As at 30 June 2016 Contractual Commitments
These are commitments for which a formal contract has been entered at 30 June 2016.
2014/2015
$(000’s) 2015/2016
$(000’s) 10,037
1,366 8,169 20,331 1,295 190 1,914 462 92 6,386
50,242
Utilities Maintenance Stormwater
Road Maintenance Refuse Operations Water Supply Maintenance
Wastewater Reticulation Maintenance River Maintenance
Parks and Reserves Programmed Maintenance Richmond Aquatic Centre
Parks and Reserves
These commitments are based on the legal commitment outstanding under contracts. They do not take into account any additional work required due to emergency events or any adjustments to costs based on inflation.
7,758 160 23,837 17,149 1,055 2,377 5,186 356 892 4,258
63,028
Operating leases as lessee
Council leases property, plant and equipment in the normal course of its business. The majority of these leases have a non-cancellable term of 24 months. The future aggregate minimum lease payments to be made under non-
cancellable operating leases are as follows:
Non Cancellable Operating Lease Commitments 2014/2015
$(000's)
2015/2016
$(000's) 8
2 - 10
No later than one year
Later than one year, not later than two years Later than two years, not later than five years
2 - - 2
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a) Guarantees
Council has agreed to act as guarantor for the following loan:
2014/2015
$
2015/2016
$
20,00020,000
Motueka Promotions Association 20,000
20,000
This is in the form of a guarantee for the loan to Westpac. The probability of liability is considered remote and hence no estimate of possible liability has been made. The value of guarantees disclosed as contingent liabilities reflects Council’s assessment of the undiscounted portion of financial guarantees that are not recognised in the statement of financial position
.
b) Guarantee – New Zealand Local Government Funding Agency Limited
Tasman District Council is a guarantor of the New Zealand Local Government Funding Agency Limited
(NZLGFA). The NZLGFA was incorporated in December 2011 with the purpose of providing debt funding to local authorities in New Zealand and it has a current credit rating from Standard and Poor’s of AA+.
Tasman District Council is one of 30 local authority shareholders and 11 local authority guarantors of the NZLGFA. In that regard it has uncalled capital of $1.866 million. When aggregated with the uncalled capital of other shareholders, $20 million is available in the event that an imminent default is identified. Also, together with the other shareholders and guarantors, Tasman District Council is a guarantor of all of NZLGFA’s borrowings. At 30 June 2016, NZLGFA had borrowings totalling $6.22 billion (2015: $4.998 billion).
Financial reporting standards require Tasman District Council to recognise the guarantee liability at fair value.
However, the Council has been unable to determine a sufficiently reliable fair value for the guarantee, and therefore has not recognised a liability. The Council considers the risk of NZLGFA defaulting on repayment of interest or capital to be very low on the basis that:
we are not aware of any local authority debt default events in New Zealand; and
local government legislation would enable local authorities to levy a rate to recover sufficient funds to meet any debt obligations if further funds were required.
c) Other Contingent Liabilities
Council has contingent liabilities of $Nil (30 June 2015 $Nil). Council has no contingent claims against other parties (30 June 2015 Nil).
Seven active claims have been lodged with the Weathertight Homes Resolution Service (WHRS) as at 30 June 2016 (June 2015: six active claims). These claims relate to weather tightness issues of homes in the Tasman District and name Tasman District Council as well as other parties. It is not certain whether all of these claims are valid. Council is unable to assess its exposure to the claims lodged with the WHRS and has not allowed for any contingent liabilities relating to this. RiskPool from 1 July 2009 is no longer providing coverage for leaky homes.
Council has provided for no contingent liability claims in 2016 (2015: Nil).
Council is a signatory to the Government’s leaky homes package, which may expose Council to up to 25% of any settlement costs.
The Council is also exposed to potential future claims which have not yet been advised until the statutory limitation period expires. The amount of potential future claims are not able to be reliably measured and is therefore unquantifiable. Claims must be made within 10 years of construction or alteration of the dwelling in order for the claim to be eligible under the Weathertight Homes Resolution Services (WHRS) Act 2006, but other statutory limitation periods could also affect claims.
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of members and reinsurance recoveries) in any Fund year, then the Board may make a call on members for that fund year. The Council received a notice during July 2012 for a call for additional contributions in respect of the 2002/2003 and 2003/2004 Fund years as those funds are exhibiting deficits due to the “leaky building” issue. This notice also highlighted that it is possible that further calls could be made in the future. A liability will be recognised for the future calls when there is more certainty over the amount of the calls.
Council is aware of two claims brought against Council. The first claim relates to an Environment Court ruling against Council with orders made. Council’s maximum exposure to this second claim is approximately $850,000, of which $383,044 has already been paid. Further proceedings were initiated in the Nelson High Court in April 2014.
The second claim relates to the sinking of a yacht and its valuation. It is too early to estimate the outcome and effect on Council. Council is covered by insurance with an excess of $5,000.
Council is required to undertake seismic assessments of its buildings under its Earthquake Prone Buildings Policy prepared under the Building Act 2004. These assessments are in two parts, firstly Initial Evaluation Procedures (IEPs) are made and if the results show that a building may be earthquake prone, then a further Detailed
Engineering Assessment (DEA) is made. The assessments undertaken to date only cover some of the Council’s community buildings. There are a number of other buildings where initial or detailed assessments have yet to be completed. The Golden Bay Service Centre has been vacated as it is considered unsafe and the value of the building has been written down to $Nil. The design for the strengthening and refurbishment of the Golden Bay Service Centre has commenced. Decisions have been made as part of the Long Term Plan 2015-2025 process as to whether to strengthen any buildings or whether any buildings under standard will be demolished if
necessary. Currently five buildings have been assessed as high priorities for upgrade and were incorporated into capital works budgets for 2015/2016. Instructions have been issued to undertake IEP’s for 14 further community buildings
d) Other Contingent Assets
For the flood events that occurred in December 2010 and December 2011, Council is able to recover a portion of its costs from a number of sources, including insurance, New Zealand Transport Agency subsidies and Central Government subsidies. For the December 2011 event, Council has recognised a Ministry of Civil Defence and Emergency Management claim for the event. Council expects that it is probable that this claim will be accepted.
e) Associates Contingent Liabilities and Contingent Assets
The Calwell Basin, which has been fully impaired, contains contaminated seabed sediments. Port Nelson has title to this area of seabed. While the marine engineering and vessel coating industries in and around the slipway area are now controlled, the historical contamination still persists in the sediments. The ongoing sedimentation of the basin now requires dredging to allow for the ongoing operation of the slipway and surrounding the marine engineering and vessel coating industries. Port Nelson, together with the Nelson City Council, has attained reasonable certainty regarding the quantification of the liability associated with the remediation works.
During 2013 Port Nelson, together with the Nelson City Council, obtained funding from the MFE to undertake Remediation Planning (Phase Three) work to establish a preferred approach for remediation of the contaminated sediments. The work required under Phase Three was completed during the 2014 financial year.
During the 2015 financial year Port Nelson and MFE signed a letter of intent that proposes the commencement of remediation in the 2017 financial year. Phase 3b works were undertaken in the 2016 financial year. This phase refined the remediation approach and resulted in an application for resource consent to complete the works being lodged. The approved programme of work for Phase 4 is expected to be completed by 31 December 2017.
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Tasman District Council’s Notes to the Financial Statements for the year ended 30 June 2016 INDEX
Note 1. Summary revenue and expenditure for groups of activities ... ……. 157 Note 2. Rates... ………158 Note 3. Other revenue ...160 Note 4. Subsidies and grants ...161 Note 5. Fees and charges ...161 Note 6. Employee benefit expenses ...162 Note 7. Other expenses ...162 Note 8. Finance Costs and Revenue...163 Note 9. Tax ...164 Note 10. Cash and cash equivalents ... …….165 Note 11. Trade and other receivables ... …….166 Note 12. Derivative financial instruments ... …….168 Note 13. Other financial assets ... …….169 Note 14. Property held for resale ... …….172 Note 15. Property plant and equipment ... …….172 Note 16. Intangible assets ... …….181 Note 17. Depreciation and amortisation expense by group of activities ... …….183 Note 18. Forestry assets ... …….184 Note 19. Investment property ... …….185 Note 20. List of associates ... …….186 Port Nelson Ltd ...186 Nelson Airport Ltd ...186 Nelson Bays Heritage Trust ...186 Note 21. Interest in Joint venture ...188 Note 22. Trade and other payables ...191 Note 23. Provisions ...192 Note 24. Employee benefit liabilities ...193 Note 25. Borrowings & Finance lease ...195 Note 26. Revaluation reserve ...197 Note 27. Accumulated equity ...197 Note 28. Reserve Funds...198 Note 29. Cashflow reconciliation ...201 Note 30. Related party transactions ...202 Note 31. Severance payments ...203 Note 32. Remuneration ...203 Note 33. Financial instruments ...204 Note 34. Capital management ... 207 Note 35. Urban portions of the State Highway Network ... …….207 Note 36. Significant variances compared to the Annual Plan ... ... …....208 Note 37. Events occurring after balance date ...209 Note 38. Elected representatives ...210 Note 39. Financial performance in relation to financial regulation benchmarks ... …...211 Note 40. Rating base and insurance of assets ... …...221