Return on Funds Employed Net Surplus after Tax as % of JV Partners funds Landing Charges to Other Income

Target

Actual

53.7%

59.9%

3.4%

4.8%

3.2%

4.5%

53:47

57:43

Bird Strikes - per 000 aircraft movements

0.5

0.5

Safety & Security - accidents on airport

nil

nil

CAA Rule 139 - non-compliance with rule

nil

nil

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. The Trust’s Constitution and Rules have been amended to reflect the change in role to that of owner and guardian of the regional collection. A Statement of Intent is currently in draft form for consideration by the Board and because of the change in role the original policies and objectives of Council have not been fully met. (b) Nature and Scope of Activities The Objectives of the Trust are:

•

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.

The management of the daily operation of the: •

Museum,

•

Century Theatre,

•

Century Cinema,

•

Berry Historical Library,

•

Hawke’s Bay Regional Archives,

•

Education Discovery Centre,

•

Faraday Centre

are provided by Napier City Council under a Management Agreement with Hawke’s Bay Cultural Trust. This is a significant change of function from the prior year. Also the Trust no longer operates the Hawke’s Bay Exhibition Centre in Hastings. (c) Performance Targets As noted above a draft Statement of Intent for the Trust is with the Board for consideration and adoption. This Statement of Intent will include measurable performance targets that are relevant to the new nature and scope of activities of the Trust.

Hawke’s Bay Incorporated (HB Inc) a) Policies and Objectives Regarding Ownership and Control This is a Council-Controlled Organisation as the 3 funding Councils, Napier City Council, Hastings District Council and Hawke’s Bay Regional Council, have the right to appoint 50% of the Trustees of the Trust.

•

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

•

To establish, maintain, operate, and develop Museums, Art Galleries, Theatres, and Cultural Centres, for cultural purposes in Hawke’s Bay

The purpose of HB Inc is 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. It includes the previous activities of Hawke’s Bay Tourism and Hawke’s Bay Economic Development Agency.

•

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

It is still too early to determine the extent to which Council’s policies and objectives have been met.

Napier City Council Annual Report 2006/07

Page 53

Council Controlled Organisations ... b) Nature and Scope of Activities The nature and scope of the activities of HB Inc are: •

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

providing strategic direction and leadership

-

marketing the region effectively as a competitive place to visit, live, work, invest and grow

-

managing processes and relationships to attract greater tourism revenues, inward investment and favourable immigration

-

c) Performance Targets The key performance targets (as reflected in the organisation’s 2006/07 Statement of Intent) are: i)

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

ii) Non-Financial •

To have in place a fully staffed organisation structure.

•

To provide ongoing reporting against the outcome oriented performance measures developed last year.

These reflect funding Council’s desired outcomes (eg GDP and tourism revenue growth) and follow sound principles in performance measurement (eg the extent to which Hawke’s Bay Incorporated influences or controls the outcome and the ability to measure this outcome).

•

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

assisting growth businesses located in Hawke’s Bay to realise their potential

•

To promote a partnership in economic leadership between the public and private sectors of the Hawke’s Bay region.

•

To support initiatives taken by others and take appropriate initiatives which encourage the growth of economic activity in the Hawke’s Bay region.

•

To act as an advocate and lobbyist on behalf of the Hawke’s Bay region on tourism and economic development.

•

To act as a facilitator or originator of regional cooperation and strategic economic development initiatives in the Hawke’s Bay region.

•

To advocate, promote and support for the region the appropriate land use policies to ensure the sustainable use of regional resources in the Hawke’s Bay region.

HB Inc has met its broad key financial and non financial performance targets. Full details are outlined in the Annual Report for HB Inc for 2006/07.

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 decision-making 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 Community

Page 54

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 2006/07

Significant Acquisitions or Replacement of Assets

McLean Park Redevelopment

Budget 06/07 $000

Actual 06/07 $000

4,438

985

509

433

776

-

1,780

4,007

500

-

750

-

1,459

1,267

-

966

1,150

-

3,264

2,652

3,353

1,498

22

828

1,791

2,973

728

406

414

791

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. The resource consent for stage II of lights is completed and the resource consent for the new stand underway. Budget will be carried forward for the completion of the project.

Library Bookstock Purchases of bookstock in accordance with the Library Activity Management Plan Extend Taradale Library Both Napier and Taradale Libraries are close to or at capacity. A report for future service delivery for the Libraries has been carried out by OCTA and Council adopted the report and recommendations on 8 August 2007. Work on implementing the recommendations will commence in the 2007/08 year.

Additional CBD Parking (includes Development of Carpark - closed part of Vautier Street) The Dickens Street West carpark has been expanded onto the former Mitre 10 site. This will provide 26 offstreet parking spaces. This work is being done in conjunction with the upgrade of Dickens Street and will provide a large proportion of the additional CBD parking facilities required for future needs. The expenditure includes the property purchase for the extension of the carpark. The portion not required for the extension is to be sold.

New Offstreet Parking Taradale Provision for Taradale Off-Street Car Park - land purchase and development as recommended in the 1995 Taradale Parking Study. Investigation work for the project is still being carried out. The project may be done as part of the Taradale retail centre upgrade. As yet no decision has been made on the location or number of parking spaces to be provided.

Car Pound The existing carpark has been upgraded with a new security fence and the project was not required.

Roading Capital Projects (Bulk Funded) Roading projects in accordance with the Roading Activity Management Plan. Works completed in 2006/07 include the upgrade of Bowling Road and the completion of Osier Road upgrade.

Prebensen Drive / Severn Street Intersection Intersection upgrade in conjunction with Mitre 10 Mega store funded from Capital Contributions.

Taradale Redevelopment Taradale shopping centre renewal. Whilst most of the infrastructure is sound and only about 25 years old its style, materials and form are dated. The project is still in the consultation phase.

Roading Renewals Roading renewals in accordance with the Roading Activity Management Plan.

Roading Vested Assets Roading Vested Assets in accordance with the Roading Activity Management Plan. Fewer assets were vested in 2006/07 than projected.

Omarunui Regional Landfill Site Development Valley D Development of the Omarunui Regional Landfill is an ongoing project and a key component of the City's Waste Management Plan. Valley D of the Omarunui Regional Landfill was officially opened on 15 December 2006. This also marked the closure of Valley A. Cross Country Drain and Pumping Station The Cross Country Drain and Pumping Station will provide increased capacity to convey and dispose of stormwater to cater for urban development and upgrade existing services to meet current drainage standards.

Excavation of the drain and all culverts are substantially complete. Design work on the pump station and discharge is in progress. The majority of the budget provision for the project was included in past financial years.

Upgrading Stormwater Catchments Stormwater projects in accordance with the Stormwater Activity Management Plan. Works completed in 2006/07 included the construction of high capacity sumps and associated pipework and the redirection of run off into detention dam ponding area at Churchill Drive.

Stormwater Vested Assets Stormwater Vested Assets in accordance with the Stormwater Activity Management Plan.

Napier City Council Annual Report 2006/07

Page 55

Significant Acquisitions or Replacement of Assets ...

Advanced Sewage Treatment

Budget 06/07 $000

Actual 06/07 $000

500

206

763

399

535

309

-

513

7,000

7,696

2,000

-

748

675

32,480

26,604

Wastewater Treatment. At the Council meeting 9 August 2006 it was resolved that Council apply for a change to the existing discharge consent conditions to delay the implementation date for advanced primary treatment. This would allow for a resource consent application for a BTF (biological trickling filter) plant to be prepared and heard and for any operational concerns associated with a BTF plant to be addressed.

Community consultation on the use of a BTF plant commenced in January 2007 and investigations for the discharge consent application are under way.

Sewerage Infrastructural Renewal Sewerage Infrastructural Renewal in accordance with the Wastewater Activity Management Plan.

Wastewater Vested Assets Wastewater Vested Assets in accordance with the Wastewater Activity Management Plan.

Trunk Water Main Ulyatt Road to Bledisloe Ave Budget for the project of the water trunk main - Uylatt Road to Bledisloe Avenue was included in previous financial years. The project is currently underway and will be completed in the 2007/08 year.

Parklands Residential Development The Parklands Residential Development is a staged project providing up to 800 new building sites for residential development. Expenditure shown as capital in the LTCCP has been reclassified and reported as inventory under IFRS. Redevelop Cultural Trust Buildings The Hawke's Bay Cultural Trust is custodian of the artefacts, artworks and associated cultural facilities for the people of Hawke's Bay. The buildings occupied by the Cultural Trust need to be upgraded to allow the proper storage and display of Hawke's Bay heritage. The project is currently on hold.

Replacement of Mobile Plant and Vehicle Councilâ&#x20AC;&#x2122;s annual plant and vehicle renewal programme.

Page 56

Napier City Council Annual Report 2006/07

Statement of Services and 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 2006 LTCCP 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 2007 with 450 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 450 the margin of error is plus or minus 6.5%.

The Governance Activity in the 2006 LTCCP has been renamed Democracy and Governance. This change resulted from the public consultation process for the 2007/08 Annual Plan.

Onekawa Aquatic Centre is now the Napier Aquatic Centre.

Napier City Council Annual Report 2006/07

Page 57

DEMOCRACY AND GOVERNANCE Activities

Key Issue

The Democracy and Governance Group comprises:

Representation Review

Democracy and Governance

The Representation Review was undertaken in the 2006/07 year. Council's decision was to continue with twelve Councillors representing the city at large. Six appeals were received and were heard by the Local Government Commission on 31 January 2007, and its decision was received on 10th April. As a result Council will have six councillors representing the city at large and six councillors representing four newly formed wards, Ahuriri (1 representative), Onekawa-Tamatea (1), Nelson Park (2) and Taradale (2) for the 2007 triennial elections.

• • •

Meeting Cycle Standing and Specialist Committees Elections Last Held

6 weeks 6 9 October 2004

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.

Performance Measures for 2006/07 Performance Measures

Results

Democracy and Governance 1. Number of meetings of Council and Standing Committees

Target:

Eight meeting cycles were achieved with the following numbers of Committee Meetings:

8 meeting cycles

Council Strategic Planning Environmental Management Community Development Corporate Business Maori Consultative

2. % resident satisfaction for “Sufficiency of the Information Supplied” in the NRB Public Opinion Survey

Target:

14 6 8 6 7 8

The NRB Survey carried out in July 2007 showed 78% public satisfaction for “Sufficiency of the Information Supplied”.

More than enough Enough Not Enough Nowhere near enough Don’t Know / Not Sure

65%

3. Carry out all processes for Council Elections.

Target: Carry out any required legislative processes such as the review of representation in accordance with Local Electoral Act 2001 Part 1A.

9% 69% 17% 2% 3%

The review of representation was carried out as described in the Key Issue above.

Financial Summary Budget 06/07 Activity $000

1,803 Democracy and Governance

Actual 06/07 $000 Operational Costs Operating

Depn

Interest

Total

Income

Net cost of service

Actual 05/06 $000

1,681

-

-

1,681

-

1,681

1,748

1,803 Total net operating

1,681

-

-

1,681

-

1,681

1,748

- Capital expenditure

-

-

-

-

-

-

-

1,681

-

-

1,681

-

-

1,748

1,681

1,748

1,681

1,748

1,803 Funding required Funded by 1,803 Non targeted rates 1,803 Total

Page 58

Napier City Council Annual Report 2006/07

RECREATION Activities

Key Issues and Notes

The Recreation Group comprises:

McLean Park Redevelopment

Sportsgrounds

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.

The Council is working with the McLean Park Regional Trust fundraising committee to raise funding for the redevelopment of McLean Park. Fundraising had a recent boost with a grant of $2.9 million from the Significant Community Based Projects Fund. This is on top of all the generous funding already received. Work completed on redevelopment last year is as follows:

• •

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 • •

Outdoor facilities - 50m Olympic pool with dive well Indoor facilities (heated) - 5-lane 25m pool, 6-lane 25m pool, 15m learner’s pool, 2 toddlers pools, 2 spa pools, 2 waterslides

A comprehensive aquatic facility providing educational and recreational programmes, and a range of non aquatic outdoor activities.

Lighting •

User Requirements •

Enclosing of one set of media benches for use as Coaches Boxes for Rugby and enclosed Media seating for Cricket

•

Construction of Players Lounges underneath the Harris Stand

Marine Parade Pools •

4 heated outdoor pools, 5 spa pools

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

Reserves • •

35 neighbourhood parks, 41 greenbelt reserves, 22km pathways, 21 playgrounds, 7 foreshore reserves and 6 public gardens.

70.8 m2 recreational reserves per residential lot

The first stage of the lighting upgrade was completed for use in the 2006 Air New Zealand Cup competition by the Hawke’s Bay Rugby Football Union and achieved the required 1,200 lux across the rugby playing surface

Botanical Gardens Council carried out a public consultation process for the restoration of the Botanical Gardens. As a result a independent archeological assessment of the Botanical Gardens will be done before pursuing any further work on the restoration programme. The Report is expected to be completed in September 2007.

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

Inner Harbour •

95 berths

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

Performance Measures for 2006/07 Performance Measures

Results

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

The NRB Survey carried out in July 2007 showed 94% resident satisfaction with Parks and Sportsfields.

Sportsgrounds

Target:

90%

2. Sportsground area per 1,000 residents

Target:

Sportsground area per 1,000 residents = 2.919 Ha

International events

4

4

4. National/Inter-regional Events

Target:

51% 43% 3% 3%

3.129 Ha

3. International Events

Target:

Very Satisfied Fairly Satisfied Not Very Satisfied Don’t Know

National/Inter-regional events

94

75

Napier City Council Annual Report 2006/07

Page 59

Recreation ...

Performance Measures

Results

Napier Aquatic Centre 1. Users per Year.

Target:

230,000

2. Percentage of Facilities ‘Poolsafe’

Target:

100%

3. Customer Satisfaction in the NRB Public Opinion Survey

Target:

80%

4. Programmes Operating Per Year.

Target:

6

5. Adherence rate to Water Quality Meeting NZ Standards.

Target:

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

6. Number of Learn To Swim Users per Year.

Target:

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

83,871 17,156 7,214 23,510 3,553 14,468 52,270 13,880 215,922

The Napier Aquatic Centre has been audited in 2006 and has 100% compliance with PoolSafe requirements.

The NRB Survey carried out in July 2007 showed 76% resident satisfaction with Swimming Pools.

Very Satisfied Fairly Satisfied Not Very Satisfied Don’t Know

33% 43% 10% 14%

6 programmes: • School learn to swim • Aqua Fitness programmes • Tiny tots (under Five’s) Programme • Holiday programme • Learn to swim • Water babies 92.3% of water tests met NZ pool water treatment standards for 2006/07

Learn to swim participants

23,510

25,000

Marine Parade Pools No performance measures.

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

Target:

90%

2. Number of annuals propagated and planted throughout the city

Target:

Page 60

Very Satisfied Fairly Satisfied Not Very Satisfied Don’t Know

73% 24% 3% 0%

Annuals propagated and planted 2006/07 - 188,780

180,000

3. 3. Area of Recreational Land Per Residential Lot

Target:

The NRB Survey carried out in July 2007 showed 97% resident satisfaction with Public Gardens and Street Beds.

75m2

Area per lot - 70.8m2. The target is a long term average and the result is dependent on the timing and development of greenfield reserves and the acquisition of suitable reserve areas to counter infill development.

Napier City Council Annual Report 2006/07

Recreation ...

Performance Measures

Results

Inner Harbour 1. Percentage of vessels berthed that are Commercial

Target:

30% of vessels berthed were commercial for 2006/07

30% Dredging was last carried out in 2004 and is scheduled to be undertaken during 2007/08

2. Time between Dredges of the Inner Harbour

Target:

3 years

95 permanent berths for 2006/07

3. Number of Permanent Berths

Target:

95

Financial Summary Budget 06/07 Activity $000

2,399 Sportsgrounds 1,095 Napier Aquatic Centre 140 Marine Parade Pools 2,698 Reserves 231 Inner Harbour 6,563 Total net operating 5,086 Capital expenditure [2] 11,649 Funding required

Actual 06/07 $000 Operational Costs Operating

Depn

Interest

Total

Income [1]

Net cost of service

Actual 05/06 $000

2,091 1,636

544 203

114 11

2,749 1,850

1,367 614

1,382 1,236

25

148

11

184

50

134

160

2,410

205

149

2,764

98

2,666

2,689

82

17

328

158

170

184

1,182

302

7,875

2,287

5,588

6,459

1,394

1,385

6,982

7,844

6,045 549 -

6,115 199 1,181 -

388

349

6,982

7,844

229 6,391

2,342 1,084

Funded by 5,794 5,287 250

Non Targeted Rates Loans Special Funds Vested Assets

318 Depreciation (non funded) 11,649 Total

[1]

Summary of Income Actual 06/07 $000

User Charges Retail and product sales Other Income Total Income

Napier City Council Annual Report 2006/07

1,965 35 287 2,287

Page 61

Recreation ...

[2]

Capital Expenditure Budget 06/07 $000

Actual 06/07 $000

Sportsgrounds 15 Park Island Clyde Jeffery Drive Crossing 4,438 McLean Park Redevelopment 9 Artificial Cricket Pitches - Minor Capital Items 106 Sportsgrounds Infrastructural Asset Renewal

985 1 11 16

Napier Aquatic Centre 35 Napier Aquatic Centre Asset Renewal - Minor Capital Items

11 3

Reserves Botanical Gardens Improvements

64

Tree Planting Programme Marine Parade Walkway/Cycleway Minor Capital Items Reserves Vested Assets

75 49 19 -

178 Reserves Infrastructural Asset Renewal

160

55 250

5,086 Total

Page 62

1,394

Napier City Council Annual Report 2006/07

SOCIAL AND CULTURAL Activities

Halls •

The Social and Cultural Group comprises: Libraries • •

2 Libraries - Napier and Taradale 35,276 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 online 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 52,000 tickets annually, is situated in the front foyer.

HB Museum and Art Gallery (ex Cultural Services) Arts, cultural and museum facilities previously provided by the HB Cultural Trust are now provided through the Tourism Services department of Napier City Council. The facilities comprise the Hawke’s Bay Museum and Art Gallery, Century Theatre / Cinema and Faraday Centre - Technology Museum and Science Centre.

Community Development Community facilitation, administration of community grants, and youth development are the main components of community development. 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.

Safer Community The purpose of this activity is to develop community based crime prevention initiatives, 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 - with the aim of supporting community solutions to reduce crime and antisocial behaviour.

Safety Watch •

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 area with the highest rate of offending, the inner city. The aim of the programme is to - reduce violence; encourage sensible social behaviour; reduce littering and soiling of streets; encourage skateboarding in appropriate designated areas; to move “at risk” youth away from violent and anti-social behaviour; encourage community ownership of the responsibility to reduce crime; reduce graffiti in the inner city streets; create an inner city environment that is friendly and welcoming.

Napier City Council Annual Report 2006/07

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.

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.

Key Issues and Notes Napier and Taradale Library Facilities Both facilities are close to or at capacity. The proposed project to extend the Taradale Library ($1.7 million) has been included in the plan over the 2005/06 to 2007/08 years funded by loan. Agreement has been reached with the community that $50,000 of this loan will be used to investigate optimum usage of both the Taradale and Napier libraries.

An investigation into enhancing the future delivery of Library Services, considering space/buildings, staffing/service levels and information communications technology, was conducted by OCTA Associates Limited between April and June 2007. The report with recommendations was adopted by Council on 8 August 2007.

Page 63

Social and Cultural ...

Performance Measures for 2006/07 Performance Measures

Results

Libraries 1. Number of issues of Specialist Collections

Target:

1,513

2. Number of users of Indexes

Target:

New measure - no target set

3. Number of Users (Door and Virtual)

Target:

462,670 (door and web) 458,021 (door only)

4. Bookstock Refreshment Rate

Target:

Number of Items issued = 745,045

735,000 Number of resident members at 30 June 2007 = 35,276

31,405

7. Users of Community Information Database

Target:

Number of Users = 113

119

9. Number of children’s programmes

Target:

Number of Users = 3,208

New measure - target to be set for 2007/08

8. Books on Wheels users

Target:

Number of users 2006/07: Door and Web = 508,445 Door only = 420,328

250

6. Number of members

Target:

This statistic is not able to be measured accurately with the current systems. Measure was deleted in the 2007/08 Annual Plan.

Refreshment Rate = 328

5. Number of Items issued

Target:

Number of Issues = 3,481 (including renewals) from Art Deco, Maori and Robson collections

Number of Programmes = 240

150

War Memorial Centre 1. Days Eternal Flame Memorial maintained

Target:

365 Usage Rate for 2006/07 = 275 days

2. Usage Rate

Target:

252 days

3. Customer Satisfaction

Target:

Customer satisfaction for 2006/07 = 96%

90%

4. Number of “Full Service” Conferences

Target:

Page 64

Flame memorial maintained for 365 days in 2006/07

Total Delegates Conferences Average delegates

2,700 18 150

Number of "Full Services" conferences for 2006/07 Total Delegates Conferences Average delegates

3,981 28 142

Napier City Council Annual Report 2006/07

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:

1 per year

3. Number of ‘Other’ Hire Days

Target:

Regular inspections of the exterior and interior of the building are undertaken and any required building maintenance is carried out.

The standard of Art Deco presentation is maintained with regular paint touch-ups and bulb replacements.

'Other' Hire Days 2006/07 = 40

72

4. Number of Tickets sold

Target:

Number of Performance Days 2006/07 = 223

Tickets sold 2006/07 = 52,493

74,000

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

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%

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

Target:

90%

5. Number of Napier Community Network Meetings Coordinated Each Year

Target:

6

6. Number of Community Organisations Receiving Information By Way of Mail-out and Email Four Times per Year

Target:

100% allocated within the time fame. ($22,450 allocated to 15 organisations, approved at Council meeting on 20 September 2006.)

100% funding distributed or allocated to support community development initiatives.

100%

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

Target:

100% allocated within the time fame. ($56,100 allocated to 40 community organisations, approved at Council meeting on 20 September 2006.)

90

Napier City Council Annual Report 2006/07

Service Agreements & Purchase Contracts met 90% of reporting requirements. The following organisations have service agreements or purchase contracts with Council: • Creative Napier • Surf Life Saving - completed • Napier Citizens Advice Bureau • Neighbourhood Support • Sport HB Five community network meetings completed.

• 3 August 2006 • 2 November 2006 • 12 February 2007 • 2 May 2007 • 25 May 2007 100 community organisations have received information via community network meetings, newsletters, email groups, community projects updated on the Council website.

Page 65

Social and Cultural ...

Performance Measures

Results

Youth Development 1. Number of Youth Forums Coordinated Per Year

Target:

12 Youth Forums coordinated in 2006/07

6

2. Number of Scholarships Awarded For the Youth Development Fund

Target:

10 Scholarships awarded for 2006/07

12

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

Target:

60 Youth Services providers received Information Mail-outs Quarterly in 2006/07.

21

4. Number of Alcohol and Drug Free Events and Activities

Target:

6

Five events held in 2006/07; SPACPAC event, Amplified event, Youth Rave event, Roller Disco and Hip Hop Concert

Safer Community 1. Crime Reduction Strategies

Target:

Crime reduction strategies for 2006/07: •

3

• •

Theft ex cars reduced by 58% on the previous fiscal year figures The Maraenui Urban Renewal Plan The Napier Alcohol Liaison Group

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

Target:

260 1,294 incidents recorded for 2006/07

2. Total Incidents Recorded

Target:

750

3. Total Recorded Crime in CBD

Target: Note:

Patrolled 246 nights for 2006/07

882 recorded crime in CBD for 2006/07

1,360 The measures “Total Incidents Recorded” and “ Total Recorded Crime in CBD” do not reflect the actual performance of the Safety Watch Patrol. They are primarily influenced by variables beyond the control of Council. They have not been included in the 2007/08 Annual Plan.

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

3. Customer Satisfaction Rate

Target:

Page 66

78% for 2006/07

1,250 1,600 700

Hours Hired 2006/07: Greenmeadows Memorial Square Library Seminar

1,380 1,931 766

Customer Satisfaction Rate for 2006/07 = 99%

80%

Napier City Council Annual Report 2006/07

Social and Cultural ...

Performance Measures

Results

Retirement and Rental Housing 1. Number of flats inspected

Target:

100%

2. Occupancy Rate - Rental Flats

Target:

Arrears 2006/07 $987.8 = 0.18% of rentals

0.16% of rentals

5. Maximum Rent Arrears - Retirement Flats

Target:

Occupancy rate for 2006/07 = 97%

96.7%

4. Maximum Rent Arrears - Rental Flats

Target:

Occupancy rate for 2006/07 = 97%

96.7%

3. Occupancy Rate - Retirement Flats

Target:

100% of flats inspected in 2006/07

Arrears 2006/07 $426.9 = 0.04% 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 2006/07 Ash interments for 2006/07

143 149

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

Target:

80%

2. Daily inspections and cleaning of all Toilets

Target:

The NRB Survey carried out in July 2007 showed 75% resident satisfaction with Public Toilets.

Very Satisfied Fairly Satisfied Not Very Satisfied Donâ&#x20AC;&#x2122;t Know

26% 49% 12% 13%

100% of Toilets were inspected and cleaned daily in 2006/07

100%

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:

51 Civil Defence Community Networks

57

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

Target:

9 Civil Defence Centres

9

4. Number of Civil Defence Community Networks (Volunteers)

Target:

34 training activities in 2006/07

30

3. Number of Civil Defence Centres

Target:

100% of radios operative during weekly checks

95%

Napier City Council Annual Report 2006/07

The NRB Survey carried out in July 2007 showed 66% resident satisfaction with Civil Defence.

Very Satisfied Fairly Satisfied Not Very Satisfied Donâ&#x20AC;&#x2122;t Know

20% 46% 7% 27%

100% of warnings, where required, were responded to within 30 minutes

Page 67

Social and Cultural ...

Financial Summary Budget 06/07 Activity $000

2,464 Libraries

Actual 06/07 $000 Operational Costs Operating

Depn

Interest

Total

Income [1]

Net cost of service

Actual 05/06 $000

2,096

540

10

2,646

218

2,428

2,372

1,282 542 2,418 1,202 301 236 194 1,123 398 542 273

97 258 170 1 42 462 27 36 36

8 18 1 8 126 7 4 -

1,387 818 2,588 1,203 301 237 244 1,711 432 582 309

1,132 340 1,414 315 230 42 1,732 226 14 38

255 478 1,174 888 71 237 202 (21) 206 568 271

166 400 745 852 63 228 196 (152) 232 553 237

10,607

1,669

182

12,458

5,701

6,757

5,892

1,607 Capital expenditure [2]

1,390

654

7,898 Funding required

8,147

6,546

6,783 503 465 396

6,012 128 406

8,147

6,546

235 410 746 759 107 371 240 (93) 258 529 265

War Memorial Centre Municipal Theatre Cultural Services Community Development Safer Community Safety Watch Halls Retirement and Rental Housing Cemeteries Public Toilets Emergency Management

6,291 Total net operating

Funded by 5,777 776 940 405

Non Targeted Rates Loans Special Funds Vested Assets Depreciation (non funded)

7,898 Total

[1]

Summary of Income Actual 06/07 $000

User Charges Land Transport NZ and Other Government Grants Rental Income Rendering of Services Retail and Product Sales Other Income Total Income

Page 68

2,347 52 1,852 150 179 1,121 5,701

Napier City Council Annual Report 2006/07

Social and Cultural ...

[2]

Capital Expenditure Budget 06/07 $000

Actual 06/07 $000

Libraries 509 776 10 15 -

Library Bookstock Extend Taradale Library Verna Corbett Bequest New Service Desk Taradale Library (Health and Safety requirements) Minor Capital Items

433 12 24

Cultural Services - Minor Capital Items - Vested Assets

166 465

Retirement and Rental Housing 100 Minor Capital Projects

27

War Memorial Centre 15 Minor Capital Provision

3

Municipal Theatre 24 Minor Capital Provision

10

Cemeteries 37 Renewals

39

Public Toilets - Toilet Replacement Programme 71 Renewals

119 63

Safety Watch Minor Capital Items

1

Emergency Management 50 Replacement Civic Building Emergency Generator - Minor Capital Items 1,607 Total

Napier City Council Annual Report 2006/07

23 5 1,390

Page 69

CITY PROMOTION Activities The City Promotion Group comprises:

National Aquarium of NZ

City and Business Promotion

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.

• • •

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.

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.

Napier i-SITE Visitor Centre Napier i-Site Visitor Centre on Marine Parade is part of NZ Visitor Information 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 business events and entertainment information, maps, guides and books.

Par 2 MiniGolf Two 18 hole themed miniature golf courses and a club house situated next to the Napier i-SITE Visitor Centre on Marine Parade providing entertainment for all ages. Services include group rates and coaching for schools, Big Day Out Programme incorporating Marine Parade Heritage Features, and corporate business house competitions.

Kennedy Park 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.

Marineland of NZ New Zealand’s only marine zoo houses Kelly the dolphin, seals, sea lions, penguins and other birds. Marineland runs shows and behind the scenes tours daily and has 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 and the public. Located on Marine Parade.

Volunteers welcome.

Page 70

Napier City Council Annual Report 2006/07

City Promotion ...

Performance Measures for 2006/07 Performance Measures

Results

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

Target:

4

2. ‘Be Your Own Boss’ clients served

Target:

121 clients in 2006/07

100

3. Public Satisfaction rating in the NRB Public Opinion Survey

Target:

Four economic reports were produced in 2006/07: Napier City Business Survey - August 2006 Napier City Business Survey - March 2007 Economic Monitor Report - November 2006 2006 Census Results for Napier Suburbs / Area Units

70%

The NRB Survey carried out in July 2007 showed 44% resident satisfaction with Council’s policies to promote job opportunities.

Very Satisfied Fairly Satisfied Not Very Satisfied Don’t Know

9% 35% 7% 49%

Excluding "Don't Know" the resident satisfaction is 86%.

City Promotion Grants There are no non financial performance measures.

Marineland of New Zealand 1. Attendances

Target:

66,500

2. Range of visitor experience options

Target:

33 rehabilitated animals in 2006/07

30

5. Work experience and skill enhancement volunteers

Target:

4,533 education visits for 2006/07

4,450

4. Number of rehabilitated animals and birds

Target:

7 visitor experience options for 2006/07

7

3. Number of educational programme attendees

Target:

47,072 attendances for 2006/07. The death of Shona the Dolphin has resulted in lower attendance levels.

36 volunteers in 2006/07

25

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

Target:

395,000

2. New and renewal paid operator displays

Target:

403 new and renewed paid operator displays for 2006/07

120

3. Number of information packs distributed

Target:

351,637 visitors for 2006/07. The target projected an increase in visitor numbers through the centre which did not occur.

3,074 information packs distributed in 2006/07

1,600

Napier City Council Annual Report 2006/07

Page 71

City Promotion ...

Performance Measures

Results

Par 2 MiniGolf 1. Admission numbers

Target:

50,280

2. Customer satisfaction ratings

Target:

55,130 admissions for 2006/07

Customer satisfaction for 2006/07 = 96%

75%

National Aquarium of New Zealand 1. Number of schools

Target:

50

2. Number of school children

Target:

1 major cultural exhibit in 2006/07

1

9. Number of Friends of the Aquarium

Target:

997 sleepover attendees in 2006/07

840

8. Number of major cultural exhibits

Target:

2,063 function attendees in 2006/07

1,610

7. Number of sleepover attendees

Target:

114,344 visitors in 2006/07

114,793

6. Number of function attendees

Target:

2 environmental projects in 2006/07

2

5. Number of visitors

Target:

2 environmental exhibitions in 2006/07

2

4. Number of environmental projects

Target:

6,200 school children in 2006/07

7,322

3. Number of environmental exhibitions

Target:

148 schools in 2006/07

919 friends of the Aquarium in 2006/07

850

Kennedy Park 1. Overall Room Nights Booked

Target:

35,819

1. Room nights booked for sport groups Target:

Page 72

1,870 room nights booked for sport groups in 2006/07

1,513

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

36,481 room nights booked for 2006/07

27.6% of users with young children in family groups in 2006/07

61%

Napier City Council Annual Report 2006/07

City Promotion ...

Financial Summary Budget 06/07 Activity $000

391 689 173 534

City and Business Promotion City Promotion Grants Marineland of NZ National Aquarium of NZ

Actual 06/07 $000 Operational Costs Operating

Depn

Interest

Total

Income [1]

505 758 687 1,540

42 344

3 210

505 758 732 2,094

34 152 458 1,429

Net cost of service

471 606 274 665

Actual 05/06 $000

488 526 198 679

264

Napier i-Site Visitor Centre

842

30

1

873

622

251

264

(47)

Par 2 MiniGolf

239

8

1

248

328

(80)

(67)

(452)

Kennedy Park

2,028

206

15

2,249

2,913

(664)

(668)

6,599

630

230

7,459

5,936

1,523

1,420

136

149

1,659

1,569

1,029 630

941 628

1,659

1,569

1,552 214 1,766

Total net operating Capital expenditure [2] Funding required Funded by

846 289 631 1,766

[1]

Non Targeted Rates Special Funds Depreciation (non funded) Total

Summary of Income Actual 06/07 $000

User Charges Uniform Annual Charges Rendering of Services Retail and Product Sales Other Income Total Income [2]

4,237 152 588 860 99 5,936

Capital Expenditure Budget 06/07 $000

Actual 06/07 $000

Marineland 5 Minor Capital Provision

-

National Aquarium 12 Minor Capital Provision 27 Capital Provision

5

Napier i-Site Visitor Centre 10 Minor Capital Provision

43

Par 2 MiniGolf 5 Minor Capital Provision

-

Kennedy Park 60 Kennedy Park Renewals 95 Minor Capital Provision 214 Total

Napier City Council Annual Report 2006/07

88 136

Page 73

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 Cityâ&#x20AC;&#x2122;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 Councilâ&#x20AC;&#x2122;s environmental management policies. Also covered is enforcement work to ensure compliance with Resource Consent approvals and the operative District Plans.

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 â&#x20AC;˘

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.

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

Key Issues and Notes The 2006/07 - 2015/16 LTCCP included funding of $1 million in both 2006/07 and 2010/11 for additional CBD Parking. The current project underway in Dickens Street and the newly completed Vautier Street carpark will provide a large proportion of the additional CBD parking facilities required for future needs.

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 74

Napier City Council Annual Report 2006/07

Planning and Regulatory ...

Performance Measures for 2006/07 Performance Measures

Results

City Development Planning 1. Review Councilâ&#x20AC;&#x2122;s Strategic Policy Documents

Target:

Report as required

2. Process any District Plan modifications within legislative requirements and within 2 years

Target:

60%

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

Target:

Report as required

8. Consistency with other regional/territorial plans

Target:

14% 48% 12% 26%

Heritage sections of the Plan are currently being reviewed.

No consultation undertaken in 2006/07.

State of the Environment report not completed in 2006/07.

Report as required

7. Reduce number of resource consent applications

Target:

2006 showed 62% resident

Report as required

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

Target:

The NRB Survey carried out in July satisfaction with Town Planning.

Very Satisfied Fairly Satisfied Not Very Satisfied Donâ&#x20AC;&#x2122;t Know

Report as required

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

Target:

All District Plan modifications processed within two year time frame.

100%

3. Residents Satisfaction rating in the NRB Public Opinion Survey

Target:

Discussion has been instigated with the Hawke's Bay Regional Council and Hastings District Council with the aim of co-ordinating a regional approach to the review of all relevant urban growth strategies.

Report as required

The number of consents for 2006/07 was 315 which is above the 311 for 2005/06. Resource consent applications are mainly influenced by the state of the economy.

Changes to the Hastings District Plan are reviewed as and when they are notified to ensure no cross boundary issues arise. Hearings on the Hawke's Bay Regional Council coastal Environment Plan are currently being held.

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% (398) processed within 10 working days.

100%

4. Residents Satisfaction rating in the Planning Customer Satisfaction Survey

Target:

Not achieved. 33% (1 of 3 applications) processed within 70 working days.

100%

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

Target:

Not achieved. 81% (251 of 310) processed within 20 working days.

60%

Napier City Council Annual Report 2006/07

The Planning Customer Satisfaction Survey is not an annual survey and was not carried out in 2006/07. Results for NRB survey are included above for City Development Planning.

Page 75

Planning and Regulatory ...

Performance Measures

Results

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

Target:

100%

2. Percentage of Building Consents processed within 10 working days

Target:

Due to the changes in the Building Act this is no longer applicable.

100%

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

Target:

99% (1,470 of 1,491) processed within 20 working days

20%

7% of Building WOFs audited in 2006/07. requirement to audit Building WOF.

It is not a legal

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

Target:

100%

2. Number of water samples taken compared to national standard at all sites.

Target:

Number of samples taken = 196% of national standard.

165% of national standard

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

Target:

100% in 2006/07

75%

The NRB Survey carried out in July 2007 showed 73% satisfaction for Noise Control.

Very Satisfied 20% Fairly Satisfied 53% Not Very Satisfied 14% Donâ&#x20AC;&#x2122;t Know 13%

Animal Control 1. Number of registered dogs

Target:

6.090

2. Complaints actioned within 5 working days

Target:

Page 76

99.6% of complaints actioned within 5 working days in 2006/07.

100%

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

Target:

5,926 registered dogs as at 30 June 2007

60%

The NRB Survey carried out in July 2007 showed 79% satisfaction for Dog Control.

Very Satisfied 24% Fairly Satisfied 55% Not Very Satisfied 19% Donâ&#x20AC;&#x2122;t Know 2%

Napier City Council Annual Report 2006/07

Planning and Regulatory ...

Performance Measures

Results

Parking Services 1. Occupancy of CBD Off street parking areas

Target:

85%

2. Occupancy of Taradale Off street parking areas

Target:

Note:

The targets for the above measures are the upper limit of acceptable occupancy rates.

60%

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

Target:

69% average over 5 days, 9 am to 5 pm.

85%

5. Residents Satisfaction with ‘Parking in the City Centre’ in the NRB Public Opinion Survey

Target:

73% average over 6 days, 8 am – 4 pm.

85%

4. Occupancy of Taradale On street parking areas

Target:

58% average over 5 days, 9 am to 5 pm.

85%

3. Occupancy of CBD On street parking areas

Target:

57% average over 6 days, 8 am to 4 pm (excluding leased parks).

75%

Napier City Council Annual Report 2006/07

The NRB Survey carried out in July 2007 showed 64% satisfaction for Parking in the City Centre.

Very Satisfied 11% Fairly Satisfied 53% Not Very Satisfied 32% Don’t Know 4% The NRB Survey carried out in July 2007 showed 83% satisfaction for Parking in the Suburbs.

Very Satisfied 33% Fairly Satisfied 50% Not Very Satisfied 11% Don’t Know 6%

Page 77

Planning and Regulatory ...

Financial Summary Budget 06/07 Activity $000

756 527 315 291 161 (970)

City Development Planning Regulatory Consents Building Consents Environmental Health Services Animal Control Parking Services

Actual 06/07 $000 Operational Costs Operating

Depn

Interest

Total

Income [1]

Net cost of service

Actual 05/06 $000

833 835 1,070 539 574 1,038

25 1 2 1 93

1 19

858 836 1,072 540 575 1,150

270 850 193 368 2,086

858 566 222 347 207 (936)

949 603 273 246 161 (832)

4,889

122

20

5,031

3,767

1,264

1,400

4,448

1,197

5,712

2,597

1,824 Non Targeted Rates

2,194

2,253

- Loans 2,406 Special Funds - Depreciation (non funded)

57 3,368 93

93 186 65

5,712

2,597

1,080 Total net operating 3,150 Capital expenditure [2] 4,230 Funding required Funded by

4,230 Total

[1]

Summary of Income Actual 06/07 $000

Regulatory Revenue

3,074

Rental Income

61

Infringements and fines

632

Total Income [2]

3,767

Capital Expenditure Budget 06/07 $000

Actual 06/07 $000

City Development Planning - Develop Geographic Information System

7

Animal Control - Animal Shelter

110

Parking Services 100 20 1,780 500 750

Parking Equipment Replacement Minor Capital Items - Parking Services Additional CBD Parking (includes Development of Carpark - closed part of Vautier Street) New Offstreet Parking Taradale Car Pound

3,150 Total

Page 78

324 4,007 4,448

Napier City Council Annual Report 2006/07

ROADING Activities

Key Issues and Notes

The Roading Group comprises:

As a result of submissions to the 2007/08 Annual Plan public consultation was carried out regarding heavy traffic on Marine Parade. Council resolved to carry out various measures to mitigate the effects of heavy traffic, including the Cape Sealing of the remaining sections of Marine Parade, when the Annual Plan was adopted on 26 June 2007. The initial improvements of new signage and lane marking have subsequently been installed.

Roading • • • • • •

352 km of roads (100% sealed) 294 km Urban Standard Roads (approx. 10% not constructed to Council’s current urban standards) 57 km Rural Roads (72% requiring widening to cope with current traffic volumes) 37 km State Highways 5,158 sumps and manholes to be cleaned 479 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.

Performance Targets for 2006/07 Performance Measures

Results

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

The NRB Survey carried out in July 2007 showed 82% satisfaction for Footpaths.

Very Satisfied 23% Fairly Satisfied 59% Not Very Satisfied 17% Don’t Know 1%

Roading

Target:

75%

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

Target:

85%

3. Number of Injury Crashes in Napier City

Target:

100 NAASRA counts per km

5. Maximum deferred capital works

Target:

136 injury crashes in Napier City

140

4. Average Roughness of Sealed Urban Roads

Target:

The NRB Survey carried out in July 2007 showed 86% satisfaction for Roads.

Very Satisfied 27% Fairly Satisfied 59% Not Very Satisfied 13% Don’t Know 1%

Average roughness of sealed urban roads = 96 NAASRA counts per km which exceeds the target.

Deferred capital works = $42 million

$42 million

Napier City Council Annual Report 2006/07

Page 79

Roading ...

Financial Summary Budget 06/07 Activity $000

9,170 Roading 9,170 Total net operating

Actual 06/07 $000 Operational Costs Operating

Depn

Interest

Total[1]

Income

Net cost of service

Actual 05/06 $000

5,828

4,850

1,197

11,875

2,773

9,102

6,823

5,828

4,850

1,197

11,875

2,773

9,102

6,823

7,969

8,850

17,071

15,673

12,247 359 1,859 1,498 1,108

11,078 632 993 1,612 1,358

17,071

15,673

10,399 Capital expenditure [2] 19,569 Funding required Funded by 7,923 1,325 5,667 3,353 1,301

Non Targeted Rates Loans Special Funds Vested Assets Depreciation (non funded)

19,569 Total

[1]

Summary of Income Actual 06/07 $000

User Charges Uniform Annual Charges Land Transport NZ and Other Government Grants Other Income Total Income

[2]

29 181 2,537 26 2,773

Capital Expenditure Budget 06/07 $000

Actual 06/07 $000

Roading 388 1,459 172 240 1,150 373 -

Transportation Proposals Roading Capital Projects (Bulk Funded) Meeanee Road Widening Prebensen Drive / Puketitiri Road Reconstruction Prebensen Drive / Severn Street Intersection Taradale Redevelopment Prebensen Drive Four Laning and Hyderabad Overbridge CBD Development Foodstuffs Pak 'n Save Development Pandora Developments Ahuriri Shopping Centre Upgrade Cycleway Project Urban Growth - Northwest Development Minor Capital Items

136 1,267 4 192 966 462 362 148 105 68 12 97

3,264 Renewals

2,652

3,353 Vested Assets

1,498

10,399 Total

Page 80

7,969

Napier City Council Annual Report 2006/07

WATER AND WASTES Activities

Key Issues and Notes

The Solid Waste Group comprises:

Cross Country Drain

Solid Waste

Excavation of the drain and all culverts is substantially complete.

Design work on the pump station and discharge is in progress.

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

Wastewater Projects •

A kerbside recycling service for residential properties is provided fortnightly. Litter bins and drums are located throughout the City and serviced on a daily basis. Council’s Refuse Transfer Station, including the composting operation, at Redclyffe accepts most domestic, garden and building waste.

Currently Napier disposes of approximately 30,000 tonnes of refuse annually at the landfill from domestic collection, kerbside recycling, litter collection 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 Council and is managed on a day to day basis by the Hastings District Council.

Wastewater Treatment. At the Council meeting 9 August 2006 it was resolved that Council apply for a change to the existing discharge consent conditions to delay the implementation date for advanced primary treatment. This would allow for a resource consent application for a BTF (biological trickling filter) plant to be prepared and heard and for any operational concerns associated with a BTF plant to be addressed.

Community consultation on the use of a BTF plant commenced in January 2007 and investigations for the discharge consent application are under way.

•

The design work for the Taradale Road Pumping Main and Station is in progress.

Omarunui Regional Landfill Valley D of the Omarunui Regional Landfill was officially opened on 15 December 2006. This also marked the closure of Valley A.

Stormwater

Thompson Road Water Tower

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

Public Consultation was carried out on the future of the Thompson Road Water Tower. The tower is to be retained and renovated.

Public access will not be provided and security will be improved in order to prevent unauthorised access to the tower. The reservoir site will be upgraded with plantings, park benches and some minor security fencing.

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

37 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 • • • • • • •

9.8 million m3 Water Consumed Annually 10 Wells 10 Ground Water and 8 Booster Pump Stations 8 Reservoir Sites 28 million litres Storage Facilities 438 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 2006/07

Page 81

Water and Wastes ...

Performance Targets for 2006/07 Performance Measures

Results

Solid Waste 1. Total waste to landfill

Target:

33,000 tonnes

2. Waste to landfill per capita

Target:

100% compliance for 2006/07

100%

5. Number of recycling stations

Target:

16.8% diversion rate for 2006/07

15%

4. Compliance with requirements of resource consents

Target:

493 Kg per capita for 2006/07

578 Kg

3. Refuse diversion rate

Target:

28,275 tonnes for 2006/07

2 recycling stations

2

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 2006/07

100%

3. Pumping capacity available

Target:

The NRB Survey carried out in July 2007 showed 89% resident satisfaction with Stormwater.

Very Satisfied 50% Fairly Satisfied 39% Not Very Satisfied 7% Don’t Know 4%

99.3% 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 82

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

The NRB Survey carried out in July 2007 showed 91% resident satisfaction with Wastewater.

Very Satisfied 55% Fairly Satisfied 36% Not Very Satisfied 3% Don’t Know 6% 100% compliance for 2006/07

100%

Napier City Council Annual Report 2006/07

Water and Wastes ...

Performance Measures

Results

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

Target:

90%

2. Compliance with Resource Consent requirements

Target:

100%

4. Percentage Distribution Mains Cleaned

Target:

100% compliance for 2006/07.

100%

3. Compliance with Drinking Water standards

Target:

The NRB Survey carried out in July 2007 showed 94% resident satisfaction with Water Supply.

Very Satisfied 70% Fairly Satisfied 24% Not Very Satisfied 2% Donâ&#x20AC;&#x2122;t Know 4%

20%

Napier City Council Annual Report 2006/07

100 % compliance.

One transgression in the Bay View reticulation zone and one at source with all follow up monitoring in compliance with NZ Drinking Water Standards.

15% of mains cleaned in 2006/07. Due to good weather in June and tight construction deadlines efforts were concentrated on the pipe construction programme at the expense of mains cleaning.

Additional cleaning will be carried out in 2007/08 to maintain the average of 20% mains cleaned per year.

Page 83

Water and Wastes ...

Financial Summary Budget 06/07 Activity $000

446 2,514 (966) -

Actual 06/07 $000 Operational Costs Operating

Depn

Interest

Total

Income [1]

Net cost of service

Actual 05/06 $000

Solid Waste Stormwater Wastewater Water Supply

3,419 1,095 2,331 2,067

216 1,258 2,421 1,061

37 181 228 101

3,672 2,534 4,980 3,229

3,780 22 6,628 3,242

(108) 2,512 (1,648) (13)

(597) 2,392 (922) 103

1,994 Total net operating

8,912

4,956

547

14,415

13,672

743

976

8,746

7,743

9,489

8,719

2,875 Non Targeted Rates

1,894

2,401

577 4,109 1,152 -

2,645 3,416 1,491 43

951 3,079 2,245 43

9,489

8,719

6,719 Capital expenditure [2] 8,713 Funding required Funded by Loans Special Funds Vested Assets Depreciation (non funded)

8,713 Total

[1]

Summary of Income Actual 06/07 $000

User Charges Uniform Annual Charges Income from Omarunui Landfill Joint Venture Other Income Total Income

[2]

1,984 10,251 1,370 67 13,672

Capital Expenditure Budget 06/07 $000

Actual 06/07 $000

Solid Waste 254 22 109 35 -

Omarunui Regional Landfill Site Development Valley A Omarunui Regional Landfill Site Development Valley D Omarunui Regional Landfill Site Development Gas to Energy Solid Waste Renewals Minor Capital Items

828 36 102

Stormwater 1,791 728 48 11 279 414

Page 84

Cross Country Drain and Pumping Station Upgrading Stormwater Catchments Develop Excess Flood Control System Saltwater Bank Creek Improvements Mobile Generator Dalton Street Pump Replacement Georges Drive Drain Stormwater Infrastructural Renewal Stormwater Vested Assets

2,973 406 120 84 105 226 791

Napier City Council Annual Report 2006/07

Water and Wastes ...

Budget 06/07 $000

Actual 06/07 $000

Wastewater 500 763 181 200 535 -

Advanced Sewage Treatment Sewerage Infrastructural Renewal Asset Renewal Sewage Pumping Stations Milliscreen Replacement Programme Wastewater Vested Assets Minor Capital Items

58 17 475 96 203 -

Infrastructural Asset Renewal - Water Pump Stations Infrastructural Asset Renewal - Water Meters Infrastructural Asset Renewal - Water Pipes Capital Upgrade Associated with Pipe IAR Water Supply Vested Assets Trunk Main Ulyatt Road to Bledisloe Ave Enfield Reservoir Retaining Wall Minor Capital Items

206 399 203 173 309 55

Water Supply

6,719 Total

Napier City Council Annual Report 2006/07

41 8 470 205 391 513 22 80 8,746

Page 85

PROPERTY ASSETS Activities The Property Assets Group comprises:

Property Holdings

Lagoon Farm

Leasehold Properties:

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

It is also responsible for the management, including maintenance and renewal, of all Council buildings not specifically allocated to other activities.

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.

Page 86

Commercial Residential

83 77

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.

Napier City Council Annual Report 2006/07

Property Assets ...

Performance Targets for 2006/07 Performance Measures

Results

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

Lagoon Farm Residential Development 1. Number of new lots created

Target:

70 new lots created 2006/07.

70

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:

Buildings comply with regulatory requirements. The Civic and Library Buildings have current Building Warrants of Fitness.

100%

4. Freeholding of leasehold properties facilitated in accordance with Council’s freeholding policy

Target:

All buildings 100% occupied. Term of lease extended and new rentals negotiated with two tenants of the Library Building.

100%

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

Target:

12 leases fell due for renewal during 2006/07: • seven have been renewed • two have been freeholded • one is in the process of being freeholded • two are still under action

Eleven freeholding transaction completed, all in accordance with Council's freeholding policy.

100%

Napier City Council Annual Report 2006/07

Page 87

Property Assets ...

Financial Summary Budget 06/07 Activity $000

Actual 06/07 $000 Operational Costs Operating

54 Lagoon Farm (1,174) Lagoon Farm Residential Development (945) Property Holdings (2,065) Total net operating 9,100 Capital expenditure [2] 7,035 Funding required

Depn

Interest

Total

Income [1]

Net cost of service

Actual 05/06 $000

558 5,907 (407)

42 344

206

600 5,907 143

390 9,506 1,539

210 (3,599) (1,396)

81 (2,898) (1,066)

6,058

386

206

6,650

11,435

(4,785)

(3,883)

220

5,191

(4,565)

1,308

(935) 220 (3,993)

(986) 442 1,723

143

129

(4,565)

1,308

Funded by (535) Non Targeted Rates 2,000 Loans 5,435 Special Funds 135 Depreciation (non funded) 7,035 Total

[1]

Summary of Income Actual 06/07 $000

User Charges Rental Income Retail and Product Sales Income from Sale of Sections Other Income Total Income

[2]

19 998 333 9,493 592 11,435

Capital Expenditure Budget 06/07 $000

Actual 06/07 $000

Lagoon Farm Residential Development 7,000 Lagoon Farm Residential Development

-

Property Holdings 100 Building Air Conditioning 2,000 Redevelop Cultural Trust Buildings - Property Purchases 9,100 Total

Page 88

220 220

Napier City Council Annual Report 2006/07

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 Councilâ&#x20AC;&#x2122;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.

Allocation of Costs: The costs of the following support units are reallocated on an overhead basis: Budget 06/07 $000

641 78 536 29 238 228 902 1,388 350 227 516 111 627

Asset Administration Cafeteria Chief Executive Cleaning Services Community Development Administration Corporate Services Management Council Finance Human Resources Information Services Planning Support Services Property Support Secretarial Services

5,871 TOTAL

Actual 06/07 $000

Actual 05/06 $000

646 70 520 32 268 232 848 1,836 390 160 538 (46) 496

698 61 530 29 248 236 819 1,475 412 183 566 37 611

5,990

5,905

578 751 910 777 4,524 2,223 681 192 6,977

568 594 943 776 4,318 1,834 641 189 5,778

17,613

15,641

The costs of the following support units have been recharged direct to delivery business units on a usage basis: 574 718 1,017 695 3,914 1,659 665 151 6,182

Asset Information Technology Corporate Information Technology Design Services Mechanical Services Parks Operations Plant and Vehicles Services Administration Stores Utilities Operations

15,575 TOTAL

Capital Expenditure General Provision 63 Minor New and Replacement Capital Items Services Administration 26 Relocate Dogs Building to Yard

85 107

Plant and Vehicle 748 Replacement of Mobile Plant and Vehicle

675

Technology Equipment Renewals - Technology Equipment Renewals

223

Corporate I.T. 59 PC and Printer Replacement 36 Software Replacement and Upgrades 12 Corporate I.T. Network 944 Total

Napier City Council Annual Report 2006/07

94 9 11 1,204

Page 89

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 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.

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

Impairment

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.

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

Page 90

Napier City Council Annual Report 2006/07