Long Term Community Plan 2012-2022 - Hurunui District Council

www.hurunui.govt.nz
Financial Position
Financial Position as at 2012
Our financial position at the start of the LTP period is set out in
the 2011/2012 Annual Plan shown below:
• The total rates were set at $12.8 million; of which $5.3
million are in District Wide rates and $7.5 million are in
targeted rates.
• Total income from non-rate sources was $16.9 million,
which includes $9.6 million in gross revenue derived from
the Hanmer Springs Thermal Pools and Spa.
• Total Operating Expenditure is forecast at $23.5 million
and Capital expenditure for the 2011/2012 year is
expected to be $9.2 million (which includes a level of
Capital that has been carried over from the 2010/2011
year).
• External Debt was expected to be $13.5 million at the
end of June 2012; however, the forecast has been reduced
to $12.5 million due to deferring some projects as part of
the LTP budget preparation.
• Internal Debt is expected to total $16.6 million as at 30
June 2012.
• Total Assets as at 30 June 2011 was $335 million, of which
$253 million related to our infrastructure.
The Relevance of the Current Financial Situation
to the Financial Strategy
• The current financial situation is relevant to the
financial strategy as it provides the starting point for the
development of the budgets for the LTP.
• There have been relatively low levels of rate increases for
the past three years.
• We took on debt for the first time in September 2010,
principally to provide funding for the $7.5 million
expansion of the Hanmer Springs Thermal Pools and Spa,
but there was already a need to obtain external debt to
fund the following keys projects over the preceding years:
• Town Centre Development in Hanmer Springs ($1.9
million) and Amberley ($560,000)
• Water Upgrades in Amberley ($714,000), Cheviot
($658,000) and Hanmer Springs ($788,000).
• Sewer Upgrades for Amberley ($2 million) and
Hanmer Springs ($1.8 million)
• Capital Expenditure to address the Drainage issues in
the Amberley Ward ($890,000).
• New Medical Centre in Hanmer Springs ($450,000)
and Rotherham ($1 million)
• As a result, there have been a number of large projects that
have been funded through the internal financing policy and
the requirement for those communities to start to repay
the debt through rates to replenish our cash reserves.
Until then, we will continue to hold debt for the period
of the LTP.
• The financial performance of the Hanmer Springs Thermal
Pools and Spa remains critical to our ability to keep rates
at an affordable level. The surpluses derived from the
HSTP&S is actively used to fund various costs relating to
reserves throughout the district. If we did not have the
surpluses to offset these costs, then they would need to be
rated for. In addition, and under the terms of the Internal
Financing Policy, we receive interest from the HSTP&S
for funds lent to it for the recent expansion works. This
interest received is used to offset the costs of our external
debt and to offset the District Wide Rates. The Council is
forecasting to spend more on reserve based costs than it
is forecast to earn from the surpluses derived from the
Hanmer Springs Thermal Pools & Spa for the first three
years of the Long Term Plan. To fund this the Council will
utilise existing reserves.
Forecast Financial Position as at 2022
At the end of the LTP period, our position is forecast as follows:
• Total rates revenue of $19.9 million; of which $8.0 million
are in District Wide rates and $11.9 million are in targeted
rates.
• Total income from non-rate sources is expected to
be $22.3 million, which includes $13.8 million in gross
revenue derived from the HSTP&S.
• Total Operating Expenditure is forecast at $39.6 million
and Capital Expenditure for the 2021/2022 year is
expected to be $7.7 million.
• External Debt was expected to reduce to $12 million at
the end of June 2022.
• Internal Debt will reduce to $15 million by the end of
June 2022.
• Total Assets as at 30 June 2022 is forecast to be $493
million, of which an estimated $393 million relates to
infrastructure.
Key Movements Over the Ten Year Period
Rates – Over the ten year period, we are forecasting to
receive a total of $167 million in Rates. This is broken down to
$69million in District Wide Rates and $98 million in Targeted
Rates. To achieve the total increase of 55% since the 2011/2012,
we intend to take incremental steps over the ten year period,
however with a relatively large increase of 5.83% required for
the 2012/2013 year.
Non-Rate Income – Excluding gains in asset valuation and vested
assets, we are forecasting that a total of $191 million will be
received from other forms of income. Roading Subsidies make
up $38 million over the period, Development Contributions are
forecast at $4.3 million and the gross revenues from the HSTP&S
are forecast at $115 million. In addition, we are expected to
receive $3.4 million from Forestry Sales, which is used directly
to reduce debt.
Operating Deficits - Due to Council spending more on reserve
based costs than it is forecast to earn from the surpluses from
the Hanmer Springs Thermal Pools & Spa, for the first three
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