Napier City Council Annual Report 2009/2010

ISSN 1770-9847

NAPIER CITY COUNCIL

ANNUAL REPORT1 JULY 2009 TO 30 JUNE 2010

Adopted 6 October 2010

This Annual Report is our way of being accountable to you. It sets out what we have achieved in the last year and looks at the progress we have made in providing the sort of city that you have told us is important to you.

This Annual Report compares our achievements and progress to what was planned to be achieved in our Annual Plan 2009/10, which was part of our 2009-19 Ten Year Plan (the Long Term Council Community Plan). The 2009-19 Ten Year Plan is our City business plan and the Council's key strategic document. This applies from 1 July 2009 and builds on the 2006-16 LTCCP. It outlines the Council's policies and programmes and the financial implications of these.

Under the Local Government Act all Councils are required to produce an Annual Report and for certain information to be audited, such as the financial statements and the non-financial performance information. The audit has been completed successfully by Audit New Zealand and their audit opinion can be found on page 15.

Welcome to theNapier City Council's

Annual Report for 2009/2010

Contents

INTRODUCTION 3

Napier City at a Glance 4

What is in the Annual Report? 5

Mayor and Chief Executive Review 6

Maori Contribution to Decision-Making Process 8

Financial Summary 9

Key Statistics 10

Community Outcomes 11

Statement of Compliance and Responsibility 14

Audit New Zealand Report 15

FINANCIAL STATEMENTS 17

Statement of Comprehensive Income 18

Income Statement 19

Statement of Changes in Equity 20

Statement of Financial Position 21

Statement of Cash Flows 22

Notes to the Financial Statements 23

ACTIVITY STATEMENTS 65

Democracy and Governance 66

Recreation 69

Social and Cultural 74

City Promotion 84

Planning and Regulatory 91

Roading 99

Water and Wastes 102

Property Assets 109

Support Services 114

APPENDICES 115

Council Controlled Organisations 116

Glossary of Terms 119

1INTRODUCTION

NAPIER CITY COUNCIL Annual Report 2009/2010 4

Napier City at a Glance

Council Funded Community Assets

1 Regional Museum 2 Libraries

13 Sports Parks 2 Pool Facilities

4 Sports Complexes 1 Visitor Information Centre

1 Inner Harbour with Berths 1 Municipal Theatre

1 Civil Defence 1 Conference Centre

1 Community House 35 Neighbourhood Parks

49 Greenbelt Reserves 22km Pathways

7 Community Halls 44 Public Toilets

1 National Aquarium 1 Par2 MiniGolf

1. "Subnational Population Estimates: At 30 June 2009". Statistics New Zealand. http://www.stats.govt.nz/methods_and_services/access-data/tables/subnational-pop-estimates-tables.aspx. Retrieved 17-08-2010.

2. “General Napier Weather Information” http://www.nzs.com/new-zealand-weather/hawkes-bay/napier/. Retrieved 17-08-2010.

Napier City Wards:

AHURIRI WARD

TARADALE WARD

NELSON PARK WARD

ONEKAWA–TAMATEA WARD

Land Area:

106km2

Population:57,2001

Climate:

A near Mediterranean climate with long, fine, dry summers and short, mild winters.2

Average annual rainfall (mm): 803

Average annual sunshine hours: 2,188

Average summer temperature (°C): 24

Average winter temperature (°C): 13


The Annual Report 2009/10 sets out what the Napier City Council did in the past year, why we did those things, how much they cost, and how we paid for them.

This report shows how the Napier City Council is delivering on the promises made to our community – promises made after asking Napier residents what they want for their city as part of our long term planning process.

The report shows the Council’s overall financial position and performance as measured by its achievement against its financial Key Performance Indicators.

IntroductionThis part includes the Mayor and Chief Executive’s message along with a financial summary and key statistics. The auditor’s report and the statement of compliance and responsibility finish off this part.

Financial StatementsThis part presents detailed financial statements and accounting policies for the Council. The financial statements provide information about the Council’s assets, liabilities, income and expenditure.

Activity StatementsThis part explains the activities that the Council is engaged in and reports on achievements and progress in delivering these services to the community over the last year. It details the costs and resources applied to these activities together with non-financial performance targets and results and key issues. Where applicable comparisons to budgets and last year’s actuals are provided.

AppendicesThis final part has some extra information that may be of interest to the reader in relation to Council Controlled Organisations, Maori Contributions to Decision Making Processes and a Glossary of Terms.

What is in the Annual Report?

How The Annual Report Fits Into The Planning Process

Community OutcomesWhat the community values now and wants in the future.

Ten Year PlanA forward-thinking plan with a 10 year outlook that sets out the future direction and costs of running the kind of city the community wants.

Annual PlanSets out how much we will spend, what the rates will be for the year ahead and our work programme for the 12 month period from 1 July to 30 June. In the year the Ten Year Plan is produced the Annual Plan is contained in this document.

Annual Report

Sets out what we achieved in the past year and looks at the progress made.


Mayor and Chief Executive Review

Our aim is to give residents of Napier a fabulous city to work and play in as well as keeping the city affordable for ratepayers. This year kicked off (literally) at McLean Park on 1st August 2009. The opening of the Graeme Lowe Stand is the culmination of a $13million upgrade of the park and Hawke’s Bay celebrated in style as the Magpies took the game away from Auckland. Three other large projects were completed:

• The Overland Drain - $15 million and relief for stormwater from Greenmeadows and Taradale.

• The Taradale Library – opened on time and on budget. This is an amenity well used and appreciated.

• Kennedy Park facilities were redeveloped to add $1million of cabin accommodation.

The Secondary Sewage pipe from Greenmeadows to Awatoto – back up infrastructure for the future is underway. The Council added to our attractive clean green city by starting the $500,000 greening project which aims to put trees and planting in streets and pathways. Our environmental work as a city has reaped rewards which include reduced waste to our landfill. The other side of successful recycling is less income for the facility, which resulted in a $450,000 top up to maintain operations. Recycling is worthy, but expensive for ratepayers. The Parklands development even in this difficult economic climate has produced better returns than anticipated and this gives Napier a positive income for capital works which alleviates pressure on rates. Regionally, the big issue was the Heretaunga Plains Urban Development Strategy (HPUDS). Napier City, Hastings District and Hawke’s Bay Regional Councils were part of this huge planning project which aims to protect our versatile soils, manage growth responsibly and give certainty of where growth can and cannot occur to the people of Hawke’s Bay now and in the future. Thank you to all staff who take pride in their work and our city. The results of their excellent work can be seen for themselves. Thank you to the Council. Much can be achieved when people work together for a common cause. Thank you to the people of Napier who have given us feedback, support, ideas and are helping us to build a great community.

Neil TaylorCHIEF EXECUTIVE

Barbara ArnottMAYOR


Mayor and Councillors as at 30 June 2010

Back Row (L-R):

Cr Rob Lutter (Taradale Ward),

Cr Bill Dalton, Cr Mark Herbert (Ahuriri Ward),

Cr Keith Price (Onekawa–Tamatea Ward), Cr Tony Jeffery,

Cr Dave Pipe (Nelson Park Ward), Cr Harry Lawson

Middle Row (L-R):

Cr John Cocking, Cr Faye White, Cr Kathie Furlong,

Cr Tania Wright (Taradale Ward), Cr Maxine Boag (Nelson Park Ward)

Front:Mayor Barbara Arnott

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


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 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.

The Committee membership is as follows;

Chairperson Bevan Taylor

Napier City Council Mayor or Deputy Mayor (as alternate)

Tangata Whenua Tangoio - Bevan Taylor

Waiohiki - Tipu Tareha

Timi Kara, Hamuera Marae - Riordan Kemp

Petane - Te Reo Spooner

Maata Waka - Dan Wakefield


Financial Summary

Financial Condition Indicators

Actual 2009/10

$000

Budget 2009/10

$000

Actual 2008/09

$000

Rates Revenue 42,898 42,434 41,724

Net Surplus 16,507 15,505 4,441

Working Capital 47,205 15,399 27,703

Public Debt 6,046 12,776 7,069

Total Assets 1,304,779 1,320,568 1,288,722

Proportion of Rates Revenue to Total Revenue (%) 48.08% 47.01% 55.56%

Public Debt as a Percentage of Total Assets 0.46% 0.97% 0.55%

Proportion of Rates Revenue Applied to Service Debt (%) 5.54% 13.01% 7.44%

The financial performance measures reflect Council's overall performance and financial position at 30 June 2010. Public debt and working capital show favourable variances due to timing variations of capital projects and a net surplus above budget.

Explanations of major budget variations are outlined in note 2 of the Financial Statements.

How Rates Were Spent

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

-3.36%-1.71%-1.43%

-0.17%-0.06%

0.06%0.26%0.46%0.49%0.53%0.55%0.61%0.63%0.69%0.82%0.87%0.92%0.92%1.41%1.46%1.62%1.83%1.93%2.53%2.77%2.90%

4.88%7.19%7.11%

6.55%6.76%

7.53%7.77%

8.97%25.70%

Property HoldingsRetirement & Rental Housing

Kennedy ParkPar 2 MiniGolf

Marine Parade PoolsInner Harbour

Safer CommunityWar Memorial Centre

Animal ControlCity Promotion Grants

Municipal TheatreBuilding Consents

HallsEmergency Management

Napier i-SITE Visitor CentreEnvironmental Health

Marineland of NZCemeteries

National Aquarium of NZCity and Business Promotion

Regulatory ConsentsPlanning Policy

Public ToiletsHB Museum and Art Gallery

Community DevelopmentNapier Aquatic Centre

Democracy and GovernanceSolid Waste

SportsgroundsStormwater

ReservesWater Supply

LibrariesWastewater (Sewerage)

Roading


Key Statistics

30 June 2010 30 June 2009

Area and Population

Area (ha) 10,364 10,364

Population (2006 Census) 57,200 57,100

Valuation

Rateable Properties (number of) 24,440 24,236

Non Rateable Properties (number of) 362 358

Gross Capital Value 10,235,815,900 10,113,764,650

Net Capital Value (i.e. capital value of rateable property) 9,767,356,450 9,649,485,200

Gross Land Value 4,852,964,050 4,826,394,800

Net Land Value (i.e. land value of rateable property) 4,661,235,600 4,634,509,350

Date of last revision of values 2008 2008

Rates and Rating

Total rates struck (incl. GST) 47,893,327 46,507,307

System of rating Land Value Land Value

Public Debt

Public debt outstanding (excluding finance leases) 6,043,700 7,054,500

Loan redemption reserves 1,260,260 1,142,749

Unexercised loan authorities 73,181,000 67,362,000

Building Consents

Value of consents for year 116,037,547 134,040,333

Value of consents for residential properties 60,877,621 53,379,436

Date of Constitution of City 1989 1989

Average Residential Rates

1,463

1,550

1,554

1,487

1,652

1,694

1,757

1,742

1,789

1,691

1,638

1,428

1,520

1,533

1,536

1,623

1,636

1,640

1,645

1,679

1,689

1,593

Timaru

Napier

Hamilton

Invercargill

Hastings

Wanganui

Tauranga

Palmerston North

Rotorua

Whangarei

AVERAGE

2009/10 2008/09


Community Outcomes

The Community Outcomes were established in Hawke’s Bay jointly for the five Hawke’s Bay Councils - Napier City Council, Hastings District Council, Central Hawke’s Bay District Council, Wairoa District Council and Hawke’s Bay Regional Council. It is important to remember that these outcomes belong to the community – they are not Council outcomes. They were determined from an extensive consultation process with the community in 2003/04, which included telephone surveys, district meetings with key stakeholders, mail outs, media campaigns and interviews. The outcomes that have been developed represent the views of individuals and organisations on the important ingredients for the future economic, social, cultural and environmental wellbeing of the region. The Community Outcomes are generally similar across the region with some priority of outcomes specific to Napier City.

The first monitoring report was produced in May 2009 which is a report at the region wide level. Copies of the report are available on the Napier City Council website. District level information is to be investigated and developed and included in future reports. The Local Government Act 2002 Amendment Bill currently before parliament includes changes to the provisions relating to Community Outcomes. The effect of any changes will be reflected in Council’s 2012 Long Term Plan.

The Council considers that meeting its service level targets constitutes its major role as a contributor to the progress of Community Outcomes for the 2009/10 year. The main contributions of Council’s activities to the nine community outcomes, providing economic, environmental and social and cultural wellbeing, are as follows:

Economic Wellbeing

Outcome - A strong prosperous and thriving economy.

Inner Harbour facilitates the fishing industry by maximising berthage facilities.

Napier War Memorial Conference Centre promotes Napier as a conference destination and is an integral part of the Marine Parade precinct.

HB Museum and Art Gallery is an integral part of the Marine Parade / Herschell Street cultural precinct and utilises a nationally significant regional collection.

City and Business Promotion is directly concerned with increasing the overall economic well-being of the Napier community, working in association with community agencies and central government.

City Promotion Grants primary focus is the economic wellbeing of the community.

National Aquarium of NZ helps to promote tourism in Napier and the region.

Napier i-SITE Visitor Centre provides increased information about Napier to visitors to promote visitor spending.

Par 2 MiniGolf is a tourism promotion which provides a return on investment to Council.

Kennedy Park provides access for a wide range of visitors and contributes to local employment opportunities, and provides an economic return. It provides support to National and Regional sports events.

Lagoon Farm in future will provide land for Business Park development.

Parklands Residential Development provides residential land for growth and development.

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

Outcome - Infrastructure and services that are safe, effective and integrated.

Sportsgrounds provide a full range of attractive facilities for organised outdoor sports for use by citizens and visitors.

Marine Parade Pools provide well presented and modern aquatic facilities and local business opportunities.

Inner Harbour maintains the Inner Harbour environment to allow safe access to the amenities.

Public Toilets provide and maintain suitably located and adequate number of public toilets throughout the city, minimising closure due to cleaning or repair and maintenance.

Planning Policy develops planning frameworks for identified city growth and development areas such as the greenfield growth areas of infill and adequate supply of commercial and industrial zoned land.

Regulatory Consents provides the administration and monitoring of the District Plan through the resource consents process.

Building Consents provides controls, inspections and enforcement to maintain a safe built environment.

Parking Services provide accessible quality transportation amenities.

Roading constructs and maintains roads and footpaths and cycle ways at an appropriate standard to meet the residents satisfaction targets with paths and roads in the NRB Customer Satisfaction Survey.

Solid Waste provides ease of access through improved facilities.

Stormwater maintains pumping stations and open drains to a standard that will maximise the pumping capacity.


Wastewater provides and maintains a wastewater system with adequate wastewater capacity.

Water Supply provides flushing and cleaning of the system and makes capacity and storage improvements.

Social and Cultural

Outcome - Strong regional leadership and a sense of belonging.

Democracy and 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.

HB Museum and Art Gallery is the leading regional arts and culture institution.

Community Advice recognises the needs of the communities of interest, community organisations, youth and youth service providers, and resettled migrants and key migrant providers towards a sense of ownership and belonging. Community Advice supports migrants who resettle in the Hawke’s Bay and builds on a sense of community pride and identity with the assistance of migrant services and other key partners.

Outcome - Supportive, caring and inclusive communities.

Libraries provide reading programmes for children and teens to support literacy.

Community Advice supports and encourages voluntary and community based organisations, youth providers and migrant services and relevant stakeholders to address important community, social and cultural issues in the city through self-help processes. Community Advice recognises the needs of the communities of interest, youth and migrants that will lead to possible solutions or joint effort toward agreed goals in a sustainable manner.

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

Retirement and Rental Housing provides affordable housing with resident assistance, support and advice.

Cemeteries provide and maintain burial facilities for the community preserving the historic and cultural significance and providing genealogical information.

Emergency Management formulates community networks and communication systems to respond effectively to a civil defence emergency.

Outcome - Safe and accessible recreational facilities.

Sportsgrounds promote the multiple use of facilities in order for grounds and buildings to be used to capacity.

Napier Aquatic Centre provides a safe and well presented aquatic centre whilst the standards are recognised to the highest national standards. It provides pool water quality that is safe for users and meets or exceeds national standards and installs pride in the centre by its users, and to assist the users in a positive recreational experience.

Marine Parade Pools provide an alternative recreation facility which encourages and promotes fitness of residents.

Reserves provide public gardens for the pleasure and quiet relaxation of residents and visitors with a network of open space reserves, which subdivide the city into manageable suburban areas and local community areas for general outdoor recreation for the use of the local residents, especially children.

Inner Harbour provides safe accessible water-based recreational opportunities.

Libraries are open to the public, 97 hours per week providing a variety of resources including books, magazines, audio visual materials and electronic databases. Staff are available at multiple service points to assist the public with obtaining the material they need. The library service is used by a wide variety of people.

Napier Municipal Theatre provides a facility for commercial and community hire.

HB Museum and Art Gallery is located strategically in the centre of Napier City providing a facility for cultural stimulation and commercial and community hire.

Halls provide communities with a place to come together for meetings and activities.

National Aquarium of NZ provides safe, educational and recreational facility for schools, young people and families.

Par 2 MiniGolf provides an attractive and relaxed leisure environment where all ages, fitness levels, families, school groups etc can ‘Play together – have fun’.

Outcome - Communities that value and promote their unique culture and heritage.

Libraries maintain 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. Libraries index all family notices and important local news stories published in the main local journal(s) of record to acceptable library standards and make it electronically accessible to all library users.

Community Outcomes


Community Outcomes

Napier War Memorial Conference Centre houses and maintains the historically significant eternal flame memorial and roll of honour.

Napier Municipal Theatre values and protects a place of historical significance.

HB Museum and Art Gallery provides cultural stimulation to local residents to improve their awareness and ability to understand the value of broad cultural engagement. It produces exhibitions of national standards, attracting domestic and international visitors to Hawke’s Bay.

Planning Policy identifies the heritage value of the city as a whole through adding to the heritage inventory when appropriate and commissioning appropriate Heritage studies.


Environmental Wellbeing

Outcome - A lifetime of good health and wellbeing.

Community Advice supports community activities and projects that enhance health and well being led by other key stakeholders and providers for the benefit of Napier residents, visitors and the wider community.

Emergency Management identifies hazards and risks and plans for the management and response to a civil defence emergency.

Environmental Health carries out inspections of registered premises, undertakes a water sampling programme in excess of the National Drinking Water Standard requirements and provides noise control.

Solid Waste safeguards the environment and community health.

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

Wastewater protects public health by means of collection, conveyance and disposal of wastewater from urban areas.

Water Supply provides water suitable for human consumption.

Outcome - Safe and secure communities.

Community Advice is proactive in leading activities, projects or programmes in a collaborative way with key stakeholders that lead to citywide and regional benefits and outcomes. Community Advice supports community activities and projects that enhance community safety and social well being for the benefit of Napier residents, visitors and the wider community.

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. It promotes safety in the community that emphasises situational crime.

Retirement and Rental Housing provides a safe environment for the tenants and ensures tenants comply with the conditions of the Tenancy Agreement and identifies any maintenance or capital improvements required.

Planning Policy encourages all relevant stakeholders to have the opportunity to comment prior to formal notification of District Plan modifications.


Animal Control provides services that are effective in reducing registration costs, consistent application of the principles of equity and fairness, a more co-ordinated approach to social service delivery to provide a secure and more satisfying environment and improved safety and quality of the urban environment.

Parking Services contribute to a safe inner city and traffic and pedestrian safety in the suburbs.

Roading designs and constructs safety improvements to minimise the number of injury crashes and provides adequate street lighting.

Outcome - An environment that is appreciated, protected and sustained for future generations.

Reserves sustainably manage, develop and use reserves of ecological importance primarily as a natural recreational resource for the enjoyment of the residents of and visitors to Napier.

National Aquarium of NZ raises environmental awareness in the community through increased understanding of marine life, conservation and environmental issues.

Planning Policy clearly and effectively communicates planning and resource management processes to the public.


Animal Control provides services that are effective in reducing registration costs, consistent application of the principles of equity and fairness, a more co-ordinated approach to social service delivery to provide a secure and more satisfying environment and improved safety and quality of the urban environment.

Solid Waste protects resources by reducing waste generated and ensures the producer pays for disposal to reflect the true cost of waste.

Stormwater complies with the requirements of resource consents for discharging stormwater.

Wastewater protects the environment from adverse effects of wastewater by compliance with discharge consents and conditions.


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.

Responsibility

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

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.

3. In the opinion of the Napier City Council and its management the annual Financial Statements for the year ended 30 June 2010 fairly reflect the financial position and operations of Napier City Council.

Neil Taylor Barbara Arnott CHIEF EXECUTIVE MAYOR6 October 2010 6 October 2010

Statement of Compliance and Responsibility


Audit New Zealand Report

Audit Report

To the readers ofNapier City Council’s

financial statements and activity statementsfor the year ended 30 June 2010

The Auditor General is the auditor of Napier City Council (the City Council). The Auditor General has appointed me, Mark Maloney, using the staff and resources of Audit New Zealand, to carry out the audit on her behalf. The audit covers the financial statements, the activity statements and the City Council’s compliance with the other requirements of Schedule 10 of the Local Government Act 2002 that are included in the annual report of the City Council for the year ended 30 June 2010.

Unqualified opinion

In our opinion: • The financial statements of the City Council on pages 18 to 114:

º comply with generally accepted accounting practice in New Zealand; and º fairly reflect:

• the City Council’s financial position as at 30 June 2010; and • the results of its operations and cash flows for the year ended on that date.

• The activity statements of the City Council on pages 66 to 118: º complies with generally accepted accounting practice in New Zealand; and º fairly reflects the City Council’s levels of service provision for the year ended 30 June 2010,

including:• the levels of service provision as measured against the intended levels of service provision

adopted in the long-term council community plan; and º the reasons for any significant variances between the actual service provision and the

expected service provision.• The City Council has complied with the other requirements of Schedule 10 of the Local

Government Act 2002 that are applicable to the annual report, and that are included in the City Council’s financial statements and activity statements.

The audit was completed 6 October 2010, 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, the activity statements 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, the activity statements 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, the activity statements and the other requirements. We assessed the results of those procedures in forming our opinion.Audit procedures generally include:• determining whether the significant management and system controls are working and can be relied

on to produce complete and accurate data;


Audit New Zealand Report

• verifying samples of transactions and account balances;• performing analyses to identify anomalies in the reported financial and service provision data;• reviewing significant estimates and judgements made by the Council;• confirming year-end balances; • determining whether accounting policies are appropriate and consistently applied;• determining the appropriateness of the reported activity statements within the Council’s framework

for reporting performance; and • determining whether all required disclosures are adequate.We did not examine every transaction, nor do we guarantee complete accuracy of the financial statements, the activity statements and the other requirements.We evaluated the overall adequacy of the presentation of information in the financial statements, the activity statements 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 and activity statements in accordance with generally accepted accounting practice in New Zealand. The financial statements must fairly reflect the financial position of the City Council as at 30 June 2010. They must also fairly reflect the results of its operations and cash flows for the year ended on that date. The activity statements must fairly reflect the City Council’s levels of service provision for the year ended 30 June 2010.The Council is also responsible for meeting the other requirements of Schedule 10 of the Local Government Act 2002 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, the activity statements 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 New Zealand Institute of Chartered Accountants. Other than the audit and in carrying out the audit of long-term council community plan, we have no relationship with or interests in the City Council.

Mark MaloneyAudit New ZealandOn behalf of the Auditor GeneralPalmerston North, New Zealand

Matters relating to the electronic presentation of the audited financial statements, service provision information and the other requirementsThis audit report relates to the financial statements, service provision information and the other requirements of Napier City Council for the year ended 30 June 2010 included on Napier City Council’s website. The Council is responsible for the maintenance and integrity of Napier City Council’s website. We have not been engaged to report on the integrity of Napier City Council’s website. We accept no responsibility for any changes that may have occurred to the financial statements, service provision information and the other requirements since they were initially presented on the website. The audit report refers only to the financial statements, service provision 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, service provision 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, service provision information and the other requirements as well as the related audit report dated 6 October 2010 to confirm the information included in the audited financial statements, service provision information and the other requirements presented on this website.Legislation in New Zealand governing the preparation and dissemination of financial information may differ from legislation in other jurisdictions.

2FINANCIAL

STATEMENTS


Statement of Comprehensive Incomefor the year ended 30 June 2010

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

Note

Actual2010$000

Budget2010$000

Actual2009$000

Income

Rates Revenue 3 42,898 42,434 41,724

Finance Income 8 2,498 1,389 3,034

Other Revenue 4 46,815 45,208 38,557

Other Gains/(Losses) 5 (2,991) 1,240 (8,222)

Total Income 89,220 90,271 75,093

Expenditure

Employee Benefit Expenses 6 23,789 23,136 23,402

Depreciation and Amortisation 16, 17 18,444 19,749 17,577

Other Expenses 7 30,125 30,874 29,133

Finance Costs 8 424 1,124 747

Total Operating Expenditure 72,782 74,883 70,859

Operating Surplus/(Deficit) before Tax 16,438 15,388 4,234

Share of Associate Surplus/(Deficit) 19 69 117 207

Surplus/(Deficit) before Tax 16,507 15,505 4,441

Income Tax Expense 9 - - -

Surplus/(Deficit) after Tax 16,507 15,505 4,441

Other Comprehensive Income

Valuation Gains taken to Equity 470 - (1,200)

Total Comprehensive Income 16,977 15,505 3,241


Note

Actual2010$000

Budget2010$000

Actual2009$000

Income

Recreation 5,619 2,284 2,099

Social and Cultural 6,813 5,966 6,561

City Promotion 5,638 5,554 5,735

Planning and Regulatory 4,459 4,154 4,069

Roading 5,944 9,893 7,122

Water and Wastes 16,712 18,876 17,029

Property Assets 9,747 10,577 (1,571)

Total Operating Revenue 54,932 57,304 41,044

Non Targeted Rates 30,868 30,507 30,076

Interest Income 2,497 1,389 3,034

Rendering of Services 480 585 503

Other Income 443 487 436

Total Income 89,220 90,271 75,093

Expenditure

Democracy and Governance 1,773 1,948 1,784

Recreation 8,819 9,397 9,330

Social and Cultural 13,276 13,837 13,253

City Promotion 7,274 7,478 7,653

Planning and Regulatory 5,488 5,307 5,488

Roading 13,968 15,543 14,286

Water and Wastes 16,816 18,956 16,635

Property Assets 7,227 5,175 3,375

74,641 77,641 71,804

Internal Expenditure (2,221) (3,916) (2,523)

Rates Remissions 314 211 386

Other Expenses 48 947 1,192

Total Operating Expenditure 72,782 74,883 70,859

Operating Surplus/(Deficit) before Tax 16,438 15,388 4,234

Share of Associate Surplus/(Deficit) 19 69 117 207

Surplus/(Deficit) before Tax 16,507 15,505 4,441

Income Tax Expense 9 - - -

Surplus/(Deficit) after Tax 16,507 15,505 4,441

Total interest expense as per Note 8 - Finance Income and Finance Costs is included in the cost of services expenditure above and in the Activity Statements.

* The 2008/09 actual values and 2009/10 budget figures have been restated to include Financial and Capital Contribution Petrol Tax and UAC revenue attributable to each activity.

Income Statementfor the year ended 30 June 2010



Note

Actual2010$000

Budget2010$000

Actual2009$000

Retained Earnings at beginning of period 659,565 671,654 653,319

Surplus/(Deficit) after Tax (i) 16,507 15,505 4,441

Transfers from Restricted Reserves 3,759 1,677

Transfer to Restricted Reserves (4,454) (383) (903)

Transfer from Revaluation Reserve on disposal of Property, Plant and Equipment 6,266 4,885 1,031

Retained Earnings at close of period 24 681,643 691,661 659,565

Other Reserves

Revaluation Reserve at beginning of period 596,613 596,858 598,844

Restricted Reserve at beginning of period 7,511 8,656 8,285

Fair Value through Equity Reserve at beginning of period 101 101 101

Other Reserves at beginning of period 604,225 605,615 607,230

Movements

Transfers from Restricted Reserves to Retained Earnings (3,759) - (1,677)

Transfers from Retained Earnings to Restricted Reserves 4,454 383 903

Valuation Gain/(Loss) taken to Equity (ii) 470 - (1,200)

Transfer to Retained Earnings on disposal of Property, Plant and Equipment (6,266) (4,885) (1,031)

Total Movements in Other Reserves (1,342) (4,502) (3,005)

Revaluation Reserve at close of period 590,807 591,973 596,613

Restricted Reserve at close of period 8,206 9,039 7,511

Fair Value through Equity Reserve at close of period 111 101 101

Total Other Reserves at close of period 24 599,124 601,113 604,225

Total Equity 1,280,767 1,292,774 1,263,790

Total Comprehensive Income includes items (i) and (ii) above 16,977 15,505 3,241

Statement of Changes in Equityfor the year ended 30 June 2010



Statement of Financial Positionas at for the year ended 30 June 2010


Note

Actual2010$000

Budget2010$000

Actual2009$000

Assets

Current Assets

Cash and Cash Equivalents 10 5,518 4,783 5,805

Debtors and Other Receivables 11 10,886 9,946 9,918

Inventories 12 2,651 4,990 5,144

Biological Assets 13 379 200 240

Other Financial Assets 14 41,567 8,903 21,213

Non-current Assets held for sale 15 - - -

Total Current Assets 61,001 28,822 42,320

Non-current Assets

Property, Plant and Equipment 16 1,194,198 1,229,055 1,195,699

Intangible Assets 17 280 430 286

Inventories 12 4,306 3,123 -

Investment Property 18 35,984 47,156 37,400

Investment in Associates 19 3,655 4,124 3,124

Other Financial Assets 14 5,355 7,858 9,893

Total Non-current Assets 1,243,778 1,291,746 1,246,402

Total assets 1,304,779 1,320,568 1,288,722

Liabilities

Current Liabilities

Creditors and Other Payables 20 8,965 9,262 10,756

Employee Benefit Liabilities 21 2,821 2,082 2,838

Borrowings 22 2,010 2,079 1,023

Total Current Liabilities 13,796 13,423 14,617

Non-current Liabilities

Provisions 23 2,182 1,540 2,386

Revenue received in advance 4 2,164 - -

Employee Benefit Liabilities 21 1,834 2,134 1,883

Borrowings 22 4,036 10,697 6,046

Total Non-current Liabilities 10,216 14,371 10,315

Total Liabilities 24,012 27,794 24,932

Equity

Retained Earnings 24 681,643 691,661 659,565

Other Reserves 24 599,124 601,113 604,225

Total Public Equity 1,280,767 1,292,774 1,263,790

Total Liabilities and Equity 1,304,779 1,320,568 1,288,722


Statement of Cash Flowsfor the year ended 30 June 2010

Note

Actual2010$000

Budget2010$000

Actual2009$000

Cash Flows from Operating Activities

Receipts from Rates Revenue 43,135 42,434 41,440

Interest received 1,791 1,389 3,655

Dividends received 17 - 24

Receipts from Other Revenue 47,719 40,942 36,690

Goods and Services Tax (net) 595 - (814)

Payments to Suppliers and Employees (51,860) (58,516) (50,001)

Interest paid (461) (1,124) (798)

Net Cash from Operating Activities 29 40,936 25,125 30,196

Cash Flows from Investing Activities

Proceeds from sale of Property, Plant and Equipment 444 5,146 934

Proceeds from withdrawal of Investments 50,213 8,308 57,754

Purchase of Property, Plant and Equipment (24,756) (35,527) (32,743)

Purchase Intangible Assets (101) - -

Acquisition of Investments (66,000) (2,597) (49,245)

Net Cash from Investing Activities (40,200) (24,670) (23,300)

Cash Flows from Financing Activities

Proceeds from Borrowings - 1,250 -

Repayment of Borrowings (1,011) (1,019) (4,508)

Payment of Finance Lease Liabilities (12) - (51)

Net Cash from Financing Activities (1,023) 231 (4,559)

Net (decrease)/increase in Cash, Cash Equivalents & Bank Overdrafts (287) 686 2,337

Cash, Cash Equivalents & Bank Overdrafts at 1 July 2009 5,805 4,097 3,468

Cash, Cash Equivalents and Bank Overdrafts at 30 June 2010 5,518 4,783 5,805

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.



Notes to the Financial Statementsfor the year ended 30 June 2010

1.1 Reporting Entity

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

The accounting policies adopted for preparation of the 2009/10 financial statements comply with the New Zealand equivalents to International Reporting Standards (NZ IFRS) and are set out below. These policies have been consistently applied to the year presented, unless otherwise stated. The financial statements include separate financial statements for Napier City Council (the Council) as an individual entity and its 26% equity share of its associate Hawke’s Bay Airport Limited which is equity accounted.

The primary objective of the Council is to provide goods and services for the community or social benefit rather than making a financial return. Accordingly, the Council has designated itself as a public benefit entity for the purposes of New Zealand equivalents to NZ IFRS. Although the Council’s associate company (Hawke’s Bay Airport Limited) is not classified as a public benefit entity, the Council is considered a public benefit entity for the purposes of New Zealand equivalents to NZ IFRS.

The financial statements of the Council are for the year ended 30 June 2010. The financial statements were authorised for issue by the Council on 21 October 2010.

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 NZ IFRS, and other applicable Financial Reporting Standards, as appropriate for public benefit entities.

These financial statements have been prepared in accordance with the requirements of the Local Government Act 2002: Part 6, Section 98 and Part 3 of Schedule 10, which includes the requirement to comply with New Zealand generally accepted accounting practice (NZ GAAP).

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

1.3 Changes in Accounting Policies

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

Existing policies have also been detailed in the accounting policies to provide additional clarification for readers of the financial statements.

The Council has adopted the following revisions to accounting standards during the financial year, which have had only a presentational or disclosure effect:

• NZ IAS 1 Presentation of Financial Statements (Revised 2007) replaces NZ IAS 1 Presentation

1. Statement of Accounting Policies for the year ended 30 June 2009

of Financial Statements (Issued 2004). The revised standard requires information in financial statements to be aggregated on the basis of shared characteristics and introduces a statement of comprehensive income. The statement of comprehensive income will enable readers to analyse changes in equity resulting from non-owner changes separately from transactions with owners. The Council has decided to prepare a single statement of comprehensive income for the year ended 30 June 2010 under the revised standard. Financial statement information for the year ended 30 June 2009 has been restated accordingly. Items of other comprehensive income presented in the statement of comprehensive income were previously recognised directly in the statement of changes in equity.

• Amendments to NZ IFRS 7 Financial Instruments: Disclosures. The amendments introduce a three-level fair value disclosure hierarchy that distinguishes fair value measurements by the significance of valuation inputs used. A maturity analysis of financial assets is also required to be prepared if this information is necessary to enable users of the financial statements to evaluate the nature and extent of liquidity risk. The transitional provisions of the amendment do not require disclosure of comparative information in the first year of application. The Council has elected to disclose comparative information.

Standards, amendments and interpretations issued that are not yet effective and have not been early adopted and which are relevant to Napier City Council include:

• NZ IFRS 9 Financial Instruments will eventually replace NZ IAS 39 Financial Instruments: Recognition and Measurement. NZ IAS 39 is being replaced through the following 3 main phases: Phase 1 Classification and Measurement, Phase 2 Impairment Methodology, and Phase 3 Hedge Accounting. Phase 1 on the classification and measurement of financial assets has been completed and has been published in the new financial instrument standard NZ IFRS 9. NZ IFRS 9 uses a single approach to determine whether a financial asset is measured at amortised cost or fair value, replacing the many different rules in NZ IAS 39. The approach in NZ IFRS 9 is based on how an entity manages its financial instruments (its business model) and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the many different impairment methods in NZ IAS 39. The new standard is required to be adopted for the year ended 30 June 2014. Napier City Council has not yet assessed the effect of the new standard and expects it will not be early adopted.


• NZ IAS 24 Related Party Disclosures (Revised 2009) replaces NZ IAS 24 Related Party Disclosures (Issued 2004). The revised standard simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition. The revised NZ IAS 24 is required to be applied, at the latest, in preparing the 30 June 2012 financial statements.

1.4 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 Principles of Consolidation

Consolidated financial statements are prepared adding together like items of assets, liabilities, equity, income, and expenses on a line-by-line basis. All significant intra-group balances, transactions, income, and expenses are eliminated on consolidation.

AssociatesAssociates 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.

Dividends receivable from associates are recognised in the Council’s Statement of Comprehensive Income.

The Council’s associate investment is accounted for in the financial statements using the equity method. An associate is an entity over which the Council has significant influence and that is neither a subsidiary nor an interest in a joint venture. The investment in an associate is initially recognised at cost and the carrying amount in the financial statements is increased or decreased to recognise the Council’s share of the surplus or deficit of the associate after the date of acquisition. Distributions received from an associate reduce the carrying amount of the investment.

If the share of deficits of an associate equals or exceeds its interest in the associate, the Council discontinues recognising its share of further deficits. After the Council’s interest is reduced to zero, additional deficits are provided for, and a liability is recognised, only to the extent that the Council has incurred legal or constructive obligations or made payments on behalf of the associate. If the associate subsequently reports surpluses, the Council will resume recognising its share of those surpluses only after its share of the surpluses equals the share of deficits not recognised.

Where the Council transacts with an associate, surplus or deficits are eliminated to the extent of the group’s interest in the associate.

Dilution gains or losses arising from investments in

associates are recognised in the surplus or deficit.

Entities are required to disclose all accounting policies that are relevant to an understanding of the financial statements. The investment in the associate is carried at cost in the Council’s financial statements.

Subsidiaries

As at 30th June 2010 the Council has no subsidiaries.

1.6 Joint Ventures

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

1.7 Foreign Currency Translation

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

Transactions and BalancesForeign 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 Comprehensive Income, 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:

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

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

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

• Licences and permitsRevenue derived from licences and permits are recognised on application.

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




• Sales of goods – retailSales 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 servicesSales 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 revenueRental revenue is recognised in the period that it relates to.

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

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

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

• Grants and subsidiesGrants 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. The Council receives the majority of grants and subsidies income from Land Transport New Zealand (LTNZ) which subsidises part of Napier City Council’s costs in maintaining the local road infrastructure.

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 Comprehensive Income has been prepared so that all components are stated exclusive of GST. All items in the Statement of Financial Position are stated net of GST, with the exception of receivables and payables, which include GST invoiced.

Commitments and contingencies are disclosed exclusive of GST.

1.11 Leases

The Council is the LesseeLeases of property, plant and equipment where the Council has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other long term payables. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The interest element of the finance cost is charged to the Statement of Comprehensive Income 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 Comprehensive Income on a straight line basis over the period of the lease.

The Council is the LessorAssets 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 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.

1.13 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.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for impairment of receivables is established when there is objective evidence that the Council will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the Statement of Comprehensive Income.

1.14 Inventories

Raw Materials and Stores, Work In Progress and Finished GoodsRaw materials and stores, and finished goods are stated at the lower of cost and net realisable value costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Inventory Held for DistributionInventories held for distribution are measured either

at cost or at cost adjusted where applicable for any loss of service potential. These assets are held for distribution at no charge in the ordinary course of the Council’s operations.

1.15 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 in the Council’s operating costs. 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.

1.16 Investments and Other Financial Assets

Financial Assets at Fair Value through Profit or LossThis 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 as held for trading 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 ReceivablesLoans 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. Those with maturities greater than 12 months after the Statement of Financial Position date are classified as non-current assets.




Held to Maturity InvestmentsHeld 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 EquityAvailable for sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the Statement of Financial Position date.

Purchases and sales of investments are recognised on trade date, the date on which the Council commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Council has transferred substantially all the risks and rewards of ownership.

Measurement of Investments and Other Financial AssetsAvailable 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 Comprehensive Income as gains and losses from investment securities.

Fair Value ChangesThe 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.

Impairment of Financial AssetsThe 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 Comprehensive Income. Impairment losses recognised in the Statement of Comprehensive Income on equity instruments are not reversed through the Statement of Comprehensive Income.

1.17 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 HedgeChanges in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Statement of Comprehensive Income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Cash Flow HedgeThe 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 Comprehensive Income.

Amounts accumulated in equity are recycled in the Statement of Comprehensive Income 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 Comprehensive Income. 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 Comprehensive Income.Derivatives that do not Qualify for Hedge AccountingCertain 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 Comprehensive Income.

1.18 Fair Value EstimationThe 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.

1.19 Property, Plant and EquipmentItems 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.

Assets which are revalued (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 and impairment losses. 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 Comprehensive Income during the financial period in which they are incurred.

Increases in the carrying amounts arising on revalued assets are credited to a revaluation reserve in public equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit and loss. Decreases that reverse previous increases of the same asset are first charged against revaluation reserve directly in equity to the extent of the remaining reserve attributable to the asset; all other decreases are charged to the Statement of Comprehensive Income.

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 & structural improvements 2 to 10%Fixed plant & equipment 5 to 20%Mobile plant & equipment 5 to 50%Motor vehicles 10 to 33.33%Furniture & fittings 4 to 20%Office equipment 8 to 66.67%Library bookstock 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:

YearsRoadingBase course 70Surfacings 12Concrete pavers 70Footpaths & pathways/walkways 15-80Drainage 14-80Bridges & structures 20-100Road lighting 4-50Traffic services & safety 10-25

Water Reticulation 56-107Reservoirs 100Pump stations 25-80

Stormwater Reticulation 100Pump stations 15-75

Sewerage Reticulation 80Pump stations 15-80Milliscreen 10-80Outfall 80




YearsOthersGrandstands, community & sports halls 50Sportsgrounds, parks & reservesimprovements 10-50Buildings on reserves 10-50Pools 10-50Inner harbour 20-50

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each Statement of Financial Position date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 1.12).

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Comprehensive Income. 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 EquipmentAs at 30 June 2010, Council’s Property and Equipment are valued as follows:

Description Method of valuation

Investment property

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2009 using fair value. Valuation of this class of asset is performed on an annual basis (see also note 1.21).

Library collections

Valued at depreciated replacement cost in accordance with the guidelines released by the New Zealand Library Association and the National Library in May 2002 for general collections and replacement cost for the Heritage Collection. Library valuations are performed by Dr Robin Watt MA (Hons.) PhD of R J Watt & Associates on an annual basis. The last valuation was performed in June 2009.

Land under roads

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

Land and buildings

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

Infrastructural assets

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

Restricted assets

Valued by independent registered valuer M. Penrose, ANZIV, SNZPI, AAMINZ of Telfer Young (HB) Ltd as at 30 June 2008 using depreciated replacement cost method. Restricted 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 restricted asset classes carried at valuation were valued.

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.

1.20 Investment Property

Investment property is held for long term rental yields and capital appreciation and is not occupied by the Council or held to meet service delivery objectives.

Properties leased to third parties under operating leases will generally be classified as investment property unless:

• the property is held to meet service delivery objectives, rather than to earn rentals or for capital appreciation;


• the occupants provide services that are integral to the operation of the owner’s business and/or these services could not be provided efficiently and effectively by the lessee in another location;

• the property is being held for future delivery of services;

• the lessor uses services of the owner and those services are integral to the reasons for their occupancy of the property.

Investment property is carried at fair value, representing open market value determined annually by external valuers. Changes in fair values are recorded in the Statement of Comprehensive Income as part of other gains/(losses).

1.21 Intangible AssetsTrademarks and LicencesTrademarks 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 SoftwareAcquired 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.

1.22 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).

1.23 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 Comprehensive Income 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.

1.25 Borrowing Costs

The Council has elected to defer the adoption of NZ IAS 23 Borrowing Costs (Revised 2007) in accordance with the transitional provisions which are applicable to public benefit entities.

Consequently, all borrowing costs are recognised as an expense in the period in which they are incurred.

1.26 Provisions

Provisions are recognised when the Council has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. An increase in the provision due to the passage of time is recognised as an interest expense.

1.27 Grant Expenditure

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

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




1.28 Employee Benefits

Wages and Salaries, Annual Leave and Sick LeaveLiabilities 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 GratuitiesThe 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 ObligationsCurrent 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 there is no consistent and reliable basis for allocating the obligation scheme assets and cost of the multi-employer 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 PlansThe Council recognises a liability and an expense for bonuses where contractually obliged or where there is a past practice that has created a constructive obligation.

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

1.30 EquityEquity is the community’s interest in the 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

Restricted and Council Created ReservesRestricted 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 the Council.

Restricted reserves are those subject to specific conditions accepted as binding by the Council and which may not be revised by the 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.

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

1.31 Budget Figures

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

1.32 Cost Allocation

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

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

1.33 Crit ical Accounting Estimates and Assumptions

In preparing these financial statements the 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:

Landfill Aftercare ProvisionNote 24 discloses an analysis of the exposure of the Council in relation to the estimates and uncertainties surrounding the landfill aftercare provision.

Infrastructural AssetsThere 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 of 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 the Council could be over or under estimating the annual depreciation charge recognised as an expense in the Statement of Comprehensive Income. To minimise this risk, the Council’s 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 Council asset management planning activities, which gives the Council further assurance over its useful life estimates.

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

Critical Judgements in Applying Napier City Council’s Accounting PoliciesManagement has exercised the following critical judgements in applying the Council’s accounting policies for the period ended 30 June 2010.

Classification of PropertyThe Council owns a number of leasehold land and rental properties. The receipt of market-based rentals from these properties is incidental to the holding of these properties. In the case of residential leasehold properties, there are legal restrictions applying to how council can manage these properties and in the case of rental properties, these are held as part of the Council’s 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.




Explanations for major variations from Napier City Council's estimated figures in the 2009/10 Annual Plan are as follows:

Statement of Comprehensive Income Income

Income is $1.0m below 2009/10 budget and $14.1m above 2008/09 year in total. Notes 4 and 5 detail income received for 2008/09 and 2009/10 years. These notes detail the income components of the items comprising ‘other revenue’ and ‘other gains/(losses)’. Significant items of variance to budget are:

a) Finance income - this is the interest received by Council from placing cash on deposit, both short and medium term, with banks or in corporate bonds. The income received is above budget due to higher than budget average interest rates achieved during 2009/10 ($375,000 increase), and from having higher than budget cash on deposit during 2009/10 ($734,000 increase).

b) Other revenue - The current slow down in housing and subdivision development is reflected in the other revenue for 2009/10. Revenues from financial contributions and vested assets from the private sector are $2.0m below budget and revenue from Council’s Parklands Residential Development, combined section sales and vested assets, is $1.4m below budget for the year. These reductions have been offset by revenues from donations and grants $4.7m above budget. The most significant donation received was from the McLean Park Trust for the development of the Graeme Lowe Stand of $4.0m. At the time budgets were prepared, it was anticipated that this donation would be received in the 2008/09 year. Additional unbudgeted donations of $0.5m were received for the Museum building project. These were from the Dobson Trust $479,000 and the Kingdom Foundation $50,000. These donations are held in a separate fund and will be applied to the cost of the new building during the course of the building project

c) Other gains/(losses) are $4.2m below budget. BERL forecast price change indexes were used in the budget preparation process. Based on these indexes it was anticipated that there would be a small increase in the value of Council’s investment property for the 2009/10 year of $1.2m. The valuation undertaken at 30 June assessed that there was a reduction in investment property values since 2008/09 of -$1.4m.

Expenditure

Total expenditure is $2.1m below budget and $1.9m above 2008/09 actual outcome. Significant items of variance are as follows:

a) Employee benefit expenses were $0.7m or 3% above budget and $0.4m or 2% above 2008/09 year. The difference between 2008/09 actual costs and 2009/10 actual costs was due to:

- Full Time Equivalents ‘FTE’s’ hours worked were 0.6% above 2008/09 or $0.1m,

- Increased holiday pay accruals $0.1m

- Increase in the average hourly cost per FTE of 1% `$0.2m.

The average hourly cost increase includes additional costs arising from the employer subsidy cost of increased staff participation in the Kiwi saver scheme between 2008/09 year and 2009/10 year. The 2009/10 budget was prepared on the basis of FTE hours and costs at September 2008.

b) Depreciation charges were $1.3m below budget for the year. This variance to budget arises from timing differences of capital additions between budget 2009/10 and actual 2009/10.

c) Other expenses are $0.7m below 2009/10 budget and $1.0m above 2008/09.

The cost of development of residential sections sold were $2.3m above 2009/10 year budget due to the increase in the number of sections sold in 2009/10 (40% above budget quantity). This increase of costs was offset by below budget operating costs refuse -$0.7m including lower operating costs Omarunui landfill -$0.5m, lower refuse costs due to reduced volume and lower litter collection costs -$0.2m. In addition Council building and rental housing maintenance was -$0.4m below budget, roading maintenance expenditure -$0.4m and -$0.2 decrease in potential liabilities arising from guarantees to community organisations. During the 2009/10 year significant internal works, both capital and operating, were undertaken by Council staff. This resulted in recoveries from jobs, plant and labour of -$1.3m above the level budgeted for 2009/10. Variances between 2008/09 year and 2009/10 include the cost of development of residential sections sold which were $3.4m above 2008/09 year due to the increase in the number of sections sold in 2009/10 and refuse costs which were $0.5m above 2008/09. Cost increases in refuse included increased recycling costs and increased landfill costs arising from the central government landfill levy. Increased costs between the 2 years were offset by costs incurred in 2008/09 and not in 2009/10. These included a change in the value of guarantees to community organisations -$1.0m, inner harbour dredging -$0.6 (undertaken every 3 - 5 years), contribution to Hawke’s Bay Inc. -$0.4m which was taken over by Hawke’s Bay Regional Council from 2009/10 year, lower roading maintenance expenditure -$0.4m and lower Council building and rental housing maintenance -$0.4m.

2. Explanation of Major Variances Against Budget


In addition internal recoveries from jobs, plant and labour were above 2008/09 by $0.6m.

d) Finance costs were -$0.7 below 2009/10 budget and -$0.3 below 2008/09 levels. This was due lower average loans than 2009/10 budget and the 2008/09 year.

Statement of Financial Position Current AssetsSignificant variances in current assets are:

a) The current portion of other financial assets consisted of cash on deposit where the deposit is held for more than 3 months and investments in local authority stock. At 30 June 2010 funds held in this classification were $34.8m above budget and $20.4m above 2008/09. The reasons for the variance in this item are reflected in the Statement of Cash Flow. Cash from operating activities is $15.8m above budget and $10.7m above 2008/09. This is the result of a combination of items including revenue above budget $6.0m McLean Park (partially included in prior year budgets) from grants, donations the sale of corporate boxes and the sale of naming rights, sale of residential sections at Parklands $2.1m above budget, payments to suppliers and employees $6.7m below budget, interest received $0.4m above budget and interest paid $0.7m below budget. In addition cash outflows for fixed assets purchases were $10.7m below budget. Council also started the year with cash on deposit $8.6m above that opening balance anticipated in the 2009/10 budget.

The significant variances between 2008/09 year and 2009/10 year arose from the additional revenue received for the McLean Park project $6.0m, additional Parklands residential section sales $4.7m and lower fixed assets purchases 2009/10 than 2008/09 $7.9m.

b) The current asset portion of inventories are below budget for 2009/10 year $2.3m. This is due to Parklands residential section sales above budget for 2009/10 and a higher portion of non-current inventory than that anticipated in the preparation of the 2009/10 budget.

Non-Current Assets

Significant variances in non-current assets are:

a) Property, plant and equipment was $34.8m below budget at year end. This is attributable to expenditure below budget $17.0m and opening fixed assets $17.3 below the value anticipated in the budget. $2.8m of the lower expenditure in the 2009/10 year was as a result of significantly lower than budget vested assets. The remainder, $14.2m, comprises projects that will be carried forward to 2010/11 year and amounts set aside for infrastructure asset renewal (IAR).

b) Investment properties are revalued annually and at 30 June 2010 the valuation was lower than budget expectations. As noted above for Income - Other gains and losses it was expected during the budget process that investment properties would increase in value in the 2009/10 year by $1.2m. However the valuation of these properties resulted in a further decrease from the 2008/09 year of -$1.4m. The balance of the difference between 2009/10 budget and 2009/10 outturn arose from a lower opening value than that anticipated in the budget.

c) Other financial assets comprise corporate bonds, local authority stock and unlisted shares. During the 2008/09 year this classification also included some term deposits. The variance between budget 2009/10, 2008/09 actual and 2009/10 actual arises from a move to maintain cash assets in shorter term deposits rather than deposits for a period of more than 12 months. There were no term deposits classified as non-current at 30 June 2010. The budget was prepared on the basis that some cash assets, in line with 2008/09, would be held on deposit with repayment due more than 12 months in the future. See also current assets a) above.

Current Liabilities

Significant variances in current liabilities are:

a) Employee benefit liabilities classified as current were $0.7m above budget. However, this difference is $0.4m when both current and Non-Current employee benefit liabilities are viewed as a single item. Both current and non-current values are in line with 2008/09 actual amounts.

Non-Current Liabilities

Significant variances in non-current liabilities are:

a) Revenue received in advance relates largely to McLean Park corporate boxes where the licence to occupy is granted for 10 years. Under NZ IAS revenue received for these licences, although the cash has been received, is required to be allocated over the 10 years of the box holder licence. The amount included in this classification is for the 8 years from 2011/12 to 2018/19.

b) Borrowings are $6.7m lower than budget for the period. This arises from loan funds budgeted but not yet drawn for projects planned to be in progress or completed either in 2009/10 or earlier. Funding of projects by internal loan, when cash flow requirements permit, have also reduced actual external borrowings required compared to the position forecast when the budget was prepared.



Equity

Significant variances in equity are;

a) Retained earnings are $9.9m below budget for the 2009/10 year. This resulted from a lower opening retained earnings balance than budgeted, $12.1m, and was offset by above budget transfers from revaluation reserves on sale of assets to retained earnings.

Statement of Movements In Equity

There are no significant variances in the statement of movements in equity for the year ended 30 June 2010.

3. Rates Revenue

Actual2010$000

Actual2009$000

Non-targeted rates 30,868 30,076

Targeted rates attributable to activities

Water 3,301 3,233

Sewerage 6,705 6,638

Refuse and Sanitation 1,708 1,461

Roading 164 164

Marketing 152 152

Total revenue from rates 42,898 41,724

Rates remissions (314) (386)

Rates revenue net of remissions 42,584 41,338

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.




4. Other Revenue

Actual2010$000

Actual2009$000

User charges 5,219 4,680

Land Transport NZ and other government grants 3,994 3,831

Regulatory revenue 2,677 2,306

Rental income from investment properties 922 924

Other rental income 3,918 3,713

Infringements and fines 822 768

Rendering of services 1,481 1,489

Retail and product sales 7,978 8,146

Omarunui Landfill joint venture 1,695 1,410

Sales residential development 8,704 3,516

Other income 186 637

Grants and donations 4,770 519

Petrol tax 402 384

Vested assets – Parklands Residential Development 1,695 2,424

Vested assets – other 124 2,207

Financial and development contributions – other 2,211 1,579

Dividend income 17 24

Total other revenue 46,815 38,557

Revenue Received in Advance

In the 2009/10 year Council received funds from the sale of both 10 year licences’ to occupy corporate boxes in the Graeme Lowe Stand at McLean Park and naming rights for the same. Recognition of these funds as revenue to Council will be spread over the life of each agreement. Consequently 10% of the funds received are recognised in current year income in user charges. The remaining 90% is included in the Statement of Financial Position within liabilities. Of the 90% included in the Statement of Financial Position, 10% is included in current liabilities, this being the amount to be recognised as revenue in 2010/11. The remainder, $2,164,000 (2009:$0), is separately disclosed, in non-current liabilities, as revenue received in advance. Total liabilities at 30 June 2010 will be amortised over the remaining 9 years of the licence and naming rights agreements.

5. Gains/(Losses)

Actual2010$000

Actual2009$000

Non-financial instruments

Gain/(loss) on revaluation of library bookstock (100) (176)

Gain/(loss) on revaluation of investment properties (1,416) (7,528)

Gain/(loss) on sale of assets 75 75

Gain/(loss) on disposal of assets (1,603) (708)

Fair value gain/(loss) on livestock 53 115

Total non-financial instruments gains/(losses) (2,991) (8,222)

Total gains/(losses) (2,991) (8,222)


6. Employee Benefit Expenses

Actual2010$000

Actual2009$000

Salaries and wages 23,513 22,987

Employer contributions to multi-employer defined benefit plans 265 121

Increase/(decrease) in employee benefit liabilities 11 294

Total employee benefit expenses 23,789 23,402

7. Other Expenses

Actual2010$000

Actual2009$000

Audit fees – financial statement audit 110 114

Audit fees – Ten Year Plan audit - 79

Donations 66 26

Bad debts written off 72 5

Rental expense on operating leases 184 178

Other operating expenses 29,693 28,731

Total other expenses 30,125 29,133

8. Finance Income and Finance Costs

Actual2010$000

Actual2009$000

Finance income

Interest income:

– term deposits and call accounts 1,821 2,313

– local authority stock 677 709

– sinking fund - 12

Total finance income 2,498 3,034

Finance costs

Interest expense:

– interest on external borrowings 424 746

– interest on internal borrowings 2,111 2,267

Total interest expense: 2,535 3,013

– discount unwind on provisions - -

– finance charges on leased assets - 1

Internal interest income (2,111) (2,267)

Total finance costs 424 747

Net finance income 2,074 2,287




9. Tax

Relationship between tax expense and accounting profit:

Actual2010$000

Actual2009$000

Surplus/(deficit) before tax 16,507 4,441

Tax at 30% (2009: 30%) 4,952 1,332

Non-taxable income (4,952) (1,332)

Tax expense - -

Additional Disclosures

A deferred tax asset has not been recognised in relation to unused tax losses of $1,031,238 (2009: $1,032,491).

10. Cash and Cash Equivalents

Actual2010$000

Actual2009$000

Cash at bank and in hand 3,857 4,036

Short term deposits maturing three months or less from date of acquisition - 1,000

Omarunui Landfill 1,661 769

Total cash and cash equivalents 5,518 5,805

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 includes the following for the purposes of the cash flow statement:

Actual2010$000

Actual2009$000

Cash at bank and in hand 3,857 4,036

Short term deposits maturing within three months - 1,000

Omarunui Landfill 1,661 769

Total cash and cash equivalents 5,518 5,805

Omarunui Landfill represents the Napier City Council share of the Omarunui Landfill investments at 30 June 2010.


11. Debtors and Other Receivables

Actual2010$000

Actual2009$000

Rates receivables 755 996

Other receivables 3,782 3,989

Parklands - unconditional contracts subdivision sales 5,107 3,656

Transfund NZ subsidy claims 1,175 1,152

Prepayments 67 125

Total debtors and other receivables 10,886 9,918

Debtors and other receivables are non interest bearing and receipt is normally on 30 day terms. Therefore the carrying value of debtors and other receivables approximates their fair value.

There is no concentration of credit risk with respect to receivables outside the Council, as the Council has a large number of customers.

The 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 the 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 judgement, then the Council can apply to the Registrar of the High Court to have the judgement enforced by sale or lease of the rating unit.

The amount of rates receivable overdue, whose payment terms have been renegotiated is $138,700 (2009: $170,300).

The Council holds no collateral as security or other credit enhancements over receivables that are past due. Other receivables have been assessed for impairment at year end by taking into consideration collectability on an individual basis and no additional provision is required.

The status of receivables as at 30 June 2010 and 2009 are detailed below:

Actual2010$000

Actual2009$000

Current 9,496 6,268

Past due 30 days 449 581

Past due 60 days 124 218

Past due 90 days 817 2,851

10,886 9,918




12. Inventories

Actual2010$000

Actual2009$000

Current portion

Inventory held for distribution 155 171

Inventory held for resale 116 133

Parklands - work in progress 2,380 4,840

Total current portion 2,651 5,144

Non-current portion

Parklands - land under development 3,431 -

Parklands - work in progress 875 -

Total non-current portion 4,306 -

Inventory held for distribution and resale decreased by $12,075 (2009: $17,000) as a result of stocktake adjustments.

The carrying amount of inventories pledged as security for liabilities is $nil (2009: $nil).

The Council is currently developing land for future sale. Of the costs incurred to date (including the value of land transferred to inventory) $4,306,000 are not expected to be recovered until after 30 June 2011.

13. Biological Assets

Actual2010$000

Actual2009$000

Biological assets changes in value

Opening value 1 July 240 189

Change in value arising from changes in fair value 53 115

Increase in value due to natural increase / (decrease) 65 67

Increase in value due to purchases 350 130

Change in value due to sales (329) (261)

Closing value 30 June 379 240

Biological assets comprise 2,560 (2009: 777) sheep largely held for breeding and 194 (2009: 235) cattle largely held for trading.


14. Other Financial Assets

Actual2010$000

Actual2009$000

Current portion

Short-term deposits with maturities of 4-12 months 37,669 17,000

Sinking fund investments - 213

Local authority stock 3,898 4,000

Corporate bonds - -


Non-current portion

Term deposits with maturities of over 12 months - 4,669

Sinking fund investments - -

Unlisted shares 464 454


Corporate bonds 500 500

Total non-current portion 5,355 9,893

There are no impairment provisions for other financial assets.

The carrying amount of term deposits approximates their fair value.

Local authority stock is classified as held to maturity. The fair value of local authority stock is $8,600,000 (2009: $8,822,000). Fair value has been determined by discounting cash flows from the instruments using a discount rate derived from relevant market inputs. The discount rates are 3.75% to 5.95% (2009: 3.60% to 6.50%).

Unlisted Shares – ValuationThe fair value of the unlisted shares have been determined as follows:

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

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

Fair Value Hierarchy DisclosuresFor those instruments recognised at fair value in the statement of financial position, fair values are determined according to the following hierarchy:

� Quoted market price (level 1) – Financial instruments with quoted prices for identical instruments in active markets.

� Valuation technique using observable inputs (level 2) – Financial instruments with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable.

� Valuation techniques with significant non-observable inputs (level 3) – Financial instruments valued using models where one or more significant inputs are not observable.

The following table analyses the basis of the valuation of classes of financial instruments measured at fair value in the statement of financial position.




30 June 2010Total$000

Quoted Market Price

$000

Observable Inputs

$000

Significant Non-

Observable Inputs

$000

Financial Assets

Derivatives - - - -

Shares 464 464 - -

Term Deposits 37,669 37,669 - -

Sinking Fund Investments - - - -

Local authority stock 8,600 8,600 - -

Corporate bonds 500 500 - -

Financial Liabilities

Derivatives - - - -

30 June 2009Total$000

Quoted Market Price

$000

Observable Inputs

$000

Significant Non-

Observable Inputs

$000

Financial Assets

Derivatives - - - -

Shares 454 454 - -

Term Deposits 21,669 21,669 - -

Sinking Fund Investments 213 213 - -

Local authority stock 8,822 8,822 - -

Corporate bonds 500 500 - -


Derivatives - - - -

15. Non-Current Assets Held for Sale

There are no non-current assets held for sale as at 30 June 2010 (2009: $nil).


16

. Pro

pert

y P

lan

t an

d E

qu

ipm

en

t

20

10

Co

st/

revalu

ati

on

Acc

um

ula

ted

d

ep

n a

nd

im

pair

men

t ch

arg

es

Carr

yin

g

am

ou

nt

Cu

rren

tyear

ad

dit

ion

s

Cu

rren

tyear

dis

po

sals

co

st

Cu

rren

t year

dis

po

sals

acc

um

ula

ted

Cu

rren

t year

tran

sfers

an

d

corr

ect

ion

sC

urr

en

t year

dep

reci

ati

on

Revalu

ati

on

su

rplu

sC

ost

/re

valu

ati

on

Acc

um

ula

ted

d

ep

reci

ati

on

an

d i

mp

air

men

t ch

arg

es

Carr

yin

g

am

ou

nt

1 J

uly

20

09

$0

00

1 J

uly

20

09

$0

00

1 J

uly

20

09

$0

00

$0

00

$0

00

$0

00

$0

00

$0

00

30

Ju

ne 2

01

0$

00

03

0 J

un

e 2

01

0$

00

03

0 J

un

e 2

01

0$

00

0

Co

un

cil

op

era

tio

nal

ass

ets

Land

87,1

86

-

87

,18

6

43

2

(5

,14

6)

--

--

82

,47

2

-

82

,47

2

Leas

ehold

lan

d 1

9,8

91

-

19

,89

1

- (

20

9)

--

--

19

,68

2

-

19

,68

2

Buildin

gs

50,1

96

(1,1

95

) 4

9,0

01

1

,75

4

(2

20

) 5

-

(1

,18

4)

- 5

1,7

30

(

2,3

74

) 4

9,3

56

Libra

ry b

ooks

2,4

75

-

2,4

75

5

86

(

17

) 5

-

(2

63

) (

10

0)

2,6

86

-

2

,68

6

Plan

t an

d e

quip

men

t 2

4,7

53

(14,4

69

) 1

0,2

84

1

,92

3

(4

29

) 4

10

-

(1

,71

8)

- 2

6,2

47

(

15

,77

7)

10

,47

0

Moto

r ve

hic

les

3,5

62

(2,1

69)

1,3

93

4

54

(

32

3)

30

6

- (

37

1)

- 3

,69

3

(2

,23

4)

1,4

59

Landfi

ll p

ost

clo

sure

225

(225

) -

-

--

--

- 2

25

(

22

5)

-

To

tal

op

era

tio

nal

ass

ets

18

8,2

88

(

18

,05

8)

17

0,2

30

5

,14

9

(6

,34

4)

72

6

-

(3

,53

6)

(1

00

) 1

86

,73

5

(2

0,6

10

) 1

66

,12

5

Co

un

cil

infr

ast

ruct

ura

l ass

ets

Sew

erag

e sy

stem

110,8

40

(2,9

55)

10

7,8

85

4

,83

2

(7

23

) 3

98

-

(3

,07

4)

- 1

14

,94

9

(5

,63

1)

10

9,3

18

Wat

er s

yste

m 6

2,2

75

(1,2

55

) 6

1,0

20

1

,12

8

(3

84

) 1

81

-

(1

,27

8)

- 6

3,0

19

(

2,3

52

) 6

0,6

67

Dra

inag

e net

work

91,3

82

(1,0

31

) 9

0,3

51

1

,88

9

(3

9)

18

-

(1

,37

8)

- 9

3,2

32

(

2,3

91

) 9

0,8

41

Road

ing n

etw

ork

149,9

45

(6,1

06)

14

3,8

39

8

,89

3

--

- (

6,7

57

)-

15

8,8

38

(

12

,86

3)

14

5,9

75

Land u

nder

road

s 4

19,1

25

-

41

9,1

25

2

1

--

--

- 4

19

,14

6

-

41

9,1

46

To

tal

infr

ast

ruct

ura

l ass

ets

83

3,5

67

(

11

,34

7)

82

2,2

20

1

6,7

63

(

1,1

46

) 5

97

-

(1

2,4

87

) -

84

9,1

84

(

23

,23

7)

82

5,9

47

Co

un

cil

rest

rict

ed

ass

ets

Sport

sgro

unds

132,8

28

(970)

13

1,8

58

1

,20

4

(9

89

) 3

9

- (

83

6)

- 1

33

,04

3

(1

,76

7)

13

9,2

76

Gra

ndst

ands

and h

alls

16,6

63

(135

) 1

6,5

28

3

23

-

--

(13

6)

- 1

6,9

86

(

27

1)

16

,71

5

Buildin

gs

on r

eser

ves

32,1

78

(847

) 3

1,3

31

3

51

-

--

(88

0)

- 3

2,5

29

(

1,7

27

) 3

0,8

02

Swim

min

g p

ools

10,5

33

(365

) 1

0,1

68

-

--

- (

36

5)

- 1

0,5

33

(

73

0)

9,8

03

Inner

har

bour

13,4

62

(96

) 1

3,3

66

2

61

-

--

(9

7)

- 1

3,7

23

(

19

3)

13

,53

0

To

tal

rest

rict

ed

ass

ets

20

5,6

64

(

2,4

13

) 2

03

,25

1

2,1

39

(

98

9)

39

-

(2

,31

4)

-

20

6,8

14

(

4,6

88

) 2

02

,12

6

To

tal

gro

up

pro

pert

y, p

lan

t an

d e

qu

ipm

en

t 1

,22

7,5

19

(

31

,81

8)

1,1

95

,70

1

24

,05

1

(8

,47

9)

1,3

62

-

(1

8,3

37

) (

10

0)

1,2

42

,73

3

(4

8,5

35

) 1

,19

4,1

98

Item

s ad

ded

to w

ork

in p

rogre

ss $

10,9

24,0

00 (

2009:

$16,4

60,0

00).

Com

ple

ted a

sset

s tr

ansf

erre

d f

rom

work

in p

rogre

ss $

24

,53

9,0

00

(2

00

9:

$2

,12

4,0

00

).T

he

net

car

ryin

g

amount

of

pla

nt

and e

quip

men

t hel

d u

nder

fin

ance

lea

ses

is $

429

(2009: $7,0

00).

In a

ccord

ance

wit

h A

ccounti

ng P

olici

es t

he

reva

luat

ion loss

for

Libra

ry B

ooks

has

bee

n t

aken

to

pro

fit

and loss

.




00

9C

ost

/re

valu

ati

on

Acc

um

ula

ted

d

ep

n a

nd

im

pair

men

t ch

arg

es

Carr

yin

g

am

ou

nt

Cu

rren

tyear

ad

dit

ion

s

Cu

rren

tyear

dis

po

sals

co

st

Cu

rren

t year

dis

po

sals

acc

um

ula

ted

d

ep

reci

ati

on

Cu

rren

t year

tran

sfers

an

d

corr

ect

ion

sC

urr

en

t year

dep

reci

ati

on

Revalu

ati

on

su

rplu

sC

ost

/re

valu

ati

on

Acc

um

ula

ted

d

ep

reci

ati

on

an

d i

mp

air

men

t ch

arg

es

Carr

yin

g

am

ou

nt

1 J

uly

20

08

$0

00

1 J

uly

20

08

$0

00

1 J

uly

20

08

$0

00

$0

00

$0

00

$0

00

$0

00

$0

00

30

Ju

ne 2

00

9$

00

03

0 J

un

e 2

00

9$

00

03

0 J

un

e 2

00

9$

00

0

Co

un

cil

op

era

tio

nal

ass

ets

Land

86,9

37

-86,9

37

334

--

(85)

--

87

,18

6-

87

,18

6Le

aseh

old

lan

d20,7

63

-20,7

63

-(7

84)

-(8

8)

--

19

,89

1-

19

,89

1Buildin

gs

48,0

56

(27)

48,0

29

2,2

27

(303)

(23)

216

(1,1

45

-5

0,1

96

(1,1

95

)4

9,0

01

Libra

ry b

ooks

2,3

39

-2,3

39

544

--

-(2

32

)(1

76

)2

,47

5-

2,4

75

Plan

t an

d e

quip

men

t22,3

05

(12,9

46

)9,3

59

2,5

43

(265)

114

170

(1,6

37

)-

24

,75

3(1

4,4

69

)1

0,2

87

Moto

r ve

hic

les

3,3

57

(1,9

74

)1,3

83

381

(176)

161

-(3

56

)-

3,5

62

(2,1

69

)1

,39

3La

ndfi

ll p

ost

clo

sure

225

(225)

--

--

--

-2

25

(22

5)

-

To

tal

op

era

tio

nal

ass

ets

18

3,9

82

(15

,17

2)

16

8,8

10

6,0

29

(1,5

28

)2

52

21

3(3

,37

0)

(17

6)

18

8,2

88

(18

,05

8)

17

0,2

30

Co

un

cil

infr

ast

ruct

ura

l ass

ets

Sew

erag

e sy

stem

110.2

96

(96)

110,2

00

809

(265)

222

-(3

,08

1)

-1

10

,84

0(2

,95

5)

10

7,8

85

Wat

er s

yste

m61,0

00

(10)

60,9

90

1,4

35

(160)

71

-(1

,31

7)

-6

2,2

75

(1,2

56

)6

1,0

19

Dra

inag

e net

work

84,9

88

(119)

84,8

69

7,1

40

(746)

463

-(1

,37

5)

-9

1,3

82

(1,0

31

)9

0,3

51

Road

ing n

etw

ork

138,2

00

-138,2

00

9,0

84

--

-(6

,10

6)

-1

47

,28

4(6

,10

6)

14

1,1

78

Land u

nder

road

s419,1

25

-419,1

25

--

--

--

41

9,1

25

-4

19

,12

5

To

tal

infr

ast

ruct

ura

l ass

ets

81

5,7

16

(22

5)

81

5,4

91

19

,02

2(1

,17

1)

75

6-

(11

,87

9)

-8

33

,56

7(1

1,3

48

)8

22

,21

9

Co

un

cil

rest

rict

ed

ass

ets

Sport

sgro

unds

132,6

37

(120)

132,5

17

640

-(1

6)

(449)

(83

5)

-1

32

,82

8(9

71

)1

31

,85

7G

randst

ands

and h

alls

9,1

89

-9,1

89

7,4

74

--

-(1

35

)-

16

,66

3(1

35

)1

6,5

28

Buildin

gs

on r

eser

ves

30,4

86

(4)

30,4

82

1,6

65

(44)

-71

(84

3)

-3

2,1

87

(84

7)

31

,33

1Sw

imm

ing p

ools

10,5

10

-10,5

10

23

--

-(3

65

)-

10

,53

3(3

65

)1

0,1

68

Inner

har

bour

13,4

62

-13,4

62

--

--

(96

)-

13

,46

2(9

6)

13

,36

6

To

tal

rest

rict

ed

ass

ets

19

6,2

84

(12

4)

19

6,1

60

9,8

02

(44

)(1

6)

(37

8)

(2,2

74

)-

20

5,6

64

(2,4

14

)2

03

,25

0

To

tal

gro

up

pro

pert

y, p

lan

t an

d e

qu

ipm

en

t1

,19

5,9

82

(15

,52

1)

1,1

80

,46

13

4,8

53

(2,7

43

)9

92

(16

5)

(17

,52

3)

(17

6)

1,2

27

,51

9(3

1,8

20

1,1

95

,69

9

Item

s ad

ded

to w

ork

in p

rogre

ss $

16,4

60,0

00 (2

008: $

4,9

93,0

00).

Com

ple

ted a

sset

s tr

ansf

erre

d fro

m w

ork

in p

rogre

ss $

2,1

24

,00

0 (2

00

8: $

3,5

88

,00

0).

The

net

car

ryin

g a

mount

of

pla

nt

and e

quip

men

t hel

d u

nder

fin

ance

lea

ses

is $

7,0

00 (

2208

: $128,0

00).

In a

ccord

ance

wit

h A

ccounti

ng P

olici

es t

he

reva

luat

ion loss

for

Libra

ry B

ooks

has

bee

n t

aken

to

pro

fit

and loss

. The

20

08/0

9 w

ork

in p

rogre

ss d

istr

ibuti

on w

ithin

ass

et c

lass

ific

atio

ns

has

bee

n r

esta

ted in lin

e w

ith 2

009

/10

dis

trib

uti

on.



Buildings 1,035

Buildings on reserves 132

Drainage network 229

Grandstands and halls 72

Land 179

Plant and equipment 414

Roading network 3,779

Sewerage system 10,000

Sportsgrounds 83

Water system 1,540

17,463

The following amounts of works under construction valued at cost are included above as at 30 June 2009

Buildings 987

Buildings on reserves 21

Drainage network 12,901

Grandstands and halls 7,816

Land 80

Plant and equipment 160

Roading network 2,661

Sewerage system 5,510

Sportsgrounds 99

Water system 842

31,077

The following amounts of works under construction valued at cost are included above as at 30 June 2010


17

. In

tan

gib

le A

ssets

20

10

Co

st/

revalu

ati

on

Acc

um

ula

ted

d

ep

reci

ati

on

an

dim

pair

men

t ch

arg

es

Carr

yin

g

am

ou

nt

Cu

rren

tyear

ad

dit

ion

s

Cu

rren

tyear

dis

po

sals

Cu

rren

tyear

dis

po

sals

acc

um

ula

ted

d

ep

reci

ati

on

Cu

rren

tyear

imp

air

men

t ch

arg

es

Cu

rren

t year

am

mo

rtis

ati

on

Revalu

ati

on

su

rplu

sC

ost

/re

valu

ati

on

Acc

um

ula

ted

d

ep

reci

ati

on

an

d

imp

air

men

t ch

arg

es

Carr

yin

g

am

ou

nt

1 J

uly

20

09

$0

00

1 J

uly

20

09

$0

00

1 J

uly

20

09

$0

00

$0

00

$0

00

$0

00

$0

00

$0

00

$0

00

30

Ju

ne 2

01

0$

00

03

0 J

un

e 2

01

0$

00

03

0 J

un

e 2

01

0$

00

0

Com

pute

r so

ftw

are

2,1

57

(1,8

71)

286

101

(630)

630

(107)

-

1,6

28

(1,3

48

)2

80

20

09

Co

st/

revalu

ati

on

Acc

um

ula

ted

d

ep

reci

ati

on

an

dim

pair

men

t ch

arg

es

Carr

yin

g

am

ou

nt

Cu

rren

tyear

ad

dit

ion

s

Cu

rren

tyear

dis

po

sals

Cu

rren

tyear

dis

po

sals

acc

um

ula

ted

d

ep

reci

ati

on

Cu

rren

tyear

imp

air

men

t ch

arg

es

Cu

rren

t year

am

mo

rtis

ati

on

Revalu

ati

on

su

rplu

sC

ost

/re

valu

ati

on

Acc

um

ula

ted

d

ep

reci

ati

on

an

d

imp

air

men

t ch

arg

es

Carr

yin

g

am

ou

nt

1 J

uly

20

08

$0

00

1 J

uly

20

08

$0

00

1 J

uly

20

08

$0

00

$0

00

$0

00

$0

00

$0

00

$0

00

$0

00

30

Ju

ne 2

00

9$

00

03

0 J

un

e 2

00

9$

00

03

0 J

un

e 2

00

9$

00

0

Com

pute

r so

ftw

are

1,9

89

(1,8

17)

172

168

- -

-(5

4)

-2

,15

7(1

,87

1)

28

6

Com

pute

r so

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18. Investment Property

Actual2010$000

Actual2009$000

Balance at 1 July 37,400 44,928

Additions from acquisitions - -

Disposals - -

Fair value gains/(losses) on valuation (1,416) (7,528)

Balance at 30 June 35,984 37,400

Council’s investment properties are valued annually at fair value effective 30 June. All investment properties were valued based on open market evidence. The 30 June 2010 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 the Council.

The fair value of investment property has been determined using the capitalisation of net income and discounted cash flow methods. These methods are based upon assumptions including future rental income, anticipated maintenance costs and appropriate discount rates.

Actual2010$000

Actual2009$000

Rental income from investment property 922 924

Expenses from investment property generating income - -

Contractual obligations for capital expenditure - -

Contractual obligations for operating expenditure - -

19. Investments in Associates

The Council has a 26.00% (2009: 26.12%) interest in Hawke’s Bay Airport Limited. HB Airport Ltd’s reporting date is 30 June.

Hawke’s Bay Airport Limited is an unlisted entity and, accordingly, there are no published price quotations to determine the fair value of this investment.

With effect from 1 July 2009, Hawke’s Bay Airport Authority was corporatised. The new entity, Hawke's Bay Airport Limited took over the business, assets and liabilities from that date.

Actual2010$000

Actual2009$000

Movements in the carrying amount of investments in associates

Balance at 1 July 3,124 3,771

New investments during year - -

Adjustment due to revaluation of property, plant and equipment 462 (853)

Share of total recognised revenues and expenses 69 228

Interest adjustment on appropriation account - (22)

Share of dividend - -

Balance at 30 June 3,655 3,124


Actual2010$000

Actual2009$000

Summarised financial information of associate entities

Assets 15,879 15,354

Liabilities 1,822 1,565

Revenues 2,446 2,444

Surplus/(deficit) 267 874

Group's interest 26.00% 26.12%

Associated Contingencies

There are no contingent liabilities arising from the Council's involvement in the associate.

20. Creditors and Other Payables

Actual2010$000

Actual2009$000

Trade payables 7,144 9,253

Deposits and bonds 1,039 680

Accrued interest 106 143

Rates in advance 676 680

Total creditors and other payables 8,965 10,756

Creditors and other payables are non-interest bearing and are normally settled on 30-day terms, therefore the carrying value of creditors and other payables approximates their fair value.

21. Employee Benefit Liabilities

Actual2010$000

Actual2009$000

Current portion

Accrued pay 308 502

Annual leave 2,453 2,336

Retirement and long service leave 60 -


Non-current portion

Retirement and long service leave 1,834 1,883


Total employee entitlement 4,655 4,721




22. Borrowings

Actual2010$000

Actual2009$000

Current portion

Secured loans 2,008 1,011

Lease liabilities 2 12


Non-current portion


Lease liabilities - 2


Fixed-Rate Debt

The Council’s secured debt of $6,043,700 (2009: $7,054,500) is issued at fixed rates of interest.

The Council’s final external sinking fund in respect of loans matured in 2009/10 (30 June 2009 carrying amount $212,850). The sinking fund investment, together with accumulated interest, was sufficient to repay the principal of the associated loan on the due date. As at 30 June 2010 the Council no longer holds any external sinking funds.

The Council's loans are secured by a Secured Trust Deed creating a charge over the special rate deemed to be made by the Council upon the value of all rateable property within the City of Napier.

Lease liabilities are effectively secured as the rights to the leased asset revert to the lessor in the event of default.

Refinancing

The Council manages its borrowings in accordance with its funding and financial policies, which include a Liability Management policy. These policies have been adopted as part of the Council's Ten Year 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 the conditions attached to the secured loans, there may be early repayment options.

Actual2010$000

Actual2009$000

Secured Loans

Less than one year 2,008 1,011

Weighted average effective interest rate 6.60% 8.04%

Later than one year but not more than five years 4,031 6,031

Weighted average effective interest rate 7.23% 7.02%

Later than five years 5 13

Weighted average effective interest rate - -

6,044 7,055


Analysis of Finance Lease Liabilities

Actual2010$000

Actual2009$000

Total minimum lease payments are payable

Not later than one year 2 12

Later than one year and not later than five years - 2

Total minimum lease payments 2 14

Future finance charges - -

Present value of minimum lease payments 2 14

Present value of minimum lease payments are payable


Later than one year and not later than five years - 2

Total 2 14

Current 2 12

Non-current - 2

Total 2 14

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 Council's option, with rents set by reference to current market rates for items of equivalent age and condition. The Council has the option to purchase the asset at the end of the lease.

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

23. Provisions

Financial Guarantees

$000

Landfill aftercare provision

$000Total$000

2009

Balance at 1 July 2008 595 953 1,548

Additional provisions made 799 39 838

Unused amounts reversed - - -

Balance as at 30 June 2009 1,394 992 2,386

2010

Balance at 1 July 2009 1,394 992 2,386

Additional provisions made - 4 4

Unused amounts reversed (208) - (208)

Balance as at 30 June 2010 1,186 996 2,182

Provision for Financial Guarantees

The Council is listed as sole guarantor to a number of related authorities and locally incorporated societies for bank facilities.

The Council is obligated under the guarantees to make payments in the event the authority or society defaults on a financial arrangement. The exercising of guarantees will be dependent on the financial stability of the authorities and societies, which will vary over time.




Provision for Landfill Aftercare

The Omarunui Landfill is owned jointly by the Hastings District Council (63.68%) and Napier City Council (36.32%). The landfill is operated by the Hastings District Council on behalf of a joint committee (comprising elected representatives from the two councils). The joint Landfill Committee gained a resource consent in 1985 to operate the Omarunui Landfill. The Councils have responsibility under the resource consent to provide ongoing maintenance and monitoring of the landfill after the site is closed. There are closure and post-closure responsibilities such as the following:

Closure responsibilities:

� Final cover application and vegetation

� Incremental drainage control features

� Completing facilities for leachate collection and monitoring

� Completing facilities for monitoring and recovery of gas

Post-closure responsibilities:

� Treatment and monitoring of leachate

� Ground water and surface monitoring

� Gas monitoring and recovery

� Implementation of remedial measures such as needed for cover, and control systems

� Ongoing site maintenance for drainage systems, final cover and vegetation

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 three and four will only be created when the stage is commissioned and when refuse begins to accumulate in these stages.

Capacity of the Site:

� 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. These estimates will vary over time dependent on the amount of waste entering the landfill and changes in technology.

The cash outflows for landfill post-closure are expected to occur in 2023/24 for Valley D and began in 2007 for Valley A. 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 is discounted using a discount rate of 7.5%.

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 Valley A and D is $308,189.

� The provision reported is for Napier City Council's share only (36.32%).


24. Equity

Actual2010$000

Actual2009$000

Retained earnings

As at 1 July 2009 659,565 653,319

Transfers to:

Restricted reserves (4,454) (903)

Transfers from:

Asset revaluation reserve on disposal of property, plant and equipment 6,266 1,031

Restricted reserves 3,759 1,677

Surplus/(deficit) for the year 16,507 4,441

As at 30 June 2010 681,643 659,565

Restricted reserves

As at 1 July 2009 7,511 8,285

Transfers to:

Retained earnings (3,759) (1,677)

Transfers from:

Retained earnings 4,454 903

As at 30 June 2010 8,206 7,511

Restricted reserves consist of:

Loan redemption reserve 1,260 1,143

Loan funds reserves (294) (562)

Trusts and bequests 644 621

Advanced Waste Water Treatment Fund (HBRC) 5,395 5,013

Other restricted reserves 1,201 1,296

Total restricted reserves 8,206 7,511




Actual2010$000

Actual2009$000

Asset revaluation reserves

As at 1 July 2009 596,613 598,844

Revaluation gains/(losses) - (1,200)

Asset revaluation reserve Hawke’s Bay Airport Limited 460 -

Transfer of revaluation reserve to retained earnings on disposal of property, plant and equipment (6,266) (1,031)

As at 30 June 2010 590,807 596,613

Asset revaluation reserves consist of:

Operational Assets

Land 61,451 66,337

Leasehold land 18,050 18,241

Buildings 28,900 29,052

Plant & Equipment 199 199

Infrastructural Assets

Sewerage system 90,660 90,964

Water system 43,137 43,290

Drainage network 54,150 54,165

Roading network 170,059 170,059

Restricted Reserves

Sportsgrounds 97,979 98,545

Grandstands & Halls 2,607 2,607

Buildings on reserves 8,090 8,090

Swimming pools 3,637 3,637

Inner harbour 10,294 10,294

Hawke’s Bay Airport Limited 1,594 1,133

Total asset revaluation reserves 590,807 596,613

Fair value through equity reserve

As at 1 July 2009 101 101

Valuation gains/(losses) on unlisted shares taken to equity 10 -

As at 30 June 2010 111 101

Total other reserves 599,124 604,225

25. 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 the Council to manage its revenues, expenses, assets, liabilities, investments, and general financial dealings prudently and in a manner that promotes the current and future interests of the community. Ratepayers' Funds are managed largely as a by-product of managing revenues, expenses, assets, liabilities, investments, and general financial dealings.

The objective of managing these items is to achieve intergenerational equity, which is a principle promoted in the Act and applied by the Council. Intergenerational equity requires today’s ratepayers to meet the costs of utilising the Council’s assets but does not expect them to meet the full cost of long-term assets that will benefit ratepayers in future generations.


Additionally, the Council has Asset Management Plans in place for major classes of assets, detailing renewal and maintenance programmes to ensure that future generations of ratepayers are not required to meet the costs of deferred renewals and maintenance.

The Act requires the Council to make adequate and effective provision in its Ten Year Plan and in its Annual Plan (where applicable) to meet the expenditure needs identified in those plans. The Act sets out the factors that the Council is required to consider when determining the most appropriate sources of funding for each of its activities. The sources and levels of funding are set out in the funding and financial policies in the Council’s Ten Year Plan.

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.

26. Capital Commitments and Operating Leases

Actual2010$000

Actual2009$000

Capital commitments

Capital expenditure contracted for at balance date but not yet incurred for property, plant and equipment 2,891 10,975

Operating Leases As Lessee

The Council leases the following properties in the normal course of its business:

4. Napier Community House

The Council subleases the Community House building to several organisations and groups which provide community services and support to Napier, Hastings and the wider Hawke's Bay region.

5. Tourism House

The Tourism Services business unit operates from part of this building. The Council subleases 80% of the leased area to Venture Hawke’s Bay (previously Hawke’s Bay Incorporated), Hawke’s Bay Wine Country Tourism Association and Napier Inner City Marketing.

The future aggregate minimum lease payments to be paid by the Council under non-cancellable operating leases are as follows:

Actual2010$000

Actual2009$000

Non-cancellable operating leases as lessee


Later than one year and not later than five years 57 209

Later than five years - -

Total non-cancellable operating leases 222 387




The total minimum future sublease payments expected to be received under non-cancellable subleases at balance sheet date is $191,012 (2009: $624,381).

Leases can be renewed at the Council's option, with rents set by reference to current market rates for items of equivalent age and condition.

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

Operating Leases As Lessor

The Council leases excess building space under operating leases. The future aggregate minimum lease payments to be collected by the Council under non-cancellable operating leases are as follows:

Actual2010$000

Actual2009$000

Non-cancellable operating leases as lessor


Later than one year and not later than five years 272 954

Later than five years - 234

Total non-cancellable operating leases 689 1,508

27. Contingencies

Contingent Liabilities

Actual2010$000

Actual2009$000

Financial guarantees 479 179

Total contingent liabilities 479 179

Financial Guarantees

The value of guarantees disclosed as contingent liabilities reflects the Council’s assessment of the undiscounted portion of financial guarantees that are not recognised in the statement of financial position. Refer to note 23 Provisions for information on recognised financial guarantees..

Unquantified Claims

In 2009/10, there are 2 (2009: 8) claims against Council which have been notified to Council’s Insurers. Because of the uncertainty associated with the claims, an estimate of the financial effect cannot be made. These matters were not recognised in the financial statements because of the uncertainty associated with the outcomes.

Other Contingencies

Contingent AssetsThe Council reviews annual rentals payable by lessees of its leasehold property portfolio in accordance with the lease arrangements entered into with various lessees. Accordingly, the Council has issued revised rentals payable for various properties as these have fallen due. The lessees of some properties, in accordance with the terms and conditions of the agreeement between the parties, have chosen to dispute the new rentals advised by the Council. Depending on the outcome of the disputed reviews, the Council has a contingent asset of $611,000 (2009: $379,000) which due to the uncertainty around the value of the final resolution, is not included in rental income as at 30 June 2010.

Contingent LiabilitiesThe Council obtains public liability and professional indemnity insurance cover from New Zealand Mutual Liability Risk Pool. This operates as a mutual fund where each member makes an annual contribution to obtain cover however should claims exceed contributions then calls can be made on the members of that fund year for the shortfall amount. Risk Pool have advised that calls may be required for past pool periods. As the amount and timing is uncertain, provision has been made for future calls to the amount advised by


Risk Pool, $246,000 (2009: $66,914), however there is uncertainty as to the final amount of contribution required. In addition, the Council is defending a claim for compensation in respect of land taken for purposes of a road. As the amount and timing is subject to the outcome of a future hearing, no provision has been made in respect of this item.

Other ContingenciesAt 30 June 2010, the Council held 14 (2009: nil) conditional contracts for sale of residential development sections against which deposits received were $476,400 (2009: nil). 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. In addition, the Council has defended a claim for $350,000 for compensation in respect of land taken for purposes of a road. As any potential amount is subject to a decision pending from the Land Valuation Tribunal, no provision has been made in respect of this item.

The Council is a participating employer in a Defined Benefit Plan Contributors Scheme (“the scheme”) which is a multi-employer defined benefit scheme. If the other participating employers ceased to participate in the scheme, the Council could be responsible for the entire deficit of the scheme. Similarly, if a number of employees ceased to participate in the scheme, the Council could be responsible for an increased share of the deficit.

28. Reconciliation of Net Surplus After Tax to Net Cash Flow from Operating Activities

Actual2010$000

Actual2009$000

Surplus/(deficit) after tax 16,507 4,441

Add/(less) non-cash items:

Share of associate surplus/(deficit) (69) (207)

Depreciation and amortisation expense 18,444 17,577

Vested assets (124) (2,207)

(Gains)/losses in fair value of investment property 1,416 7,528

(Gains)/losses on library bookstock 100 176

Other non-cash Items

- Fixed assets to inventory 5,146 (16)

- Other non-cash (25) -

Add/(less) items classified as investing or financing activities:

(Gains)/losses on disposal of property plant and equipment 1,528 633

Add/(less) movements in working capital items:

Accounts receivable (968) 3

Inventories (1,813) 266

Biological assets (139) (51)

Accounts payable (961) 921

Provisions (204) 838

Revenue Received in Advance 2,164 -

Employee benefits (66) 294

Net cash inflow/(outflow) from operating activities 40,936 30,196




29. Remuneration

Chief Executive

The Chief Executive of Napier City Council, appointed under section 42 of the Local Government Act 2002, received a salary of $235,309 (2009: $229,667).

In terms of his contract, the Chief Executive also received the following additional benefits:

Actual2010

$

Actual2009

$

Cost During the Financial Year

Subscriptions - 566

Vehicle allowance (3 years) 20,000 -

For the year ended 30 June 2010, the total annual cost, including Fringe Benefit Tax, to the Council of the remuneration package being received by the Chief Executive is calculated at $255,309 (2009: $230,233).

Elected Representatives

Total remuneration

Actual2010$000

Actual2009$000

Mayor

Barbara Arnott 89 89

Councillors

John Cocking 39 38

Kathie Furlong 42 42

Mark Herbert 39 39

Tony Jeffery 39 39

Harry Lawson 30 30

Rob Lutter 39 39

Dave Pipe 39 38

Faye White 39 39

Tania Wright 39 39

Keith Price 30 30

Maxine Boag 30 30

Bill Dalton 30 30

30. Severance Payments

For the year ended 30 June 2010, the Council made nil (2009: 1) severance payments to an employee totalling $nil (2009: $3,411).


31. Events After the Balance Sheet Date

There have been no significant events since balance date.

32. Financial Instrument Risks

Financial Instrument Categories

Actual2010$000

Actual2009$000

Financial Assets

Loans and receivables

Cash and cash equivalents 5,518 5,805

Debtors and other receivables 10,886 9,918

Other financial assets

Term deposits 37,669 21,669

Total loans and receivables 54,073 37,392

Held to maturity




Corporate bonds 500 500

Total held to maturity 8,789 8,983

Fair value through equity

Local authority stock - -

Unlisted shares 464 454

Total fair value through equity 464 454


Financial liabilities at amortised cost

Creditors and other payables 8,965 10,756


Finance leases 2 14

Total financial liabilities at amortised cost 15,011 17,825

Financial Instrument Risks

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

Market Risk

Price RiskPrice risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as a result of changes in market prices. The Council is exposed to equity securities price risk on its investments, which are classified as financial assets held at fair value through equity. This price risk arises due to market movements in listed securities. This price risk is managed by diversification of the Council’s investment portfolio in accordance with the limits set out in the Council’s Investment Management Policy.




Currency RiskCurrency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in foreign exchange rates. The Council purchases plant and equipment associated with the construction of certain infrastructural assets as well as library book assets, from overseas. These transactions require the Council to enter into transactions denominated in foreign currencies. As a result of these activities, exposure to currency risk arises.

It is Council’s policy to manage foreign currency risks arising from contractual commitments and liabilities that are significant values by entering into forward foreign exchange contracts to hedge the foreign currency risk exposure. This means the Council is able to fix the New Zealand dollar amount payable prior to delivery of the plant and equipment from overseas.

Fair Value Interest Rate RiskFair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. Borrowings and investments issued at fixed rates of interest expose the Council to fair value interest rate risk. The Council’s Liability Management Policy is to stay within a minimum and maximum percentage of its borrowings in fixed-rate instruments. Fixed to floating interest rate swaps can be entered into to hedge the fair value interest rate risk arising where Council’s fixed rates borrowings are in excess of the target range.

Cash Flow Interest Rate RiskCash 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 the Council to cash flow interest rate risk. In order to manage the cash flow interest rate risk, under its Liability Management Policy, the Council has the ability to raise long-term borrowings at floating rates, then later swap them to fixed rates using interest rate swaps.

Credit Risk

Credit risk is the risk that a third party will default on its obligation to the Council, causing the Council to incur a loss. Due to the timing of its cash inflows and outflows, the Council invests surplus cash into term deposits and local authority stock, which gives rise to credit risk. Council’s Investment Management Policy limits the amount of credit exposure to any one financial institution or organisation. Investments in other Local Authorities are generally secured by charges over rates. Other than other local authorities, the Council invests funds only with entities that have a Standard and Poor’s credit rating of at least A-1 for short-term investments, and at least A+ for long-term investments.

The Council holds a credit enhancement via the Crown Retail Deposit Guarantee Scheme (CRDGS) for funds held with banks that have opted into the scheme. There is a cap on the size of the deposit that is covered by the guarantee of $1 million per depositor per guaranteed institution. The total amount of funds covered by the CRDGS is $4.0 million (2009 $5.0 million).

The Council has no collateral or other credit enhancements for financial instruments that give rise to credit risk.

Maximum Exposure to Credit Risk

The Council's maximum credit exposure for each class of financial instrument is as follows:

Actual2010$000

Actual2009$000

Cash at bank 5,518 5,789

Term deposits 37,669 21,669



Financial guarantees 1,560 1,573

Total credit risk 53,036 37,514



Credit Quality of Financial Assets

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

Actual2010$000

Actual2009$000

Counterparties with credit ratings

Cash at bank

AA (others) 5,518 5,789

AA- (Kiwibank) - -

Total cash at bank 5,518 5,789

Term deposits

AA (others) 26,000 12,000

AA- (Kiwibank) 11,669 9,669

Total term deposits 37,669 21,669

Counterparties without credit ratings



Financial guarantees 1,560 1,573

Total 9,849 10,056

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

Liquidity Risk

Management of Liquidity RiskLiquidity risk is the risk that the 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. The Council aims to maintain flexibility in funding by keeping committed credit lines available.

In meeting its liquidity requirements, the Council maintains a target level of investments that must mature within the next 12 months. The Council manages its borrowings in accordance with its funding and financial policies, which include a Liability Management Policy. These policies have been adopted as part of the Council's Ten Year Plan.

The Council has an overdraft facility of $300,000 (2009: $300,000), and there are no restrictions on the use of this facility. The Council has negotiated offsetting arrangements with its bank for all its bank accounts, and the net balance of current accounts.


Contractual Maturity Analysis of Financial Liabilities

The table below analyses the Council's financial liabilities into relevant maturity groupings based on the remaining period at the balance date to the contractual maturity date. Future interest payments on floating rate debt is based on the floating rate on the instrument at the balance date. The amounts disclosed are the contractual undiscounted cash flows.

Carrying Amount

$000

Contractual Cash Flow

$000

Less Than1 year$000

1-2 years

$000

2-5 years

$000

More than5 years

$000

2010

Creditors and other payables 8,965 8,965 8,965 - - -

Secured loans 6,044 7,196 2,429 297 4,465 5

Finance leases 2 2 2 - - -

Financial guarantees 1,560 1,560 1,560 - - -

Total 16,571 17,723 12,956 297 4,465 5

2009

Creditors and other payables 10,756 10,756 10,756 - - -

Secured loans 7,055 8,667 1,472 2,429 4,754 12

Finance leases 14 14 12 2 - -

Financial guarantees 1,573 1,573 1,573 - - -

Total 19,398 21,010 13,813 2,431 4,754 12

Contractual Maturity Analysis of Financial Assets

The table below analyses the Council's financial assets into relevant maturity groupings based on the remaining period at the balance date to the contractual maturity date.

Carrying Amount

$000

Contractual Cash Flow

$000

Less Than1 year$000

1-2 years

$000

2-5 years

$000

More than5 years

$000

2010

Cash and cash equivalents 5,518 5,518 5,518 - - -

Debtors and other receivables 10,886 10,886 10,886 - - -


Term deposits 37,669 39,304 39,304 - - -

Local authority stock 8,289 9,477 4,395 280 4,802 -

Sinking fund investments - - - - - -

Corporate bonds 500 645 48 48 548 -

Total 61,862 65,830 60,151 328 5,351 -

2009

Cash and cash equivalents 5,805 5,816 5,816 - - -

Debtors and other receivables 9,918 9,918 9,918 - - -


Term deposits 21,669 22,682 17,246 5,436 - -

Local authority stock 8,270 9,285 4,694 4,144 447 -

Sinking fund investments 213 213 213 - - -

Corporate bonds 500 693 48 48 597 -

Total 46,375 48,607 37,935 9,628 1,044 -



Sensitivity Analysis

The table below illustrates the potential effect on the surplus or deficit and equity (excluding accumulated funds) for reasonably possible market movements, with all other variables held constant, based on the Council’s financial instrument exposures at balance date.

2010$000

2009$000

-50bps 100bps -100bps 100bps

Profit Equity Profit Equity Profit Equity Profit Equity

Interest Rate Risk

Financial assets

Cash and cash equivalents (28) - 56 - (58) - 58 -

Other financial assets - - - - - - - -

Term deposits (188) - 376 - (217) - 217 -

Local authority stock (41) - 82 - (83) - 83 -

Sinking fund investments - - - - (2) - 2 -

Corporate bonds (3) - 6 - (5) - 5 -

Financial liabilities

Term loans - floating - - - - - - - -

(1,260) - 1,520 - (365) - 365 -

Explanation of Interest Rate Risk SensitivityThe interest rate sensitivity is based on a reasonable possible movement in interest rates, with all other variables held constant, measured as a basis points (bps) movement. For example, a decrease in 50 bps is equivalent to a decrease in interest rates of 0.5%.

The sensitivity has been calculated based on a shift in interest rates of -50bps/+100bps (2009: -100bps/+100bps).

Sinking Fund InvestmentsExternal Sinking Fund Investments totalling $213,000 were repaid during the 2009/10 financial year.

Term LoansAt 30 June 2010 the Council had $nil of floating rate debt (2009: $nil). Therefore a movement in interest rates of +100 bps or -50 bps has no effect on interest income.

33. Derivative Financial Instruments

As at 30 June 2010, the 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 (2009: $nil).



34. Related Party Transactions

The Council has significant influence over Hawke’s Bay Cultural Trust. The Council also has a 36.32% share in the Omarunui Landfill joint venture and has significant influence over Hawke’s Bay Airport Limited due to its 26% 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 Cultural Trust is classified as an associate entity for financial reporting purposes.

Actual2010$000

Actual2009$000

Hawke's Bay Cultural Trust (HBCT)

Grants paid to HBCT 337 431

Book purchases paid to HBCT - -

Conferences expenses paid to HBCT - -

Services provided to HBCT 770 862

Accounts receivable from HBCT - -

Accounts payable to HBCT 31 -

Hawke’s Bay Airport Limited (HBA)

Services provided to HBA 4 8

Omarunui Landfill

Landfill fees paid to Hastings District Council 1,106 1,236

Key Management Personnel – Council

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

During the year, Councillors and key management, as part of normal local authority relationships, were involved in transactions of a minor and routine nature with the Council on normal commercial terms (such as payment of rates and transfer station fees). In addition, during the year:

� The Council received revenue of $589 (2009: $505) from East Pier Bar and Restaurant, in which Mark Herbert, a Councillor, has an equity interest. This revenue was for advertising displays at Napier i-SITE Visitor Centre and licences related to East Pier Bar and Restaurant.

� Council received revenue of $3,242 (2009: $7,168) from Thirsty Whale Bar and Restaurant Limited, in which Keith Price, a Councillor, has an equity interest. This revenue was for licences related to Thirsty Whale Bar and Restaurant Limited and advertising in Napier Life Magazine. The Council purchased goods and services of $nil (2009: $167) from Thirsty Whale Bar and Restaurant Limited which were supplied on normal commercial terms.

� Council received revenue of $244 (2009: $231) from Wiseys Pies and Bakehouse Limited, in which Keith Price, a Councillor, has an equity interest. This revenue was for issuance of licences to Wiseys Pies and Bakehouse Limited. The Council also purchased goods and services from Wiseys Pies and Bakehouse Limited of $nil (2009: $372) which were supplied on normal commercial terms.

� Council received revenue of $89 (2009: $nil) from Clyde Jeffery Limited, in which Tony Jeffery, a Councillor, has an equity interest. This revenue was for issuance of licences to Clyde Jeffery Limited.

� Council received revenue of $1,500 (2009: $nil) from F L Bone & Son Limited, in which Neil Fergus, a key management personnel, has an equity interest. This revenue was for sponsorship F L Bone & Son Limited of a Hawke’s Bay Museum Symposium.

� Council received $171,000 from Bill McWatt, a key management personnel. This revenue was the remainder of payment for purchase of a residential section which was supplied on the same commercial terms as other residential sections at that location. The purchase was completed in May 2010.

No provision has been required, nor any expense recognised for impairment of receivables for any loans or other receivables to related parties (2009: $nil).



Key Management Personnel Compensation

Actual2010$000

Actual2009$000

Salaries and other short-term employee benefits 1,762 1,720

Post-employment benefits - -

Other long-term benefits - 10

Termination benefits - -

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

35. Joint Venture

The Council’s interest in the Omarunui Landfill is accounted for as a joint venture with jointly controlled assets. The Council’s interests in the joint venture are as follows:

Actual2010$000

Actual2009$000

Current assets 1,661 769

Non-current assets 4,892 5,310

Non-current liabilities 996 992

Income 2,097 1,820

Income (NCC sales eliminated) (402) (410)

Expenses 1,096 778

Depreciation 589 500

Joint venture commitments and contingencies

There are no capital commitments and contingent liabilities arising from involvement in the joint venture (2009: $nil).


3ACTIVITY

STATEMENTS


Democracy and Governance

ScopeDemocracy and Governance

� Mayor and six Councillors elected by the city as a whole

� Ahuriri Ward - 1 Councillor

� Onekawa-Tamatea Ward - 1 Councillor

� Nelson Park Ward - 2 Councillors

� Taradale Ward - 2 Councillors

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 2002 and other related legislation.

Key IssuePreparation is under way for the Napier City Council election on 9 October 2010.



Performance Targets for 2009/10


Performance Measures 2009/10 Targets 2009/10 Results

1. Number of Council meeting cycles. 8 cycles 8 meeting cycles were held in 2009/10 with the following number of Council and Standing Committee Meetings:

Council (incl. Extraordinary) 13Strategic Planning 2Environmental Management 7Community Development 5Corporate Business 6Maori Consultative 7Tourism & Economic Development 6LTCCP & Annual Plan 1

2. Percentage of residents satisfied with 'Sufficiency of Public Information Supplied' in the NRB Customer Satisfaction Survey.

75% The NRB Survey carried out in July 2010 showed 75% resident satisfaction with Sufficiency of Public Information:

More than enough 9% Enough 66% Not enough 17% Nowhere near enough 3% Don’t know / not sure 5%

3. All significant issues, as defined by the significance policy, are subject to public consultation.

Report on all consultation carried out.

Public consultation was carried out for the following in the 2009/10 year:• 2010/11 Annual Plan• Footpath Management Policy• Dog Control Bylaw & Policy• Review of Class 4 Gambling Policy• Footpath Management Policy – Draft

Fees & Rental Charges• Heretaunga Plains Urban Development

Strategy (jointly with Hastings)


Financial Summary

Actual 09/10 - $000

Budget 09/10$000 Activity Operating Depn Interest Total Income

Net Cost of Service

Actual 08/09$000

1,948 Democracy and Governance 1,773 - - 1,773 - 1,773 1,784

1,948 Total Net Operating 1,773 - - 1,773 - 1,773 1,784

- Capital Expenditure - -

1,948 Funding Required 1,773 1,784

Funded by:

1,948 Non Targeted Rates 1,773 1,784

1,948 Total 1,773 1,784



Recreation

ScopeSportsgrounds

� 13 sports parks (168 hectares)

� Major facilities – McLean Park Complex, Park Island, Nelson Park and Tareha Park

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

Napier Aquatic Centre

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

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

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, 49 greenbelt reserves, 22km pathways, 21 playgrounds, 7 foreshore reserves and 6 public gardens.

� 75 m2 recreational reserves per residential lot

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.

Key IssuesSportsgrounds

Construction of the Graeme Lowe Stand at McLean Park was completed. The new stand increased the park’s seated capacity to approximately 8,400, and further enhanced McLean Park’s corporate facilities, with the addition of two corporate lounges and 26 corporate boxes. The stand was opened for the Magpies’ first home game of the Air New Zealand Cup.

Three new light towers (two additional) and generator power were installed at McLean Park, ensuring some of the best and most reliable lighting of any outdoor venue in the country.

The ongoing project to upgrade sportsground irr igation progressed, with two upgrades implemented at Park Island (Bluewater Stadium and Tremain Field).

Planting and Landscaping – Greening of Napier

A report on the programme was prepared by consultants, Isthmus Group Limited, which identified priority streets for the project. The first stage has been completed with plantings down Prebensen Drive from the Expressway to Church Road.

Whakarire Ave Breakwater and Westshore Beach Reprofiling

The remainder of funding for the reprofiling of Westshore Beach and the Whakarire Ave Breakwater is included in the Capital Plan. The total of $1.314 million for the Breakwater and $2.473 million for the Beach reprofiling will be funded by loan.

Council is currently preparing a Resource Consent application for the replacement of the Whakarire Ave breakwater.


A condition report was carried out in May 2010 on the Napier Aquatic Centre old 25m pool. No remedial work is needed at this time and another report will be carried out in 2012.



Sportsgrounds


1. Percentage of residents satisfied with ‘Parks and Sportsfields’ in the NRB Customer Satisfaction Survey.

92% The NRB Survey carried out in July 2010 showed 91% resident satisfaction with Parks and Sportsfields:

Very satisfied 51% Satisfied 40% Not very satisfied 5% Don’t know 4%

The target was not achieved.

2. Sportsground area per 1,000 residents. 3.129 Ha 2.801 HaThe target (not achieved) is a long term average and the result is dependent on the timing of development of sportsgrounds.



1. Napier Aquatic Centre accredited as meeting Poolsafe standards.

100% 100% compliance with Poolsafe for 2009/10.

2. Water quality adherence rate to NZ Water Treatment Standards 5826:2000

95% 97% water quality adherence rate for 2009/10.

3. Number of users (targeted reflects closure of outdoor pool)

200,000 190,920 users for 2009/10: Casual users 54,850Concessions 15,386Aerobics 8,758Learn to Swim 31,622Other programmes 1,931Clubs 13,129Facility hires (groups) 45,684Non-paying users 19,560

The target was not achieved. The closure of the outdoor pool has reduced the number of users more than anticipated

4. Percentage of residents satisfied with 'Swimming Pools' in the NRB Customer Satisfaction Survey.

80% The NRB Survey carried out in July 2010 showed 60% user satisfaction with Swimming Pools:



Recreation


Recreation

4. continued Additionally an in house survey carried out in Nov 2009 showed 94% satisfaction with Swimming Pools:

Very satisfied 51%Satisfied 43%Not very Satisfied 3%Disappointed 3%

Marine Parade Pools

This activity is managed by an external contractor. There are no non-financial performance measures.

Reserves


1. Percentage of residents satisfied with ‘Public Gardens and Street Beds’ in the NRB Customer Satisfaction Survey.

97% The NRB Survey carried out in July 2010 showed 96% resident satisfaction with Public Gardens and Street Beds:



2. Number of annuals propagated and planted throughout the city to achieve aesthetic appeal.

180,000 198,290 annuals for 2009/10.The increase is due to improved propagation techniques resulting in better seed strike rate and increased number of annual beds.

3. Area of recreat ional land per residential lot.

75m2 71.8m2

The target was not achieved. The target is a long term average and the result is dependent on the timing of development of greenfield reserves and the acquisition of suitable reserve areas to counter infill development

Inner Harbour


1. Maximum time between dredges of the Inner Harbour.

4 years No dredging required during 2009/10. Dredging was last undertaken in 2008/09.

2. Maximum time between Depth Soundings of the Inner Harbour.

18 months No soundings required during 2009/10. The next sounding is due in September 2010.

3. Number of berths provided. 95 berths(29 commercial,66 recreational)

92 berths occupied (27 commercial, 65 recreational).The target was not achieved.There were some vacant berths reflecting the current economic climate.


Financial Summary

Actual 09/10 - $000

Budget 09/10$000 Activity Operating Depn Interest Total

Income [1]

Net Cost of Service

Actual 08/09$000

2,720 Sportsgrounds 2,491 691 123 3,305 (4,313) (1,008) 2,345 *

1,310 Napier Aquatic Centre 1,724 238 8 1,990 (720) 1,250 1,161

179 Marine Parade Pools 19 171 10 200 (50) 150 151

2,644 Reserves 2,641 234 145 3,020 (353) 2,667 2,761

260 Inner Harbour 204 97 23 324 (183) 141 812

7,113 Total Net Operating 7,079 1,431 309 8,8139 (5,619) 3,200 7,230

3,801 Capital Expenditure [2] 2,306 8,179


Funded by:


2,126 Special Funds (4,262) 9,059

537 Financial and Capital Contributions (440) (127)

1,449 Loans 277 30

649 Non Funded Items 3,839 689

10,914 Total 5,506 15,409

Note (*): Includes the $4 million donation from McLean Park Trust for the development of the Graeme Lowe Stand.

[1] Summary of Income

Actual09/10$000

User Charges 1,682

Land Transport NZ and other Government Grants 24

Rental Income – Other 404

Retail and Product Sales 29

Financial and Development Contributions 373

Other Income 46

Grants and Donations 3,996

Vested Assets 15

Loss/Gain on Sale of Assets (950)

Total Income 5,619

Recreation


Recreation

[2] Capital Expenditure

Budget09/10$000

Actual09/10$000

Sportsgrounds

199 Sportsgrounds I.A.R. 2

164 Install Automatic Irrigation Systems 91

1,427 Park Island - Bond Field Extension - *

56 Guppy Rd Sports Village Stage 1 -

- McLean Park Redevelopment 1,103

- Other Sportsgrounds Projects 389


40 Napier Aquatic Centre I.A.R. -

Reserves

321 Reserves I.A.R. 173

302 Reserves Vested Assets 15

474 City Wide Recreation Reserves 1

63 Tree Planting Programme 54

500 Westshore Beach Reprofiling -

170 Planting and Landscaping 128

- Whakarire Ave Groyne 57

- Other Reserves Projects 31

Inner Harbour

85 Inner Harbour Facilities Renewals 215

- West Quay New Surfacing 47

3,801 Capital Expenditure 2,306

Note (*): Project will be implement upon completion of the Development Plan for Park Island which will be developed in the 2010/11 financial year.


Social and Cultural

ScopeLibraries � 2 Libraries – Napier and Taradale

� 39,000 members

Libraries offer free-to-all services and a stimulating and pleasant environment. Services include recreational, educational, historical, genealogical, cultural and current affairs material together with on-line facilities, reading and outreach programmes.

War Memorial Conference CentreA 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 TheatreThe 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 is situated in the front foyer.

Cultural ServicesArts, cultural and museum facilities are provided by the Hawke’s Bay Museum and Art Gallery, The Century Theatre/Cinema and The Faraday Centre – Technology Museum and Science Centre.

Community DevelopmentCommunity facilitation, administration of community grants, youth development and Settlement Support 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.

Settlement Support ensures migrants, refugees and their families access appropriate information and responsible services that are available in the wider community.

Safer CommunityThe 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.

Halls

� 7 casual hire facilities, 2 leased facilities

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

Retirement and Rental Housing

� 303 retirement flats in 9 villages – all one bedroom

� 72 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%.

Cemeteries

� 6 cemeteries – 4 operational and 2 historic

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

Public Toilets

� 44 toilet facilities

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 IssuesLibraries

The extension and redevelopment of the Taradale Library was completed in May 2009 when the building was handed over to Napier City Council. The new building re-opened to the public on 13 July 2009. Unspent budget from this project is to be used for some short term redevelopment in the Napier Library.

In April 2010, a major upgrade of the SPYDUS Library management System commenced. The new system is scheduled to go live early in August 2010.

HB Museum and Art Gallery Redevelopment

The Government announced on 2 July 2010 that it will contribute $6m toward the $18m redevelopment of the HB Museum and Art Gallery. This commitment adds to the confirmed funding from Napier City Council, HB Regional Council, Hastings District Council, Lotteries, and other Trusts and individuals.

The consent and tender process will be progressed over the next 6 months. During this time community fundraising will continue in order to secure the small outstanding portion of required funding.

The museum will officially close on 25 July 2010 and staff will begin relocation of the collection to off-site storage prior to building works beginning. Building is expected to begin in April 2011 with the redevelopment expected to take around 2 years.

Housing

Council’s application for funding from the Government Housing Innovation Fund was not successful. By the time of lodgement of the claim the criteria for qualification had been changed by the incoming Government and the Fund was no longer available for modernising existing housing. Napier City Council’s current focus is providing insulation for Retirement Flats with the costs funded from existing budgets.


Emergency Operations Activations for 2009/2010 were:

� Alleged bomber on bus (23 September 2009) – Partial Activation of the Emergency Operations Centre for monitoring and setting up of a Welfare Centre and all associated resources.

� Tsunami Warning (30 September 2009) – Emergency Operations Centre, partially activated. Napier/Taupo Snow Event (4 October 2009) – Welfare Team from Napier went out to Hukurere Girls College to run a Welfare Centre for Hastings Emergency Management.

Social and Cultural

� Tsunami Warning (8 October 2009) – Emergency Operations Centre, partially activated with situation monitored and website updated and press releases produced.

� Tsunami Warning (28 February 2010) – Emergency Operations Centre partially activated with situation monitored and website updated and press releases produced.

� Flooding Event (29 and 30 May 2010) – Emergency Operations Centre partially activated and evacuees taken to hotel.

� Influenza A (H1N1) outbreak (2009/2010) – During this period of time the Emergency Operations Centre was partially activated on a number of occasions as the situation increased in our district. This was mostly monitoring and preparing plans for a welfare response should it be required.

� Weather Warnings/Swell Warnings/ Thunderstorm Warnings/Alerts (2009/2010) – Throughout the year the Napier Civil Defence Duty Manger has responded to (according to prescribed procedures) over 55 warnings/alerts.

The Hawke’s Bay Region Exercise Bay Vac was carried out on 13th November 2009 with the main objective to test Emergency Operation Centre processes and operations. The Napier Emergency Management response for this exercise was evaluated by independent Evaluators from the Ministry of Civil Defence and Emergency Management and other Emergency Management Officers from around the country. Their feedback was extremely positive complimenting the Emergency Operation Centre setup and procedures, the leadership within the Emergency Operation Centre at all levels and enthusiasm of all staff involved.



Libraries


1. Library Stock Refreshment Rate per 1000 people.

376 460 Refreshment Rate for 2009/10.The Library Stock budget was fully expended during the financial year. Stock purchases were focussed on children’s titles and the re-opening of the new Taradale Library.

2. Items issued per annum 850,000 922,471 items issued for 2009/10.

3. Total visitors Door and Web 610,000

601,759 visitors for 2009/10:Door 487, 363Web 114,396


4. Number of members who have used the Library (based on issues).

18,000 19,573 members used the Library, based on issues for 2009/10.

5. Each library open at least 45 hours per week.

45 hours 48.5 open hours per week for both Napier and Taradale Libraries for 2009/10.

6. Website services available and improvement programme in place.

91,500 website visits

114,396 website visits for 2009/10.

Report on web improvements.

Website development is currently aligned with the upgrade of the Library Management System, SPYDUS. The re-launch is scheduled for August 2010.

7. Summer reading programmes provided.

200(Note: Target is for total

literacy programmes provided for the full

year.)

189 programmes for 2009/10.The target was not achieved.Due to the increased library usage following the re-opening of the Taradale Library building the programmes at Taradale Library were put on hold for one term.

Social and Cultural


Social and Cultural

Napier War Memorial Conference Centre


1. Number of days WMC is in use. 280 261 days in use for 2009/10.The target was not achieved.Achievement for target is impacted by achievement for community hires. The WMC is not available for other use during community hires.

2. Number of community hires. 30 51 community hires for 2009/10.Higher community use than anticipated.

3. Number of National and International hires.

290 350 national and International hires for 2009/10.Higher use than anticipated.

4. Customer satisfaction. 94% Customer satisfaction = 97% (In house survey)

5. Maintain Qualmark Venue star 4 rating.

Rating maintained.

Rating maintained.

6. Days the eternal flame memorial operating.

365 365 days for 2009/10.

Napier Municipal Theatre


1. Number of hire days for theatrical and cultural events.

160 152 hire days for 2009/10.The target was not achieved due to less touring product.

2. Number of hire days for non performance events e.g. conferences, meetings, exhibitions.

45 53 hire days for 2009/10.


Hawke’s Bay Museum and Art Gallery


1. Number of admissions to the museum and art gallery annually

28,000 36,087 admissions for 2009/10.The target was exceeded as a result of better quality of exhibitions.

2. Number of exhibitions held in the museum and art gallery per annum.

9 15 exhibitions for 2009/10.11 new exhibitions were held and four were carry-over from the last financial year.

3. Number of cinema admissions annually.

31,000 25,608 admissions for 2009/10.The target was not achieved due to the lack of availability of films with strong appeal to Century Cinema audiences.

4. Percentage of residents satisfied with ‘Museum and Art Gallery’ in the NRB Customer Satisfaction Survey.

80% The NRB Survey carried out in July 2010 showed 79% resident satisfaction with Museum and Art Gallery:



5. Number of workshops and educational programmes.

10 The 2009/10 School Holiday programme consisted of 10 workshops/programmes of various themes consistent with the Art Gallery.

Community Advice


1. Community Services Grants and Property Grants and Community Development Funding distributed each year in accordance with Council policy (including follow up of funds expended).

100% 100% of Community Services Grant and Community Services Property Grants distributed.

2. Service Agreements and Purchase Contracts meet reporting requirements (ie contract requirements).

90% All service agreements and purchase contracts met the reporting and contract requirements. (Agreements are with Creative Napier, HB Surf Life Saving, Napier Citizens Advice, Napier Neighbourhood Support Bureau and Sport HB.)

Social and Cultural


Social and Cultural

3. Number of community organisations receiving information via email four times per year.

120 120 community organisations have received information.

4. Number of Youth forums coordinated per year.

18 19 forums for 2009/10.

5. Number of Youth alcohol and drug free events and activities.

8 6 events for 2009/10.The target was not achieved due to staff vacancy.

Safer Community


Minimum number of community based crime reduction strategies supported

4 1. To reduce alcohol related violence in public places

• The alcohol liaison group continues to meet. Police are investigating ways of increasing the group membership. • The joint alcohol strategy with Hastings District Council has gone out for tender.

2. Youth Offending

• A working party is established to assist with the development of a report to Police to increase Policing in the CBD.

3. Reduce wilful damage in Napier

• The5KHTRprogrammecommenced in April and continues to progress well.

• TheCivicPrideProjectcontinues.

• The Police are teaching 4 primary schools the importance of Civic Pride through the Junior. Neighbourhood Support Programme.

• PlanninghasbegunfortheMaraenui Community Safety day.

• The Taradale survey has been completed and data analysed.

• CPTED assessments have been completed in Symes Lane and an alleyway in Tamatea.

4. Continuing the Maraenui Urban Renewal Plan

• Theplanters inMaraenuihavebeen planted out with mondo grass.

• Aworkingpartyhasbeenestablished to assist with the development of an action plan aimed at reducing the negative influences of the gangs in the area.


Halls


1. Total hours hired in Greenmeadows East, Memorial Square and Library Seminar Room.

Greenmeadows1,500

Memorial Square1,900

Library Seminar700

2009/10 hours hired:Greenmeadows 1,467 Memorial Square 1,604 Library Seminar nil

The targets were not achieved.The aim is to provide affordable venues and usage is dependent on the public demand. The Library Seminar Room is no longer hired to the public.

2. Customer satisfaction that the service provided meets acceptable standards.

95% Customer satisfaction rating = 100% (In house customer survey)



1. Occupancy Retirement and Rental Flats.

97% Occupancy rates:Retirement Flats = 98%Rental Flats = 99%

2. Village coordinators are available during normal working hours and on call for emergencies 24 hour/7 days.

100% Village coordinators available 100% of the time for 2009/10.

Cemeteries


1. Percentage of residents satisfied with ‘Cemeteries’ in the NRB Customer Satisfaction Survey.

95% The NRB Survey carried out in July 2010 showed 77% resident satisfaction with Cemeteries:


Excluding “don’t know” the satisfaction rate is 96%. The target was not achieved.

2. Number of burials and ash interments. Due to sensitivity a target is not

included.

Number for 2009/10:Burials 149Ash Interment 189

Social and Cultural


Social and Cultural

Public Toilets


1. Percentage of residents satisfied with 'Public Toilets' in the NRB Customer Satisfaction Survey.

80% The NRB Survey carried out in July 2010 showed 76% resident satisfaction with Public Toilets:

Very satisfied 25%Satisfied 51%Not very satisfied 7%Don’t know 17%


2. Daily inspections and cleaning of all toilets.

100% 100% of toilets were inspected and cleaned daily 2009/10.



1. Emergency Operations Centre Training Activities.

30 33 training activities for 2009/10.Volunteers training included:• Welfare training

• Co-ordinated Incident Management

• Radio Communications

• First Aid

• Welfare Exercises

• Flood Exercise

Emergency Operations Centre training included:• Welfare Team Training

• Controllers Training

• Flood Exercise (Exercise Bay Vac 09)

2. Radio Communications Operative during weekly checks. Note: this ensures the radios will be operative in an emergency.

100% 100% operative for 2009/10.

3. Proportion of national warnings responded to within 30 minutes.

100% 100% of relevant National Warnings test messages were responded to within 30 minutes.


Financial Summary

Actual 09/10 - $000


Income [1]

Net Cost of Service

Actual 08/09$000

2,819 Libraries 2,528 392 10 2,930 (181) 2,749 2,713

282 War Memorial Centre 1,248 112 8 1,368 (1,115) 253 263

474 Municipal Theatre 657 284 16 957 (457) 500 490

1,371 HB Museum and Art Gallery 2,785 129 - 2,914 (2,193) 721 855 *

1,136 Community Development 1,300 2 - 1,302 (306) 996 714

116 Safer Community 257 - - 257 (170) 87 79

- Safety Watch - - - - - - 191

252 Halls 235 51 7 293 (59) 234 (38)

59 Retirement and Rental Housing 1,140 484 128 1,752 (2,076) (324) 33

317 Cemeteries 495 32 6 533 (218) 315 338

683 Public Toilets 603 56 5 664 (13) 651 738

362 Emergency Management 277 29 - 306 (25) 281 315

7,871 Total Net Operating 11,525 1,571 180 13,276 (6,813) 6,463 6,691

996 Capital Expenditure [2] 1,290 3,445


Funded by:


1,315 Special Funds 858 1,426

(7) Financial and Capital Contributions 20 (44)

- Loans 41 1,582

563 Non Funded Items 727 676

8,867 Total 7,753 10,136

Note (*): Includes the unbudgeted donations of $0.5 million received for the Museum building project.


Actual09/10$000

User Charges 1,364


Rental Income – Other 2,099

Retail and Product Sales 2,212


Other Income 37

Grants and Donations 663

Loss/Gain on Revaluation of Library Bookstock (100)


Total Income 6,813

Social and Cultural


Social and Cultural


Budget09/10$000

Actual09/10$000

Libraries

634 Library Bookstock 591

- Taradale Library Redevelopment 41

- Minor Capital Items 17

War Memorial Centre

30 Replace Carpet in Lower Level 4

17 WMC - Minor Capital Provision 24

Municipal Theatre

- Replacement Chiller Unit 149

27 Municipal Theatre Minor Capital Provision 21

HB Museum and Art Gallery

- Redevelop HB Museum and Art Gallery Buildings 67

25 Minor Capital Items 9

Community Development

- Crime Prevention Through Environmental Design 27


Halls



80 Retirement Flats Minor Capital Projects 185

20 Rental Flats Minor Capital Projects 1

Cemeteries

51 Cemeteries I.A.R. 35

11 Cemeteries New Beams 1

- Cemetery Carparks 1

Public Toilets

101 Public Toilets I.A.R. 22

- New Toilet Programme 6

996 Capital Expenditure 1,290


City Promotion

ScopeCity and Business Promotion

� Business advisory and facilitation services

� Business re-focus

� Business start up facilitation

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 - Tomakomai (Japan), Lianyungang (China), Victoria (Canada).

City Promotion Grants

� Grants to key local tourism organisations

Art Deco is an important tourism feature of the City and Council assists the Art Deco Trust in its promotion of Art Deco in Napier by way of a contract for service. Council also provides assistance for the marketing of the Central Business District.

Marineland of New Zealand

Marineland of New Zealand is subject to current Council review as noted in Key Issues. Situated on Marine Parade it houses marine mammals and birds. Marineland of New Zealand acts as an education centre and as an animal rehabilitation centre for sick, injured and orphaned marine animals. The Marineland Education Department also acts as the vehicle for the delivery of the Napier City Council “Waste Aware” programme.

National Aquarium of New Zealand

The National Aquarium of New Zealand on Marine Parade houses sharks, stingray, hundreds of fish species, reptiles and kiwi. Activities include shows and tours daily, diving and photograph facilities, a themed souvenir shop and a café. The aquarium regularly hosts school groups, tour groups, birthday parties, sleepovers, and many other functions.

Napier i-SITE Visitor Centre

Napier i-SITE Visitor Centre on Marine Parade is part of 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, 169 powered and non-powered sites, as well as a restaurant, bar, conference facility, children’s playground, commercial laundry, service buildings, shop and a pool complex.


Key IssuesMarineland

As part of the Annual Plan consultation, submissions on Marineland were received. Research of an option for the Marineland site is ongoing. Information from the submitters is being considered and further consultation will be undertaken at the appropriate time.

Kennedy Park

The replacement cabins project was completed on time and within budget in December 2009. Other capital projects identified in last year’s Annual Plan have been temporarily deferred.

City Promotion



City and Business Promotions


1. Number of Economic Monitoring reports produced.

4 4 reports for 2009/10:• Economic Monitor Report August

2009, March 2010

• Tourism Report March 2010

• Napier City Business Survey September 2009

2. ‘Be Your Own Boss’ clients served. 108 109 clients served for 2009/10.

3. Percentage of residents satisfied with 'Council's policies to promote job opportunities' in the NRB Customer Satisfaction Survey.

80%(Excluding don't know)

The NRB Survey carried out in July 2010 showed 72% resident satisfaction with Council’s policies to promote job opportunities – excluding “don’t know”. The target was not achieved.

City Promotion Grants


1. Art Deco and Inner City Marketing comply with contract agreement for grants.

100% 100% compliance.Art Deco contract currently under review. Both contracts are due for renewal in the next financial year.

Marineland of New Zealand

Appropriate performance measures will be developed pending the results of the review and public consultation process.

National Aquarium of New Zealand


1. Number of visitors. 96,000 99,216 visitors for 2009/10.

2. Non-standard admission numbers (includes friends revisits, functions, behind the scenes tours, diving, sleepovers and birthday parties).

8,316 10,927 admissions for 2009/10.

City Promotion


City Promotion

3. Maintain ARAZPA and Qualmark visitor activity endorsements.

Ratings maintained.

Ratings maintained. ARAZPA membership requires a minimum criteria. Qualmark carries out an annual audit with a minimum score of 60% required for endorsement. The last assessment for the Aquarium was 97%

4. Average visitor satisfaction grading of the exhibits (1 to 5 where 5 is excellent).

At least 4 Average visitor satisfaction = 4+ (In house survey)

5. Numbers of school children. 7,300 7,074 school children for 2009/10.The target was not achieved due to smaller class sizes.

6. Number of schools. 170 236 schools for 2009/10.Higher number of schools than projected.



1. Number of information packs and e-mails distributed.

2,800 9,824 information packs for 2009/10.Target exceeded due to the impact of email distribution.

2. Visitor number through the centre. 310,000 268,243 visitors for 2009/10.The target was not achieved due to the change in visitor mix and drop in number of visitors.

3. Opening hours/days. Minimum 8 hrs / 364 days

The i-SITE Visitor Centre was open for a minimum of 8 hours for 363 days in 2009/10. The target was not achieved due to closure for 1 day 5 hours for the Civil Defence Tsunami evacuation.

4. Maintain i-SITE membership. Membership maintained.

Membership maintained.Membership is awarded by i-SITE New Zealand and requires the Visitor Centre to meet quality standards, part of which is through Qualmark, including mystery shopping, financial, operational, management systems, sustainability, OSH, customer focus and quality of the facility.


Par 2 MiniGolf


1. Admission numbers. 51,000 41,928 admissions for 2009/10.The target was not achieved due to weather and a drop in visitor numbers.

2. Customer satisfaction rating. 90% Customer satisfaction rating = 96% (In house customer survey)

Kennedy Park


1. Overall room nights booked. 33,000 28,153 room nights booked for 2009/10.The target was not achieved due to the impact of unavailability of cabins during replacement period and the impact of the recession.

2. Percentage of users who are young children family groups.

27% 25% young children family groups for 2009/10.The target was not achieved due to the Impact of the recession.

3. Maintain “Top 10” and Qualmark 5 star Holiday Park and 4 plus star self contained and serviced ratings.

Ratings maintained.

Ratings maintained.Qualmark reassesses annually with a comprehensive site visit, including accounting, operational and management systems, OSH, customer service, business plans and overall standard of the facility and grounds.

City Promotion


City Promotion

Financial Summary

Actual 09/10 - $000


Income [1]

Net Cost of Service

Actual 08/09$000

562 City and Business Promotion 533 - - 533 (4) 529 599

201 City Promotion Grants 344 - - 344 (152) 192 591

572 Marineland of NZ 562 18 1 581 (49) 532 512

795 National Aquarium of NZ 1,576 395 155 2,126 (1,441) 685 835

352 Napier i-SITE Visitor Centre 903 32 1 936 (607) 329 343

(42) Par 2 MiniGolf 238 19 1 258 (301) (43) (56)

(516) Kennedy Park 2,283 197 16 2,496 (3,084) (588) (906)

1,924 Total Net Operating 6,439 661 174 7,274 (5,638) 1,636 1,918

1,394 Capital Expenditure [2] 1,567 244


Funded by:


968 Special Funds 701 36

500 Loans 500 -


3,318 Total 3,203 2,162


Actual09/10$000

Uniform Annual Charges 152

User Charges 4



Rendering of Services 1

Retail and Product Sales 5,337

Other Income 21


Interest 1


Total Income 5,638


City Promotion


Budget09/10$000

Actual09/10$000

Marineland of NZ

6 Marineland Minor Capital Provision 7

- Marineland Plant and Equipment Renewals 23

National Aquarium of NZ

13 Minor Capital Items 6

32 Capital Provision -

- Other Minor Capital Items 26

- Building Roof Renewal 183


- Napier i-SITE New Front Counter 1

11 Napier i-SITE Minor Capital Provision -

Par 2 MiniGolf

6 Par 2 MiniGolf Minor Capital Provision 6

Kennedy Park

116 Kennedy Park Renewals 5

500 Kennedy Park Replace Cabins 1,114 *

110 Kennedy Park Minor Capital Provision 196

600 Kennedy Park Facilities Renewals - *


Note (*): Timing of cabin replacement was brought forward so they were in place for summer of 2009/10. The facilities Renewals will be undertaken in 2010/11.


Planning and Regulatory

ScopeThese activities are legislative requirements, with the exception of Parking.

City Development Planning

City Development Planning manages the development of the natural and built environment of Napier, via the District Plan, under the Resource Management Act 1991 in a sustainable manner, ensuring the quality and quantity of the City’s resources are maintained and enhanced.

Regulatory Consents

Council ensures that development of the City is within the Resource Management Act 1991 and the policies of the District Plan through Regulatory Consents. This includes processing non-notified Resource Consents and Land Information Memorandum, preparing resource applications for land sub-divisions and an annual environmental programme to gauge the effectiveness of Council’s environmental management policies. Also covered is enforcement work to ensure compliance with Resource Consent approvals and the operative District Plans.

Building Consents

The Council ensures that building development within the City is in accordance with the Building Act 2004 through the process of the Building Consents. Services include counter advisory service, processing building consent applications, providing codes of compliance and building warrants of fitness, and investigating complaints.

Environmental Health

Council deals with the environmental problems of noise, smoke, smell and refuse pollution through its Environmental Health Services through investigation and enforcement under a range of Acts. Licences are processed and premises inspected for food premises, hairdressers, offensive trades, camping grounds, skin piercing, mobile shops, funeral directors and street occupation. Also covered is the administration of matters relating to the Sale of Liquor Act, monitoring compliance with household swimming pool regulations, and investigations and advice on environmental and any other health matters and nuisances such as vermin, pests and fire hazards.

Animal Control

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

Parking

� Public Parking Spaces: CBD – 2,405, Taradale – 366

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


Key IssuesParking

The Taradale Town Centre Upgrade is under way and Pay and Display parking meters will be introduced in Taradale late 2010. The decision to delay the introduction of charging for parking will give local residents time to adjust to the new layout and charging regime and alterations to the time restrictions.

One large single factor that may impact Napier City parking demand is the potential development of land that is currently used for parking close to the CBD. This would cause the displacement of 250 vehicles currently parking free of charge. At present there are no plans for development of the “free parking” site. Accordingly, with the current economic climate, work towards the development of a multi-level parking building is on hold. Peripheral development may still occur to enhance current parking facilities or assist is preparation for the future multi-level facility.

Heretaunga Plains Urban Development Study (HPUDS)

Hastings District Council, Hawke’s Bay Regional Council and Napier City Council have recently collaborated on developing a strategy for the future development of the Heretaunga Plains from 2015 through to 2045. The chosen option was to encourage more intensive development within the present urban boundaries rather than spreading across the versatile soils that are needed for future food production.

The findings of HPUDs will be incorporated in the Regional and District Plans, in the decisions on when and where development occurs in the Long Term Council Community Plans and in the individual council budgets. It is intended to review HPUDs after each 5 year census.


The HPUDs scenario is for a total of 8200 extra people living on the Heretaunga Plains area by 2045, and 8000 extra houses or dwelling units. During the period up to 2045 the average number of people per household is expected to drop and the nature of the housing development will change.

The average age of the overall population will increase. The most obvious effect of the strategy will be seen in the residential development in Napier. The main areas for residential development are;

- Te Awa - Mission Heights in Poraiti - Parklands Oroutu - Bay View

The areas for industrial and commercial development in Napier will be largely unchanged from the present. It is likely that the bulk of future industrial in the Heretaunga Plains area development will be located within the Whakatu and Tomoana areas at Hastings. The bulk of the new residential development within Napier will be done by individual private developers who will meet the cost of the development and make financial contributions towards the provision of public infrastructure. Napier City Council will also need to fund a proportion of the infrastructure costs. This funding is likely to come from general rates.

There will be transportation and roading effects from HPUDs, and the information from this study will be used to help formulate the transportation plans for the Heretaunga Plains. The roading projects will be paid for by a mixture of central and local government funding.




Planning Policy


1. Ensure the integrity of the District Plan is maintained through strategic reviews.

Report on progress. • The review of multi unit developments and subdivision standards on Napier Hill has been notified and submissions called for.

• The joint Heretaunga Plains Urban Growth Study being undertaken with NCC, HDC and HBRC has recently seen the Governance Group consider public comments on the strategy.

• The preferred Structure Plan for the Te Awa rezoning proposal is nearing completion.

• Council has adopted the strategy “Greening Napier: A Framework for Street & Pathway Greening Initiatives”. The strategy is to be implemented over the next three years.

• A district plan harmonisation project is currently underway between Napier City Council and Hastings District Council with the aim of harmonising plan provisions where practicable while retaining a place based planning approach within the district plans.

2. Manage District Plan modifications within legal requirements.

Report on progress. • A summary of submissions for Plan Modifications 1 & 2 (Large Format Retail Zone and Business Park) have been prepared and further submissions called for. Due to substantial additional modelling work that was required post submission period these plan changes will not be processed within the statutory time frames.

• A Notice of Requirement for a roading designation on the Lee Road, Meeanee Road intersection has been limited notified and submissions received.


Regulatory Consents


1. Process non-notif ied resource consents and all subdivision consents to approval stage, within the statutory time frames of 20 working days.

100% 94% processed within 20 working days (198 out of 211).The target was not achieved due to staffing levels and the complexity of some applications.

2. Process notified consents within the statutory time frames of 70 working days.

100% 0% processed within 70 working days (nil out of 1).The target was not achieved due to the complexity of the application.

3. Land information Memorandums to be processed within the statutory time frame of 10 working days.

100% 100% processed within 10 working days (241 out of 241 with a 4 day average process time).

4. Response rate to complaints. All urgent complaints investigated within

3 days.

94% of complaints investigated within 3 days (29 out of 31 complaints dealt within 3 days). The target was not achieved due to the workload and staffing levels.

Building Consents


1. Process building consents within the statutory time frame of 20 working days.

100% 99.6% processed within 20 working days (1,212 out of 1,217).The target was not achieved.

2. Process Code Compliance Certificates within the statutory time frame of 20 working days.

100% 91% processed within 20 working days (1,150 out of 1,260).The target was not achieved.

3. Audit 20% of all buildings requiring building warrants of fitness registered from owners of buildings, subject to code of compliance schedule.

20% 6% audited for 2009/10.The target was not achieved. This is not a legal requirement and is therefore lower priority.

4. Maintain Building Consent Authority (BCA) and International Organisation for Standardisation (ISO).

Accreditation maintained.

• At 30 June 2010 ISO and BCA accreditation was maintained.

• A requirement of the Building Act 2004 is that the Building Consent Division of Council is required to become certified as a Building Consent Authority. Also the Act requires the Building Consent Division to undergo BCA re-certification every two years, with




4. continued. re-assessment of regulations 5 to 16 and the initial assessment of regulation 17, conducted in May 2010.

• ISO re-certification assessment was conducted in April 2010.

Environmental Health


1. Proportion of all food premises inspected twice per year (including re-checking) and non-food premises inspected once per year.

100% 100% inspected for 2009/10.

2. Number of water samples taken compared to number of the National Standard.

180% Number of samples taken in 2009/10 was 155% of the National Standard.The target was not achieved. Sampling has been increased but addition funding will be required to increase further. This result is 55% above compliance level.

3. Requests for swimming pool fencing inspections initiated within 10 working days.

100% 100% inspections initiated within 10 working days.

4. Percentage of residents satisfied with 'Noise Control' in the NRB Customer Satisfaction Survey.

77% The NRB Survey carried out in July 2010 showed 84% resident satisfaction with Noise Control:


Animal Control


1. Complaint investigations initiated within 5 working days.

100% 99.5% complaints investigated within 5 working days.The target was not achieved. The few delays result from staff illness and rostered days off.


2. Number of licenced dog owners (to become licenced an owner must demonstrate that they are responsible).

67% 17.4% of dog owners licensed.The target was not achieved.This is a new measure and the target is long term. Success is dependent on members of the public being willing to be trained and have an inspection of their property. This will be a focus for the years ahead.

3. Percentage of residents satisfied with 'Animal Control' in the NRB Customer Satisfaction Survey.

75% The NRB Survey carried out in July 2010 showed 75% resident satisfaction with Animal Control:


Parking Services


1. CBD parking occupancy rate (off street and on street).

less than 70% 70.4% on street47.4% off streetThe target was not achieved for on street parking.

2. Taradale parking occupancy rate (off street and on street).

less than 70% 68.5% on and off street.

3. Percentage of residents satisfied with 'Parking in the Inner City' in the NRB Customer Satisfaction Survey.

60% The NRB Survey carried out in July 2010 showed 64% resident satisfaction with Parking in the Inner City:


4. Percentage of residents satisfied with 'Parking in the Suburbs' in the NRB Customer Satisfaction Survey.

80% The NRB Survey carried out in July 2010 showed 72% resident satisfaction with Parking in the Suburbs:





Financial Summary

Actual 09/10 - $000


Income [1]

Net Cost of Service

Actual 08/09$000

609 Planning Policy 822 3 - 825 - 825 971

601 Regulatory Consents 856 - - 856 (267) 589 717

376 Building Consents 1,311 - - 1,311 (1,120) 191 440

309 Environmental Health 543 1 - 544 (227) 317 335

170 Animal Control 583 10 11 604 (539) 65 91

(912) Parking 1,205 124 19 1,348 (2,306) (958) (1,135)

1,153 Total Net Operating 5,320 138 30 5,488 (4,459) 1,029 1,419

1,259 Capital Expenditure [2] 181 1,007


Funded by:


225 Special Funds (889) (162)

- Financial and Capital Contributions - (60)

- Non Funded Items 134 103

2,412 Total 1,210 2,426


Actual09/10$000

User Charges 5

Regulatory Revenue 2,622


Infringements and Fines 822



Other Income 6

Total Income 4,459





Budget09/10$000

Actual09/10$000

Building Consents

139 Electronic Document Management for Property Information -

Animal Control


Parking

- Develop Napier Senior Citizens Site 85

- Parking Equipment Replacement 1

- Parking Minor Capital Items 8

- Additional CBD Parking 2

100 Upper Dickens Street 80

1,000 CBD Parking Building -

20 Other Minor Capital Items -

1,259 Capital Expenditure 181


Roading

ScopeRoading

� 363 km of roads (100% sealed)

� 306 km Urban Standard Roads (approx. 10% not constructed to Council’s current urban standards)

� 57 km Rural Roads (70% requiring widening to cope with current traffic volumes)

� 46.4 km State Highways

� 5,441 sumps and manholes to be cleaned

� 480 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.

Key IssuesRoading Projects

� Taradale Town Centre upgrade

� Roading capital projects (bulk funded)

� Transportation proposals

� Cycleway projects

Crash Statistics

The number of injury crashes over the past two years is showing a trend upwards. While this is somewhat concerning it has to be remembered that Council is only one part of the road safety equation. Enforcement undertaken by the Police and Education, which in the past has been largely undertaken by Roadsafe HB and the Police both have a major impact on crash statistics.

While full analysis of the data will be undertaken as part of the upcoming Crash Reduction Study, it is evident from the base information that “road factors”, as a contributor to a crash, is present in less than 30% of recorded crashes. The road factors or the engineering of a road are the main areas where Council has influence.

Council will continue to work with its road safety partners to try to reduce the number of road crashes on our network. Council will also be undertaking a formal Crash Reduction Study over the coming months to determine if there are sites that would benefit from low cost remedial measures and we will continue to safety audit all major road work proposals.

Reduced NZTA funding

As a result of the Government’s revised targets for the Land Transport Programme, subsidy levels for maintenance and renewal works for the three years from 2009/10 to 2011/12 have been reduced by approximately 10%. The Council decided to “fund” the shortfall in the 2009/10 year from outturn surplus from the 2008/09 year. Therefore there has been no impact on the level of service to date. For the coming two years however careful prioritisation of works will be required to minimise any adverse affect of this shortfall in funding.

Increase in Mass and Dimensions for Trucks

Council is working with NZTA and their consultants to accurately determine the likely effects of the increased mass and dimension of trucks on parts of the network. Initial indications are that the effect on straight sections of road are likely to be minimal (less than 5% increase in maintenance and renewal) largely because the increased tonnage per vehicle is expected to result in less vehicles on the road. The effects on high stress areas however, (intersections and tight bends) could be more pronounced because of the additional shear forces generated by the additional axle loadings.



Roading


1. Percentage of residents satisfied with 'Footpaths' in the NRB Customer Satisfaction Survey.

82% The NRB Survey carried out in July 2010 showed 87% resident satisfaction with Footpaths:


2. Percentage of residents satisfied with 'Roads' in the NRB Customer Satisfaction Survey.

87% The NRB Survey carried out in July 2010 showed 91% resident satisfaction with Roads:


3. Average roughness of sealed roads (NAASRA – National Association of Australian State Road Authorities Ratings: 70 considered smooth, 150 considered rough.)

Less than 100 NAASRA

90 NAASRA counts per km for 2009/10.

4. Number of injury crashes in Napier City.

Reduce by 4% on previous year

(2008/09 = 151)

183 injury crashes, 21% increase over the past year.The target was not achieved.(see Key Issues)

Roading


Roading

Financial Summary

Actual 09/10 - $000


Income [1]

Net Cost of Service

Actual 08/09$000

5,650 Roading 6,152 6,760 1,056 13,968 (5,944) 8,024 7,548

5,650 Total Net Operating 6,152 6,760 1,056 13,968 (5,944) 8,024 7,548



Funded by:


6,046 Special Funds 6,221 5,637

(1,650) Financial and Capital Contributions (1,277) (702)

1,399 Loans 1,398 92

1,639 Non Funded Items 1,423 1,461

18,001 Total 16,937 16,815

[1] Summary of IncomeActual09/10$000

Uniform Annual Charges 164

User Charges 18

Land Transport NZ and other Government Grants 3,305

Regulatory Revenue 18


Petrol Tax 402

Vested Assets - Parklands Residential Development 903

Financial and Development Contributions 1,075


Total Income 5,944


Budget09/10$000

Actual09/10$000

Roading

4,054 Roading I.A.R. 3,568

4,541 Roading Vested Assets 903

1,417 Taradale Town Centre Upgrade 2,115

1,756 Roading Capital Projects (Bulk Funded) 2,125

486 Transportation Proposals 21

97 Bay View Footpaths -

- Prebensen Drive 4 Laning 98

- CBD Projects 65

- West Quay 18



Water and Wastes

ScopeSolid Waste

Council provides a domestic refuse collection service for both residential and commercial properties within the city as follows:

� Residential Properties – once per week

� Commercial / Suburban Shops – twice per week

� Commercial / Central Business District – three times per week

A kerbside recycling service for residential properties is provided fortnightly. Litter bins and drums are located throughout the City and serviced on a daily basis. Council’s Refuse Transfer Station at Redclyffe accepts most domestic, garden and building waste. In 2009/10 Napier disposed 21,269 tonnes of refuse 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 Napier City and Hastings District. It is jointly owned by both the Napier City and Hastings District Councils and is managed on a day to day basis by the Hastings District Council.

Stormwater

� 216km stormwater mains

� 58km open drains

� 13 pump stations (Napier City Council and Hawke’s Bay Regional Council managed)

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

� 40 pump stations

� 365km wastewater mains

� Milliscreen Plant (Awatoto)

� 1,607m 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

� 32 million litres storage facilities

� 461km 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.


Water and Wastes

Key IssuesCross Country Drain

The Cross Country Drain and pump station was commissioned during the year. This major, long term project will provide for current and future stormwater requirements. The drain runs from the intersection of the Napier/Hastings motorway and Tannery Road to Te Awa Avenue, where the stormwater is pumped via pipe to the sea. As well as draining Taradale South it intercepts stormwater from the upper Pirimu Drain which makes capacity available in the Pirimu Station to service North West development areas (Oaklands, Parklands, Park Island). There has been a major event since the drain’s completion during which time the system worked effectively providing bulk stormwater pumping capacity. An aerial view of the Cross Country Drain is included on page 121.

Taradale Pumping Station and Main

Construction of the 800mm diameter pumping main started during the year. Construction of the remainder of the main and the pumping station will continue into 2010/11.

Wastewater Treatment

The 2010/11 Annual Plan provides $6.443 million for the Biological Trickling Filter Treatment Plant which is additional to the amount of $26.3 million already provided for the Advanced Primary Treatment Plant. The total cost of implementing the Biological Trickling Filter Treatment process is $32 million.

A resource consent application to discharge treated wastewater into Hawke’s Bay following treatment of all domestic and non-separated industrial effluent in the proposed Biological Trickling Filter Wastewater Treatment Plant, and treatment of all separated industrial trade waste effluent to meet the Trade Waste Bylaw, has been lodged with the Hawke’s Bay Regional Council. A request for further information has been received and it will take until the end of March 2011 to complete the oceanographic work needed to collate the information. It is expected that the consent application will be notified after receipt of the additional information. The new treatment plant is programmed for commissioning during the last quarter of 2013.

Water Supply

A new 900m3 reservoir in Bay View is now in service to replace the original 200m3 reservoir. The net storage increase of 700m3 provides capacity for an additional 1,300 population. All mains at the reservoir site were renewed in conjunction with this project to ensure continued supply reliability.

Completion of the Awatoto Water Trunk Main project was delayed due to a delay in the supply of some fittings. The trunk main is now expected to be commissioned before the end of 2010 and will provide increased supply capacity to the City for the coming summer.

With focus on these two projects work on the Water Pipes I.A.R. and Capital Upgrade Associated with I.A.R. has been delayed. The new Taradale reservoir has been delayed for two years and budget will be carried forward. The replacement of the Water Supply Control System was delayed due to delays in obtaining equipment for evaluation. This equipment is now being evaluated and the system is expected to be in service by end of 2010/11 year.

Resource Consents

The resource consents associated with the Solid Waste, Water Supply, Wastewater and Stormwater activities are administered by the Hawke’s Bay Regional Council. The consent conditions are set pursuant to provisions under the Resource Management Act. All the consents contain reporting requirements. The HBRC uses this information to assess compliance. Any known areas on non-compliance are contained in this Annual Report.



Solid Waste


1. Provide kerbside collection of refuse. Weekly household collection.

Weekly household collection achieved in 2009/10.

2. Percentage of residents satisfied with 'Refuse Collection' in the NRB Customer Satisfaction Survey.

92% The NRB Survey carried out in July 2010 showed 91% resident satisfaction with Refuse Collection:



3. Total Waste to Landfill. 27,500 tonnes 21,269 tonnes to Landfill for 2009/10, an improvement on the target.

4. Waste to Landfill per capita. Less than 476kg 368kg per capita for 2009/10, an improvement on the target.

5. Refuse Diversion Rate. 21% 28% diversion rate for 2009/10, an improvement on the target.

6. Compliance with Resource Consent Parameters.

100% 100% compliance for 2009/10.

7. Operate education and waste reduction promotion programmes.

Programmes in place.

Waste Aware, an environmental education programme for school children is in place.

Stormwater


1. Percentage of residents satisfied with 'Stormwater' in the NRB Customer Satisfaction Survey.

85% The NRB Survey carried out in July 2010 showed 86% resident satisfaction with Stormwater:


Water and Wastes


Water and Wastes

2. Percentage time total pumping capacity available to prevent flooding. (Pumping capacity maintained at an average of 95% arising from pumps being out of service for maintenance.)

97% 100% pumping capacity available for 2009/10.

3. Compliance with requirements of resource consents for quality and volume.

100% 100% compliance for 2009/10.

Wastewater


1. Urban Main Residential and Rural Settlement Population served by reticulated system as proportion of total City Population.

93% Reticulated system as proportion of total City Population = 93%

2. Percentage of residents satisfied with 'Wastewater' in the NRB Customer Satisfaction Survey.

85% The NRB Survey carried out in July 2010 showed 91% resident satisfaction with Wastewater:


3. Compliance with requirements of resource consents for quality and volume.

100% 100% compliance for 2009/10.

4. Number of reticulated properties that are unable to dispose of wastewater, due to stormwater infiltration, for longer than 6 hours.

Zero 13 properties for 2009/10.The target was not achieved.During a rainfall event in May 2010 these 13 properties were unable to use toilets for longer than 6 hours.


Water Supply


1. Percentage of residents satisfied with 'Water Supply' in the NRB Customer Satisfaction Survey

90% The NRB Survey carried out in July 2010 showed 95% resident satisfaction with Water Supply:


2. Compliance with Resource Consent requirements for volume and rate of extraction.

100% 100% compliance for 2009/10.

3. Compliance with Drinking Water standards.

100% 100% compliance for 2009/10.

4. Percentage of Distribution Mains cleaned.

20% 18.6% mains cleaned for 2009/10.The target was not achieved. The second round of cleaning was delayed due to staff committed to capital projects.

5. Operate community education and conservation promotion programme.

Programme in place

The programme is in place and consists of radio advertising for conservation and local newspaper advertising in conjunction with conservation campaigns and brochures promoting water conservation.

Water and Wastes


Financial Summary

Actual 09/10 - $000


Income [1]

Net Cost of Service

Actual 08/09$000

538 Solid Waste 4,414 640 65 5,119 (4,681) 438 389

2,147 Stormwater 1,088 1,394 176 2,658 (910) 1,748 1,582

(1,953) Wastewater 2,258 3,080 212 5,550 (7,248) (1,698) (1,654)

(651) Water Supply 2,087 1,297 105 3,489 (3,873) (384) (712)

81 Total Net Operating 9,847 6,411 558 16,8156 (16,712) 104 (395)



Funded by:

5,219 Non Targeted Rates (728) (679)

1,119 Special Funds 3,408 5,393

1,458 Financial and Capital Contributions 3,812 4,007

903 Loans 1,040 916

- Non Funded Items 1,188 944

8,699 Total 8,720 10,581


Actual09/10$000

Uniform Annual Charges 11,714

User Charges 2,026


Rental Income - Other 80


Omarunui Landfill Joint Venture 1,695

Other Income 10

Vested Assets - Parklands Residential Development 793

Vested Assets - Other 109



Total Income 16,712

Water and Wastes


Water and Wastes


Budget09/10$000

Actual09/10$000

Solid Waste

266 Omarunui Development - Valley D 139

3 Omarunui Development - Plant 7

1 Omarunui Development - Forestry -

57 Omarunui Development Valleys A, B and C 24

110 Solid Waste I.A.R. 21


Stormwater

793 Upgrade Stormwater Catchments I.A.R. 374

417 Stormwater I.A.R. 12

499 Stormwater Vested Assets 489

- Cross Country Drain and Pumping Station 1,266

- Extend Outfalls - Marine Parade -

12 Georges Drive Drain 31

264 Bay View - Upgrade Stormwater 25

54 Drain Improvements 40

173 Saltwater Creek Culvert Duplication 17

43 Dalton St Pump Replacement -

Wastewater

620 Sewerage I.A.R. 306

232 Milliscreen Renewal Programme 26

210 Sewage Pumping Equipment I.A.R. 84

645 Wastewater Vested Assets 311

2,559 Taradale Rd Pump Station and Main 4,094

- Advanced Sewerage Treatment 91


Water Supply

551 Water Pipes I.A.R. 269

82 Water Pump Stations I.A.R. 106

20 Water Meters I.A.R. -

111 Capital Upgrade Associated with I.A.R. 5

244 Water Supply Vested Assets 102

52 New Reservoir Taradale -

50 Replace Water Supply Control System -

- Thompson Stg 2 No 2 Round Tank 71

- Bay View Reservoir 247

550 Awatoto Water Trunk Main 360



Property Assets

ScopeLagoon Farm

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. A quarter of the area acts as a flood ponding area during unusual and extreme weather events. Approximately 40ha is currently in the planning process of being rezoned as a Business Park. As residential or business park development occurs, farming operations will reduce. The farming operation has already been impacted upon by construction of the Prebensen Drive extension, which bisects the farm. As these activities progressively impact on the farm operations, it is likely that Council will cease to operate Lagoon Farm as a commercial farm.

Parklands Residential Development

The Council’s Parklands Residential Development on 120 hectares of former Lagoon Farm land will provide up to 800 residential sections and includes land for sportsgrounds. The rate of development will be driven by market demand.

Property Holdings

Leasehold Properties:

� Commercial 83

� Residential 73

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

Key IssuesCouncil is now able to provide significant project funding from surpluses of the Parklands Subdivision for projects that would otherwise not have been able to be included in the capital plan or would have resulted in a direct impact on rates. The projects included in the 2010/11 Annual Plan are Planting and Landscaping, Lagoon Farm Business Park, Marine Parade/CBD Upgrade and Council Chambers and Weatherproofing.

Business Park Proposal

Like other sectors of the economy the requirements for business development are forever changing. The Napier City Council believes that taking a proactive approach in meeting the changing land needs of all of the City’s business sectors is the most beneficial way to plan for growth while avoiding and minimising any adverse effects associated with development.

The Business Park Zone was created to meet an identified regional need for a zone where industry/business interests could establish businesses on larger sites in a high quality environment. The intention is that this zone will compliment and not compete with the established industrial zones. The zone is located on part of the Lagoon Farm backing onto the ecologically important Ahuriri Estuary. The sensitive nature of the site and its proximity to the Hawke’s Bay Airport and the ecologically significant Ahuriri Estuary mean that any activities must be low impact and environmentally aware.

The Business Park is located on Council owned land. It is intended that the land will be developed in a staged manner over time in response to industry driven demand for industrial developments on larger sites that rely on technology and do not create the discharges or other environmental effects usually associated with ‘heavy’ industrial activity. Consideration may be given to entering into a strategic alliance with an appropriate partner to develop the land as a means of reducing risk.

Development of the land in utility terms is expected to ultimately be cost neutral with the costs of developing the land being recouped off the end users of the land via development contributions and/or financial contributions in accordance with Council’s philosophy of any new development being required to pay its fair share of the costs of providing services necessary to support that development in order to avoid, remedy or mitigate the effects of such development.


Key Issues continued...

The initial expenditure of $1.105 million committed by the Napier City Council in the Capital Plan is ‘seeding’ funding to be allocated towards developing specific feasibility studies for infrastructural solutions necessary to develop the land. Funding will also be directed towards undertaking design work on the key components necessary to provide appropriate access to the Business Park (traffic intersections, roading, bridges, culverts, etc) as without proper access the Business Park will effectively remain land locked. The funding is provided from surpluses of the Parklands Subdivision and is spread over the 2009/10 to 2013/14 years.

Property Assets



Lagoon Farm

There are no non-financial performance measure for Lagoon Farm. This activity is not providing a public service.

Parklands Residential Developments


1. Number of lots created. 41 30 lots created in 2009/10.The target was not achieved.The number of lots created is staged to meet demand which was impacted by the slowing economy particularly in 2008/09. Increased sales arising from substantially higher demand in 2009/10 were filled from sections created in prior years.

Property Holdings


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

100% Half of a floor of the Library Building currently vacant.The target was not achieved.

2. Buildings maintained to a satisfactory level and complying with the Building Act and Health and Safety Act and hold current Warrant of Fitness certificates where required by statute.

100% Target achieved. 100% buildings comply with regulatory requirements. Maintenance is continuing.

3. All leases renewed within the statutory t imeframe in accordance with individual registered lease documents.

100% Of the seven leases due for renewal during the period three are in process of freeholding, one has been freeholded, one has been renewed and with two the proposed new ground rental is still being negotiated.

4. All freeholding requests handled in accordance with Council policy.

100% Two requests were received and both have been freehold.

Property Assets


Property Assets

Financial Summary

Actual 09/10 - $000


Income [1]

Net Cost of Service

Actual 08/09$000

(93) Lagoon Farm 568 37 - 605 (476) 129 (43)

(2,263)Parklands Residential Development

6,501 1 - 6,502 (8,714) (2,212) (753) *

(3,046) Property Holdings (410) 301 229 120 (557) (437) 5,742 *

(5,402) Total Net Operating 6,659 339 229 7,227 (9,747) (2,520) 4,946

975 Capital Expenditure [2] 9 242

(4,427) Funding Required (2,511) 5,188

Funded by:

(962) Non Targeted Rates (1,220) (326)

(3,538) Special Funds (1,359) 5,132

- Loans - 235


(4,427) Total (2,511) 5,188

[1] Summary of IncomeActual09/10$000

User Charges 6

Rental Income – Investment Property 921

Rental Income – Other 1,084


Sales Residential Development 8,704

Other Income 50

Dividend Income 5

Gain/(Loss) on Revaluation of Investment Properties (1,416)

Fair Value Gain/(Loss) on Livestock 53

Total Income 9,747

Note (*): Parklands Residential Development sales in the 2008/09 year were severely impacted by the economic condition and have increased considerably in 2009/10.

Property Holdings: See notes to the Financial Statements Note 2 Income (c)



Budget09/10$000

Actual09/10$000

Lagoon Farm


Parklands Residential Development


Property Holdings

375 Council Chambers and Weatherproofing 1

500 Marine Parade CBD Upgrade - *

100 Lagoon Farm Business Park -

975 Capital Expenditure 9

Note (*): The project is long term and dependent on other Marine Parade projects.

Property Assets


Council has a number of Cost Centres of a corporate or support nature. These cost centres provide the technical and support services necessary for the function of Council’s activities.

Costs of the support services are reallocated to activities either as overheads based on the support each activity receives, or recharged direct on a usage basis.

Support Units include 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.

Capital Expenditure

Budget09/10$000

Actual09/10$000

63 General Provision - Minor Capital Items 75

1,158 Replacement of Mobile Plant and Vehicle 1,028

- Intramaps Project 40

- Pirimai Playground -

37 Software Replacement and Upgrades 42

64 PC and Printer Replacement 17

12 Corporate I.T. Network 14

652 Technology Equipment Renewals 51 *


Note (*): Timing variance of purchase of renewals and some purchases made direct to activities.

Support Services

4APPENDICES


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 Limited

a. Policies and Objectives Regarding Ownership and Control

Previously Hawke’s Bay Airport Authority, airport operations were transferred to Hawke’s Bay Airport Limited on 1 July 2009. Hawke’s Bay Airport Limited is incorporated under the Companies Act and is owned by the Crown 50%, Hastings District Council 24% and Napier City Council 26%. The Company produces separate annual accounts. No payments were made by the Council to the Company during the financial year and there was no financial provision included in Council budgets. The Council share of the Company is included in its annual financial statements as an investment, valued using the equity method of accounting.

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

b. Nature and Scope of Activities

The Company’s core business is to be an efficient airport operator providing appropriate facilities for all airport users and the travelling public.

The Company:

- Operates the airport in accordance with the standard terms and conditions of its licence, including meeting appropriate safely and health standards, as required by the Civil Aviation Authority.

- Provides appropriate infrastructure to deliver the appropriate level of service consistent with the operational outcomes of an efficient airport operator.

- Ensures it adopts an environmentally responsible attitude to the operation of the business including noise management and storm water runoff.

- Pursues initiatives to increase and diversify revenue from aeronautical and non-aeronautical business streams.

- Aims for continuous improvements in all aspects of its operations.

- Adopts a “no surprises” policy in respect of significant shareholder related matters, to the extent possible in the context of commercial sensitivity and confidentiality obligations.

There has been no change between the intended and actual nature and scope of activities delivered.

c. Performance Targets

Performance targets for Hawke’s Bay Airport Authority were revised after the incorporation of Hawke’s Bay Airport Limited. Results reported are

against the revised targets. The key objectives, performance targets and performance results (as reflected in the Company’s Annual Report for 2009/10) are:

Objective 1 – Deliver sustainable growth in revenue and earnings.

Financial Performance Targets Target Actual

Landing Charges 1,122,230 1,117,664

Other Revenue 1,288,299 1,328,527

Total Revenue 2,410,529 2,446,191

Other Revenue % of Total 53.4% 54.3%

Profit Before Income Tax 497,655 968,975

Profit After Tax 345,359 267,169

Dividend 0 0

Revenue was 1% above budget while Expenses were 13% below budget, the major reasons being a reduction in the area of planned runway maintenance carried out and reduced depreciation based on the lower cost of assets rather than budgeted ODRC.

Deferred tax on building depreciation being non-deductible from the 2012 financial year has increased Income Tax expense for the year by $411,189.

Objective 2 - Present business plan to shareholders on options for Airport development including runway extension options and business park development.

Target: Business plan due 30 September 2009 to be presented to shareholders.

Result: A business plan for a runway extension to 1750 metres was presented to the shareholders in February 2010. As a result of the positive feedback from shareholders the board decided to let a contract for the extension, construction of the first stage commence in June 2010. Further work is being carried out on a business park development concept plan, which will be presented to shareholders when completed.

Objective 3 - Provide appropriate infrastructure to meet future needs.

Target: Performance to be measured against strategic plan.

Result: A new strategic plan is being worked on by the board and when complete will include requirements for appropriate infrastructure to meet future needs. In the meantime a comprehensive asset management plan ensures current needs are provided for.

Objective 4 - Deliver a high level of customer service to all airport users.



Target: Customer satisfaction survey to be undertaken in 2010.

Result: An initial telephone survey has been carried out, which highlighted some areas of concern although mainly to do with airline pricing policies. A further full survey of airport users is currently being worked on.

Prior to 1 July 2009 the Company operated as an unincorporated Airport Authority under the Airport Authorities Act 1966.

In order to allow the Airport to better meet current and future regional demand for its growth and development, the Airport was corporatised with effect from 1 July 2009, still owned in the same proportions by the Crown and the two Councils.

Corporatisation had little impact on the Council in terms of control over the Airport, strategic ownership, investment profile or financial position. The Airport continues to be a Council Controlled Organisation in terms of the Local Government Act 2002.

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.

Hawke's Bay Cultural Trust is classified as an associate entity for financial reporting purposes.

b. Nature and Scope of Activities

The Objectives of the Trust are:

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

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

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

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

- To regulate and approve the disposal of collection items.

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

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

The provision of:

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

- Development – To grow in accordance with Collection Policies.

- Housing – To ensure proper storage/protection of collection items.

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

- Access to the collection – To ensure appropriate access to the collection is maintained.

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

- The management of the daily operations 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 the Hawke’s Bay Cultural Trust.

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 Trust’s Annual Report for 2009/10) are:

Key Result Area

Performance Indicator

Target Actual

Care of Collection

Number of objects having conservation performed.

36 2

Number of insurance claims against collection damage (expressed in number of items and number of claims).

0 0

Development Number of de-accessions made annually within collection policies.

10 379

Percentage of items offered to collection accepted.

32% 39%

Exhibition / Display

Number of exhibitions held compared to target annually.

11 15

Focus of Collection

Percentage of items that come from Hawke's Bay sources.

90% 51% collection

55%archives

Performance Target Narrative

Care of Collection


The conservation of five items has been completed during the 2009/10 year. A further 11 items were dispatched and are either awaiting treatment or in the process of being treated at year end. A further 21 items were prepared for sending for treatment at 30 June and will be sent out once conservators are available to process these items. Nationally there is an extreme shortage of qualified conservators and the Trust is in a queue. The extent of the delay was not anticipated. The items that are away for conservation are all fully funded.

DevelopmentThe deaccession numbers have exceeded the target because the Trust has had a special project underway working on deaccessioning before relocating the collection. These figures do not include the bulk deaccessioning of 154 items that did not have accession numbers or any known provenance.

Exhibition/Display15 exhibitions were held compared to a target of 11. 11 new exhibitions were held, four were a time impact of a carry-over from last financial year.

Focus of CollectionThis measure will fluctuate quite substantially based on items that are offered. The performance indicator is measuring where the object has been donated from, which does not necessarily relate to the provenance of the object.



Glossary of Terms

Activities and Activity Groups

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 2009/10.

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.

Carrying Amount

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

Community Outcomes

These are goals determined by the community that it believes are important for its present and future economic, social, cultural and environmental wellbeing.


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

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

Infrastructural Assets

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.

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.

Levels of Service

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

Non-targeted Rates

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 Sat isfact ion 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. Interviews were carried out in July 2010 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 455 the margin of error is plus or minus 6.5%.

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.

Glossary of Terms


Aerial view of the Cross Country Drain

www.abovehawkesbay.co.nz

Documents

Napier City Council Annual Report 2009/2010