2011-2012 Annual Report - Full Version - PDF - Palmerston North ...

Palmerston North City CouncilAnnual Report 2011/12vibrant, caring, innovative & sustainable cityYouth Space (refer page 2)www.pncc.govt.nz

Denman: Ocean processes and iron fertilization221Table 1. Cumulative emissions of CO 2 (Pg C) from fossil-fuelburning for several IPCC future emission scenarios (fromIPCC 2001, WG1: Appendix 2, Table II.I.I)IPCC SRES 1751–2000 a 2001–2050 2001–2100scenarioA1B 286 622 1367A1FI 286 681 2058A2 286 597 1702B1 286 842 0918a Based on annual emissions from Marland et al. (2007),available at: http://cdiac.ornl.gov/ftp/ndp030/global.1751_2004.emsocean from the atmosphere, it is rapidly dissolved andchemically distributed among the 3 components thatcomprise dissolved inorganic carbon (DIC): aqueous[CO 2 ], bicarbonate [HCO 3¯], and carbonate [CO = 3 ]ions,the latter 2 with negative charge. Corresponding H +ions, released through the dissociation of water molecules,lower the pH of the water simultaneously.Through photosynthetic primary production, CO 2 istaken up by phytoplankton and converted to organicmolecules (with some species also forming CaCO 3 ,referred to in Fig. 1 as particulate inorganic carbonNutrientsNutrientsPOC + PICBioticPumpsSinkingPOC + PICBurialAtmosphereCarbon cycle diagramDOCDOCPrimary productionDiagenesisSedimentsRespirationMixing + AdvectionCO 2DICDIC[PIC]). Photosynthesis requires sunlight and nutrients(nitrogen, phosphorous, iron, etc.) in approximatelyfixed proportions known as the Redfield ratios. Phytoplanktonare grazed by zooplankton and they excretedissolved organic carbon (DOC) and respire organiccarbon back to DIC. In Fig. 1, all particulate ecosystemcarbon, living and dead, is grouped together as particulateorganic carbon (POC) plus PIC. Much of this carbon,with the associated nutrients, is respired or remineralizedwithin the ocean surface layer on shorttimescales.A fraction of this carbon, referred to as export production,sinks out of the surface layer as particles(Fig. 1, sinking POC + PIC) or is transported from thesurface layer by mixing and advection of DOC. Most ofthe POC and DOC are remineralized through theaction of bacteria in the top 500 m back into DIC. Thisremineralization also requires dissolved oxygen whenit is available. During remineralization, especially atvery low concentrations of dissolved oxygen, some‘denitrification’ occurs, producing the gases N 2 andN 2 O, which may outgas to the atmosphere when thewater parcel enters the surface layer again. A smallfraction of POC and PIC reaches the sediments, wheresome is buried and some is released back into thewater column after transformation, i.e. ‘diagenesis,’back into dissolved nutrients and DIC.Large-scale physical advective andSurfaceoceanOceaninteriorTransportsTransformationsFig. 1. Schematic of the main components of the ocean carbon cycle, includinginteractions with the atmosphere and bottom sedimentsmixing processes eventually returnthe DIC (and associated dissolvedinorganic nutrients) in the ocean interiorback to the surface layer, wherethe CO 2 comes into contact with theatmosphere once more. For sequestrationto reduce the rate of increaseof atmospheric CO 2 , this return timescalemust be long enough (at leastdecades) and the associated dissolvednutrients must be returned as soon as,or sooner than, the DIC, which is possible,as they appear to remineralize atshallower depths than the organic carbon,except for silica.The first key point is that biologicalprocesses set the rate of sequestrationof carbon to the ocean interior, butphysical processes regulate the timescaleover which the sequestered CO 2is returned to the surface ocean whereit again comes in contact with the atmosphere.The second key point isthat fertilization will only work wherethere are unutilized macronutrients inthe sunlit surface layer; these unusedmacronutrients occur at large concen-

Contents1. OVERVIEWCouncil’s Vision for the Future 3Year in Review 4Financial Overview 7Revenue 9Expenditure 11Capital Expenditure 12Equity 13Borrowing Ratios 142. WHAT THE COUNCIL DOESOverview 27Leadership 31Community Support 41Economic Development 57Leisure 63Environmental Sustainabilityand Health 85Support Services 119Contents & He MihiWhat’s Happening in the City? 15State of the City 15Palmerston North - Key Facts 18Recreation, Cultureand Leisure Activities 18Events 18How Do We Operate? 19Role of the Council 19Council Representationand Structure 19Role of Managementand Employees 22Funding Supportto External Organisations 233. FINANCIAL STATEMENTSAuditor’s Report 131Statement ofCompliance and Responsibility 133Comprehensive Income 134Financial Position 135Changes in Equity 136Cash Flows 137Accounting Policies 138Notes to Financial Statements 1384. COUNCIL CONTROLLEDORGANISATIONSOverview 189Caccia Birch Trust Board 190Globe Theatre Trust Board 191Regent Theatre Trust Board 192Te Manawa Museums Trust Board 193Palmerston North Airport Limited 195He Mihi5. APPENDICESHow to Find us 197Glossary 198Kei te mihi atu ki a Tararua te pae maunga me tōnataumata Te Ahu ā Turanga.Ko te awa e rere mai nei ko Manawatū.Ko Tānenuiarangi te tangata, ko Rangitāne te iwi, no reiraka tuku whakamihi ki te iwi o Rangitāne e pupuri nei i temauri otēnei whenua.Tini whetu ki te rangi, Rangitāne ki te whenua.Tihei Mauriora!The Palmerston North City Council respectfullyrecognises the local iwi Rangitāne and their customaryrelationship to this area and appreciates the ongoingsupport of the iwi in the development of this City and allof those people who have made it their home.The Council remains committed to fostering andstrengthening our relationship with Rangitāne.2Cover Photo: “Ignition’ event for youth in the CIty held in the newYouth Space, organised by the Youth Council.Palmerston North City Council Annual Report 2011/12

OverviewOverviewPalmerston North City Council Annual Report 2011/12

OverviewPalmerston North City Council Annual Report 2011/12Skate ParkPhotographyImage by Laura Ridley

Council’s Vision for the Future.Welcome to our 2011/12 Annual Report. This Annual Report looks at what the Council achievedbetween July 2011 and June 2012 and progress towards achieving our goals. It shows you whatwe did to make Palmerston North a better place to live in.Our actions and future plans are driven by ourVision and Goals.These are updated to ensure appropriate to thedirection of Council and the sort of city the Councilwants.Our Vision:Palmerston North is recognised as a vibrant, caring, innovative and sustainable city.To achieve this Vision the Council also has five key goals. Three of these are about the Cityand two are about the Council.Our City Goals are:• Palmerston North is a sociallysustainable city where people wantto live because of its safe and easylifestyle and its many social, culturaland recreational opportunities.• Palmerston North is a leading city inthe quest to become environmentallysustainable.• Palmerston North is an economicallysustainable city which attracts, fostersand retains businesses and jobs tocreate a prosperous community.Our Organisational Goals are:• Palmerston North City Council isfinancially responsible and residentsare satisfied that they get value formoney from their rates.• Palmerston North City Councilunderstands the diverse views ofthe City’s people, makes prudentdecisions, and ensures that peopleknow what it is doing and why.Overview Council’s Vision for the FutureThis Vision and Goals put more emphasis onsustainability. To guide our path towards ourvision and goals we use strategies to focus on theoutcomes required with some of these strategiesreferred to in this report. The key over-ridingstrategy is the Sustainable City Strategy. It showshow Council is working towards more sustainableoutcomes in areas like energy consumption,biodiversity, waste management, communitydevelopment, housing, public transport, land use,economic development and urban design. Specificdetail is then included in other strategies.In the 10 Year Plan there is further explanation ofhow these strategies are incorporated into ourplanning and subsequently implemented.In developing these strategies we will continueto support community groups, provide recreationfacilities like walkways and libraries, make it easyfor people to move around the City, and provideanimal control services. These, and the many otherservices we provide, all make Palmerston North avibrant, caring and safe place where people wantto live.We will also keep working with businesses so thatPalmerston North is a city that attracts, fosters andretains businesses. This will help keep and createjobs for people. We will especially work with theeducation and research sectors to make more ofthe creativity and innovation they bring.Palmerston North City Council Annual Report 2011/123

Year in ReviewAgainst the backdrop of global and national economic uncertainty Palmerston North has beenbetter off than a lot of the country, however times remain tough for our residents and businessesand we remain conscious of this.Overview Year in ReviewThe Council remains committed to its directionto have Palmerston North recognised as a vibrant,caring, innovative and sustainable city. This wasreviewed as part of the long term plan with no majorchange in direction and is part of our planning.Financial PerformanceFinancially it’s been a difficult year. Some plannedrevenue sources did not eventuate meaningthat to stay within budget tight controls onexpenditure were required. In setting rates Councilhas to balance the need to provide the servicesrequested, many with a statutory requirement toprovide, against the ability of the community topay. We also needed to weigh up who benefitsfrom the services we fund to maintain the Council’sassets and infrastructure while also repaying debtto ensure the City is financially sustainable.Section 2 of this document includes detailedinformation on the activities and services theCouncil provided, but the financial highlightsinclude the following items.• The Council finished the year with a surplus of$921,000 over its rates-funded operating costbudget.• An additional $3,444,000 was available fordebt reduction on top of the budgeted$2,205,000 – meaning the Council reduced atotal of $5,649,000 worth of existing debt.• All asset renewals to maintain existingcapacity have also been funded fromoperating cashflow with $2,127,000 less spentthan budgeted. Part of this is yet to be spentin the new year and will increase debt then.• While Council officers worked hard to deliverservices within budget resulting in a surplusfrom controllable operating activities,inclusion of non-controllable items meantthe Council’s overall financial result was a$10,749,000 deficit compared to a budgetsurplus of $1,315,000. This unfavourable resultwas largely out of the Council’s control due tothe effect of the continuing recession.A large part relates to budgeted non-cashcapital revenues for vested assets fromdevelopers with only a minimal amountreceived, capital revenues on other capitalprogrammes which didn’t go ahead and noncashaccounting adjustments.• Expenditure on new capital has been $9.6million funded by capital revenues of $2.1million and a debt requirement of $7.5 million.This was lower than planned for a numberof reasons:• some amounts will be expendednext year.• some programmes are no longer required.• Some programmes have been deferred toallow review of the on-going need forthe programme.• Gross debt has increased marginally over 2011with the increase primarily due to the amountto fund new capital of $7.5 million. This hasbeen offset by debt reduction from currentyear rates-funding of $5.649 million and fromapplication of long term investment fundwithdrawals of $1.7 million.A key focus for the Council continues to beensuring financial sustainability and enablingfuture debt repayment. To achieve this requiresCouncil to continually seek excellence to achievemore with less, to change to meet requirementsof the economy and community, to question howwe operate and what we are doing, and ensuringwe continue to deliver services within operationalbudgets. These financial results reflect that we areachieving this.4Palmerston North City Council Annual Report 2011/12

Long Term PlanDuring the year the draft long term plan wasissued with submissions sought from the publicbefore being finalised. This is our major planningdocument to determine the level of services to bedelivered over the next ten years and the cost ofthose services. It involves a huge amount of workfrom everyone involved but is essential to enableproper planning and assessment of the growingrequirements of the community. It also involves areview of the City’s assets, their condition, expectedlife, maintenance requirements and requirementsto meet future growth. The output of this review isincorporated into the ten year plan and leaves usknowing that the infrastructure of the city is beingproperly managed, maintained and replacementplanned for.Regional Development StrategyA Regional Development Strategy was endorsed byall parties (Palmerston North City Council, ManawatuDistrict Council, Vision Manawatu and DestinationManawatu) in October 2011 and provides the visionthat everything partners undertake will contributeto being the “best place to raise a family.” The visionis underpinned by 16 goals.Growth IssuesThe proposed boundary alteration between theCity and Manawatu District Council (“MDC”) hasbeen completed with effect from 1 July 2012 andwe welcome those people to the community ofPalmerston North. This alters the boundary toeffectively include additional areas in the City toalleviate the industrial growth issues the City wasencountering. This required public consultationand submissions following which the scheme wassubmitted to the Local Government Commissionwith approval being received in May. Economicgrowth in the industrial area will now be easier toachieve and of benefit to all.Rural IssuesA significant proportion of the City’s land mass isrural land. The Council is committed to protectinghigh class soils for productive purposes. Thisrecognises the importance of agriculture in theregion and the growing demands placed onfood production. The Council partnered withMassey University to undertake a study of whatmotivates farmers to subdivide their land. Thisprovided an insight into the issues facing our ruralcommunity. Subsequently, the Council adopted aRural Residential Land Use Strategy. This Strategyintroduces a hierarchy that gives top priority toproductive land use and will inform the reviewof land use rules for the Rural Zone as part of theSectional District Plan review.Sustainability and the EnvironmentSustainability of operations and minimisingenvironmental impacts remain key to futureoperations with many projects undertaken toimprove sustainability and reduce costs. Wasterecycling remains the most visible of these withmuch focus on improving the efficiency of therecycling plant and maximising revenue earnt.This will continue into the new year with furtherenhancements planned.There has also been investigation into improvedusage of gas, energy and material generatedfrom the wastewater plant to utilise these byproductsand reduce the volume of material goingto the landfill. Energy savings are anticipatedfrom installation of solar panels and efficientlighting at the Lido and Freyberg Pools and CivicAdministration Building. Improvements arecontinuing with benefits expected.ParkingDuring the early part of the year the public wereconcerned with the new car parking sensor system.To improve this, the key pads were changed anda public assistance campaign undertaken whichis still continuing. This system remains as leadingedge technology under development and as withany change there is a balance between cost andefficiency.Manawatū River Water QualityCouncil is a signatory to the Manawatū RiverAccord and remains committed to improvementof the river’s water quality. In 2011 the Councilwas deemed by Horizons Regional Council to benon-compliant with a condition of its wastewaterdischarge consent relating to the discharge havinga significant adverse effect on aquatic life withinthe river. To better understand the cause of thisCouncil and Horizons Regional Council haveundertaken a joint investigation to monitor theecology of the river. This study is yet to be finalisedand it is hoped that the results will enable the twocouncils to jointly determine an agreed courseof action that will improve the quality of theManawatū River in the vicinity of the wastewatertreatment plant.Overview Year in ReviewPalmerston North City Council Annual Report 2011/125

Overview Year in ReviewLocal GovernmentLocal government has largely determined theservices required by the community in additionto those required by law and delivered on these.Central Government has announced its intentionto commence a “Better Local Government” reformthat has the potential to change the purpose oflocal government, how it operates and servicesprovided. Council is evaluating these proposals,the effect on how we operate with the communityand have submitted our opinions on them toCentral Government.Rugby World CupTwo 2011 Rugby World Cup games weresuccessfully held in Palmerston North. The RugbyWorld Cup provided a focal point for the communitywith many local organisations providing supportfor the associated festivities. As expected theeconomic benefit to the City was limited. The NZRugby Museum moved into expanded exhibitionareas in Te Manawa and experienced an increase invisitor numbers during the world cup period.Projects on the GoThere have been a number of other key projectsconsidered or undertaken during the year, andwe’d like to update you on these:Strategic Roading and Bridging – Council haswithdrawn funding of a second bridge over theManawatū River from the next 10 Year Plan asthe traffic level increase required to meet NZTAfunding guidelines would be beyond the 10 yearperiod covered. Further deliberation by Counciland discussion with other affected organisationswill now be required.New Bus Terminal – with a number of concernsraised during the public consultation phaseCouncil has deferred construction of a new busterminal. We have sought further submissionsto ensure that the ultimate location is the mostappropriate and acceptable to all those affected.Partly this will await a “first principles” review ofthe existing service by Horizons Regional Council,who manages the urban bus service contract, todetermine future requirements. Construction hasbeen scheduled for the 2014/15 year.Mobile library replacement – previously Councilhad a preference that the replacement wouldbe a battery electric vehicle. Tenders receivedevidenced that this option would be financiallyexpensive and given the cost-benefit of the optionsCouncil has now determined to remain with adiesel powered vehicle. This has been ordered andexpected in the next year.Youth library, youth café – the Youth Space hashad a successful year adding to the resources ofthe City.Finally, our sincere thanks to all Councillorsand staff for their contributions during the yeartowards the growth and development of our city.Jono NaylorMayor26 September 2012Chief Executive Paddy Clifford andMayor Jono Naylor in The Square.Image by Tracey Marshall, Print Synergy,Palmerston North City Council.Paddy CliffordChief Executive26 September 20126Discoloured Water – work has continuedreplacing cast iron water main pipes and thenumber of complaints about discoloured waterhas continued to drop.Victoria Esplanade, relocation of depot toFitzherbert Park – this project is well underwaywith completion expected early in the newfinancial year.Palmerston North City Council Annual Report 2011/12

Financial OverviewEach year Council sets rates and fees to fund the services the community needs, maintain theCouncil’s assets and infrastructure and to enable scheduled debt reduction. A major factor indoing this is to be financially sustainable in our decision-making while ensuring rates and chargesgive value for money. In this section we look at how rates set at the beginning of the year comparewith our actual performance.Council sets rates and fees to match the cashamount required for the services provided. Incomparing performance we need to reflect thatthese are set differently to how we report asrequired by accounting standards. This is becauseCouncil includes in rates the funding required forrenewal capital expenditure to maintain existingassets and for repayment of both existing and newdebt. This is different to accounting requirementswhere these are not operating transactions withaccounting requirements also requiring valuationadjustments, and other non-cash differences, suchas depreciation.Financial highlights of theyear include:• Surplus from rates-funded operating activitieswas $921,000 above budget achieving ourgoal of living within our budget as a steptowards financial sustainability.• Renewal capital expenditure to maintaincapabilities was below budget however thereare some amounts of work to be completed in2012/13.• The balance remaining from operationsfor debt reduction exceeded the budgetedamount of $2,205,000 although a small partof this will be required for renewal capitalexpenditure carried forward to be incurred in2012/13.Overview Financial OverviewPalmerston North City Council Annual Report 2011/127

The following table details how we applied rates compared to how these were set in the 2011/12 AnnualPlan.FOR THE Year Ended 30 June 2012Rates are set to ensuresufficient fundingto meet objectivesfor operatingrequirements,maintain capabilityand loan repaymentsOther revenues areset to cover operatingrequirements as inapproved policiesActuals Budget Variance$000 $000 $000Rates received:General rates 55,110 54,746 364Targeted rates 13,764 13,620 144TOTal raTES 68,874 68,366 508We then received other revenues:Fees 23,025 24,276 (1,251)Other revenue 3,720 3,275 445Interest and dividends 1,138 1,448 (310)TOTal REVENuE 96,757 97,365 (608)Overview Financial OverviewOperating expensesare the amountswe incur to deliverservices and promotecommunity activitiesRenewal capitalexpenditure maintainsthe standard andquality of assets toenable delivery ofservicesTo enable planneddebt repaymenton new capitalexpenditure forgrowthWe then paid out:Grants for community support (7,504) (7,490) (14)Other expenses (62,873) (63,317) 444Interest to fund assets (10,022) (11,121) 1,099We paid out to maintain capability (14,097) (16,224) 2,127We received external revenues to fundservices or maintain capability 1,551 1,654 (103)Borrowing effect of renewal 3 year averaging 825 825 -We received net proceeds from sale of assets 732 - 732We received proceeds fromsale of investment forest 280 513 (233)Which leaves for debt reductionaND WORkING caPITaL 5,649 2,205 3,444This excludes accounting valuation adjustments as these are non-cash or rate funded in future years.Capital expenditure to maintain capability includes amounts actually incurred during the year only. Therewill also be a small amount of the total funded by rates yet to be incurred in the next period.Debt movements above also exclude other net borrowing requirements for movements in working capitaland for the effect of the rolling average used for capital renewal funding.In addition we intended to acquire new assets for growth or to add capacity, partly funded by grants orsubsidies.Amount of newcapital expenditurefor new assets and toincrease capabilitiesNew capital expenditure (9,603) (32,915) 23,312Less non-operating revenue cash received 2,098 4,057 (1,959)FuNDED BY NET DEBT (7,505) (28,858) 21,353The table above includes that we will generate cashto enable debt reduction of $5,649k compared tothe budget amount of $2,205k, including forestryloan repayment of $280k. Proceeds from the saleof assets have boosted this amount although partof this difference is required to fund movements inworking capital that occur each year.Part of both the renewal and new capitalexpenditure budgeted and not incurred will beincurred in the future. This has been allowed for inthe 2012/13 long term plan and will increase debtwhen incurred.8Palmerston North City Council Annual Report 2011/12

The following charts highlight some of the key financial areas covering where we receive income from, howthis is spent, how Council is funded and what is the equity of the Council.Interest & DividendIncome 1%Petrol Tax 1%Where did Revenue come from?Development Contributions 1%Rendering of Services &Other Income 16%3% Revenue For Capital ExpenditureRental Income 4%NzTA OperatingSubsidies 2%55% General RatesRegulatory UserCharges & Fees 3%Targeted Rates 14%While general rates are the primary revenue source of theCouncil they represents only 55% of total revenue included innet surplus/(deficit). Other key sources of revenue are targetedrates to recover specified service delivery costs, regulatory usercharges and fees, rendering of services and other income,interest and dividends, government transport subsidies,revenue obtained for capital expenditure and vested assets.An objective of Council has been to reduce the proportion oftotal revenue that is sourced from general rates and obtainmore from those using the services provided or requested. Inthis way Council can maximise revenue streams from otherincome sources on a user pays basis as Council tries to relievethe rates burden and reduce the general rates amount. Inthe current economic climate the proportion of rates to totalrevenue has increased due to lower growth related income andwithdrawals from the long term investment fund.Overview Financial OverviewPalmerston North City Council Annual Report 2011/129

Funding Source Proportions for Operating CostsThe Council in it’s financial policies details guidelines for use in determining the various fees. The table below shows the actual amount ofcosts covered by each fee or funding source for the 2011/12 year.The funding proportions below represent the Council’s desired intended share of the gross operating costs for that activity to be born byeach sector.General Targeted UsERRATEs RATEs Fees & ChargesPolicy Actual Policy Actual Policy ActualTarget Target TargetLeadershipCouncillor Leadership & Decision Making 80-100% 99% 1-19% 1%Direction Setting 80-100% 99% 1-19% 1%Overview Financial OverviewCommunity SupportCemeteries 20-39% 39% 60-79% 61%Civil Defence 80-100% 98% 1-19% 2%Community Development 80-100% 87% 1-19% 13%Housing 20-39% 15% 60-79% 85%Economic DevelopmentEconomic Development 80-100% 79% 1-19% 21%LeisureArts and Culture 80-100% 99% 1-19% 1%City Library 80-100% 95% 1-19% 5%Parks and Recreation 60-79% 84% 20-39% 16%Environmental Sustainability and HealthRegulatoryAnimal Control 20-39% 13% 60-79% 87%Building Control 20-39% 45% 60-79% 55%Resource Consents 1-19% 60% 80-100% 40%Land Administration 40-59% 0% 40-59% 100%Public Health 60-79% 67% 20-39% 33%Roading and Parking 60-79% 69% 20-39% 31%Rubbish and RecyclingRubbish 1-19% 19% 80-100% 81%Recycling 80-100% 69% 1-19% 31%Stormwater 80-100% 100% 1-19% 0%Wastewater 80-100% 90% 1-19% 10%Water 60-79% 76% 20-39% 24%Support ServicesCommercial or Strategic Investments 80-100% 100%Corporate Support 80-100% 100%Customer Services 80-100% 100%Variance explanation for user fees and charges1. Housing - higher rent revenue from high occupancytogether with lower maintenance in the year hasimproved the recovery percentage.2. Economic Development - higher percentage dueto higher percentage recovery of Rugby World Cupcosts.3. Parks and Recreation - approved budgetanticipated policy not being met. The recovery ofrevenue is higher than budget expectation andhigher than 2010/11. Fees have not been adjusted inline with funding policy and this is to be addressedin the future.4. Animal Control - higher revenue from targeting ofunlicenced dogs and lower operating costs haveimproved the percentage.5. Building Control - revenue was lower than budgetexpectation due to economic climate. This matchedby expense reduction however recovery percentagereduced.6. Resource Consents - recovery was lower due tolitigation legal costs being significantly over budget.7. Land Administration - revenue lower due toprice reduction however expenses lower, recoverypercentage higher as result of higher internal costallocation to other regulatory areas.8. Recycling - budget expected recovery percentageto be exceeded. Actual recovery was lower thanbudget expectation but higher than last year withlower revenue due to budgeted revenue not beingreceived.10Palmerston North City Council Annual Report 2011/12

What costs did we incur?Depreciation andAmortisation 22%26% Other Expenditureon Operating ActivitiesGrants andFunding to ExternalOrganisations 7%Fair Value Changes 5%Interest Expenses 9%31% Employee ExpensesWe incur costs to provide the services necessary for thefunctioning of the City. This year the amount spent on grantsand funding to external organisations has increased to almost7%.These amounts are spent for a range of objectives includingto support and boost economic development, provideleisure activities, support sustainability activities and supportthose organisations that provide local solutions to localproblems.Depreciation has reduced slightly from last year. This is noncashand not rates-funded with the related asset renewal orloan funding being rates-funded.Interest expense has decreased following reduction in interestrates and withdrawals from the long term investment fundreducing gross debt.Where was Operating Expenditure spent?Customer ServicesCivil DefenceCorporate SupportCemeteriesHousingCommunity DevelopmentCouncillor Leadership & Decision MakingStormwaterDirection SettingEconomic DevelopmentCommercial Or Strategic InvestmentsRegulatoryArts & CultureWaterWastewaterRubbish & RecyclingCity LibraryParks & RecreationRoading & Parking$0.0m$0.5m$0.8m$0.9m$1.6m$2.7M$2.8M$3.6m$3.9m$4.6m$4.8M$6.2m$6.4m$6.7M$7.0M$7.1m$8.9m$15.2m$21.2mOverview Financial Overview0 4 8 12 16 20 24Total Activity operating expenditure, includingdepreciation, was $104.9 million in the 2011/12 financialyear.Council responsibility encompasses a large range ofactivities. Costs are incurred to maintain, manage,develop and provide diverse services and facilities inaccordance with the annual plans and the long termplan.These range from provision of infrastructure to keepyou healthy including the supply of water and wasteservices, well maintained roads to allow you to movearound the city, providing sporting and recreationalfacilities, providing art and cultural facilities, assistingwith economic development and regulatory planningrequirements.Customer Services net costs are allocated to all otherActivities.Palmerston North City Council Annual Report 2011/1211

Asset Base1,3601,3401,3201,300$ Million1,2801,2601,2401,2201,200Overview Financial Overview1,1801,1602006/072007/082008/09Council’s asset base has increased by 9% since 2006/07 to$1.33 billion. This is due to new assets acquired or constructedthrough capital expenditure programmes, from valuationincreases and vested assets.2009/102010/112011/12The Council’s infrastructural assets were last valued as at 30June 2011 and operational assets were revalued on 30 June2010.How much Capital Expenditure was spent?50,000Total40,000New$00030,000Renewal20,00010,00002006/072007/082008/092009/102010/112011/12Council has had a large capital works programme throughoutthe year and was able to complete $23.7m of works andinvestments. This compares with $31m last year and a budgetof $49.1m this year.During the year some major projects were only able to becommenced or were deferred with the full budget not incurred.Those projects underway at year end will be completed in the2012/13 year. Expenditure to maintain or extend the life ofexisting assets (renewal capital expenditure) was funded fromoperating income.Expenditure for growth or to add new assets (new capitalexpenditure) is usually intended by Council to be fundedfrom borrowing with scheduled repayments included in rates,although part is funded by grants, subsidies and developmentcontributions.12Palmerston North City Council Annual Report 2011/12

Where was Capital Expenditure spent?Cemeteries 1%Commercial Or StrategicInvestments 8%Corporate Support 8%Housing 1%1% Community Development2% Arts & Culture4% City Library17% Parks & RecreationWater 12%Wastewater 4%Stormwater 3%Rubbish & Recycling 5%The majority of capital expenditure was spent on constructingand developing infrastructure assets (roading, stormwater,rubbish and recycling, wastewater, and water assets). This yearroading and parking has incurred the biggest part to maintainand enhance the roading network to improve safety and makeit easier to move around. Work has also continued to improvethe water distribution network to reduce discoloured waterissues.1,200What is the Equity of the City?34% Roading & ParkingInvestments are to resource capability to enable servicedelivery to the community, such as purchases of plant andequipment to deliver services as in the Annual Plan.Overview Financial Overview1,000800$ Million60040020002006/072007/082008/092009/102010/112011/12Equity in the Council has grown steadily over the past fiveyears, 9%, particularly due to asset revaluations. No majorrevaluations occurred this year resulting in equity being similarto last year.Statistics on equity per dwelling and per resident for the pasttwo years are provided in the table. With equity similar to lastyear the effect of increases in resident and property numbershas reduced the equity applicable to each.The amount of net debt per dwelling and per resident is alsoprovided. These have increased slightly following the smallincrease in net debt to fund new capital expenditure duringthe year.2010/11 2011/12%changelastYEarEquity per dwelling $37,260 $36,484 (2.1%)Equity per resident $14,300 $14,061 (1.7%)Net debt per dwelling $3,711 $3,746 (1.0%)Net debt per resident $1,424 $1,444 (1.4%)Palmerston North City Council Annual Report 2011/1213

Borrowing Ratios20%Policy Maximum16%201212%201120108%4%Overview Financial Overview0%200%160%120%80%40%0%Net debt to equityNet interest to revenueNet debt to revenueNet interest to ratesPolicy Maximum201220112010Through a period of intensive capital investment ininfrastructure the Council’s gross debt has risen to currentlybe $140m. With the decision to wind down the investmentfund withdrawals have been applied in repaying debt withthe effect being to reduce gross debt from $154m in 2008 tothe $140m currently. Prospective debt levels are determinedthrough the robust long term and annual planning cyclesand managed within criteria set out in the Council’s TreasuryPolicy. The policy contains conservative prudential ratios ofborrowing permitted against several benchmarks, as detailedin the graphs above. The net debt, currently $120m, representsthe total debt less the value of the long term investmentfund.With the increasing level of debt the gross interest expense hadbeen increasing until 2008, but with the reduction in gross debtthis has been reducing. This year with the reduction in effectiveinterest rates the gross interest expense has decreased by 6%remaining below the conservative policy limit contained in theCouncil’s Treasury Policy.14Palmerston North City Council Annual Report 2011/12

What’s Happening in the City?State of the CityThis part of the report looks at major social, environmental and economic trends in the City overthe past year. These trends are considered when Council is developing the three key plans whichguide its actions - the 10 Year Plan, the District Plan, and the Sustainable City Strategy. The 10Year Plan describes Council’s response and strategic approach to these trends and strategies toachieve the City’s vision and goals.The Council is involved in working in many ofthese trend areas, sometimes in partnership withother organisations. For example, the Councilhelps support and fund groups like the SafeCityTrust, Youth Apprenticeship Support, SportManawatu, the Palmerston North CommunityArts Council, Destination Manawatu and VisionManawatu. It provides many recreation, leisureand cultural facilities, including the Central, Branchand Mobile Libraries; parks, reserves, sportsfieldsand walkways; the Lido and Freyberg swimmingpools, Arena Manawatu; the Regent Theatre; andTe Manawa. It provides much of the infrastructurelike roading and parking, water, wastewater,stormwater and rubbish and recycling thathouseholds and businesses rely on. It providesregulatory services that keep people healthy andsafe. These include animal control, liquor licensing,noise control, and planning services.Further details on what the Council does is shownin the “What the Council Does” section of thisreport.Key sources for this information are the Ministryof Social Development’s 2010 Social Report andthe Council’s 2011 State of the City Report. Not allthe data is for the 2011/12 year; however, the mostup to date data is used to describe the key trends.The delay in the Census because of the Canterburyearthquakes has put back some data collection.Social TrendsData shows that Palmerston North has manypositive social trends.For example, reported crime in Palmerston Northin 2011 was 17% lower than it was in 2000. Thiscompares with a 5% drop nationally. However,within this, violent crime has increased. This is partof a long-term trend.2010 survey data shows that most people aresatisfied with feelings of safety around their homesand neighbourhoods (58% are delighted or verysatisfied; 34% are fairly satisfied). Satisfaction withsafety in public places at night is lower - 12% aresatisfied or delighted; 35% fairly satisfied; 41% notvery satisfied or disappointed and 12% did not know.Satisfaction has increased markedly since the early2000s when it was around 40%. It peaked in 2005 at67% and has dropped off in the last few years.The number of road crashes per 10,000 peoplein Palmerston North increased for several yearsbetween 2005 and 2007, but has now dropped backto the 2004 levels of around 20 crashes per 10,000people each year.While house prices fluctuate over time, housing isrelatively affordable to buy and rent in PalmerstonNorth compared with other cities like Hastings andNew Plymouth.Overview What's Happening in the City?Sixty percent of Palmerston North people live in ahouse that they own (with or without a mortgage),slightly lower than the proportion of peoplenationwide who own their own houses (63%). Thisis probably due to the high number of students inthe City.The New Zealand Housing Survey 2008 suggeststhat about one-third of Palmerston Northrespondents think their homes are causing illnessfor the people living within them because they areenergy inefficient and hard or expensive to heat.Palmerston North City Council Annual Report 2011/1215

Overview What's Happening in the City?Homelessness is not a large problem in the City - themain problem is night accommodation for singlemen, but the numbers requiring this are small.Data from MidCentral Health shows that thePalmerston North people have the best healthin MidCentral’s area. For example, PalmerstonNorth has 8% fewer than expected deaths fromall causes, including the most common causes ofcirculatory disease, cancer, respiratory disease andintentional injury and accident. These figures arein comparison with death rates across the wholeMidCentral District and are age adjusted so thedifferences are not due to different age structuresin the different areas.Life expectancy for Palmerston North people isslightly below the national average. (77.1 years forPN males compared with 78.2 nationally. 82.2 yearsfor PN females compared with 82.4 nationally.)Of course, there are clear links between healthand active lifestyles. There is a wide range ofleisure facilities and activities in PalmerstonNorth and people are generally satisfied with theopportunities they have to participate in formaland informal leisure activities.Anecdotally, at the national and local levelthere has been a drop in the number of peoplewho actively participate in formal sport andrecreation. However, this seems to reflect a movefrom organised sport to more social or informalrecreation, rather than people becoming inactive.Palmerston North has a wide range of formal andinformal education opportunities. Data showsthat many people are taking advantage of theseand Palmerston North people are well educated.• 71% of Palmerston North pre-schoolers arein early childhood education, compared with60% nationally.• About one-quarter have no formal education(similar to national levels).• About one-third have school qualifications astheir highest qualification (similar to nationallevels).• About one-quarter have post schoolcertificates or diplomas as their highestqualification (similar to national levels).• Palmerston North people are slightly morelikely than other New Zealanders to havebachelor or higher qualifications (18%compared with 16%).Environmental TrendsPalmerston North is in the Lower Manawatū Riversub-catchment. The Manawatū River LeadersAccord says that “the water quality of the LowerManawatū sub-catchment is characterised by highsuspended sediment (sand, silt and mud) loads(inherited from further upstream in the catchment),and high phosphate and nitrate levels. The highnutrient levels are a combination of inputs fromthe upper part of the Manawatū catchment, as wellas non-point and point source inputs from withinthis sub-catchment. Palmerston North sewage isthe largest discharge in the Manawatū catchment.Pathogen levels are generally safe for swimming.”The City’s streets and recreational public spacesare of mixed quality. Some are well-designed andvibrant; but others are not engaging and do notprovide a people-friendly urban environment.Residential neighbourhoods show a similarpattern. Some are well connected and cohesive,but others are isolated by the way that they aredesigned, and are not good for walking around.There has been a big increase in the percentage ofresidents who are satisfied with the “look and feel”of the City. In 2007 54% said they were satisfiedwith the look and feel of the City - in 2011 this hadincreased to 85%. There is also plenty of greenspace in the City - the Council has 172 reservesand sportsfields, with a total area of nearly 650hectares. On top of this are walkways, streetverges, school playgrounds, etc.People made over 1.2 million journeys on theCity buses in the year to June 2012. This numberhad been increasing by about 15% a year. Ofthis, 700,000 were the free trips for Massey andUCOL students and staff. However, the pictureis different for cycling. Nationally the number ofpeople cycling to work, university or school hasdropped, and particularly in Palmerston Northwhere the decline has been three times fasterthan the national decline. There is some recentanecdotal information that the number of peoplecommuting by cycle has started to increase againin the City. There is also anecdotal informationthat the number of people cycling for recreationis increasing.16Palmerston North City Council Annual Report 2011/12

Economic TrendsPalmerston North has experienced strongeconomic growth over the last 10 years, withthe incomes in the City increasing at faster ratesthan those recorded nationally. Total incomes in2010 were 75% higher than in 2000 while nationalincome growth was 65% over this period.The biggest national economic trend last yearwas the stalling in economic growth in late2010 in response to weak domestic householdspending and a difficult production season forthe agricultural sector. Positive factors currentlyboosting the local economy include high dairyand meat prices and strong population growth.One issue for the City is that the positive trendsoutlined do not always flow through into a strongsense of community spirit and pride. Surveysshow residents and visitors see Palmerston Northas a great city for education and research, as a citywith good parks and recreational facilities, as a citythat is attractive to walk around, and as a likeablefriendly city.A strong retail sector also helped protect the localeconomy. Retail sales growth in Palmerston Northis strongly ahead of national figures – annualaverage growth in retail sales in Palmerston Northover the last four years was 4.4%, compared with2.9% for New Zealand. Part of this growth hascome from strong international visitor spendingand improved agricultural incomes.An encouraging aspect of the employment growthin Palmerston North has been the breadth ofgrowth across a range of sectors. Tertiary educationremains very important to the City but the level ofgrowth which has been occurring in other sectors(especially transport and warehousing jobs whichhave increased in number by over 50% since2000 and health and social assistance, which hasincreased by nearly 40%) reduces the vulnerabilityof the City to an economic downturn in one or twosectors. There has been a more recent contributionto growth from the transfer of defence personnelto Palmerston North. A new Defence base wasestablished on the Massey University Hokowhitucampus in August 2011 (officer training for the AirForce, Army and Navy) and expansion of personnelnumbers at Linton Military Camp.Overview What's Happening in the City?At the end of June 2012 6,056 Palmerston Northresidents were receiving a benefit (unemployment,domestic purposes, sickness, invalids, independentyouth or widows) from the Ministry of SocialDevelopment. This is a decline of 5% since June2011. Declines were recorded across most benefittypes, but the most significant change was an 18%decline in the number of people registered for theunemployment benefit.It is important that these strengths in our localeconomy – such as education, retailing, transportand warehousing - continue.Palmerston North City Council Annual Report 2011/1217

Overview What's Happening in the City?Palmerston North - Key FactsPalmerston North has the amenities expected of amodern, major city but with the ease and comfortof a smaller town. Our climate is temperatewithout the extremes of many other New Zealandcities with daytime temperatures averaging 22°Cin summer and 12°C in winter.PopulationPalmerston North has an estimated populationof 82,100 (NZ Statistics estimate June 2011).Compared to the demographics of the rest of NewZealand, Palmerston North has a young population.This is reflective of the City’s strength in educationand defence and an increasing birth rate. The Cityhas experienced rapid change in the ethnicityof its population with significant increases in itsMāori, Pacific and Asian populations.Area and LocationPalmerston North covers an area of 32,594 hectares(June 2011) and being very centrally located is a keydistribution centre in New Zealand. One millionpeople live within a two hour (200km) radius. TheCity is a major rail centre with the main trunk line.State Highway 1 passes through the region, andthere are excellent roading connections north,south, east and west.In addition to domestic destinations, thePalmerston North International Airport has hadconnections to Australia. All of this means thatthe City and the region have major advantages asvisitor destinations and for national distributionindustries. The urban area of the City is a servicebase for a large rural area, some of which is withinthe City boundary.EconomyPalmerston North has experienced strongeconomic growth over the last decade with thenumber of jobs and incomes increasing at fasterrates than those nationally. The health sectoris the City’s largest economic sector followedby education and public administration whichincludes defence. Logistics is also one of the fastestgrowing sectors. The growth in the retail sectorreflects the city as a regional shopping centre.EducationThe City boasts a wide range of educationalfacilities, including a leading university,polytechnic, wananga, multicultural languageschool and a number of other specialised tertiaryeducation institutes. With its great reputation, theCity is able to attract both staff and students fromthroughout the world. Four out of every 10 peoplein the City either work at or attend an educationalinstitution.Recreation, Culture andLeisure ActivitiesA wide range of quality recreational, cultural andleisure facilities are available in the City, includinglibraries, theatres, Te Manawa, The Esplanade,Arena Manawatu, swimming pools, walkways andcycleways and an all-weather athletics track.There is currently about 58 km of walkways inPalmerston North. There is also about 8 hectaresof parks and open spaces per 1,000 residents. Inaddition, there is a lively music scene, and many livetheatre events are performed in Palmerston North.EventsThe City has numerous events. Some of theseare funded by the Council, e.g. Christmas Parade,Summer Concerts, Festival of Cultures. Many otherevents happen during the year, e.g. Speedway,Kapa Haka Festival, Wedding Expo.The City’s official tourism organisation “DestinationManawatu” provides an up-to-date array ofattractions, things to do, events, and details ofaccommodation and conferencing facilities.18Palmerston North City Council Annual Report 2011/12

How Do We Operate?Role of the CouncilThe purpose of the Palmerston North City Councilis to enable democratic local decision making topromote the social, economic, environmental andcultural well-being of Palmerston North City in thepresent and for the future.In meeting its purpose the Palmerston North CityCouncil has a variety of roles.• Facilitating and monitoring ofcommunity outcomes• Formulating the Council’s strategic directionand vision for the future in conjunction withthe community through the Long Term Plan(LTP)• Determining the services and activities to beundertaken• Managing principal risks• Administering various regulations andupholding the law• Monitoring the delivery of the LTP andAnnual Plan• Advocacy on behalf of the local communitywith central government, other localauthorities and other agencies• Facilitating solutions to local needs• Development of local resources• Management of local infrastructure includingnetwork infrastructure (e.g. roads, sewagedisposal, water, stormwater) and communityinfrastructure (libraries, parks andrecreational activities)• Environmental managementThe Mayor and Councillors• Planning of the future needs of thelocal district.Council RepresentationThe Council is composed of 16 elected members –a Mayor and 15 Councillors. The Chief Executive isappointed by the Council to be in charge of Counciloperations, and certain powers of managementare delegated to that position in accordance withSection 42 and clauses 33 and 34 of Schedule7 of the Local Government Act 2002. The ChiefExecutive implements and manages Council’spolicies and objectives within the budgetaryconstraints established by Council.Overview How Do We Operate?Back row from left: Susan Baty (Papaioea Ward), Nikki Guy (Hokowhitu Ward), Lew Findlay (Papaioea Ward), Chris Teo-Sherrell (Hokowhitu Ward), Mayor JonoNaylor, Vaughan Dennison (Takaro Ward), Jim Jefferies (Hokowhitu Ward), Duncan McCann (Ashhurst-Fitzherbert Ward), Annette Nixon (Awapuni Ward), PatKelly (Awapuni Ward), Bruce Wilson (Ashhurst-Fitzherbert Ward) Front row from left: Ross Linklater (Papaioea Ward), Tangi Utikere (Takaro Ward), Jan Barnett(Papaioea Ward), Adrian Broad (Awapuni Ward), Billy Meehan (Takaro Ward).Palmerston North City Council Annual Report 2011/1219

Overview How Do We Operate?ElectionsCouncil elections take place every three years, withthe most recent one being held in October 2010.The Council comprises 15 Councillors, electedfrom five wards, and the Mayor.The Council has to review its representationarrangements for the 2013 elections. This meansit has to decide on the number of Councillors,whether the Councillors should be elected Citywideor by ward, and whether there should beCommunity Boards. Currently voting is by wardand there are no Community Boards. The Councilincluded a poll on the number of Councillors andCity-wide or ward voting in the last elections. Citywidevoting had the most support (11,519 votescompared with 10,022 for ward voting). Mostpeople supported keeping the same number ofCouncillors (11,609 votes compared with 9,251for fewer Councillors and 628 for more). Furtherconsultation will happen in mid-2012.Council and CommitteeStructureThe Council reviews its committee structure aftereach election. The committee structure for the2010-2013 term of Council is unchanged fromthat set up at the beginning of the 2007 term ofoffice, namely three primary standing committees,being the Community Well-Being, Finance andPerformance, and Planning and Policy Committees.These committees meet monthly, with the fullCouncil meeting on the last Wednesday of eachmonth. The Audit and Risk Committee also hasscheduled meetings with other committeesmeeting on an as-required basis.Key tasks and functions for the primary committeesinclude:Community Well-Being Committee - CommunityDevelopment, Social Policy Development andIssues, Recreation and Leisure Policy Developmentand Issues, Arts Policy Development and Issues,Community Grants/Funding Schemes, CommunityEvents, Civil Defence, Social Housing, Sport, Parks,Community Centres, Libraries, Cultural Diversity(including people with a disability), CouncilControlled Organisations (non commercial),Bylaws, Public Health and Safety, CitizenInteraction and Information, City Marketing andSense of Place (including Destination Manawatu),Implementation of Strategies, Plans and Policies asappropriate.Planning and Policy Committee - EnvironmentalPlanning and Policy, Urban Design andControl, Legislation and Governance Issues/Policy, Implementation of Strategies, Plans andPolicies as appropriate, Economic Growth andDevelopment, Transportation and InfrastructurePlanning, Waste Management Planning, Approvalof Draft Strategies, Plans and Policies for publicconsultation, Recommend Strategies, Plans andPolicies to Council for adoption.Finance and Performance Committee - CityFinances, Annual Report, Assets and Investments,External Corporate Relationships and Initiatives -Vision Manawatu, Council Facilities Management,Energy Management, Implementation ofStrategies, Plans and Policies as appropriate,Waste Services, Council Owned Infrastructure,Commercial CCOs – Palmerston North Airport Ltd.The purpose of the meetings is to ensurethat Council affairs are being conducted inaccordance with Council objectives and legislativerequirements. The Council also has a monitoringrole in relation to the performance of CouncilControlled Organisations.The Council also convenes informal communitymeetings at least four times per year, throughoutthe wards of the City. The purpose of thesemeetings is to provide ward residents with theopportunity to discuss any issues they mighthave with their local representatives and a seniorCouncil officer.PUBLICASHHURST - AWAPUNI HOKOWHITU PAPAIOEA TAKAROFITZHERBERT WARD WARD WARD WARD WARDCommunityWellbeingCommitteeAudit & RiskCommitteeJoint StrategicPlanning CommitteePNCC/ MDCInformal community meetingsCOUNCILMAYOR & 15 COUNCILLORSFinance &PerformanceCommitteeCommitteeof CouncilCCNZ/Arts & CultureFund CommitteePlanning& PolicyCommitteeHearingsCommitteeGordon Kear ForestSub Committee20Palmerston North City Council Annual Report 2011/12

Governance DocumentsCouncil DirectionThe Council has adopted a Local GovernanceStatement, as required by the Local GovernmentAct 2002, setting the governance role of the Council.The statement ensures that the community hasinformation on the processes the Council followswhen making decisions and taking action and howthe community can influence these processes. Thisincludes requirements for Conflicts of Interest.Other governance documents include the Code ofConduct, Policy on the Appointment of Directorsto Council Organisations, and the Council’sStanding Orders.The Council believes that it is essential, in theinterests of good management and effectiveadministration, to encourage the delegation ofdecision-making. The full list of delegations can beviewed in the Council’s Delegations Manual, whichis available on the Council’s website, www.pncc.govt.nz. However, the overall responsibility formaintaining effective systems of internal controlultimately rests with the Council. Internal controlsinclude the policies, systems and proceduresestablished to provide measurable assurance thatspecific objectives will be achieved.The Council’s focus is on making:• Palmerston North a socially sustainable citywhere people want to live because of its safeand easy lifestyle and its many social, culturaland recreational opportunities.• Palmerston North a leading city in the questto become environmentally sustainable.• Palmerston North an economically sustainablecity which attracts, fosters and retainsbusinesses and jobs to create a prosperouscommunity.In doing this the Council will ensure that:• Palmerston North City Council is financiallyresponsible and residents are satisfied thatthey get value for money from their rates.• Palmerston North City Council understandsthe diverse views of the City’s people, makesprudent decisions, and ensures that peopleknow what it is doing and why.Legislative ComplianceBeing a regulatory body, the Council administersvarious regulations and laws. It is imperative thatCouncil also complies with all relevant legislation.External law firms with local government expertiseare contracted to assist the Council to comply withapplicable legislation.Overview How Do We Operate?Palmerston North City Council Organisational ChartPaddy CliffordChief ExECUTIVEManagemENT TEAmCustomer ServicesPeter EathorneGENERAL MANAGERCity CorporateGrant ElliottCHIEF Financial OFFICERCity FutureSheryl BryantGENERAL MANAGERCity NetworksRay SwadelGENERAL MANAGERPublic health, customer servicescentre, call centre, planningand building, animal control,parking control, bylaws andliquor licensing enforcement.Chief Executive’s office, governanceand civic support, informationmanagement, finance andtreasury, legal, risk management,internal audit, Print Synergy.Community outcomes, communityplanning (LTP), social, economic,City advocacy, environmentaland leisure strategies andpolicies, Iwi relationships,bylaws development, resourcemanagement and district planningAsset Management for watersupply, rubbish and recycling,wastewater, stormwater,roading, recreation, property.Executive SupportJane JulianGENERAL MANAGERCity EnterprisesRay McIndoeGENERAL MANAGERLibrary & Community ServicesAnthony LewisGENERAL MANAGEREconomic development,City events, human resources and organisationaldevelopment, corporate communications,web development and management, Citypromotion, external relationships.Horticultural, parks and sports groundsmaintenance,rubbish and recycling collections, civilworks, emergency services, water and wastewatertreatment plants, project consultancy, cemeteryadministration, Venues Palmerston North.Library services, community facilities, communityand social housing, Council controlled organisations,grant funding, community development,community events, community safety, managingrelationships with social and cultural organisations.Wayne WilsonHUMAN RESOURCES MANAGERADVISORS toManagemENT TEAmDaniel O'ReganSTRATEGIC COMMUNICATIONS MANAGERThe Council organisation is divided into seven units, the managers of which report to the Chief Executive.Palmerston North City Council Annual Report 2011/1221

Role of Management and EmployeesOverview How Do We Operate?The Council organisation is divided into seven units,the managers of which report to the Chief Executive.The Chief Executive is responsible for day to dayoperation of the Council’s activities acting withindelegated authority from the Council, as detailed inthe Council’s Delegation Manual.The Chief Executive is employed by the Councilwith all other employees appointed by theChief Executive or delegated managers. Whenemploying any individual equal employmentopportunity protocols are followed.The Council is committed to ensuring that all staffhave the capability to deliver the annual plan asagreed with the community. This involves trainingstaff and also providing an environment in whichstaff can work to their full potential. Across theorganisation we have also developed trainingframeworks that are linked to New ZealandQualifications to enable career development forstaff.Although it has become much easier to findsuitable applicants for most jobs, the Council stillhas difficulty in attracting candidates to somemanagerial and senior technical roles.Important areas of focus for management arethe compliance with legislation, Council policy,management of risk, and acting in a sustainablemanner while delivering agreed services withinbudget. To assist with this a plan for the long-termwell-being of the City is developed. This resultsin a long term plan being developed every threeyears covering the following ten years. Within thatthree year period the first year becomes the budgetfor that year with an annual plan then preparedand adopted for years two and three. The current2011/12 year is year three of this cycle with a longterm plan for the next ten years, 2012/22, havingbeen prepared and adopted during the year. Asignificant step has been preparation of the assetmanagement plans to ensure major infrastructuralassets can meet the requirements of the City in thefuture.Palmerston North City Council Management TeamBack Row from Left: Peter Eathorne, Ray Swadel, Daniel O’Regan, Anthony Lewis, Wayne WilsonFront Row: Grant Elliott, Sheryl Bryant, Paddy Clifford, Jane Julian, Ray McIndoe.Photo: Print Synergy, Palmerston North City Council.22Palmerston North City Council Annual Report 2011/12

Funding Support to External OrganisationsPalmerston North City Council recognises the expertise, commitment and relationships that existin the community.The Council seeks to build on those existing andpotential areas of excellence in Palmerston Norththat make it a more sustainable city. Funding ofexternal organisations is one way to make thishappen.The Council funds organisations to help deliversome of the actions and communications identifiedin its strategies and plans.The relationships with the externalorganisations vary:• some of them are Council ControlledOrganisations and in these cases the Councilowns the land and buildings. There arelease agreements which determine who isresponsible for operations, maintenance andrenewals. The sums shown in the followingtables represent the budgeted amount of anyadditional operating grants provided by theCouncil.• some have a contractual arrangement and arepaid by way of a ‘fee for service’.• some are contracted to provide a coordinatedrole for the arts, sports, social andenvironmental sectors.• some are supported through rates and rentalassistance.The size of the funding envelopes for social,economic and environmental sectors is reviewedas part of the 10 Year Plan. The Council has reviewedits Community Funding Policy. This policy guidesthe way the Council funds external organisations.The Council supports the social sector in otherways than the funding listed here, for example,through rates remissions and rent subsidies.The tables following detail the major operatinggrants paid during the year but do not include allgrants paid.Overview Funding Support to External OrganisationsPalmerston North City Council Annual Report 2011/1223

ActualAmount Paid2011/12$Annual PlanBudget2011/12$Economic Development Funding Envelope 1,321,221 1,327,000Fees for serviceVision ManawatuDestination ManawatuDestination Manawatu Database ProgrammeDestination Manawatu Convention and Event MarketingRugby Institute468,100549,00010,40065,40048,960468,100549,00010,40065,40050,000TARGETED FundsYouth Events (Youth Council)Student City Initiatives5,661173,70010,400173,700Social Funding Envelope 744,285 811,200Overview Funding Support to External OrganisationsCity Social COORDINATING ServicePalmerston North Community Services CouncilmAJOR GrantsMajor grants are allocated on a three-yearly basis.See table for details.Fees for ServiceDisabled Persons AssemblyPalmerston North Community Services CouncilSafe City TrustYouth CouncilYouth Apprenticeship SupportYouth Development (Youth One Stop Shop and Highbury WhanauCentre)TARGETED FundsCommunity Development Small Grants Fund(allocated by Palmerston North Community Services Council)Community Groups Training FundLocal Initiatives Fund31,050374,10020,8001,50052,0005,20030,00051,200132,80020,16325,47231,200393,40020,8001,50052,0005,20031,200102,000132,80015,60025,500Environmental Sustainability Funding Envelope 86,107 104,200City Environmental COORDINATING ServiceEnvironment Network ManawatuFees for ServicePalmerston North City Environmental TrustSPCAUrban CareTARGETED fundsNatural and Cultural Heritage Incentives Fund31,20020,40010,0003,84820,65931,20020,40010,0004,50038,10024Palmerston North City Council Annual Report 2011/12

ActualAmount Paid2011/12$Annual PlanBudget2011/12$Leisure, Arts and Culture Funding Envelope 3,744,666 3,768,100Council Controlled OrganisationsRegent TheatreCaccia BirchGlobe TheatreTe ManawaTe Manawa – Short Term Support Incorp Rugby Museum105,20068,60051,4002,875,30090,000105,20068,60051,4002,875,30090,000City Leisure COORDINATING ServiceSport ManawatuSport Manawatu - Sport Event CoordinationSport Manawatu - Regional Sports Strategy implementation41,60031,20049,80041,60031,20049,800City Arts COORDINATING ServicePalmerston North Community Arts CouncilmAJOR GrantsMajor grants are allocated on a three-yearly basis.See table for details.Fees for ServiceManawatu Community Athletics TrackSport Manawatu Community Recreation EventsPublic Sculptures Trust FundingTARGETED FundsSports Assistance Fund (Allocated by Sport Manawatu)Creative Communities New Zealand (Council contribution)Major Grants - AllocationsSOCIALManawatu Community Housing TrustManawatu Toy LibraryHousing Advice CentrePN Citizens Advice BureauSamaritans ManawatuTe Whare Akonga Open Learning CentreManawatu Multicultural CentreArohanui HospiceBrain Injury Central DistrictsLuck VenueManawatu MS SocietyManawatu Stewart Centre TrustAge Concern ManawatuManlinePN Neighbourhood Support GroupsMethodist Social ServicesPrisoners Aid & Rehabilitation SocietyGenesis TrustGreen Bike trustYouthline PN83,200138,30046,45967,60050,00036,4009,607374,10012,2005,10015,30025,5005,10020,40030,70025,50020,40020,40024,40018,30014,20010,20024,40030,60020,400-20,40030,60083,200138,30050,00067,60050,00036,40029,500393,40012,2005,10015,30025,5005,10020,40030,70025,50020,40020,40024,40018,30014,20010,20024,40030,60020,40019,30020,40030,600Overview Funding Support to External OrganisationsLEISURE, ARTS & CULTURENZ Rugby MuseumCreative Sounds Society IncManawatu Scottish Pipe BandPipes & Drums of PN & DistrictsPN Basketball AssociationCentrepoint TheatreManawatu Theatre Society IncPN Operatic Society Inc138,3005,10051,0003,1003,80018,30040,8008,1008,100138,3005,10051,0003,1003,80018,30040,8008,1008,100Palmerston North City Council Annual Report 2011/1225

Overview Funding Support to External Organisations26Palmerston North City Council Annual Report 2011/12

What the Council DoesWhat the Council DoesPalmerston North City Council Annual Report 2011/12

What the Council DoesPalmerston North City Council Annual Report 2011/12

OverviewA key purpose of local government isthe sustainable development of localcommunities. This means that councils have tocontribute to the social, economic and culturalwell-being of people, and help maintain andenhance the quality of the environment. And,in doing these things, councils have to takeinto account the needs of current and futuregenerations.Looking after these four well-beings - social,economic, environmental and cultural - gives us avery big “to do” list.So - how do we do these things and how wellhave we done this year? That is what this sectionis about. It is not just a financial report. It showsyou what we did with your money. It shows theservices and value you get from your rates.We use your rates to:• plan our City so that it will continue to be welllaid out, safe and attractive. We also plan sothat people and organisations work togetherto meet our current and future needs.• support communities, particularly in times ofstress, through community development, civildefence and cemeteries.• establish good relationships with you throughour democratic services and customerservices.• develop our economy to attract and retainbusinesses and jobs available to you inPalmerston North.• provide a wide range of leisure opportunitiesfor you - these include parks and sportsfields,libraries, swimming pools, events, the Regent,and Te Manawa.• provide regulatory services such as buildinginspections, animal control and bylaws toprovide you with a safe, well-planned andorderly place to live.• look after the City’s roading so that you cansafely and easily get to work, schools, shops orleisure opportunities.• keep you healthy through our water andwaste services. We provide clean water andtake away your wastewater, along with yourrubbish and recycling. We also help protectyour property from flooding.That keeps us busy. And it keeps you safe andhealthy, it gives you fun things to do and it makesyour life a whole lot easier.The Council has a key role in promoting the social,economic, environmental and cultural well-beingof the City in the present and for the future. Itdoes this through the services it provides to thecommunity. These services are called Activities.Similar Activities are grouped together.The four central pillars of the diagram belowshow the main services that the Council providesdirectly to City residents and organisations. Theyare grouped in these four areas to reflect the fourwell-beings that the Council has to work towardsunder the Local Government Act: social, economic,cultural (leisure) and environmental well-being.What the Council Does OverviewCommunitySupportCemeteriesCivil DefenceCommunityDevelopmentHousingLEADERSHIPCouncillor Leadership and Decision MakingEconomicDevelopmentEconomicDevelopmentLeisureArts and CultureCity LibraryParks and RecreationDirection SettingEnvironmentalSustainabilityand HealthRegulatoryRoading and ParkingRubbish andRecyclingStormwaterWastewaterWatersupport servicesCommercial or Strategic Investments Corporate Support Customer ServicesPalmerston North City Council Annual Report 2011/1227

Tying these pillars together at the top is Council’sleadership and direction setting. These make surethat the Council is doing the right things within thefour well-beings and has got appropriate balancebetween them. Supporting them at the bottomare Council’s support services - things like humanresources, financial systems, information systemsand customer services.These six areas are the “Groups of Activities” onwhich information is provided.Community outcomes are developed from thethings that are important to people to worktowards the four well-beings, social, economic,cultural and environmental. To achieve manyof the community outcomes also requires theinvolvement of a number of other organisationsin the community. The following table showswhich community outcomes each group ofactivities contributes to. The rest of this sectionthen includes details of our service performance,including progress towards achievement of thesecommunity outcomes.Support Services support all the Council’s otheractivities and contribute indirectly to all theCouncil’s major goals and community outcomes.What the Council Does OverviewPrincipalCommunity OutCOmesPeople have lots of fun things to doPeople feel safeBusinesses grow here and people havelots of job opportunitiesPeople can move easily aroundPalmerston NorthPalmerston North’s physicalinfrastructure is reliablePalmerston North is attractive, cleanand greenThe community is supportive andpeople and organisations worktogetherPeople are well-housedand healthyPeople have lots of learningopportunitiesLeadershipCommunitySupportGroups of ActivitiesEconomicDevelopmentLeisureEnvironmentalSustainabilityand HealthWhat information is provided in the Groups of Activities section?Statements of service performance are providedfor each of the six Groups of Activities. This showshow the Council has performed over the year. Itprovides detailed information on the levels ofservice, what was achieved, whether performancetargets were met, what it cost and whether budgetwas met.The information is provided in the followingformat:For each Group of Activities:1. Group Description2. Group of Activities Operational Requirementand Funding Summary including the ratesallocated and debt reduction compared tobudget for the 2011/12 financial yearFor each Activity within a Group:3. What the Council does4. Why the Council does this and its contributionto Council vision and major goals5. What happened in the year6. How did we perform:• Levels of Service• Performance Measures for the 2011/12financial year so you can judge Council’ssuccess7. Operational Results compared to budget forthe 2011/12 financial year8. Significant Capital Projects Acquisitions andRenewals compared to budget for the 2011/12financial year.28Palmerston North City Council Annual Report 2011/12

Some performance measures are not measuredevery year. When a measure is not scheduled forcompletion in the current financial year, the ‘Result’of the prior year is included. In the comments anassessment is made of whether that result wouldbe expected to be different.In Activity financial result tables, no ratesrevenue has been allocated to the Activity. Thenet operating cost indicates the savings (wherepositive) or cost (where negative) to ratepayers,and is funded by the rates as levied in the 2011/12financial year.In each Group of Activities OperationalRequirement and Funding Summary the RatesAllocation shown is the amount needed to fundactual operating and renewal capital expenditurerequirements for that Group. The overall Group ofActivities Rates Allocation difference from budgetis included in the Support Services Group.The Council engages an independent surveyprovider, National Research Bureau, every twoyears to randomly survey residents of the Cityto assess satisfaction performance measures(the “Communitrak” survey). The performancemeasure result details those very or fairly satisfiedwith the remainder comprising those who are notvery satisfied. All surveys have a margin of error.When people compare the differences betweentwo surveys (e.g. the 2010 and 2011 CommunitrakSurveys) they have to take into account the marginof error for both surveys. This is to be sure that thedifference between two survey results is an actualdifference in the way people perceive the service,not just a combination of the margins of error.Statisticians call this the “significant difference”. Fora sample size of 400 people (as in the CommunitrakSurvey) the significant difference is 5.5% at the95% level of confidence.The Council also completes internally conductedsurveys with respondents randomly selected.Community interaction has encouraged residentsto advise Council of issues in the community. Insome performance measures this has the effectof including in measuring satisfaction advice ofcomplaints, work required and levels of serviceconcerns. These are currently all generallyrecorded as complaints and as residents increasecommunications the number of complaints mayseem to increase. Review is required to objectivelyseparate each of these communications withthe overall purpose to assist Councillors andmanagement to better determine future levels ofservice. This review has occurred in conjunctionwith preparation of the 2012/22 Long Term Plan.Groups of Activities SummaryEach year the Council determines the amountrequired from rates to fund operations and repaya portion of debt. The summary on the next pageis the total of the six groups of activities to givean overall total of all activities and how fundingfrom rates was allocated to match actual operatingrequirements. Included are group revenue,expenses, renewal capital expenditure and debtreduction that were to be funded by rates.There will be a difference between budgeted andactual cost of operations. This difference is shownas the funding surplus/(deficit), being the amountwhen a surplus of current year funds generatedutilised for additional debt reduction and in themovement in working capital required. For eachthere is a comparison to budget as included in theannual plan and variance. Key outcomes were that:• Cash generated from non-rates revenue was$1,349k less than budget.• However this was offset by expenses, includingdepreciation, being $2,864k below budget.• Depreciation included in expenses to be addedback as non-cash was $1,335k favourable.• Actual renewal capital expenditure net ofrevenue for renewal capital received was$2,024k less than budgeted to be funded byrates.• Rates received, including penalties, were $508khigher than budget.• The net effect of these variances was that debtreduction generated form operations andvariance in renewal capital expenditure waseffectively increased from $2,205k to $4,917k.Since the budget was prepared circumstanceshave changed in some areas. These have resultedin some activities having increased net fundingrequirements. To ensure financial sustainabilityand remain within budget, this required that inother areas some non-essential expenditure wasdeferred. Explanation of the variances are includedin the group sections following.What the Council Does OverviewThe performance measures and financial resultsare independently reviewed by Audit New Zealand.Palmerston North City Council Annual Report 2011/12 29

What the Council DoesLeadershipLeadershipGroup DescriptionThe Leadership Group of Activities consists of:• Councillor Leadership and Decision Making• Direction SettingBoth of these Activities are about understandingcommunity expectations and deciding what theCouncil will do to meet its goals.Palmerston North City Council Annual Report 2011/1231

What the Council Does LeadershipGroup of Activities Operational Requirement and Funding SummaryLeadership GroupRevenueActual Budget Variance Actual2012 2012 2012 2011$000 $000 $000 $000Councillor Leadership and Decision Making 17 13 4 108Direction Setting 33 100 (67) 33Total Revenue 50 113 (63) 141ExpensesCouncillor Leadership and Decision Making 2,796 3,035 239 2,826Direction Setting 3,922 4,247 325 3,179Total Expenses 6,718 7,282 564 6,005Net Operating COST OF ACTIVITY GROUP (6,668) (7,169) 501 (5,864)Rating AllocationAdd back depreciation 20 17 3 17Renewal capital expenditure - - - -External revenue for renewal capital - - - -Borrowing effect of renewal 3 year averaging - - - -Provision for debt reduction - - - -General rates allocation 6,648 7,152 (504) 5,847Funding surplus/(deficit) - - - -32 Palmerston North City Council Annual Report 2011/12

Activity - Councillor Leadership and Decision MakingWhat the Council doesThe Council provides services that allow citizensto participate in its democratic decision makingprocesses. The Council also provides informationto the community about its plans and actions.It does this through committee meetings, informalcommunity meetings, other public meetings,public consultation, the Square Circular, mediareleases, civic functions, running elections andother communications.The Activity also helps Council ControlledOrganisations meet their Constitution and TrustDeed requirements, and meet the requirementsof the Council’s policy on the Appointment ofDirectors to Outside Organisations.This Activity also includes the Mayor’s and ChiefExecutive’s office support.Why the Council does this and itscontribution to Council vision andmajor goalsBy making decisions on what the Council will dothis Activity contributes to all five of the Council’smajor goals.In particular it contributes to the Council’s goal ofthe Council understanding the diverse views ofthe City’s people, makes prudent decisions, andensures that people know what the Council isdoing and why.A strong local community depends upon peoplehaving the ability to contribute to the Council’sdecision making process, so that the Council canunderstand what people want.The Council ensures that all policy, proceduraland statutory requirements for decision makingare met to uphold the effectiveness and integrityof local democracy. This means that residentshave an opportunity to influence the Council’sdecisions.In the same way the Council promotes transparencywith its decision making process to maintainaccountability to the public. This means that theCouncil tells residents what it is doing and why.This helps close the decision making loop.What happened in the yearThe Council has continued to perform its legislativefunctions and responsibilities with significantcommunity consultation during the year.Throughout the process of preparing andadopting the Long Term Plan for the next ten yearsthe Council sought to engage and consult withthe community and made available a range ofopportunities for the public to be involved in whatthe Council proposes to achieve in the future andat what cost to the ratepayer. The Council received357 submissions to the draft Long Term Plan withthese considered as an active part of the Council’sdecision-making process in finalising the Plan.This feedback on major City issues is an importantaspect of enabling Elected Members to properlyexercise their judgement and be accountable.A strong local community dependsupon people having the ability tocontribute to the Council’s decisionmaking process, so that the Councilcan understand what people want.A full schedule of Council and Committee meetingswere held along with Community meetingsthroughout the City across February, April, June,August and November. Community meetings areanother opportunity for members of the publicto meet with Elected Members and express theirviews or ask questions which relate to decisionsmade by the Council.During the year five Citizenship Ceremonies wereheld, at which 276 residents became New ZealandCitizens. Two Civic Honour Awards were presentedin October 2012. Additionally, in April 2012, theBachelor of Resource and Environmental Planningawards were held at a Council meeting where fourstudents were presented prizes and acknowledgedfor their achievements.Representation matters have been consideredduring the year. In August 2011, the Councilresolved to adopt the Single Transferable Votingelectoral system for Council elections to be heldin 2013, replacing the First Past the Post electoralsystem. At the same time, the Council decided notto establish a Māori ward or wards.What the Council Does Councillor Leadership and Decision Making LeadershipPalmerston North City Council Annual Report 2011/1233

What the Council Does Councillor Leadership and Decision Making LeadershipReview of representation for the 2013 electionhas also commenced. In June 2012 preliminaryconsultation was commenced to further considerrepresentation arrangements and whetherCouncillors should be elected on a City-widebasis, or by wards, or a mix of the two systems; thenumber of Councillors, and ward arrangementsif applicable; and whether Community Boardsshould be established. This consultation wasintended partly to supplement the results of twopolls carried out in conjunction with the 2010elections.In August 2012, the Council resolved thatCouncillors be elected on a City-wide basis, thatthe number of Councillors continue at 15 plus theMayor and no Community Boards be established.These representation arrangements are subject tothe outcome of a formal submission and appealprocess with final outcome determined in time forthe 2013 elections.How did we performLevels of ServiceThe proposed boundary change between the Cityand Manawatu District Council was completedduring the year with effect from 1 July 2012. Thisaltered the boundary to include additional areasin the City and alleviate the growth issues theCity was encountering. To accomplish this, duringthe year the joint Council Draft Re-organisationScheme was released for public consultationand submission. This was then submitted to theLocal Government Commission with an Order inCouncil released in May approving the boundaryalteration.With the boundary alteration between ManawatūDistrict and Palmerston North City coming intoforce from 1 July 2012, four of the five existingwards within the City have been extended toinclude adjacent parts of the boundary changearea. This will apply until the 2013 electionswhen the changes following the review of therepresentation arrangements will apply.Performance Measures Result CommentThe Council provides opportunities for people to be involved in Council’s decision making.1. SatisfactionThere is an increase in residents’ satisfaction withthe way the Council involves them in decisionmaking. The average of the last two surveys is 50%very or fairly satisfied and 38% neutral or don’tknow. (Communitrak)48% Survey done in November 2011.48% very or fairly satisfied and 41%neutral or don’t know.The Council meets all statutory requirements for all Committee and Council meetings.2. Legislative ComplianceThere are no valid challenges to legal processes.Target metThe Council provides information to the community on what it is doing.3. SatisfactionThere is an increase in the number of residentswho are satisfied with the quality of informationCouncil provides them. (New question in the2010 Communitrak - first results 59% very or fairlysatisfied, 32% neutral or don’t know.There have been no challenges to legalprocesses.57% Survey done in November 2011.57% very or fairly satisfied and 34%neutral or don’t know.The Council manages its Leadership and Decision Making Activity in a financially responsible way.4. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.34 Palmerston North City Council Annual Report 2011/12

Financial ResultsActivity Operational Results: Councillor Leadership and Decision MakingRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Councillor Meetings and Administration 17 13 4 10 1.Elections - - - 98Mayoral and Chief Executive’s Office - - - -Total Revenue 17 13 4 108ExpensesCouncillor Meetings and Administration 1,908 2,076 168 1,722 2.Elections 1 45 44 325 3.Mayoral and Chief Executive’s Office 887 914 27 779 4.Total Expenses 2,796 3,035 239 2,826Net Operating CosT OF ACTiviTY (2,779) (3,022) 243 (2,718)Note1. Actual revenues for Citizenship ceremonies and CCOTrust Boards were higher than budgeted, offset byhigher Trust Board costs.2. Lower Citizenship ceremonies, Civic Awards andElected Member Support expenses than expected.3. Lower net personnel costs.4. Lower professional service costs and general expensesthan highlighted.Significant Activity Capital Projects: Councillor Leadership and Decision MakingActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 -Capital NeWCouncil Chamber seatingand electronic voting 26 30 4Total Capital NeW 26 30 4 -Total Capital Projects 26 30 4 -What the Council Does Councillor Leadership and Decision Making LeadershipPalmerston North City Council Annual Report 2011/1235

What the Council Does Direction Setting LeadershipActivity - Direction SettingWhat the Council doesThe Direction Setting Activity consists of StrategicPlanning, Long Term Planning, EnvironmentalPolicy and District Planning.The role of this Activity is to give effect to theCouncil’s Vision and five major goals throughits policy and strategic planning. It does this byaligning current policy and strategy to the Visionand by developing new policies and strategies.These give the direction to Council’s otherActivities so that they work towards the Council’sVision and Strategic Goals.It also works to develop the Council’s relationshipswith Rangitāne.Why the Council does this and itscontribution to Council vision andmajor goalsBy giving advice on how the Council can developand implement its Vision and Goals this Activitycontributes to all five of the Council’s major goals.Cities need to be well planned and well designed.Good planning is also a key requirement of theLocal Government Act. The Act places a greatdeal of emphasis on ensuring that an integratedapproach is taken to a city’s future. This meansconsidering the social, economic, cultural andenvironmental well-being of current and futurecommunities. It also means working with otherorganisations that have similar goals.The Council monitors its progress towards its goalsand reviews its policies and strategies accordingly.This ensures that its goals and actions are basedon current community needs and circumstances.What happened in the yearThis year the Direction Setting Activity focused onthree things: developing the 2012-2022 Long TermPlan, continuing the review of the District Plan,and continuing the review of Council’s strategies.The Long Term PlanDuring the year the Council completed andadopted the Long Term Plan. As part of this theCouncil reviewed its long-term Vision and Goalsand, although it made slight wording changes,the overall direction stayed the same. TheCouncil’s strategic aim is for Palmerston North tobe recognised as a vibrant, caring, innovative andsustainable city.The Council plans to pay back higherlevels of debt and has built a newconcept called ’headroom’ into theplan. Having headroom means thatthe Council will keep its borrowingbelow prudential limits.For residents this means that the Council willcontinue to focus on things like providing leisurefacilities so that there is lots to do; developing publicspaces that are safe and well used; supportingcommunity groups and encouraging peopleto volunteer for these groups; helping ensurePalmerston North has lots of jobs and successfulbusinesses; and making it easy for people to dothings like recycle, use public transport or to cycleor walk.Through the Long Term Plan the Council alsoconfirmed its goals of providing value for moneyto ratepayers and making sure it understandscommunity views and makes good decisions. TheCouncil plans to pay back higher levels of debt andhas built a new concept called ’headroom’ into theplan. Having headroom means that the Councilwill keep its borrowing below prudential limits. Itis like getting approval from the bank to borrowa certain amount and then deliberately borrowingless than that. That way, if Council is faced byunexpected costs, or if future generations want toborrow some money for things that they want toprovide, then there is capacity to do this.36 Palmerston North City Council Annual Report 2011/12

The District PlanThe Council has continued its sectional review ofthe District Plan (Shaping our City – Creating aSustainable Future). During the year this involveda range of issues including planning in the CBDand suburban centres, erosion at Anzac Cliffs,an update to the roading hierarchy, a review ofdesignations (public utilities), the impact of ruralresidential lifestyles, where future urban growthwill occur and alignment of the City View Issuesand Objectives with Council strategy. Researchand analysis is also underway on a number of theissues including natural hazards, the industrial,institutional and airport zones, and natural andcultural heritage, e.g. notable trees. The PlanChange for the Central Business Zones focused onmaking the CBD an effective place to do businessand an attractive and easy place to shop and work.The Rural-Residential Land Use Strategy balancesthe desire for some people to live on lifestyleblocks with the impact this has on rural productionand the look and feel of rural areas. The ResidentialGrowth Strategy was adopted in 2010. It identifiesCity West (land bordered by No. 1 Line, RongoteaRoad, Shirriffs Road and the Mangaone Stream)and Whakarongo (land bordered by Napier Road,Stoney Creek Road, James Line and the cemetery)as growth areas. Implementation of the ResidentialGrowth Strategy within the District Plan is subjectto evaluation of the results of the liquefaction andstormwater assessments in the areas identified.Council’s StrategiesDuring the year the Council adopted the Safe CityStrategy and the Domestic Energy Strategy. Italso started work on developing or reviewing theSocial Strategy, Social Housing Strategy, MāoriCommunity Strategy, Community EngagementStrategy, Active Recreation Strategy. All of thesestrategies show in more detail how the Council willimplement its Sustainable City Strategy.The Council also worked with the ManawatuDistrict Council, Vision Manawatu and DestinationManawatu to develop the Regional DevelopmentStrategy (RDS). Its main goal is to make theManawatū the best place to raise a family. It doesthis by making it a safe place to live, a world centreof food innovation, a distribution hub, a leaderin innovative and sustainable environmentalpractices and an economy with lots of jobs. TheEconomic Development Activity has furtherinformation about the RDS.Other areas the Council focused on during theyear include implementing the Urban DesignStrategy, preparing a Climate Change ActionPlan, amending the Community Funding Policy,developing a Public Transport Position Statement,preparing a plan to be ‘The Best Place to Ride aBike’, reviewing bylaws, and economic monitoring.The Council is committed to fostering andstrengthening its relationship with Rangitāne andhas held bi-monthly meetings with Iwi on a rangeof topics. A major consultation was on Te Motuo Poutoa and the development of river and cliffworks at Anzac Park. The nature of the structurethat will ultimately be built and other matterssuch as access and indigenous planting are all tobe worked through with Rangitāne. This has alsoled to a commitment from the Council to developa reserve management plan for the area which willhave strong iwi involvement. Central governmenttreaty settlements negotiations are well advancedwith the Rangitāne representative groups that theCouncil works with, and there is likely to be newand significant agreements negotiated in the nearfuture to manage and build relationships with theiwi collectively. There has also been consultationwith the Ngati Hineaute Hapu Authority on thedevelopment of a new kohanga in Highbury,Rangitāne has also made significant comment onthe Draft Māori Community Strategy for the Cityand the Māori community in Highbury have had amajor involvement in the development of FarnhamPark as a model for neighbourhood engagementthat Council is wanting to promote.In the next year the Council will put more emphasison advocating to central government on issuesthat affect Palmerston North. It will also put moreemphasis on monitoring its plans and strategies- including developing an online monitoring toolthat shows key tends in the City and outlines howsuccessful Council’s strategies are.Palmerston North City Council Annual Report 2011/12What the Council Does Direction Setting Leadership37

How did we performWhat the Council Does Direction Setting LeadershipLevels of ServicePerformance Measures Result CommentThe Council works with key stakeholders to take a collaborative approach to planning for the City.The Council provides good quality long term advice.1. SatisfactionFeedback from key internal and externalstakeholders shows at least 80% satisfaction withCouncil’s strategic planning (consultation, settingclear direction, customer services, etc.). Relevantstakeholders will be surveyed following eachmajor policy exercise.80% 80% satisfaction rating received. Positivefeedback included comments aboutforward planning and working with otherorganisations.The Council has plans and policies in place for the long term well-being of Palmerston North. (TheCouncil’s main plans and policies are the 10 Year Plan, District Plan, and strategies in the social,economic, environmental and cultural areas.)2. Policies and Plans• The 10 Year Plan is developed three-yearlyTarget met Plan was adopted on 27 June 2012.(2012/15/18)• Audit NZ gives the 10 Year Plan a clear report Target met Unqualified audit report was received on27 June 2012.• Major strategies are reviewed every five years Target met Reviewed strategies include SustainableCity, Domestic Energy, Arts, Urban Designand Events and Festivals.• The District Plan is reviewed by 2015 Target met On track.• A State of the Environment report is preparedby 2012.Target not metReport deferred until 2015 because thecensus was delayed by NZ Statisticsfollowing the Canterbury earthquakes.The Council identifies and monitors major community issues and trends in community well-being.3. Community Issues and Trends MonitoringA State of the City monitoring report is producedevery year.Target met State of the City monitoring reportdeveloped in July 2011.The Council maintains a well designed and attractive City through the District Plan and its strategicprojects.4. SatisfactionA three-yearly survey of residents shows increasingsatisfaction with the look and feel of the City.Base: 62% 2009/1062%(2010 survey)The Council manages its Direction Setting Activity in a financially responsible way.5. Cost EffectivenessThe budget set by the Council is not exceeded.Target metSince the last survey was carried out theCouncil has adopted an Urban DesignStrategy. Initiatives include DavidEngwicht seminars, CBD sculpture andstreet furniture and PNINS entrance. TheCouncil has also funded DestinationManawatū to implement a Sense of Placeprogramme to improve the perception ofthe City.Services provided on time and withinbudget.38 Palmerston North City Council Annual Report 2011/12

Financial ResultsActivity Operational Results: Direction SettingRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Environment Policy and District Plan 21 100 (79) 25 1.Strategic Planning and LTP 12 - 12 8 2.Total Revenue 33 100 (67) 33ExpensesEnvironment Policy and District Plan 2,148 2,390 242 1,744 3.Strategic Planning and LTP 1,774 1,857 83 1,435 4.Total Expenses 3,922 4,247 325 3,179Net Operating CosT OF ACTiviTY (3,889) (4,147) 258 (3,146)Note1. Lower revenue from minimal private plan requestsreceived.2. Unexpected grant received for sustainability.3. Lower professional service and general expenses,partly in line with lower revenue.4. Lower professional service expenses with higher costthan 2011 for three yearly LTP.Significant Activity Capital Projects: Direction SettingActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 -What the Council Does Direction Setting LeadershipCapital NeWSustainable City Strategyimplementation of assets 136 250 114 a.Total Capital NeW 136 250 114 -Total Capital Projects 136 250 114 -Significant acquisitions and explanation of variancesfrom Annual Plana. Installation of solar panels and other energy savingequipment. Suitable projects not identified for balanceof budget.Palmerston North City Council Annual Report 2011/1239

What the Council Does Direction Setting Leadership40 Palmerston North City Council Annual Report 2011/12

What the Council DoesCommunitySupportCommunity SupportGroup DescriptionThe Community Support Group of Activitiesconsists of:• Cemeteries• Civil Defence• Community Development• HousingThe Council provides them because it wants tohelp create a caring and safe community. Having acaring and safe community makes the City a betterplace to live for current residents and makes theCity more attractive to people who are thinking ofmoving here. Hence the main Council goal theseActivities work towards is Palmerston North is acity where people want to live because of its safeand easy lifestyle and its many social, cultural andrecreational opportunities.REST(Rescue Emergency Support Team)training. Image courtesy of ShaneBriggs, Rescue Manager, REST (NZ-RT4),Palmerston North.Palmerston North City Council Annual Report 2011/12 41

Group of Activities Operational Requirement and Funding SummaryCommunity Support GroupActual Budget Variance Actual2012 2012 2012 2011$000 $000 $000 $000CommunitySupportWhat the Council DoesRevenueCemeteries 534 495 39 490Civil Defence 10 15 (5) 25Community Development 365 91 274 292Housing 1,398 1,231 167 1,257Total Revenue 2,307 1,832 475 2,064ExpensesCemeteries 882 943 61 872Civil Defence 468 490 22 508Community Development 2,710 2,549 (161) 2,425Housing 1,641 1,691 50 1,614Total Expenses 5,701 5,673 (28) 5,419Net Operating COST OF ACTIVITY GROUP (3,394) (3,841) 447 (3,355)Rating AllocationAdd back depreciation 917 884 33 836Renewal capital expenditure (391) (582) 191 (716)External revenue for renewal capital 2 - 2 242Borrowing effect of renewal 3 year averaging (209) (209) - 13Provision for debt reduction (19) (19) - (11)General rates allocation 3,094 3,767 (673) 2,991Funding surplus/(deficit) - - - -42 Palmerston North City Council Annual Report 2011/12

Activity - CemeteriesWhat the Council doesThe Council provides three cemeteries (atKelvin Grove, Terrace End and Ashhurst) and acrematorium at Kelvin Grove.Why the Council does this and itscontribution to Council vision andmajor goalsThe Council provides this so that people who havelost loved ones can bury or cremate them in acontrolled and dignified manner.This Activity contributes indirectly to the Council’smajor goals.Under the Burials and Cremation Act Councils arerequired to provide cemeteries.The cemeteries and crematorium are generallyin good condition with enough capacity to meetfuture needs.What happened in the yearThere have been two recent initiatives in theKelvin Grove Cemetery over the last 12 months,both of a cultural nature. The first is the use of thenew hillside burial area which was developed inthe 2010/11 year. The creation of this new burialarea was largely driven by the Chinese community,who expressed a strong desire for an elevatedsite for burial. The second is the recent approvalof Council to create an extension of the Muslimburial area. The new burial plots will be created onan angle that more easily allows the body to faceMecca. The Muslim Association, on behalf of theircommunity, will pre-purchase a number of plotswhich they will use as required.The hard surface renewal programme continued tobe used to repair a number of roads and pathwayswithin the Kelvin Grove Cemetery which werefailing and, in the case of some of the pathways,were unsafe. The existing water supply withinthe older part of the cemetery was in very poorcondition and has been replaced. A new children’sash beam was installed during the year.The resource consent for discharge to air fromthe Kelvin Grove cremator was renewed in early2012. The existing cremator will meet the new,more stringent consent conditions, howeverretro-fitting of additional control and monitoringequipment to the cremator will be necessary nextyear to demonstrate compliance.The new wall fronting the Ashhurst Cemetery,completed as part of the Ashhurst Domainenhancements in the 2010/11 year, has made ahuge difference to the visibility and profile of thecemetery in the Ashhurst Domain. The cemeteryhas been extended and is still in use. The new wallreplaces an overgrown, unkempt hedge whichlooked untidy and gave the impression that thecemetery was abandoned and in disrepair.The Terrace End Cemetery had some more treesaround its edge removed which were damaginggraves. A new base plan of the cemetery has beencreated which will assist with future maintenanceplanning programmes.The hard surface renewalprogramme continued to be usedto repair a number of roads andpathways within the Kelvin GroveCemetery which were failing and, inthe case of some of the pathways,were unsafe.In 2012/13 investigations will begin to find a site fora Natural Burial Cemetery within the City and oncethe appropriate consents have been obtained thesite will be prepared for use. Funeral directors inPalmerston North have indicated that the demandfor a natural burial site is increasing. The ChineseAssociation will start work on the constructionof a gazebo/pagoda structure near the recentlydeveloped hillside burial area at Kelvin GroveCemetery which will be available for all sectors ofthe community to use.CommunitySupportWhat the Council Does CemeteriesPalmerston North City Council Annual Report 2011/1243

How did we performPerformance Measures Result CommentThe Council provides cemeteries and a crematorium that are accessible, well maintained and take intoaccount the cultural and religious needs of the community.1. Cemetery MaintenanceThere are less than six complaints per year thatcemeteries are untidy or not well maintained.Target not met10 complaints received (15 in2010/11):5 - damaged headstone or vases5 - general maintenanceCommunitySupportWhat the Council Does CemeteriesLevels of Service2. Legislative ComplianceThe cemeteries and crematorium comply withlegislative and regulatory requirements forsafe and hygienic burials and cremation. Thisis independently assessed through the SanitaryServices Assessment. The last assessment wasdue in 2011.3. CapacityThere is adequate capacity to meet futureburial and cremation needs. This isindependently assessed through the SanitaryServices Assessment. The last assessment wasdue in 2011.4. Asset Management PlanA 20 year asset management plan is in placefor the Cemeteries Activity. This plan isindependently audited by asset managementconsultants and is formally reviewed at threeyearlyintervals. The next review is due byJune 2012.Target metTarget metTarget metFrom internal assessments all threecemeteries comply with the legislativeand regulatory requirements for safeand hygienic burials and cremation.Sanitary Services Assessment has beendeferred to be completed at the sametime as the remainder of the Council’sSanitary Services Assessments.There is enough capacity in thecemeteries until approximately 2089based on the medium death forecast.Sanitary Services Assessment has beendeferred to be completed at the sametime as the remainder of the Council’sSanitary Services Assessments.Audited Asset Management Plans wereadopted by the Council in April 2012and are due to be reviewed in 2014.The Council provides accurate and timely access to cemetery records and plans.5. Response to EnquiriesThe Council responds to greater than 95% ofburial and cremation record enquiries withinthe allowed time period (10 days).Target not met 93% of enquiries responded to within10 days.The Council manages its Cemeteries Activity in a financially responsible way.6. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.44 Palmerston North City Council Annual Report 2011/12

Financial ResultsActivity Operational Results: CemeteriesActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000RevenueCemeteries 534 495 39 490 1.Total Revenue 534 495 39 490ExpensesCemeteries 882 943 61 872 2.Total Expenses 882 943 61 872Net Operating CosT OF ACTiviTY (348) (448) 100 (382)Note1. Revenue higher following increased fees in April 2011. 2. Lower net personnel and maintenance costs.CommunitySupportSignificant Activity Capital Projects: CemeteriesCapital RenewalActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Cemetery hardsurface renewals 101 93 (8) a.Kelvin Grove Cemeterywater pipe replacement 24 21 (3)Terrace End Cemetery enhancement 9 9 -Total Capital Renewal 134 123 (11) 99Capital NeWKelvin Grove Cemetery burialand ash plot development 25 33 8Kelvin Grove Cemetery developmentof a hillside burial area 10 - (10) b.Total Capital NeW 35 33 (2) 156What the Council Does CemeteriesTotal Capital ProjeCTs 169 156 (13) 255Significant acquisitions and explanation of variances from Annual Plana. For minor renewals, includes cost of completing2010/11 work that had no carry forward provided(within budget overall).b. Completion of 2010/11 pathway sealing on hillsidesection not completed due to wet weather with nocarry forward (within budget overall).Palmerston North City Council Annual Report 2011/1245

CommunitySupportWhat the Council Does Civil DefenceActivity - Civil DefenceWhat the Council doesThe Council provides civil defence services to helppeople prepare for, respond to, and recover froma civil defence emergency, such as an earthquake,flood, volcanic eruption, major fire, or widespreadpower or communication failure.The Council also acts as the Rural Fire Authority torespond to and put out non-structural fires in therural areas.The Council meets these responsibilities byproviding community education programmes,coordination with other civil defence andemergency service organisations, a civil defenceresponse organisation of trained Council staff andvolunteers, a local disaster recovery coordinationplan, rural fire plans and a trained rural fire team,and an emergency operations centre.Why the Council does this and itscontribution to Council vision andmajor goalsThe Council does this to help build a sense ofcommunity and to help people feel safe.When an emergency does occur the Council willwant to ensure that people, businesses, schools,community groups, sports groups, etc. can do asmuch as possible to look after themselves. It alsowants them to be able to recover as quickly aspossible from civil defence emergencies.Hence this Activity contributes indirectly to theCouncil’s goals of being a City where people wantto live and businesses want to be.The Council also has to meet legal requirements.The Council’s legislative obligations are set out inthe Civil Defence and Emergency ManagementAct and the Forest and Rural Fires Act.What happened in the yearThe big emphasis for this year has been aboutthe learnings from the Christchurch earthquakesof 2010 and 2011. Public education to both thegeneral public and business community has beenfocused around relating this event to PalmerstonNorth. There is now a greater awareness ofthe reality of such a situation occurring andaccordingly the community have made thenecessary arrangements to cope with such anevent. A recent survey shows an improved uptakein both awareness and preparedness.This Unit continues to work closely withNeighbourhood Support and the businesscommunity to get the message through. Therelease of the first list of earthquake pronebuildings has also given a focus to this subject.Another major focus has been around theintroduction and implementation of EMIS(Emergency Management Information System)to the staff and agencies that will be using it.This is ongoing and will be trialled in “OperationShakeOut” in September 2012. EMIS is a one-stopshop for managing information, listing resourcesand integrating GIS. Three Council staff have beentrained to train other Council staff in the system.The big emphasis for this year hasbeen about the learnings fromChristchurch 2011. Public educationto both the general public andbusiness community has beenfocused around relating this eventto Palmerston North.The Council has also played an active role inthe Manawatu-Wanganui Civil Defence andEmergency Management Group. This ensuresthat a collaborative approach will be taken to anyemergency in the region. The focus has been onimproving welfare plans and establishing a homevisit programme to encourage more people to getprepared for emergencies.Looking forward, work is being completedaround the establishment of a backup EmergencyOperations Centre if the one in the basement ofthe Civic Administration Building is unavailablefor some reason. Level 2 of the FMG Stadium hasbeen identified as that place.46 Palmerston North City Council Annual Report 2011/12

How did we performLevels of ServicePerformance Measures Result CommentThe Council has plans in place to prepare for, respond to and recover from emergencies. These plansare the Civil Defence Emergency Management (CDEM) Plan, and the Rural Fire Plan.1. Legislative CompliancePlans meet legal requirements and areindependently audited:• emergency management plans and processesare consistent with the Manawatu-WanganuiCDEM Plan (evaluated every three years by theCDEMG)• Rural Fire Plan is audited by the National RuralFire Authority (NRFA) - every two years for theReadiness and Response sections, and everyfive years for the Reduction and Recoverysections.Target met Plan adopted 2010 - valid until 2014.There are no known issues impacting planimplementation.Target met Rural Fire Plan rewritten and audited 2010.There are no known issues impacting planimplementation.The Council provides an Emergency Operating Centre and trained volunteers to respond to a civildefence or rural fire emergency. (This includes a 24/7 on-call Emergency Management Officer.)2. Response to Emergency Calls100% of emergency civil defence calls areresponded to within 10 minutes.3. Emergency Operating CentreNo major concerns are identified with the way theCouncil’s Emergency Operating Centre works in anindependent audit. The audit is carried out everyfive years by the Department of Internal Affairs.The next audit is in 2013.Target met All (54) calls responded to within 10minute requirement.Target metNext audit is in 2013. There are no knownissues impacting Emergency OperationsCentre.The Council carries out ongoing public education programmes to encourage people to be ready for anemergency.4. Education PresentationsAt least 100 public education presentations aregiven each year.Target met100 presentations given.The Council works collaboratively with other emergency service organisations.5. Satisfaction90% 90% satisfaction. Completed in June 2012.A two-yearly survey of emergency serviceorganisations shows at least a 90% satisfactionwith the Council’s Civil Defence and EmergencyServices team.The Council manages its Civil Defence Activity in a financially responsible way.6. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.CommunitySupportWhat the Council Does Civil DefencePalmerston North City Council Annual Report 2011/1247

Financial ResultsActivity Operational Results: Civil DefenceRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Civil Defence 10 15 (5) 25Total Revenue 10 15 (5) 25CommunitySupportExpensesCivil Defence 468 490 22 508 1.Total Expenses 468 490 22 508Net Operating CosT OF ACTiviTY (458) (475) 17 (483)Note1. Lower operating costs.What the Council Does Civil Defence48 Palmerston North City Council Annual Report 2011/12

Activity - Community DevelopmentWhat the Council doesThe Council provides a range of communitydevelopment services to help community groups,neighbourhoods and communities in PalmerstonNorth meet their needs.These services include funding, rental subsidiesand rates remissions for community groups,training, interagency collaboration, advocacy,support, and information and advice.Decisions on which groups receive Council fundingare made through the Council’s CommunityFunding Policy. The Council reviews which groupsit funds every three years to make sure it is fundingcurrent community priorities. This may change theareas or groups that the Council funds, but is notexpected to change the total amount of fundingthat Council gives.The Council liaises with community groups andgovernment agencies to ensure that their effortsare coordinated and effective. The Council alsoprovides community centres around PalmerstonNorth. These provide meeting spaces and a focalpoint for local communities and groups.The Council funds a range of community events,through its Events and Festivals Strategy, forpeople to celebrate their culture and the placein which they live. The diversity of communitiesexisting in Palmerston North, whether based onarts, education, sport or ethnicity, is reflected in avariety of events and festivals.Why the Council does this and itscontribution to Council vision andmajor goalsThis Activity makes a major contribution tothe Council’s goal of people wanting to live inPalmerston North, especially because of its safeand easy lifestyle and its many social, culturaland recreational opportunities. People like livingin a city where they feel that they are part of acommunity and can participate in communitylife. They want to live in a city that has a strongcommunity sector so that people in need can besupported.The Council helps provide events for two reasons.The first is to strengthen the local communitythrough celebrations and opportunities to growcommunity networks. These events are critical tohow people feel about the City. They are fundedthrough the Community Development Activity.The second reason for events is to grow thenumber of local jobs by increasing visitor numbersand to promote the City. These events also makePalmerston North a more attractive place to work,live and learn. These events are funded throughthe Economic Development Activity.What happened in the yearThe organisations contracted by the Councilcontinue to provide a wide range of services to thecommunity. Contracted organisations include,amongst others, Manline, Manawatu Multi-CulturalCouncil, Youth One Stop Shop, SafeCity Hosts,Environment Network Manawatu, PalmerstonNorth Community Services Council, Age Concern.The Council helps provide events fortwo reasons. The first is to strengthenthe local community throughcelebrations and opportunities togrow community networks. Theseevents are critical to how peoplefeel about the City.Community House has been fully tenanted andoperational for the last 12 months. The groupshave all settled into the house, are networkingand developing strong working relationships. Themeeting rooms at Community House are beingwell used, with many organisations and groupsfrom around the City availing themselves of thesemeeting spaces.The completion of Community House and itsongoing development into the future has beenmade possible by the generous support of anumber of funding organisations, from LotteryCommunity Facilities Fund ($527,275), CentralEnergy Trust, Eastern and Central Community Trust,Endeavour Community Trust, Lion Foundation,Pub Charity and Pelorus Trust. The ongoingsupport and commitment of these funders andtheir agreement to accept applications from theCouncil for the completion of the fitout, so thatindividual groups did not have to apply, showeda real understanding and commitment to thecommunity from them. Central Energy Trust hasrecently assisted further with funding to enablethe purchase of presentation technology forCommunity House.CommunitySupportWhat the Council Does Community DevelopmentPalmerston North City Council Annual Report 2011/1249

CommunitySupportWhat the Council Does Community DevelopmentThe Safety Advisory Board has once again excelledby delivering on a wide range of safety initiativesaround the City. The commitment of the socialservice agencies who commit themselves to thisongoing collaborative working relationship is akey element in delivering the Safe City Strategy.The Safety Advisory Board, in conjunction withthe Fire Service and the Council, are continuing tooperate twice-yearly inorganic rubbish collectionsfrom student communities. The increased rapportbetween social services and students has resultedin a significant decrease in anti-social behaviour.In order to ensure enhanced safety within theCBD the Safety Advisory Board agreed to fund theprofessional monitoring of the CCTV cameras.Increased public accessibility has been enabledwith the implementation of the Safety AdvisoryBoard website (www.pnsab.co.nz) allowingincreased community participation in on-goingand planned community activities.There is increasing awareness in the communityregarding family violence as a number of agencieshave worked collaboratively to ensure the “It’sNot Ok” message gets out. An ongoing educationprogramme has been developed to work with10-17 year olds to support them to not toleratefamily violence within their homes, culminatingin a concert at Palmerston North IntermediateNormal School.In conjunction with the Ministry of SocialDevelopment and Family and Community Services,the Council worked together with the PalmerstonNorth Pasifika Group to hold a community event atWestbrook Community Centre and Bill Brown Parkon 31 March 2012. This event was to support thelocal community to develop resilience to familyviolence and to encourage community socialcohesion.The Ministry of Justice once again supported theCouncil by providing a grant that enables theSafety Advisory Board to focus on five target areas- alcohol related harm; family violence; youth atrisk; safer city design; and burglary. This funding iscrucial to enable local community safety initiativesand is one of the primary ways of ensuring theCouncil meets its objectives as included in the SafeCity Strategy.The Palmerston North Youth Council said goodbyeto six of its longstanding members who leftfor university with six new Youth Councillorswelcomed to serve the youth community. ThreeYouth Councillors were fortunate enough toattend the Youth in Local Government Conferencein Invercargill, where they were able to networkwith other Youth Councillors and to talk abouthow to make the most of their leadershippotential. Meetings and governance training wasundertaken in January, followed by a geocachingteam building activity in February (treasure huntusing GPS). Youth Councillors continue theirinvolvement with the Youth Space. They alsoorganised the Ignition event at the Youth Space,a drug and alcohol free event for 13 to 17 yearolds. As well as providing an event for the youthof Palmerston North it is also a great way for YouthCouncillors to gain new skills.Resources for the youth in the City were increasedwith the Youth Space opening in September 2011with it going from strength to strength. The YouthSpace team is building positive relationshipswith the teens that go there, and this supportis helping them to make changes in their lives.Networking opportunities have been vital inbuilding relationships with local groups withthe team working hard to promote the facility toyoung people, those working with youth and alsoparents, and to find out how they might wish touse various aspects of the space. The number ofyoung people and organisations using the facilitycontinues to grow. This includes those who bringgroups in to use the facility and those who puton activities for the youth who visit. To date wehave welcomed the Te Aho o Te Kura PounamuCorrespondence School, UCOL, Palmerston NorthBoys High School, Supergrans, YMCA, WhaioraTrust, Awatapu Special Needs and the PublicHealth Organisation, amongst others.Central Energy Trust funding has enabled the YouthSpace to create an amazing training kitchen andcafé that will offer work experience opportunities.The kitchen is already being well used, by groupsand teens alike. Good relationships with externalorganisations are providing opportunities to worktogether on projects and also to bring services toyoung people using the space. Both UCOL and TheStomach have been key in linking to individualswho have volunteered their services as well asoffering their equipment to enable the activity totake place.50 Palmerston North City Council Annual Report 2011/12

The Youth Library, located within the Youth Space,is enjoying its new home. There is an increasingnumber of eager readers accessing the collection.The book collection continues to grow, non-fictionand graphic novels in particular, with freecomputers and laptops also offering opportunitiesfor social networking and also tutorials such as CVwriting sessions. Saturday morning is becominga hub of library activity and the next step will beto focus on workshops and reading groups duringthis time.The Local Initiatives Fund supported three projectsin the last funding round - the Crewe CrescentCommunity Garden project offering opportunitiesfor people to connect and learn new skills; REACTworkshops for local groups and individuals thatfocus on fun, creative, green projects; Parents Inc.delivery of presentations in local schools designedto encourage young people to make good lifechoices.The Council continues to host the Departmentof Labour Settlement Support Coordinator.This collaborative relationship between theDepartment of Labour and the Council providesopportunities for employers and new migrants tothe City to have access to settlement information.The Department of Labour contracted VisionManawatu to undertake a research project toidentify key employers of highly skilled migrantswithin the City.Settlement Support sponsored a new categoryin the Manawatu Westpac Business Awards, “TheInvestors in Skilled Migrants Award”. This awardwas won by Ashhurst Engineering in recognition oftheir innovative and highly proactive approach toworking with their high value migrant employees.Settlement Support and MidCentral DHBcollaborated to provide an opportunity forhigh value migrants employed over the last 12months by the DHB to offer feedback on both theemployment and the settlement process. This wasa highly successful event that will be replicated byother key employers in the area.A collaborative project is being developed withWanganui District Council to develop an onlineresource for high value migrants moving to theWanganui area.Considerable attention has been given to thecommunity centres over the last 12 months.A significant renovation of the WestbrookCommunity Centre was received very favourablyby the local community with a successfulcelebratory day well attended by locals, includingCouncil representatives.CommunitySupportWhat the Council Does Community DevelopmentPalmerston North City Council Annual Report 2011/1251

How did we performCommunitySupportWhat the Council Does Community DevelopmentLevels of ServicePerformance Measures Result CommentThe Council provides grants to community groups.1. Contracted OrganisationsContracted organisations meet their agreedperformance targets. The organisations covera range of areas, e.g. youth, employment,families, ethnic communities, safety, people withdisabilities, and older people. Their key targetsrelate to the number of people that they help.2. SatisfactionResidents’ satisfaction with the Council’s grantsand support to community groups is maintainedor increased. The average of the last two surveys is52% very or fairly satisfied and 44% don’t know orneutral. (Communitrak)Target metContracted organisations have met theiragreed targets as identified in theirStatements of Intent or their fundingagreements.52% Survey done in November 2011.52% very or fairly satisfied and 44% don’tknow or neutral.The Council works with government agencies and community groups to ensure coordination ofresources in the community.3. SatisfactionA two-yearly survey of key stakeholders shows 63%good or very good and 30% average satisfactionwith the Council’s community development. (Newmeasure 2011.)63%(2011 survey)The Council maintains community centres and promotes their use.4. Community Centre UseCommunity Centres are used for a minimum of 360hours per centre per year.5. Asset Management PlanA 20 year asset management plan is in place for theCommunity Centres. This plan is independentlyaudited by asset management consultants and isformally reviewed at three-yearly intervals. Thenext review is due by June 2012.The Council provides funding for community events.6. Contracted OrganisationsContracted organisations meet their agreedperformance targets, e.g. provision of Festival ofCultures, Christmas in The Square and WaitangiDay.Survey done in June 2011.63% good or very good and 30% average.This result will set the baseline for futuresurveys. Next one is in 2012/13.Target not met Usage not measured. The Council isstill establishing the best options for itscommunity centres and is working witheach centre committee to develop robustrelationships and to support them indeveloping increased activities.Target metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.Target metThe Council encourages community events in The Square.7. Events in The SquareThere are at least 160 days of events in The Squarea year.Target metAll Council core events were deliveredwith the exception of New Year’s Eve(which was cancelled due to poorweather).240 days of events held.The Council manages its Community Development Activity in a financially responsible way.8. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.52 Palmerston North City Council Annual Report 2011/12

Financial ResultsActivity Operational Results: Community DevelopmentActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000RevenueCommunity Development 216 60 156 259 1.Community Events 13 - 13 3 2.Community Halls and Facilities 137 31 106 24 3.Grants to Community Groups (1) - (1) 6Total Revenue 365 91 274 292ExpensesCommunity Development 411 562 151 459 4.Community Events 198 259 61 181 5.Community Halls and Facilities 535 480 (55) 402 6.Grants to Community Groups 1,566 1,248 (318) 1,383 7.Total Expenses 2,710 2,549 (161) 2,425Net Operating CosT OF ACTiviTY (2,345) (2,458) 113 (2,133)Note1. Additional unbudgeted revenue for externalcommunity service contracts managed with full offsetin expenses plus additional grants received for CitySafety, offset by higher expenses.2. Unbudgeted revenue from mobile stage hire.3. Unbudgeted rental from Community House.Significant Activity Capital Projects: Community Development4. Implementation of one programme and grants did notoccur plus lower net personnel costs.5. Lower net personnel costs.6. Higher depreciation and service delivery costs.7. Higher net personnel costs.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalCity Wide community centre upgrades 199 406 207 a.Total Capital Renewal 199 406 207 88Capital NeWConstruction of “Community House” 33 - (33) b.Total Capital NeW 33 - (33) 1,841Total Capital ProjeCTs 232 406 174 1,929Significant acquisitions and explanation of variances from Annual Plana. Various upgrades with major work at WestbrookCommunity Centre to restore building to a goodcondition. User group consultation to determine thenext centre to upgrade commenced with $100,000to be carried forward to 2012/13 to complete thiswork.b. Meeting room sound proofing found to beinadequate. This was unforeseen and had to beremedied as a late variation to the contract.CommunitySupportWhat the Council Does Community DevelopmentPalmerston North City Council Annual Report 2011/1253

CommunitySupportWhat the Council Does HousingActivity - HousingWhat the Council doesThe Council owns 311 community housing units at17 locations around the City (including Ashhurst).The Council’s Social Housing Strategy guidesCouncil’s actions in this area. Under the currentstrategy the Council’s commitment is to providesafe and accessible housing firstly for low incomeelderly, followed by people with special needs.Tenants are charged income-related rents.The Council also provides 96 public housing unitsat three locations around the City (Achilles Court,Rakaia Place and Waiheke Court). Tenants in theseare charged at market rentals. Hence this housingis part of the Council’s Commercial or StrategicInvestments Activity.The Council has a small networking and monitoringrole with other organisations on wider housingissues in the City.Why the Council does this and itscontribution to Council vision andmajor goalsThis Activity contributes to the Council’s majorgoal of being a city where people want to livebecause it is a caring community that looks afterthose in need. (For example, low-income olderpeople or people on low incomes with additionalneeds.) The new housing developments will bemore eco-friendly so will contribute to the goal ofbeing environmentally sustainable.The Council provides community housing to helpensure that those older people on low incomesand with the least amount of wealth are takencare of during the time of their greatest need andoften vulnerability. This is in recognition of thecontribution they have made to society in theiryounger years.There is a clear connection between qualityhousing options and positive mental health anddisability outcomes. The Council’s communityhousing is also available to people on disabilitybenefits. This provides housing that is affordable,acts as a safe environment, helps with the longpath towards recovery and caters to those wheretraditional housing options do not meet theirspecific requirements.What happened in the yearIn general the 2011/12 year has been a positiveone for the community housing. The occupancyrate within the complexes has continued to behigh at between 96.5 and 99 percent with rentalrevenue slightly above budget. There is a strongwaiting list of people wanting to move into thecommunity housing complexes, both in the over65 age group and in the invalid’s benefit group.MASH Trust lease 25 units at Cardrona Close andtwo at Wood Street, this arrangement is workingwell and looks to continue into the future. Duringthe year an EECA funded insulation programmewas instigated and has resulted in the units allreceiving ceiling, and where possible, under-floorinsulation.The Council provides communityhousing to help ensure that thoseolder people on low incomes andwith the least amount of wealthare taken care of during the timeof their greatest need and oftenvulnerability. This is in recognitionof the contribution they have madeto society in their younger years.It had become apparent over time that the lockand key systems at the complexes were out ofdate and security for the tenants was becominga risk. New locks have been installed which willimprove this situation. At the end of June a surveysent to the tenants regarding management ofthe physical assets and tenant liaison servicesevidenced high satisfaction and provides usefulfeedback to Council staff on future enhancementsand for planning.The 2012/13 year will be one of improving thegeneral condition of the housing stock. Manyof the units are in need of exterior painting withsome of the outside spaces needing attention tocar parking areas and pathways in general. Thisyear will be the start of the capital programmeto convert bedsits to one bedroom units. Bedsitsare more difficult to tenant than the one bedroomunits and traditionally go to the younger peopleon invalid’s benefits who are less concerned aboutthe smaller size of the units.54 Palmerston North City Council Annual Report 2011/12

The Papaioea Place project will progress from theresearch and investigation phase to the conceptand contract documentation stage. This projectwill involve demolition of the existing low qualitybuildings and replacement with energy efficientuser friendly units that will be integrated intothe surrounding external spaces and the widercommunity. Decisions will need to be maderegarding the provision of community housing inthe City in the future and whether this complex isthe start of a new style and intensification of unitson existing Council owned sites.How did we performLevels of ServicePerformance Measures Result CommentThe Council provides housing opportunities for low-income older people or people on low incomeswith additional needs.1. ProvisionAround 311 units are provided. (The exact numberwill vary slightly as units are renovated andupgraded.)Target metAll 311 units are provided.The Council provides housing that is appropriate for the tenants needs.2. SatisfactionAn annual survey of residents shows 90%satisfaction with the Council’s community housing.96% Survey done June 2012 - 96% very or fairlysatisfied. Nearly all those surveyed wouldrecommend Council housing to others.The Council maintains and develops the community housing to meet the current and future needs in acost-effective way.3. Asset Management PlanA 20 year asset management plan is in place for theCommunity Housing. This plan is independentlyaudited by asset management consultants and isformally reviewed at three-yearly intervals. Thenext review is due by June 2012.Target metThe Council manages its Housing Activity in a financially responsible way.4. Cost EffectivenessThe budget set by the Council is not exceeded.Target metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.Services provided on time and withinbudget.CommunitySupportWhat the Council Does HousingPalmerston North City Council Annual Report 2011/1255

Financial ResultsActivity Operational Results: HousingRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Social Housing 1,398 1,231 167 1,257 1.Total Revenue 1,398 1,231 167 1,257CommunitySupportExpensesSocial Housing 1,641 1,691 50 1,614 2.Total Expenses 1,641 1,691 50 1,614Net Operating CosT OF ACTiviTY (243) (460) 217 (357)Note1. Stable occupancy and rent increases has increasedrent, budget low.2. Lower maintenance required.What the Council Does HousingSignificant Activity Capital Projects: HousingCapital RenewalActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000City Wide community housing upgrades 58 53 (5) a.Total Capital Renewal 58 53 (5) 529Capital NeWPapaioea Place communityhousing unit replacement 67 1,044 977 b.Total Capital NeW 67 1,044 977 -Total Capital ProjeCTs 125 1,097 972 529Significant acquisitions and explanation of variances from Annual Plana. Major item was replacement of locks as many notsecure to improve security with some to be completednext year.b. Feasibility studies continuing to determine scope ofproject. Decisions to be made about number of unitson the site and the final design with $500k of budgetto be carried forward to 2012/13.56 Palmerston North City Council Annual Report 2011/12

EconomicDevelopmentEconomic DevelopmentGroup DescriptionThis is about Council working with otherorganisations to make sure Palmerston Northhas a strong economy and that people havea strong sense of pride in the City. The mainCouncil goal for this Activity is Palmerston Northis an economically sustainable city which attracts,fosters and retains businesses and jobs to create aprosperous community.What the Council DoesRoberts Line distribution centre inPalmerston North caters to all ofFoodstuffs’ dry goods distribution needsin the Wellington area.Palmerston North City Council Annual Report 2011/12 57

Group of Activities Operational Requirement and Funding SummaryEconomic Development GroupActual Budget Variance Actual2012 2012 2012 2011$000 $000 $000 $000Total Revenue 972 1,018 (46) 831Total Expenses 4,608 4,704 96 4,207Net Operating COST of aCTivity group (3,636) (3,686) 50 (3,376)Rating AllocationAdd back depreciation 322 189 133 193Renewal capital expenditure (34) (32) (2) (32)External revenue for renewal capital - - - -Borrowing effect of renewal 3 year averaging (1) (1) - (1)Provision for debt reduction (41) (41) - (21)General rates allocation 3,390 3,571 (181) 3,237Funding surplus/(deficit) - - - -What the Council DoesEconomicDevelopment58 Palmerston North City Council Annual Report 2011/12

Activity - Economic DevelopmentWhat the Council doesThe Council contributes to economic developmentand supports it in two different ways. These are setout in the Council’s Economic Well-Being Strategy.At a general level everything the Councildoes contributes to economic development– for example, leadership, provision of roads,stormwater, water, rubbish and recycling services,community services, and regulation and planning.These are all services used by businesses. Theyhelp attract people to live in the City.At a more specific level the Council providesfunding for business support services, e.g. skillsdevelopment and education programmes, researchcapacity, business incubators, small-businessdevelopment, and business information.The Council also provides funding to help supporttourism promotion and development, includingevents. The Council supports these events forboth economic development and communitydevelopment reasons.The Council has a limited influence on the Regionaland City economies. However, it can work withother organisations to encourage economicgrowth and to create an environment that isconducive to economic growth.Why the Council does this and itscontribution to Council vision andmajor goalsOne of the major reasons people move to a newplace to live is for work. A major aim of economicdevelopment is to increase the number ofbusinesses and jobs available to people. Hence thisActivity contributes to making Palmerston North acity where people want to live because of its safeand easy lifestyle and its many social, cultural andrecreational opportunities. Increasing the numberof visitors to the City also has economic benefits.Economic development is also about providingbusiness support services, so Council contributesas well to making Palmerston North a city whichattracts, fosters and retains businesses and jobs tocreate a prosperous community.This Activity also funds some of Council’s eventsunder the Councils Events and Festivals Strategy.There are two basic reasons for Council involvementin the event sector. The first is the growing oflocal jobs by increasing visitor expenditure andgrowing the attractiveness of Palmerston Northto the wider communities of the region andnation. Improved perception helps improve thedesirability of Palmerston North as a place to comeand work, live and learn and hence spend moneyin the local economy. These are funded throughthe Economic Development Activity.The second rationale is strengthening thelocal community through celebrations andopportunities to grow community networks. Theseare funded through the Community DevelopmentActivity.At a more specific level theCouncil provides funding forbusiness support services, e.g.skills development and educationprogrammes, research capacity,business incubators, small-businessdevelopment, and businessinformation.What happened in the yearEconomic DevelopmentCouncil partners Manawatu District Council to fundthe activities of Vision Manawatu (Vision). Visionled the development of the Regional DevelopmentStrategy (RDS) which was endorsed by bothcouncils in October 2011. The RDS identifiesthe outcomes the region will work to achieve by2021. Vision has achieved high participation frombusinesses in this region through the RegionalBusiness Partners Network. This programmehas resulted in significant investment into localmanagement capability training ($500,000 fundedby NZTE) and research and development ($3mfrom MSI).Other programmes Vision provide include sevencompanies were engaged in the Smart BusinessAcceleration programme (especially focused onbusinesses that want to step up to exporting) andthe Sustainable Business programme for 2012is fully subscribed with the 2011 programmebeing a resounding success. The City and theDistrict Council support this programme throughsponsorship of some fees.EconomicDevelopmentWhat the Council DoesPalmerston North City Council Annual Report 2011/1259

EconomicDevelopmentWhat the Council DoesVision has also worked with the Ministry of SocialDevelopment to identify social enterprises foraddressing youth employment and training issues,built relationships with the Manawatu Chamberof Commerce and coordinated the activities ofthe Integrated Education Guardian Group (IEGG).Vision re-established the Manawatu Careers Expoduring 2011, and introduced 200 senior secondarystudents to the options open to them in the windenergy sector. Links between UCOL and the NewZealand Wind Energy Association have beendeveloped. Vision has grown the Young EnterpriseScheme - doubling the number of studentsreceiving an enterprise experience.Vision continues to play an active role in keyprojects including Student City, the ManawatuDefence Hub, the Westpac Manawatu BusinessAwards, regular economic forums, and theManawatu Trades Graduation. Vision has aresearch and development partnership with theBioCommerce Centre (BCC) and supported theInnovate! Manawatu competition (see below) andthe ANZ Flying Start Business Plan competition.Vision continues to deliver contracts through NewZealand Trade and Enterprise and acts as a firstpoint of contact for investment and funding.Finally, the Council funds the BCC to provide acompetition, Innovate! Manawatu, to promoteentrepreneurship with 355 entries received thisyear (a 37% increase on last year). The youngestentrant was 8, the oldest was 78. Entries werescreened, stage two entries were given feedbackfor future development with the top 30 asked topresent to an experienced judging panel. The top10 then go into the BCC Fast Market Start Validationprogramme with the winner announced on 31 July2012.Economic Development and VisitorAgenciesDestination Manawatu (Destination) is funded toprovide support to the visitor industry, to manageevents and to build and maintain a positiveperception of the City. The goals are set by theRegional Development Strategy.Destination has shifted its focus from traditionalmarketing to web-based marketing for the tourismand visitor industry. Research indicates that mostvisitors to the region are self-guided and use theweb extensively to plan their accommodation andtrip activities. Many providers in the Manawatūhave been late entrants to web-marketing and thelinks to the Destination Manawatu website haveincreased.With the economic downturn, conferences havebeen a difficult market and Destination will beputting greater effort into providing a moreintegrated service to local venues. They have adedicated member of staff for this sector and willbe attending sector trade shows.Work has continued on improving the perceptionof Palmerston North with the development of amagazine (scheduled for publication July 2012),improved web profile of stories and blogs, andincreased media coverage. The media coveragefor Palmerston North during the Rugby World Cupwas memorable and achieved high profile in SouthAmerica.Destination is continuing to bed in its role ascontract manager for core community eventsfunded by the Council. Unfortunately the summerwas unusually inclement and one event wascancelled, however there were no concerns aboutthe event management. Destination has alsodeveloped two new events, Manawatu CountryRoad Cycle Classic and Square Affair. The CycleClassic had a greater number of participantsthis year, including national level cyclists, bothprofessionals and amateurs, and shows every signof growing to be a significant race at the tail endof the season. Square Affair, which took placeat Easter, attracted an estimated crowd of over12,000.Destination continues to work with Vision,Palmerston North City and Manawatu DistrictCouncils to achieve the outcomes of the RegionalDevelopment Strategy.Event Funding SchemeThe fund was fully allocated for the year. Thirtythreeapplications requesting $387,645 werereceived. Twenty-three of these were successful,totalling $140,400 (fully expended).Convention Centre2011/12 was a year of quality events rather thanquantity for the Convention Centre. There wasan 11% overall increase in venue rental receivedalthough the total number of functions for theyear decreased by 10% from the previous year(249 individual events 2011/12 compared with 2762010/11).A total of 14 major multiple day conferences for theyear was a great contributing factor to the rentalincrease while total attendances at the ConventionCentre were down from 36,623 to 28,917.The forward bookings for the 2012/13 financialyear are really positive with a 20% increase infunctions already booked compared to the sametime last year, this includes 14 major conferences.60 Palmerston North City Council Annual Report 2011/12

How did we performPerformance Measures Result CommentThe Council provides funding and support to attract, retain and expand businesses and jobs in the Cityin a sustainable way.1. Contracted Organisations to ExpandBusinessesContracted organisations meet their agreedperformance targets. These currently includegrowing the number of businesses in the City,encouraging diversity and innovation, enhancingtertiary education businesses and contributing toresidents’ and businesses’ sense of pride.Target metVision Manawatu has embarked on aproject to attract investment to theregion; the BioCommerce Centre isencouraging diversity and innovationthrough the Innovate! competition;tertiary education is enhanced throughactivities that contribute to studentlife (e.g. events and internships); workcontinues in Destination Manawatu onimproving sense of pride.The Council provides funding to market the City in a sustainable way to attract residents and students.2. Contracted Organisations to AttractResidents and StudentsContracted organisations meet their agreedperformance targets. These currently includeincreasing student numbers to the City, andimproving the perception of the Manawatū Region.Target not met Student numbers are capped bygovernment policy, althoughinternational students have increasedfor some tertiary institutions. Studentperception of the City has improved(Palmerston North especially known forfree buses).Levels of ServiceThe Council provides funding to market the City in a sustainable way to attract shoppers, conventionattendees and recreational visitors.3. Contracted Organisations to AttractShoppers and VisitorsContracted organisations meet their agreedperformance targets. These currently includeincreasing visitor numbers to the City, improvingthe perception of the Manawatū Region, andgrowing the region as a destination for conferences.Target met Commercial guest nights increased by 5%and visitors to private homes increased2%, passenger numbers through theairport increased 8% (data as at April2012 and compared to same period lastyear), international card holder spendingincreased 20% and domestic by 3% (dataas at June 2012 and compared to 2011).Convention delegate days increased1% as at March 2012. Perception surveyundertaken biennially.The Council works collaboratively with other people, organisations and community groups involved ineconomic development in the region.4. SatisfactionA two-yearly survey of economic developmentpeople, organisations and community groupswas to determine satisfaction with the Council’sinvolvement in economic development.Rather than focus on general satisfaction levels theinitial Council survey in 2010 focused on specificelements of its economic development role:• easy to do business 3.6• communication 5.0• customer service 4.3• business friendly fora 5.4• economic reports 6.3• setting clear direction foreconomic development agencies 4.0• funding for economicdevelopment agencies 2.7• information and support foreconomic development agencies 4.3These scores set the baseline for future surveys.Scores are average ratings (maximum possiblescore was 7).Not measured Internally conducted survey done,however very low response rate meantresults could not be used (one responsereceived from three surveyed).The Council manages its Economic Development Activity in a financially responsible way.5. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.EconomicDevelopmentWhat the Council DoesPalmerston North City Council Annual Report 2011/1261

Financial ResultsActivity Operational Results: Economic DevelopmentRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Business and Job Promotion - - - -City Marketing and Branding 180 67 113 106 1.Convention Centre 792 951 (159) 725 2.Total Revenue 972 1,018 (46) 831ExpensesBusiness and Job Promotion 746 746 - 691 3.City Marketing and Branding 2,270 2,310 40 2,062 4.Convention Centre 1,592 1,648 56 1,454 2.Total Expenses 4,608 4,704 96 4,207Net Operating CosT OF ACTiviTY (3,636) (3,686) 50 (3,376)EconomicDevelopmentWhat the Council DoesNote1. Recovery of expenditure relating to the Rugby WorldCup.2. Lower number of events held than budgeted dueto the economic climate with part offset by lowerexpenses.Significant Activity Capital Projects: Economic Development3. Grants and professional services occurred asexpected.4. Lower grants incurred including for cancelled event.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalConvention Centre equipment 34 32 (2) a.Total Capital Renewal 34 32 (2) 32Capital NeWConvention Centre new equipment 31 34 3 b.Total Capital NeW 31 34 3 69Total Capital Projects 65 66 1 101Significant acquisitions and explanation of variances from Annual Plana. Replacement of equipment.b. New equipment purchased as required.62 Palmerston North City Council Annual Report 2011/12

LeisureGroup DescriptionThe Leisure Group of Activities consists of:• Arts and Culture• City Library• Parks and RecreationThese are about providing people with a widerange of fun things to do - going to a show atthe Regent Theatre, reading or listening to music,walking along the river bank or watching andplaying sport. People expect a wide range ofleisure opportunities in a modern, vibrant city.Hence these Activities particularly contributeto the Council goal of Palmerston North being asocially sustainable city where people want to livebecause of its safe and easy lifestyle and its manysocial, cultural and recreational opportunities.LeisureWhat the Council DoesParkour moves being demonstrated atthe Skoglund Park, Youth Park opening.Image courtesy of Carole BrungarPalmerston North City Council Annual Report 2011/12 63

Group of Activities Operational Requirement and Funding SummaryLeisure GroupRevenueActual Budget Variance Actual2012 2012 2012 2011$000 $000 $000 $000Arts and Culture 57 - 57 56City Library 454 596 (142) 545Parks and Recreation 2,368 1,895 473 2,232Total Revenue 2,879 2,491 388 2,833ExpensesArts and Culture 6,377 6,381 4 6,113City Library 8,880 8,970 90 8,146Parks and Recreation 15,180 16,119 939 15,132Total Expenses 30,437 31,470 1,033 29,391Net Operating CosT OF ACTiviTY GRoup (27,558) (28,979) 1,421 (26,558)Rating AllocationAdd back depreciation 6,469 6,913 (444) 6,922Renewal capital expenditure (2,756) (3,221) 465 (2,570)External revenue for renewal capital 10 - 10 -Borrowing effect of renewal 3 year averaging 128 128 - 988Provision for debt reduction (280) (280) - (139)General rates allocation 23,987 25,439 (1,452) 21,357Funding surplus/(deficit) - - - -What the Council DoesLeisure64 Palmerston North City Council Annual Report 2011/12

Activity - Arts and CultureWhat the Council doesThe Council’s actions in this Activity are guidedby its Arts Strategy. The Council helps fund andprovide a range of arts and cultural facilities. Thetwo major ones are Te Manawa and the RegentTheatre.Te Manawa consists of the museum, sciencecentre and art gallery. The complex also containsthe Rugby Museum. The Regent Theatre is a civicauditorium and regional centre for the performingarts. Te Manawa and the Regent Theatre are runfor the Council by the Te Manawa and RegentTheatre Trust Boards.The Council develops and implements assetmanagement plans, which include arts and culturalfacilities, to ensure that these assets can deliverreliable services to existing and future customersin the most cost effective and sustainable way.The Council helps support the Rugby Museum, theGlobe Theatre, Creative Sounds (The Stomach),Caccia Birch House and Square Edge.The Council funds Community Arts PalmerstonNorth to provide an interactive space to supportartists with information and exhibition space. TheCouncil also helps fund the Centrepoint Theatre.The Council has a contract with the PublicSculpture Trust to provide part funding for worksof public art to be commissioned and placedaround the City.The Council makes grants to groups and individualsundertaking arts or cultural activities or events.This Creative Communities Scheme funding ismade available through a partnership betweenthe Council and Creative New Zealand.Why the Council does this and itscontribution to Council vision andmajor goalsThis Activity contributes mostly to the Council’s goalof making Palmerston North a socially sustainablecity where people want to live, because of its safeand easy lifestyle and its many social, culture andrecreational opportunities. It also makes the Cityattractive to business – businesses also want to bein an innovative city because it helps them attractemployees from other places.Part of the Council’s major economic goal is thatPalmerston North is an economically sustainablecity which attracts, fosters and retains businessesand jobs to create a prosperous community. Thiscan be encouraged through supporting the artsand culture sector, ranging from direct facilityprovision (such as Te Manawa and the Regent)to funding and in-kind support (grants to artsgroups).There is a demand from the community to have funthings to do – this demand is partially met by theCouncil in providing the arts and cultural facilities,and in supporting arts and cultural groups.This Activity contributes mostlyto the Council’s goal of makingPalmerston North a sociallysustainable city where people wantto live, because of its safe and easylifestyle and its many social, cultureand recreational opportunities. Italso makes the City attractive tobusiness...A city with a strong arts and culture sector alsoattracts visitors. Increasing visitor numbers canlead to spin-off benefits for the local economythrough increased retail spending. It also helpsto build local pride through recognition of thecultural achievements of the community.What happened in the yearThe past 12 months has seen the arts and culturalsector beginning to develop stronger workingrelationships and a more cohesive sector.The organisations funded by the Councilcontinue to provide a wide range of activities forthe community. These groups include, but arenot limited to, Creative Sounds (The Stomach),Community Arts Palmerston North, Abbey Theatre,Centrepoint and Manawatu Theatre Society.A major highlight of the past 12 months was thecompletion and opening of the New ZealandRugby Museum on 28 September 2011 and thefirst full year for the newly refurbished Te Manawa.This Rugby Museum opening concluded manyyears of work by many people from Te Manawa,The New Zealand Rugby Museum, PalmerstonNorth City Council as well as many consultants andcontractors.What the Council Does Leisure Arts and CulturePalmerston North City Council Annual Report 2011/1265

Arts and CultureLeisureWhat the Council DoesThe success of the Te Manawa redevelopmentis no better illustrated than to visit the museumcomplex and to hear the shrieks of the childrenas they play in the Kids TM. Kids TM is immenselypopular with young children and provides manydevelopmental and educational opportunities asthey explore the space.The New Zealand Rugby Museum attracted 13,515visitors over the Rugby World Cup period, which isa real credit to the Museum. The opening of theNew Zealand Rugby Museum was the culminationof a significant amount of work undertaken by themuseum’s volunteer resource base. Without thecontribution made by these dedicated volunteersthe City would not be able to enjoy the museumexperience that has been developed.This year has seen the installation of two moresculptures in the city “Who’s Afraid”, and “GiantsAmongst Us” as part of the Taonui/Cuba Streetredevelopment. The Sculpture Trust has workedclosely with the Council and retailers in creatingan innovative space.This activity has four Council ControlledOrganisations – Caccia Birch Trust Board, GlobeTheatre Trust Board, Regent Theatre Trust Boardand the Te Manawa Museums Trust.Caccia Birch has throughout the past 12 monthsundertaken continual improvements to theproperty including ensuring an enhanced visitorexperience through increased security lighting.An attractive wrought iron fence and gatewayhas been installed at the Caccia Birch Lane end ofthe wisteria walkway to enhance the pedestrianentrance access to the grounds. The Caccia BirchTrust Board continues to maintain and preserveCaccia Birch House as a Category One HeritageBuilding for the enjoyment of the residents of theCity.The Globe Theatre Trust Board continues toprovide a high quality venue for communityactivities and theatre activities with hireage of thespace remaining at high levels. Over the past 12months the Trust Board has been concentratingon the development of the flat floor theatre spaceand café extension. The Trust Board has a robustfundraising plan in place and is looking forward tothe future development. Highlights have includedthe hosting of The Laughing Samoans and BellaKalolo. Many community and commercial userscontinue to use the Globe Theatre on a regularbasis.The Regent Theatre continues to provide a diverserange of shows and entertainment activities forthe community. It continues to be the host venuefor graduation ceremonies in the City and formany school prizegivings. Lower theatre bookings(events) were anticipated for the latter part of2011 due to the Rugby World Cup. This predictionproved accurate with a number of regularpromoters holding back on booking regionalevents, concentrating upon placing events in themain centres.A highlight for the Regent Theatre was the hostingof the Palmerston North Operatic Society (AbbeyMusical Theatre) production of 42nd Street. TheRegent also hosted a number of other shows,including Manawatu Gang Show; Pae Taiohi KapaHaka; Chamber Music NZ - Saguaro Trio; Bride ofthe Year; Festival of Russian Ballet; Hayley Westenra;The Buddy Holly Show; Ross Intermediate SchoolProduction.Community Arts Palmerston North and CreativeSounds Society Inc. (The Stomach) continue toprovide the community with unique resources.A number of community led arts and culturalactivities have happened over the past 12 months.The inaugural Zest event happened in the Georgeand Coleman quarter. This was a collaborativeevent between Palmerston North Rotary, AccessManawatu and the Council. The event engagedover 150 students from a number of schools aroundthe City to perform in public spaces throughoutthe day and in the evening acoustic musicians,Massey University Fire Club and the ukulele groupperformed in the Youth Space. Creative Soundshosted a training session and events as part of theday. The retailers agreed to close George Streetand Coleman Mall to traffic to enable a streetcarnival, however the weather precluded this fromhappening.Art on Edge is a two-hour community driven eventheld twice a year that has also been growing inpopularity since its inception. The event is aboutcelebrating diversity of artistic expression andis a family friendly fun event held in the arts andcultural quadrant on the west side of The Squarein the Coleman quadrant.Centrepoint Theatre has provided professionaltheatre to Palmerston North for 37 years andis nationally recognised as a leading teachingtheatre. The theatre has hosted a broad range ofshows over the past year - Flipside by Ken Duncan;Michael James Manaia; Roger Hall’s, You CanAlways Give Them Back; The 39 Steps; Hits of 83.Centrepoint continues to receive funding fromCreative New Zealand with the funding providedon the basis that it is for the development andtraining of new practitioners.66 Palmerston North City Council Annual Report 2011/12

How did we performPerformance Measures Result CommentThe Council provides a central City Museum, Art Gallery and Science Centre (Te Manawa) to meet awide range of people’s arts and cultural expectations.1. SatisfactionResidents’ satisfaction with Te Manawa ismaintained or increased. The average of the lasttwo surveys is 76% very or fairly satisfied and 21%neutral or don’t know. (Communitrak)The Council protects and preserves the items held by Te Manawa.84% Survey done in November 2011.84% very or fairly satisfied and 14%neutral or don’t know.2. ProtectionArts and cultural collections owned by the Councilor Council organisations are protected to theappropriate national standard.Target metThe redevelopment of Te Manawa hasensured that the collections are stored in abuilding based on international museumsbest practice. Te Manawa Museums Trusthas a collections and storage policy.The Council provides a central city theatre (Regent on Broadway).Levels of Service3. SatisfactionResidents’ satisfaction with the Regent Theatre ismaintained or increased. The average of the lasttwo surveys is 82% very or fairly satisfied and 17%neutral or don’t know. (Communitrak)85% Survey done in November 2011.85% very or fairly satisfied and 14%neutral or don’t know.The Council provides other arts and cultural facilities. These facilities are the Globe Theatre, CreativeSounds, Caccia Birch and Square Edge.4. Contracted Organisations - FacilitiesContracted organisations meet their agreedperformance targets. These include the numberof public performance nights, provision ofperformance and conference venues, and gettingrevenue from sources other than the Council.Target not met Contracted organisations have hada challenging year. A number of theorganisations have met their contractualobligations , however commercial revenuefor Te Manawa was down, the occupancyfor Caccia Birch was slightly down, and theRegent Theatre’s commercial attendanceas a percentage of the total attendancewas down.The Council provides grants to arts and cultural organisations that offer opportunities for thecommunity to engage in arts and cultural activities.5. Contracted Organisations - EngagementContracted organisations meet their agreedperformance targets e.g:• to assist at least four community groupsstage a project each year using communitydevelopment principles• to facilitate at least four arts programmesper year in one or more of the followingcommunities: youth, aged, disability, health,justice, Māori or ethnic minority• to promote and administer two funding roundsfor the CCNZ scheme per year (the CommunityArts Council then holds a further 2 rounds)• to provide low cost access to participation inthe arts.Target metTarget metTarget metTarget metThe contracted organisations have mettheir targets, hosting a wide varietyof events from Creative Journeysundertaking dance activities with theassistance of an intern; Friday andSaturday Crafters an opportunity formigrants to get together and sharetheir crafts; Matariki was developedthrough June using Māori CommunityDevelopment principles; Kapa Hakaperformances from the kura and Māoriimmersions units in schools.Arts programmes were facilitated withthe migrant community, youth musicians,the Manawatu Youth Orchestra, disabilitysector and Māori and Pacifica youth.Two CCNZ funding rounds have beencompleted.Low cost access is provided to the arts.The Council manages its Arts and Culture Activity in a financially responsible way.6. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.What the Council Does Leisure Arts and CulturePalmerston North City Council Annual Report 2011/1267

Financial ResultsActivity Operational Results: Arts and CultureRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Grants to Arts and Cultural Groups 57 - 57 55 1.Other Cultural Facilities - - - -Te Manawa - - - 1Total Revenue 57 - 57 56ExpensesGrants to Arts and Cultural Groups 977 978 1 762Other Cultural Facilities 1,691 1,705 14 1,660 2.Te Manawa 3,709 3,698 (11) 3,691 3.Total Expenses 6,377 6,381 4 6,113Net Operating CosT OF ACTiviTY (6,320) (6,381) 61 (6,057)Arts and CultureLeisureWhat the Council DoesNote1. Additional funding received from Creative NewZealand, offset by higher expenditure.Significant Activity Capital Projects: Arts and Culture2. Higher service delivery costs offset by lowerdepreciation, net personnel costs and interest.3. Higher service delivery costs and unbudgeted repairsto automatic sliding doors.The Council has significant investment in facilities utilised in providing the community with art and cultureresources. These include properties for theatre, museums and other important facilities the community uses.Capital projects are to further improve these and enhance access by the community.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalCultural facilities renewals 346 300 (46) a.Total Capital Renewal 346 300 (46) 203Capital NeWGlobe Theatre - extend bar/café,additional 100 seat auditorium 44 765 721 b.Te Manawa development project 53 - (53) c.Total Capital NeW 97 765 668 2,303Total Capital ProjeCTs 443 1,065 622 2,506Significant acquisitions and explanation of variances from Annual Plana. Various renewals with major work to replace leakingwindows at Square Edge, remedy leaks in Librarybuilding and air conditioning, security and toiletrefurbishment at Te Manawa.b. For design work with resource consent reportcompleted and lodged. Project dependent onreceiving external funding with $640k of budgetcarried forward to 2012/13.c. Minor building works completed after main contractcompleted, including main glass doors badly affectedby strong winds.68 Palmerston North City Council Annual Report 2011/12

Activity - City LibraryWhat the Council doesThe City Library consists of the Central Library andbranches at Ashhurst, Awapuni, Highbury andRoslyn; a Mobile Library Service; the Youth Space;and a City Library website.The City Library also has an arrangement with theLinton Camp Community Library and provides acontracted library service to the Manawatu Prison.The City Library Activity provides free publiclibrary services for the residents of PalmerstonNorth City. The Council has an arrangement withthe Manawatu District Council to provide freeaccess for children and youth from the ManawatuDistrict in exchange for an annual grant of $10,000.The Central Library houses the Ian MathesonCity Archives. This includes both the CityCouncil’s Archives as well as Community Archives.The Council protects the Archives for futuregenerations.The Central Library provides more than just books.The library holds a vast range of audio-visualresources, specialist collections, magazines,electronic databases, e-books, computer softwareand puzzles and games - over 250,000 itemsin total. The library also provides a number ofspecialist services, including Housebound, Seniors,Community Languages, and Adult Learning.The library also provides a range of activities andevents throughout the year, such as the SummerReading Programme, author visits and musicalevents.The Council develops and implements an assetmanagement plan, which includes the City Libraryfacilities, to ensure that these assets can deliverreliable services to existing and future customersin the most cost effective and sustainable way.Why the Council does this and itscontribution to Council vision andmajor goalsThe library contributes mostly to the Council’s goalof making the City a place where people want tolive. This is because people like living in a city thathas lots of leisure and education opportunities –reading is a key part of their leisure and lifelonglearning. The library makes it easy for people tolearn about new things throughout their lives.The Council also recognises that a library revolvesaround the “share” concept. By providing a largenumber of items for borrowing, residents haveaccess to a wider range of material than theywould ordinarily have if they had to buy themon their own. Therefore, the Council providesthe City’s libraries to make best use of a sharedresource, to provide residents with lifelonglearning opportunities and lots of fun things to do.The Council also provides the Central Library as acommunity space, where the diverse communitiesof the City can come together and showcasetheir culture, their creativity, and build a senseof community. The design of the Central Libraryallows a wide range of events and exhibitions tobe hosted.The Council also recognises that alibrary revolves around the “share”concept. By providing a largenumber of items for borrowing,residents have access to a widerrange of material than they wouldordinarily have if they had to buythem on their own.What happened in the yearThe Palmerston North City Library continues toinspire, delight and surprise large numbers ofresidents in providing a range of access points tothe delivery of library services - resources, servicesand programmes. The City Library’s reason forbeing remains, as always, leaving customers withmany reasons why they need to return in the verynear future. Over the last 12 months the CityLibrary has had over a million visitors with morethan 1.5 million items borrowed. For many, theexperience of visiting and using the City Libraryremains a core and essential activity in their life.During the last 12 months, the City Library’sorganisational highlights included.• The physical rearrangement of the mezzaninefloor was completed, resulting in a constantstream of praise for the benefits accruing fromthe changes including significantly enlargedwelcome lounge area for pre-opening time;introduction of free Internet access, currentlyrunning at approximately 85% occupancy; andthe introduction of a welcome point at themain entrance to the Central Library.What the Council Does Leisure City LibraryPalmerston North City Council Annual Report 2011/1269

• The move from Horizon to Symphony (librarymanagement and lending software system).The City Library’s move to a consortiumapproach in this key area has savedconsiderable expenditure. Once the initialintroductory teething phase is over, the newsystem will provide an enhanced system tocustomers.• The development of a new strategic planfor taking the City Library into a changedenvironment.• The City Library has initiated a significantreview process with outside assistance fromrecognised practitioners in the field. TheCity Library has put considerable effort intocombining the excellent work put into thestrategic plan, particularly in evaluatingpotential directions for public libraries in thefuture, with the review process.• Over the last 12 months the City Library hasestablished itself as a major contributor toactivities and events in the City. Again thepublic support for this range of activities andevents is both passionate and supportive.City LibraryLeisureWhat the Council DoesIt is always a difficult task to reduce the operationalhighlights and achievements of a public libraryover a 12 month period to a few paragraphs,however, a selection of items following will give aflavour of services and direction.• The Youth Space is approaching its firstbirthday with use and praise very pleasing.• The new mobile library, for which there wasconsiderable research, has been ordered and isnow on the assembly line.• Palmerston North City Library, as a memberof the e-book consortium e-Pukapuka, isnow well and truly walking down the path ofe-books available for public downloading.• The City Library continues to develop its socialmedia presence in an area that public librarieshave been somewhat reluctant to do so todate.• Moves into the digital world continue todevelop at an exponential rate, e.g. the CityLibrary now provides its users and visitors witha range of 17 electronic newsletters.• The Roslyn Community Library was expandedafter a 12 year wait. The response has beenvery positive and it is now providing, with thehelp of a local kuia, a new reading programmein Te Reo Māori.• The Library’s website is undergoing a majorrevision with this due to be completed in thenext financial year.• The City Library and Community Services staffparticipated in two highly successful whānaudays at Westbrook and Awapuni.70 Palmerston North City Council Annual Report 2011/12

How did we performPerformance Measures Result CommentThe Council provides a variety of easily accessible library services and collections from the CentralLibrary, branch libraries, mobile library and the library website.1. Service AvailabilityThe Central Library is open 53 hours a week;branch libraries 26 hours a week; the mobile libraryincludes at least 38 stops a week; and the websiteis available 24 hours seven days a week.Target met exceptfor planned closure.Target met except the Central Library hada planned advertised closure of two daysin April as it migrated to a new computersystem. The branches were closed forthree days at the same time.The Council loans all items, other than bestsellers and the sound and vision collections, withoutcharge.2. MembershipLibrary membership is free for Palmerston Northresidents and ratepayers. There is no charge forloans other than those specified in the level ofservice.Target metThe Council provides a large, diverse and interesting range of up-to-date information and works of theimagination that meets people’s leisure and lifelong learning needs, interests and expectations.3. CollectionAt least three items per head are held in thecollections.Not measuredDue to migration to a new computersystem during the year, this information isnot available.Levels of Service4. CollectionAt least 25,000 new items are purchased per year.5. SatisfactionAt least 85% of Library users are satisfied or verysatisfied with the quality and quantity of thecollections (two-yearly Library Users’ satisfactionsurvey).6. SatisfactionResidents’ satisfaction with the Libraries ismaintained or increased. The average of the lasttwo surveys is 89% very or fairly satisfied and 10%neutral or don’t know. (Communitrak)7. IssuesIssues per capita will be at least 19 items per year.8. VisitsAt least 10 unique visits per capita per year.9. MembershipAt least 70% of the City’s citizens are members ofthe Library.10. Stock TurnoverThe stock turnover rate is at least four per year(i.e. on average each item is taken out four timesa year).Target met 29,235 new items purchased in theprevious 12 months.Not measuredThe Library decided to delay the UserSurvey until the next financial year,principally as a result of the introductionof the new computer system potentiallydistorting the results. At the same time itwas acknowledged that the CommunitrakSurvey (see next measure) gave aninsight to the current satisfaction rate- this survey was conducted before theimplementation of the new computersystem.88% Survey done in November 2011.Not measuredNot measuredTarget not metNot measured88% very or fairly satisfied and 10%neutral or don’t know.Due to migration to a new computersystem during the year, this information isnot available.Due to migration to a new computersystem during the year, this information isnot available.Due to migration to a new computersystem during the year, this information isnot available.56.5% in 2010/11. Performance measureset too high.Due to migration to a new computersystem during the year, this information isnot available.The Council provides a range of community spaces for public activities and events.11. Community ActivityAt least 200 activities or events will be held perTarget met532 activities or events held, comparedwith 337 in 2010/11.year.The Council manages its City Library Activity in a financially responsible way.12. Cost EffectivenessThe budget set by the Council is not exceeded.Target not metSmall deficit due to lower revenue fromhire and higher depreciation.What the Council Does Leisure City LibraryPalmerston North City Council Annual Report 2011/1271

Financial ResultsActivity Operational Results: City LibraryRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Archives 1 8 (7) 1Central Library 399 494 (95) 487 1.Collections 8 14 (6) 8External Library Services 46 80 (34) 49 2.Total Revenue 454 596 (142) 545ExpensesArchives (133) (97) 36 (161) 3.Central Library 7,662 7,713 51 7,022 4.Collections 1,263 1,231 (32) 1,215 5.External Library Services 88 123 35 70 6.Total Expenses 8,880 8,970 90 8,146Net Operating CosT OF ACTiviTY (8,426) (8,374) (52) (7,601)Note1. Significant decrease in audio/visual revenue resultingfrom societal changes e.g. more downloading of filmand music. Drop in overdue fees corresponding to areduction in issues.2. Some income billed to Central Library.3. Underspend in digitisation programme to constrainspending.4. Underspend to constrain spending.5. Higher than anticipated depreciation.6. Underspend to constrain spending.What the Council DoesLeisureCity Library72 Palmerston North City Council Annual Report 2011/12

Significant Activity Capital Projects: City LibraryThe City has an extensive, well patronised library. This is further developed each year to ensure the librarycollections provide a modern, up to date resource for the community.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalCity Library replacementof library materials 658 823 165 a.Central Library replacementof furniture and fittings 19 113 94 b.Central Library replacement of equipment 10 16 6Central Library interior maintenance 201 199 (2) c.Central Library replacementof building security system 32 40 8 d.Central Library library management system (31) 35 66 e.Central Library interior maintenanceof branch and mobile libraries 26 34 8 f.Total Capital Renewal 915 1,260 345 1,299Capital NeWYouth Library and Youth Space 41 50 9 g.Youth Space equipment 25 - (25) h.Mobile Library fit out - 154 154 i.Total Capital NeW 66 204 138 206Total Capital ProjeCTs 981 1,464 483 1,505Significant acquisitions and explanation of variances from Annual Plana. Renewing of library collections, new purchases andreplacements of books and audio visual material.Programme expenditure not completed with $98kbudget to be carried forward to 2012/13.b. Programme expenditure not all required.c. Library refurbishment, overspend offset byunderspend in replacement of furniture andfittings.d. Programme expenditure not all required.e. To expense operating cost element included in2010/11.f. Programme expenditure not all required.g. Programme expenditure not all required tocomplete.h. Unbudgeted expenditure funded from an unbudgetedcapital grant received from Central Energy Trustincluded in non-operating revenue.i. Programme expenditure not completed, budget to becarried forward to 2012/13.What the Council Does Leisure City LibraryPalmerston North City Council Annual Report 2011/1273

Parks and RecreationLeisureWhat the Council DoesActivity - Parks and RecreationWhat the Council doesThe Council’s parks and recreation assets fall intothree main areas. These are detailed below.Sportsfields, Parks,Reserves and WalkwaysThe Council has 172 City-wide and local reservesand sportsfields, ranging in size from 100m 2 , to the176 hectare Kahuterawa Outdoor Recreation Hub.The total area is about 642 hectares, or about 8hectares per 1,000 people. There are also 58 km ofwalkways, cycleways and shared paths in reserves.The Council provides facilities like cycle stands, carparking and public toilets at major sportsfields.The sportsfields can be used for open space bythe community when organised sport is not beingplayed.Arena ManawatuThe Council maintains and administers ArenaManawatu for the citizens of Palmerston North andsurrounding districts for recreation and sportingpurposes. It consists of the FMG Stadium, Arena2, B&M Centre, Arena 3 and Arena 5 (WaldegraveLounge, Bell and Barber Halls).Swimming PoolsThe Council owns the Lido and Freyberg swimmingpools. These are managed for the Council byCommunity Leisure Management Ltd. The Lidoconsists of three outdoor pools, four indoor pools,a hydroslide and gymnasium.Public toilets are also managed within this Activity.There are 66 public toilets provided by the Councilaround the City. These are mostly at parks andsportsfields.The Council develops and implements assetmanagement plans, which include parks andrecreation facilities, to ensure that these assetscan deliver reliable services to existing andfuture customers in the most cost effective andsustainable way.The Council provides funding to Sport Manawatuso it can act as a regional sports, recreationand events coordinator. Sport Manawatu alsodistributes Council funds for sports and recreation.The Council also provides funding through rentalsubsidies and rates remissions for a wide range ofrecreation groups.Why the Council does this and itscontribution to Council vision andmajor goalsThis Activity contributes to Council’s goals ofbeing a city where people want to live because ofits recreational opportunities (e.g. the Arena, parksand reserves, sportsfields and swimming pools).People want to live in a place that has lots of funthings for them and their families to do, either ina formal or informal way. Parks, trees and openspaces also make the City a more attractive placeto live and make it more attractive to visitors.The Council’s parks and recreation facilities alsohelp people keep fit and healthy.Sport Manawatu also distributesCouncil funds for sports andrecreation. The Council alsoprovides funding through rentalsubsidies and rates remissions for awide range of recreation groups.The Council engages in the distribution of grantsand contracts with various organisations in orderto meet the ultimate goal in the Regional Sportand Active Recreation Strategy: “to increase thetotal time and frequency that people are active”.The Activity also contributes to the Council’sgoal of environmental sustainability. It does thisby providing green space throughout the City.These spaces enhance environmental values andbiodiversity by increasing the amount and varietyof trees, plants and birdlife in the City. They alsoenhance sustainable approaches to transportsuch as walking and cycling. As well, these areasallow for sustainable drainage systems such asstormwater ponding areas. The Council alsominimises the use of chemicals on its sportsfields,reserves and walkways.74 Palmerston North City Council Annual Report 2011/12

What happened in the yearSportsfields, Parks,Reserves and WalkwaysBoth the Parkcheck and Communitrak surveysshow a continuing high level of satisfaction in thecommunity with Parks and Recreation facilitiesand services. The Parks and Recreation Activity isvery diverse with a number of new capital projectsduring the year across the facilities. The mostsignificant of the capital works was the SkoglundPark pavilion project which involved building a newwell insulated timber framed facility with naturallighting away from the end of the street allowinggood views into the park. A new youth playgroundaimed at teenage children was built near the newpavilion. The theme of the playground is Parkourwhich is a physical discipline and non-competitivesport which focuses on balance and efficientmovement around obstacles. There are alsotraditional swings and a climbing wall nearby forthose who want a more relaxing play experience.Another component of the Recreation Hub facilities,Edwards Pit Park has seen progress throughout theyear as well with planting, drainage works alongthe top of the Tweed Street slope and ongoingplanting and weeding working bees throughoutthe year. Also within the Recreation Hub, workhas been completed to provide accessibility rampsaround the Vautier Park pavilion.The Linklater Block is being well used by thelocal community with the 2011 planting wellestablished. There is more pathway work andplanting planned for the reserve in 2012/13.Forestry harvesting continued at Arapuke ForestPark over the summer and subsequently theMountain Bike Club has created a number ofcustom built tracks in the newly harvested areas.These tracks will be a significant recreation assetto the City in future years as the new plantingdevelops around them. Further work will continuefollowing the next summer tree harvest.The walkway network was extended again duringthe year with new sections developed at LowerTitoki near Summerhill Drive, Schnell Wetlandin Kelvin Grove and some renewals work in theSpringdale Grove area.The riverside shared path sealing project hasprogressed with the section from the FitzherbertBridge through to Riverside Drive sealed withasphaltic concrete. The use of the shared path asa result has increased dramatically with a widerange of users on the path, from pedestrians anddog walkers through to children learning to ridebikes and road cyclists avoiding the traffic on theroads. The second part of this project is to extendthe shared path from the Fitzherbert Bridge toMaxwells Line. Initially this will be a lime chippathway three metres wide along the edge ofthe riverbank. The long term goal is to have acomplete off road circuit of the City that can bewalked or ridden on a bike.Another walkway project is the development of theshared path from Ashhurst to Palmerston North.The first section to be completed is the Ashhurst toRaukawa Road leg. Work in the 2011/12 year wasfocused on finalising the design and negotiatingwith landowners along this portion of theriverbank with these to be concluded in 2012/13 sothat physical works can then begin. Negotiationswill also continue with the landowners of the nextsection of shared path from Raukawa Road to TeMatai Road.Further work at the Fitzroy Street end of MemorialPark was completed during the year. The objectivewas twofold, firstly health and safety, and secondlyaesthetics. The bank at the Fitzroy Street endwas being undermined with a new crib wallerected which provides structural integrity butalso provides an aesthetic surface for plants to begrown over. The crib wall provided an opportunityfor a viewing platform into the park from theFitzroy Street level. The pathway down into thepark from Fitzroy Street has been improved andbetter handrails installed. Work will continue inMemorial Park over the next seven or eight years,incrementally renewing planting and physicalassets within the park. In the 2012/13 year thefocus will be on replacement of a tree damagedretaining wall and new planting alongside theduck pond.What the Council Does Leisure Parks and RecreationPalmerston North City Council Annual Report 2011/1275

Parks and RecreationLeisureWhat the Council DoesA major concern in 2011/12 was the number ofcricket matches that were not able to be playedin the summer. This was partially due to theextremely wet spring and summer but there werealso some physical and operational reasons for thisas well. In general the cricket wickets were in goodcondition, the problem was with the outfields andthe area directly adjacent to the wickets. In thecase of the outfields the problem is with irrigationand drainage. The mains water pressure has alsodropped at Fitzherbert, Ongley and ManawaroaParks causing problems, and also at the rosegardens and the croquet lawns irrigation in theEsplanade. The irrigation equipment itself is alsoin need of replacement. The other aspect is thedrainage of the Fitzherbert Park outfield and otherfields within Ongley and Manawaroa Parks. TheCouncil has approved a budget in the 2012/13year for measures to improve the water pressure,replace irrigation equipment and install a sandslit drainage system for Fitzherbert Park. Councilstaff will be working with the Manawatu CricketAssociation to further improve the cricket facilitiesin the City.Arena ManawatuA reduced number of events were held at ArenaManawatu during the past year compared tothe previous year, partly due to the Rugby WorldCup booking the entire complex for an extendedperiod. It was, however, a year of highlights whichincluded.• Arena Manawatu was magnificently showcasedto the world during September and Octoberwith the successful hosting of two RugbyWorld Cup games. This event was not only ahighlight for the venue but also for the entireregion.• The Speedway season continued to provepopular with total attendances for the yearahead of the previous year’s attendances.• ITM Cup proved very successful for theManawatu Turbos as their success on the fieldresulted in a sellout home final.• National Basketball League again showedan increase in attendances during their pastseason with the success of the team reachingthe semi-finals for the first time in many years.• A capacity crowd also turned out during Aprilfor the ANZ Netball competition (Pulse vNorthern Mystics).The Council continues to acknowledge thatArena Manawatu also heavily relies on all of thecommunity groups who use the facilities week inand week out, and to those groups who continueto bring the national tournaments each year to theCity.Swimming PoolsThe new management contract with CLM becameoperational in September 2011. There have beenno issues with the new contract and the poolsare being run efficiently and professionally by thecontractor. The Pool Check surveys carried outover the summer show a continued high level ofoverall satisfaction with the aquatic facilities in theCity. Council staff continue to meet with the CLMstaff on a regular basis and discuss any complaintsor issues that may have been raised with thenumber of complaints relating to cleanliness andimage of the facilities continuing to fall. An issueat the Lido has been the stretching of the vinylpool liners in the leisure pools. This was addressedduring the year and the liners re-stretched by theoriginal installers.The Wave Rave is still a feature of Friday nights atthe Lido, however numbers are down on someof the previous year’s figures but there is stillapproximately 100 people turning up regularly.The Swim Magic swim school has been reorganisedand is working well with attendance numbershaving increased over the year.There is a new mobility hoist in the Lido complexwhich was funded by a grant from the CentralEnergy Trust. The new hoist is able to be transferredto different pools within the complex and is veryeasy to use. Renewal work has been completed inthe family change rooms at the Lido with the mostnoticeable change being the new non-slip flooringthat has been installed.The roof at the Lido will need to be repaired infuture years because of the harsh nature of thepool environment and the effects on fasteningsand metal surfaces. A renewal programme isplanned for the 2015/16 financial year.New starting blocks have been installed at theFreyberg Community Pool, the previous blockswere becoming slippery and some of the blockshad started to work loose from the concrete floor.The Freyberg Community Pool is also in need ofsome ceiling repairs in 2012/13 due to corrosionof screws holding the ceiling panels in place. The10 Year Plan provides for the toddler pool at theFreyberg Community Pool to be extended andrealigned which will help with the efficiency ofbeing able to provide better learn to swim classesat the facility. This work is planned to be carriedout in the 2015/16 year.76 Palmerston North City Council Annual Report 2011/12

How did we performLevels of ServicePerformance Measures Result CommentThe Council provides a well-maintained multi-purpose sports, leisure and cultural facility (ArenaManawatu) that meets a wide range of people’s leisure interests.1. Arena Manawatu - EventsExpand existing markets - by increasing the totalnumber of events held at Arena Manawatu by 4%per year. 3,127 events held in 2010/11.2. Arena Manawatu - Hours of UseIncrease the total number of hours of use.20,451 hours in 2010/11:Community Use 71%Commercial Use 29%3. Arena Manawatu - GrowthMonitor and refine market mix - by ensuringgrowth in national sporting events held at ArenaManawatu. 2010/11 figures:InternationalNationalRegionalTotalTotal64088134Sporting537691114. Arena Manawatu - Asset Management PlanA 20 year asset management plan is in place forArena Manawatu. This plan is independentlyaudited by asset management consultants and isformally reviewed at three-yearly intervals. Thenext review is due by June 2012.5. Arena Manawatu - Cost EffectivenessThe budget set by the Council is not exceeded.Target not metTarget metTarget not metTarget metTarget met2,604 events held.(Note Rugby World Cup has affected resultdue to entire complex being booked for13 days, recorded as one event in secondquarter with 137 events held in the sameperiod in 2010.)23,709 hours.Community use 57%Commercial use 43%Total SportingInternational76National3831Regional12283Total167120(Although total events increased, thetarget was to increase national sportingevents.)Audited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.Services provided on time and withinbudget.The Council provides parks that are well distributed throughout the City, and are tidy and safe.The Council provides parks that are accessible, well maintained, and cater for a diverse range ofrecreational needs.6. Parks Satisfaction93% Survey done in November 2011.Residents’ satisfaction with the Council’s parks93% very or fairly satisfied and 4% neutralis maintained or increased. The average of theor don’t know.last three surveys is 94% very or fairly satisfied.(Communitrak)7. Parks ComplaintsThere is a decreasing number of complaints thatparks are not well maintained or tidy.Base: 168 (previous two-year average)8. Playground ComplianceMore than 60% of playgrounds comply with NewZealand Standards.9. Parks SafetyGreater than 85% of users are satisfied with thelevel of safety in the parks. (Annual ParkcheckSurvey, done each February.)10. Parks and Open Space AvailabilityThe total area of parks and open space available forrecreation is at least 4.0 ha per 1,000 population orgreater.Target met142 complaints received, compared to145 for 2010/11:38 - doggie doo bins38 - garden maintenance57 - tree maintenance9 - park furniture maintenanceTarget metThe City’s playgrounds were auditedlast in April 2010 and reported 64%of the City’s playground equipmentwas compliant with the relevant safetystandards. Work is ongoing to rectifynon-compliant equipment.86% Out of 96 people surveyed 83 are satisfiedor better with the level of safety in parks.Target metTotal area of parks and open space is591.4 ha (NZ Recreation Association 2010Yardstick survey). This equates to 7.2ha/1,000 population (82,100 estimatedby NZ Statistics for 30 June 2011).What the Council Does Leisure Parks and RecreationPalmerston North City Council Annual Report 2011/1277

Parks and RecreationLeisureWhat the Council DoesLevels of ServicePerformance Measures Result Comment11. Reserve DistributionTarget metThere has been no change in reserveAll urban residences are no further than 500m,distribution. All new residential areasmeasured in a direct line, from a sportsfield or Citymeet this criteria.reserve. (This represents an easy walking distance.It excludes a small area around the hospital wherethere is no vacant land and it is too expensive tobuy a house and property to create a new reserve.)12. Parks and Reserves - Asset ManagementPlanA 20 year asset management plan is in place forparks and reserves. This plan is independentlyaudited by asset management consultants and isformally reviewed at three-yearly intervals. Thenext review is due by June 2012.13. Response to Parks Complaints andRequestsThe Council responds to 85% of complaints andrequests within five days.Target metTarget not metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.72% responded to within five days.A deliberate decision was made to holdnon-urgent work so that the jobs couldbe more effectively grouped, reducingthe cost of each job, even if this meantexceeding the five-day target.The Council provides adequate, affordable and adaptable sportsfields, playing surfaces, and associatedfacilities (e.g. changing facilities), to meet agreed sports requirements in accordance with service levelagreements.14. Sportsfield UsageThere is an increasing average number of gamesper field per week (five-yearly average). Target istwo by 2011/2012.15. Sportsfield AreaThe total area of sportsfields available is 1 ha per1,000 population or greater. (New measure.)16. Sportsfields SatisfactionResidents’ satisfaction with the Council’ssportsfields is maintained or increased. Theaverage of the last three surveys is 89% very orfairly satisfied. (Communitrak)17. Sportsfields SafetyGreater than 75% of users rate the overallperception of safety in sportsfields to beacceptable, good or excellent.(National Annual Parkcheck Survey, done eachFebruary.)18. Response to Sportsfields Complaints andRequestsThe Council responds to 75% of complaints andrequests within the allowed time (five days).19. Sportsfield AvailabilityThe percentage of weekend days that sportsfieldsare available for normal use (five-yearly average) is90% by 2011/12.To date: 91% (last five-year average from measurecommencement).Target not met There have been a number of changesto the administration of sportsfieldbookings. During the change of thisprocess data collection was interrupted.Data collection will resume this financialyear. Informal data collection indicatesthat the target was not met.Target metTotal area of grass sportsfields andimmediate surrounds is 86.5 ha. (NZRecreation Association 2010 Yardsticksurvey). This equates to 1.05 ha/1,000population (82,100 estimated by NZStatistics for 30 June 2011).91% Survey done in November 2011.91% very or fairly satisfied and 5% neutralor don’t know.89% Out of 134 people surveyed 120 weresatisfied or better with sportsfieldssafety.Target not met55% responded to within five days.A deliberate decision was made to holdnon-urgent work so that the jobs couldbe more effectively grouped, reducingthe cost of each job, even if this meantexceeding the five-day target.Target met 91%78 Palmerston North City Council Annual Report 2011/12

Levels of ServicePerformance Measures Result CommentThe Council’s sportsfields are well maintained and meet the needs of a growing city in a cost-effectiveway.20. Sportsfields ComplaintsThere is a decreasing number of complaints thatsportsfields are not well maintained or managed.Base: 71 (previous two-year average)21. Sportsfields - Asset Management PlanA 20 year asset management plan is in place for thesportsfields. This plan is independently auditedby asset management consultants and is formallyreviewed at three-yearly intervals. The next reviewis due by June 2012.Target not metTarget met148 complaints received:58 - long grass/weeds27 - water leaks/drainage/general maintenance13 - security issues12 - vandalism11 - vehicles on parks27 - other general issues.Audited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.The Council provides grants to organisations that support and develop the capacity of the community to beinvolved in recreation activities.22. Funded AgenciesGrant recipients meet their agreed performancetargets, e.g:• help at least six sports clubs through ‘ClubAssist’ accreditationTarget met Manawatu Striders, Bike Manawatu,Squash Gym, Broadway Hockey, MaristFootball, Manawatu Gym Sports,Mountain Bike Club, Triathlon Club,Badminton Club.• ensure 60 sports volunteers receive training Target met 159 people on etraining newsletterCoachPlus.• organise a minimum of six community events Target met Ongoing involvement across a rangeof community events and activities,including Workplace Challenge,Manawatu Striders, iBike for Kids, SchoolsSport World Cup.• assist in attracting at least eight events to theCity.Target metInvolved in assisting to attract and retain10 events to the City.The Council provides easily accessible swimming pools offering a range of quality, safe, water andnon-water based activities/experiences across all age groups at reasonable cost.The Council provides exclusive use of pools to swimming clubs and schools at reasonable cost andconvenient times.The Council provides uncongested lane swimming facilities at reasonable cost.23. Swimming Pools SatisfactionResidents’ satisfaction with the Council’s aquaticfacilities is maintained or increased. The average ofthe last three surveys is 72% very or fairly satisfiedand 22% neutral or don’t know. (Communitrak)24. Swimming Pools ComplaintsThere are less than six customer complaints thatrelate to overcrowding.25. Swimming Pools Value95% of customers rate the facility as value formoney. (National Annual LeisureCheck surveydone each January.)26. Swimming Pools Service98% of customers rate the overall service at poolsto be acceptable, good or excellent. (NationalAnnual LeisureCheck survey done each January.)27. Swimming Pools ComplianceThe pools fully comply with New Zealandrecommended standards for pool supervision andwater quality.73% Survey done in November 2011.Target met73% very or fairly satisfied and 21%neutral or don’t know.One complaint received for overcrowdingcompared to five for 2010/11.Target not met This question was removed from the 2012survey, which is a national benchmarkingsurvey.92% Out of 188 people interviewed 173 aresatisfied or better with swimming poolservice.Target metPool Safe assessments are completedin February of each year by the NZRecreation Association. The pools arefully compliant with all the recommendedstandards.What the Council Does Leisure Parks and RecreationPalmerston North City Council Annual Report 2011/1279

Levels of ServicePerformance Measures Result CommentThe Council maintains and develops the swimming pools to meet the current and future needs in a costeffectiveway.28. Swimming Pools - Asset ManagementPlanA 20 year asset management plan is in placefor swimming pools. This plan is independentlyaudited by asset management consultants and isformally reviewed at three-yearly intervals. Thenext review is due by June 2012.Target metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.The Council provides public toilets that are well distributed throughout the City, and are hygienic, safe andwell-maintained.29. Public Toilets SatisfactionResidents’ satisfaction with the Council’s publictoilets is maintained or increased. The average ofthe last three surveys is 66% very or fairly satisfiedand 25% neutral or don’t know. (Communitrak)30. Public Toilets - Asset Management PlanA 20 year asset management plan is in place forpublic toilets. This plan is independently auditedby asset management consultants and is formallyreviewed at three-yearly intervals. The nextreview is due by June 2012.62% Survey done in November 2011.Target met62% very or fairly satisfied and 26%neutral or don’t know.Audited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.The Council manages its Parks and Recreation Activity in a financially responsible way.31. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.What the Council DoesLeisureParks and Recreation80 Palmerston North City Council Annual Report 2011/12

Financial ResultsActivity Operational Results: Parks and RecreationRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Arena Manawatu 1,916 1,548 368 1,553 1.City Wide Reserves 139 215 (76) 167 2.Local Reserves 207 37 170 407 3.Sportsfields 103 95 8 98Swimming Pools 3 - 3 7Total Revenue 2,368 1,895 473 2,232ExpensesArena Manawatu 5,042 5,153 111 4,972 4.City Wide Reserves 4,268 3,936 (332) 4,058 5.Local Reserves 2,254 2,899 645 2,486 6.Sportsfields 1,734 2,064 330 1,782 7.Swimming Pools 1,882 2,067 185 1,834 8.Total Expenses 15,180 16,119 939 15,132Net Operating CosT OF ACTiviTY (12,812) (14,224) 1,412 (12,900)Note1. Higher revenue resulting from recovery of additionalRugby World Cup costs.2. Budget for Holiday Park rental was set unrealisticallyhigh.3. Net proceeds from harvesting of Arapuke Forest (notbudgeted).4. Lower depreciation costs.5. Higher net personnel costs, aviary costs (notbudgeted), Ashhurst Domain biodiversity grantsfor 2 years (budgeted as capital now operating)and increase vandalism repair costs to The Squaregardens.6. Lower service delivery costs.7. Lower depreciation and service delivery costs.8. Lower depreciation and service delivery costs.What the Council Does Leisure Parks and RecreationPalmerston North City Council Annual Report 2011/1281

Parks and RecreationLeisureWhat the Council DoesSignificant Activity Capital Projects: Parks and RecreationThe community access and utilise the wide range of leisure parks and sportsfields available in the City. Capitalprojects relate to the further development and extension of these to meet the growing community needs andrange of facilities sought.a. Renewing facilities at Arena Manawatu. Major workcompleted camera platform on roof of FMG Stadiumfor Rugby World Cup, radio communications withsome work to complete with $50k budget to becarried forward to 2012/13.b. Over budget due to additional scoping and planningcost to revise original concept to achieve a lower costplus construction delay increased cost. Higher costoffset by budget savings in other programmes.c. Wallace Park completed plus Bill Brown Park resealedinstead of Takaro Park as Bill Brown Park identified ashigher priority than Takaro. Lower cost as less courtsresealed.82 Palmerston North City Council Annual Report 2011/12Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalArena Manawatu asset renewals 189 237 48 a.Sportsfield re-level grass wickets 10 11 1Skoglund, Coronation, Colquhoun Parkschanging room upgrades 756 701 (55) b.Wallace and Takaro Parks asphalt courts 116 136 20 c.Playground replacement 69 72 3 d.City Wide walkway upgrades 37 38 1 e.City Wide public toilet upgrades 4 27 23 f.City Wide reserves upgrades 314 439 125 g.Total Capital Renewal 1,495 1,661 166 1,068Capital NeWSkoglund Park carparkresurfacing and extension 87 51 (36) h.Arena Manawatu land purchase 446 - (446) i.Recreation Hub development 92 192 100 j.Memorial Park facility development 64 46 (18) k.Kahuterawa Outdoor Recreation Hubdevelopment 112 106 (6) l.Ashhurst Domain biodiversity improvements (52) 42 94 m.Ashhurst Domain enhancements 11 - (11) n.Safety improvements to reserves 32 30 (2) o.Reserves disability access improvements 66 32 (34) p.City Wide reserves backflow prevention 5 35 30 q.Construction of walkways 58 56 (2) r.Purchase of land to extend, link walkways 82 138 56 s.City Wide land purchase oflocal neighbourhood reserves - 635 635 t.City Wide youth playground development 165 159 (6) u.City Wide access to rivers and streams 1 14 13 v.Victoria Esplanade relocation of depot 1,218 1,587 369 w.Manawatū Gorge new toilet (9) - 9 x.Linklater Block reserve development 2 - (2)Woodpecker Forest works and re-planting 107 107 - y.Velodrome - 4,140 4,140 z.Total Capital NeW 2,487 7,370 4,883 1,318Total Capital pRojeCTs 3,982 9,031 5,049 2,386Significant acquisitions and explanation of variances from Annual Pland. Major replacement at Awapuni Park with someproposed landscaping not completed.e. Major work on Springdale Walkway, Schnell WetlandWalkway upgraded from grass to gravel.f. Budget applied to Skoglund Park Pavilion publictoilets.g. Renewing and upgrading hard surface areas, furnitureand gardens. Unable to start Esplanade Rose gardenpath renewal, money unspent.h. Cost includes building demolition.i. Purchase of 7 Oakley Street and 107 Cuba Street forfuture development with additional approval byCouncil.

j. Programme not completed due to specialistcontractors not being available and poor weatheroccurring when the works were scheduled. To providefor wetland construction and carpark resurfacingworks with $100k budget to be carried forward to2012/13.k. Project more complex than initially envisaged withhigher costs incurred including building consentsrequired.l. Work completed approximately 4km of mountainbike tracks, renewed bridge on Back Track, metal totop of Back Track and Zig Zag Road up into forest foremergency access, with directional and informationsignage.m. Work completed but as an operating cost with the2010/11 cost incurred also transferred to operating.n. Additional cost to complete work underway from2010/11.o. To complete Memorial Park fence, Chalethandrail.p. Accessible ramps at Vautier Park and additionalaccessible assess routes from roads in to ManawatūRiver sealed pathway.q. Installed at Cemetery however lagoon bore meteringequipment work not completed as awaiting resourceconsent variation.r. New walkways in Schnell Wetland, Apollo, Waitoetoe,Lower Titoki Reserves.s. Planned programme not complete with $56k budgetto be carried forward for Ashhurst to Raukawa Roadwalkway land acquisition.t. Subdivision activity lower than anticipated withno new neighbourhood reserves required thisyear.u. Equipment at Skoglund Park with higher cost dueto need to change safety surfacing supplier becauseoriginal product not available in time.v. Budget not required.w. Work incomplete with $200k budget to becarried forward. Anticipate total cost will belower than budget due to competitive tenderingenvironment.x. Feasibility study costs in 2010/11 expensed.y. To replant 16.4ha following harvest. Includes loggingroads and skid sites.z. Bid unsuccessful. NZ Cycling Centre of Excellenceproject cancelled.What the Council Does Leisure Parks and RecreationPalmerston North City Council Annual Report 2011/1283

What the Council DoesLeisureParks and Recreation84 Palmerston North City Council Annual Report 2011/12

Environmental Sustainability and HealthGroup DescriptionThe Environmental Sustainability and HealthGroup of Activities consist of:• Regulatory• Roading and Parking• Rubbish and Recycling• Stormwater• Wastewater• WaterThese have been grouped together because theyare all about Council’s role in looking after theenvironment. They focus on the Council’s strategicgoal of Palmerston North being a leading city inthe quest to become environmentally sustainable- for example by encouraging alternatives tomotor-based transport and by making it easier forpeople to recycle. They also contribute to ensurePalmerston North is attractive, clean and green;it is easy to move around Palmerston North; theCity’s physical infrastructure is reliable; people arewell-housed and healthy; and people are safe.What the Council DoesEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/12 85

Group of Activities Operational Requirement and Funding SummaryEnvironmental Sustainability and Health GroupRevenueActual Budget Variance Actual2012 2012 2012 2011$000 $000 $000 $000Regulatory 3,385 3,880 (495) 3,694Roading and Parking 6,642 6,846 (204) 6,224Rubbish and Recycling 2,871 3,132 (261) 2,482Stormwater 3 - 3 3Wastewater 724 1,025 (301) 1,089Water 1,649 1,686 (37) 1,427Total Revenue 15,274 16,569 (1,295) 14,919ExpensesRegulatory 6,203 7,358 1,155 7,223Roading and Parking 21,162 22,274 1,112 21,153Rubbish and Recycling 7,124 6,908 (216) 6,744Stormwater 3,641 3,359 (282) 3,238Wastewater 7,030 6,639 (391) 7,498Water 6,737 6,404 (333) 6,711Total Expenses 51,897 52,942 1,045 52,567Net Operating COST OF ACTIVITY GROUP (36,623) (36,373) (250) (37,648)EnvironmentalSustainability... What the Council DoesRating AllocationAdd back depreciation 13,608 13,422 186 13,297Renewal capital expenditure (7,529) (8,359) 830 (8,656)External revenue for renewal capital 1,539 1,654 (115) 1,541Borrowing effect of renewal 3 year averaging 320 320 - 634Provision for debt reduction (1,201) (1,201) - (603)Targeted rates allocation 13,764 13,620 144 13,836General rates allocation 16,122 16,917 (795) 17,599Funding surplus/(deficit) - - - -86 Palmerston North City Council Annual Report 2011/12

Activity - RegulatoryWhat the Council doesThe Regulatory Activity provides services in fiveareas - animal control, building control, landadministration, public health, and resourceconsents.Animal ControlThe Council provides a 24/7 service to respondto complaints about wandering or stray animals,barking dogs, or animal attacks. The Council alsooperates an animal pound within the City.Building ControlThe Council processes applications forbuilding consents, undertakes inspectionsduring construction and provides advice andinformation to customers. It ensures compliancewith regulations and undertakes any requiredenforcement action.Land AdministrationThis includes graffiti removal, issuing streetnumbers and names, processing requests for LandInformation Memoranda and Residential PropertyEnquiries, maintaining the Property Issuesdatabase, providing customer advice, reviewingand auditing building warrants of fitness, andinspecting vehicle crossings and pools.Public HealthThe Council inspects food-related premises,hairdressers, funeral parlours, swimming poolsand grease traps; enforces noise controls, vermin,hygiene and hazardous substances controls;enforces the Sale of Liquor Act for compliancewith licensing provisions; enforces gambling andprostitution laws; and enforces Council bylawsrelating to signs, footpath furniture, abandonedvehicles, overgrown trees and shrubs, and litter.Resource ConsentsThe Council processes resource consentapplications, provides advice and information tocustomers, ensures compliance with regulations,and undertakes any required enforcement action.The Council provides residents with informationabout what they can and cannot do in developingland and resources.Why the Council does this and itscontribution to Council vision andmajor goalsThis Activity contributes to all of the Council’smajor City goals.It makes the City a more attractive place to liveby making sure that people and businessescomply with the rules that help make the City abetter place to live and help keep people safe andhealthy, e.g. animal control, building regulationsand commercial food place standards.It assists in making the City onethat is focused and supportive increating a business friendly culture,one that encourages growthand development to support theCouncil’s goal of sustainability.It also minimises the negative effects of thedifferent activities that can occur in a city, e.g.noise, overgrown trees and disruptions that occuralong residential and industrial boundaries. TheCouncil has a ‘business friendly’ emphasis to helpensure that Palmerston North is an engaging andeasy place to do business. These both make theCity a more attractive place to do business.It also helps to make sure that buildings and theurban environment are developed in a safe andsustainable way by enforcing planning rules andlegislation.What happened in the yearRegulatoryRegulatory contributes to all the City goals. Itmakes it a safe place to live through animal controland health inspections. It makes it an easy placeto live by enforcing rules such as noise limits andbuilding regulations. It makes it an attractiveplace to live by removing graffiti and getting wellplanned amenities and environment. It assists inmaking the City one that is focused and supportivein creating a business friendly culture, one thatencourages growth and development to supportthe Council’s goal of sustainability.What the Council Does RegulatoryEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/1287

EnvironmentalSustainability... What the Council Does RegulatoryThe year was highlighted by the continuedimpact of the economic downturn which resultedin a lower than usual number of developmentapplications being lodged for processing andrelated requests for services. As a result of a staffdownsizing process, reflecting the drop in worklevels, there has been a greater focus on identifyingproductivity improvements and opportunities todeliver services as efficiently as possible and at areasonable cost. As part of the implementationof the Business Friendly Strategy, industry liaisongroup meetings were held to gain feedback onthe Council’s performance so as to identify serviceimprovement opportunities.Animal ControlThe key focus has been on the continued targetingof unregistered dogs and issuing infringementsas a penalty for non-compliance. The successfulimplementation of the “doggy doo” initiative thatencouraged owners to pick up doggy doos hascontinued. This was enhanced by the installationof another pole and bags in Ruahine Street andRoxborough Crescent by the walkway entrance.A key highlight was the installation of a stockramp at the Animal Pound in Totara Road. This hasproved invaluable in enabling staff to move stockon and off vehicles that minimised health risks tothemselves and the animals.For 2012/13 the focus will be on identifyingproductivity improvements to enable availableresources to be used as effectively as possible.This will be achieved in part by implementing the“mobile officer” concept which centres on the useof technology to reduce the need for staff to beprimarily office based.Building ControlThe year was highlighted by the introduction of thenew Licensed Building Practitioners Scheme (LBP)which enabled certified builders to self-certify workthey undertook. This has assisted in improving thecompetency of the industry which has had a flowon effect in terms of the quality of applicationsreceived by Council for processing.A major concern was the continuing impact of theeconomic downturn on the building industry. Thishas resulted in a continuing lower than normalnumber of consent applications being lodged/issued with only 904 processed during 2011/12compared to 1,177 in 2009/10.Looking forward to 2012/13, indications from keymembers of the industry is that the economicdownturn will soften which is likely to result ina moderate increase in consents processed andrequests for inspections. Even though the LBPscheme will have a greater take-up by propertyowners, it is unlikely that this will result in a notablereduction in the level of work the Council handles.It is expected that property owners will continueto seek the Council’s involvement in confirmingcompliance of building work so as to gain somedegree of confidence that the work completedwas to a suitable standard.It is expected that the Department of Building andHousing will continue its focus on implementinginitiatives that, in their view, improves productivityin the sector, the goal being to enable the deliveryof a range of houses and buildings at prices andstandards accessible to all. It could possibly resultin the introduction of a regionalised buildingservice and new national based technology suchas the online consenting system.Land AdministrationA key highlight was the successful merging ofadministration and support staff from acrossthe Unit into a single Division so as to minimiseduplication of administration tasks throughoutthe Unit and increase productivity levels. Itallowed a greater level of staff multi-skilling so asto provide backup for those areas with seasonalhigh workloads and better coverage for sicknessand annual leave.In terms of 2012/13 implementation of theboundary alteration with Manawatu DistrictCouncil will be a focus to ensure a smooth transitionof services for new ratepayers, particularly inrespect of those services provided through thefront of house area. As a result of changes to theBuilding Act, a key piece of work will centre onupdating and inputting more detailed informationheld in respect to approximately 1,500 BuildingWarrant of Fitnesses.Public HealthA major highlight was the updating of all theliquor ban signage throughout the City. There isnow pavement signage at prominent places andoutside every licensed premise within the LiquorControl Area. Two double-sided signs for theCBD Hospitality Charter, that includes the LiquorControl Area message, have been completedbut will not be erected until the unveiling of thecharter in early July 2012.88 Palmerston North City Council Annual Report 2011/12

District Licensing Agency staff have workedclosely with premise owners and the Police onthe development of the CBD Hospitality Charter.The aim of the charter is to reduce alcohol relatedincidents and associated harm in the Main Streetarea between The Square and Princess Street.In terms of 2012/13 the focus will be on meetingcurrent service levels by working smarter andcontinuing the rollout of the CBD HospitalityCharter. District Licensing Agency staff will beclosely monitoring Alcohol Reform Bill progressand Environmental Health Officers will monitorthe Food Bill. Though it is likely that the AlcoholReform Bill and Food Bill will be passed byParliament during 2012/13, it is unlikely that therelated regulations will be implemented for afurther 1 to 2 years.Resource ConsentsA key highlight was the completion of the initialphase of a quality management review of processesand forms. This helped strengthen and streamlineprocedures in line with current good practice.The 2010/11 survey of local authorities by theMinistry of the Environment noted that nationallyonly 77% of consents were processed on time. Asignificant effort has been made by staff during2011/12 on improving procedures and themonitoring of performance indicators. The resulthas been very positive, with 98% of consentsprocessed on time. A key success was that from 1December 2011 to 31 May 2012 100% of consentswere processed on time.The focus for 2012/13 will be on assisting thePolicy team in its review of the District Plan soas to identify issues that need addressing; tomanage costs, particularly in terms of legal issues;to provide a facilitative approach for customerinquiries on land development proposals andresource consent applications; and to work closelywith consultants and the public so that rules ofthe current District Plan are conveyed clearly anddecisions occur in a timely manner. Planningliaison group meetings will continue to be heldwith consultants to share information and obtainfeedback related to consent processing and rules.Major issues relating to Regulatoryinclude:Leaky Homes - The Council is a member ofRiskPool, a local government mutual liabilityorganisation. Due to the ‘Leaky Home’ claims,RiskPool has experienced deficits in past schemeyears and has made calls on its members to fundthose deficits. The budget for 2011/12 includedprovision of $150K to cover any ‘leaky home’claims or calls from RiskPool, plus a provision of$688K carried forward from previous years. During2011/12 a RiskPool call of $262K was paid as wellas $134K to settle three ‘leaky home’ claims. Thisleaves a provision of $442K to be carried forwardto 2012/13 plus a $400K budget allocation to coverfuture RiskPool calls and ‘leaky homes’ claims.As at 30 June 2012 there is one current WHRS claimoutstanding.Under the DBH government website the Councilhas active claims by Territorial Authority - thenumber of properties with active claims as at 30June 2012 is five.Council has become part of the FAP (FinancialAssistance Programme) from July 2011. At thepresent time the Council has four claims receivedwith two declined plus potentially one other.Earthquake Prone Buildings - During the yearassessments were undertaken of 135 buildingsthat were mostly of an unreinforced masonry typeconstructed prior to 1976. From these assessments109 were identified as being earthquake prone.This was determined by a building having anassessment score of less than 33% of the nationalbuilding standards. A well-received meeting washeld with affected property owners and tenantsand other key interested parties on 7 and 8 May2012 to outline the findings from the assessments.They were advised that the earthquake pronebuilding list was to be released to the general publicsoon after and be updated as work progressed onthe assessments. It is part of a six year project within excess of 450 buildings still to be assessed.Accreditation under the Building Act - Thefocus during the year was to identify best practiceimprovement opportunities in terms of existingprocedures and policies and to ensure relevanttechnical audits were undertaken to identifytraining opportunities. For 2012/13 the focus willbe on preparing for the planned bi-annual auditdue in April 2013.What the Council Does RegulatoryEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/1289

How did we performEnvironmentalSustainability... What the Council Does RegulatoryLevels of ServicePerformance Measures Result CommentThe Council provides a 24/7 30 minute response service for dog attacks.1. Dog Complaints100% of complaints regarding dog attacks areresponded to by the Animal Control Officer within30 minutes of the call being received by Council.2. SatisfactionResidents’ satisfaction with the Council’s controlof dogs is maintained or increased. The average ofthe last two surveys is 77% very or fairly satisfiedand 10% don’t know or neutral. (Communitrak)Target not met99% responded to within the timeframe(one complaint not responded to inrequired time of 66 received.)82% Survey done in November 2011.82% very or fairly satisfied and 4% neutralor don’t know.The Council ensures that building work is safe and in accordance with the Building Act by processingbuilding applications, inspecting construction work and providing information and advice.3. Building Consents90% of building consent applications are processedto meet statutory timeframes.4. AccreditationThe Council maintains its status as an accreditedbuilding consent authority.Target met 91% processed to meet statutorytimeframes.Target metAccreditation confirmed April 2011 - ontrack for Audit in 2013.The Council ensures an acceptable level of satisfaction from customers in the delivery of planning andbuilding services.5. SatisfactionAt least 80% of respondents are very or fairlysatisfied with Council’s resource and buildingconsent services. Measured by an internallyconducted annual survey.Target met 87% of respondents were very/fairlysatisfied (22 responses from 65 surveyed).The Council ensures that resource consent applications are processed within the statutory timeframe.6. Resource Consents - Processed90% of resource consent applications areprocessed to meet statutory timeframes.7. Resource Consents - Monitored100% of resource consents from 1 July 2010 aremonitored, and any non-complying issues arefollowed up with the consent holder, to ensure fullcompliance.Target met 98% processed to meet statutorytimeframes.Target metThe Council ensures all graffiti complaints are recorded, assessed and actioned.100% monitored and any non-complianceissues followed up.8. GraffitiTarget met100% of all tagging addressed as defined.100% of all graffiti tagging that meets Councilcriteria (e.g. in high profile areas such as main andarterial roads, the CBD and suburban shoppingcentres) is actioned for removal within oneworking day of receiving the owner’s authorisationfor contractors to remove.The Council processes food licence applications and ensures compliance with Public HealthRegulations.9. Safefood Hygiene Bylaw100% of Registered Premises selling food (andhave been operational for three months or more)are inspected once a year and comply with theCouncil’s Safefood Hygiene Bylaw or are activelyaddressing any non-compliance issues through anapproved action plan.10. Food Premises Inspections100% of ‘high-risk’ food premises that have beenoperational for nine months or more are inspectedtwice a year. (‘High-risk’ are food premises withfood types which, if contaminated, are likely tocause food poisoning.)Target metTarget not met100% of premises inspected as definedwith all non-compliance issues addressed(8 premises with non-compliance issues).85% inspected twice a year as defined,inspection of remaining premises to be apriority.The Council provides a 24/7 one hour response service for noise complaints.11. Satisfaction95% of complaints about noise are responded towithin one hour (2011 98%).Target met98% responded to within the timeframe.90 Palmerston North City Council Annual Report 2011/12

Levels of ServicePerformance Measures Result Comment12. Satisfaction64% Survey undertaken in June 2012 with 64%Residents’ satisfaction with the Council’s noisevery or fairly satisfied, 18% neutral or don’tcontrol is maintained or increased. This isknow and 18% dissatisfied. This result willmeasured by an internally conducted annualset the baseline for future surveys (22survey of people who make noise complaints.responses from 30 surveyed).(New survey.)The Council manages its Regulatory Activity in a financially responsible way.13. Cost EffectivenessTarget metServices provided on time and withinThe budget set by the Council is not exceeded.budget.EnvironmentalSustainability...What the Council Does RegulatoryPalmerston North City Council Annual Report 2011/1291

Financial ResultsActivity Operational Results: RegulatoryRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Animal Control 543 483 60 521 1.Building Control 1,545 2,064 (519) 1,836 2.Land Administration 298 445 (147) 374 3.Public Health 402 291 111 428 4.Resource Consents 597 597 - 535Total Revenue 3,385 3,880 (495) 3,694EnvironmentalSustainability... What the Council Does RegulatoryExpensesAnimal Control 625 754 129 743 5.Building Control 2,794 3,359 565 3,207 6.Land Administration 49 603 554 594 7.Public Health 1,225 1,264 39 1,173Resource Consents 1,510 1,378 (132) 1,506 8.Total Expenses 6,203 7,358 1,155 7,223Net Operating CosT OF ACTiviTY (2,818) (3,478) 660 (3,529)Note1. Higher than budgeted dog registrations revenuereceived, in line with 2011.2. Building consent revenue and building inspectionrevenue below budget due to reduced activity witheconomic climate.3. Microfilming revenues lower due to price reductionfollowing customer feedback.4. Higher health licence revenue, higher liquor licencerevenue in line with 2011.Significant Activity Capital Projects: Regulatory5. Lower operating costs achieved.6. Lower net personnel costs associated with lowerrevenues, lower professional services costs.7. Lower net personnel costs following restructure, lowerexpenses on graffiti.8. Expenses above budget due to legal (litigation) andconsultancy costs significantly greater than budget.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital NeWCity Pound stock ramp 5 6 1Microfiche scanner 3 - (3)Inner City liquor ban expansionadditional signs 9 12 3Total Capital NeW 17 18 1 -Total Capital Projects 17 18 1 -92 Palmerston North City Council Annual Report 2011/12

Activity - Roading and ParkingWhat the Council doesThe Council manages and develops a network of480 km of roads, 99 bridges, 515 km of footpaths,7,601 streetlights, nearly 9,000 signs and 4,047 carparking spaces and other amenities.The Council manages the roading network for thesafe, efficient, convenient and orderly flow of alltraffic – motor vehicles, cycles and pedestrians.As part of this it discourages inappropriate (e.g.heavy vehicles) traffic activity in residential areas.It provides suitable roads for heavy transport.The Council also works with groups such as theDisabled Persons Assembly to make sure thatroads and footpaths are accessible to everybody,and the New Zealand Police for road safety.Horizons Regional Council is responsible forproviding public transport services, but the CityCouncil provides terminals and suburban busstops that are convenient and comfortable forpassengers.The Council develops and implements a Roadingand Parking asset management plan to ensurethat these assets can deliver reliable services toexisting and future customers in the most costeffective and sustainable way.Why the Council does this and itscontribution to Council vision andmajor goalsThe Roading and Parking Activity contributes to allthree of the Council’s major goals for the City:1. People wanting to live here because of thesafe and easy lifestylePeople want to be able to move easily aroundPalmerston North. This means that the roads,cycle ways and footpaths are safe and thatintersections and traffic signals allow traffic toflow freely. Roads and footpaths need to bewell designed and maintained but the impactof road works needs to be minimised.2. Environmental sustainabilityThe Roading and Parking Activity does havesome potential significant negative effects onthe environment but it works hard to minimiseand mitigate these.For example, the Council:• makes roading improvements to minimisetraffic delays and hence air pollution• improves road surfaces in the urban areasto keep road noise to a minimum withoutcompromising safety• weighs up all issues during planning ofnew roads• plants approximately 200-300 additionalstreet trees each year• promotes alternative means of transport– e.g. public transport and walking andcycling• maintains a deficiency database thatidentifies parts of the roading network thatare causing safety concerns. It then carriesout remedial work on those areas with apoor safety record and high number ofcrashes.The Council also installs energy efficient streetlighting as the network is maintained andupgraded.3. Businesses want to be hereBusinesses also depend on roading and parkingto ensure the efficient movement of goods andservices, and so that their customers can easilyreach their businesses.What the Council Does Roading And ParkingEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/1293

EnvironmentalSustainability... What the Council Does Roading And ParkingWhat happened in the yearThe Council’s Roading Activity has again completedanother year which has seen infrastructure installedto encourage the use of alternative transportoptions with programmes implemented whichsupport both passenger transport and cycling.The installation of additional bus stop facilities ofshelters and concrete board pads has supportedthe continued growth in passenger transport usewith numbers of passengers continuing to climb.The further extension of the lime cycle pathsaround the stream stopbanks on the north andwestern sides of the city have encouraged furtherrecreation use by both cyclists and walkers/joggers resulting in positive comments from thecommunity. These have been further enhancedby the construction of underpasses on threebridges resulting in users of the path not having tocontend with traffic. The continued constructionof the cycle/pedestrian path on Railway Roadfrom Tremaine Avenue to Roberts line has furthercomplimented the work undertaken during the2010/11 year and provides good access to theNorth East Industrial Area.Council’s road safety activity is primarily focussedon monitoring and responding to crash trendsoccurring over time, with particular emphasisgiven to crashes involving vulnerable road users.Engineering interventions involving safety ratehighly for financial assistance through the NewZealand Transport Agency and form an importantpart of the Council’s response. Additionally,Council staff are involved in community basedregion-wide road safety initiatives promotedby Horizons Regional Council, who coordinateroad safety activities on behalf of Council. Theprimary focus has been on development of anupdated Road Safety Action Plan that focuses onthe outcomes specified in the Safer Journeys RoadSafety Strategy. Within this work has continuedin making our roads safer particularly at thoseintersections with an unacceptable crash rate orexperiencing high levels of delay. The constructionof a number of round-abouts continues to gaingood support from the community. The removalof the round-about at the intersection of Cuba/Taonui/George Streets has been replaced witha facility that substantially enhances this areafor pedestrian activity guided by urban designprinciples. The inclusion of the fifth streetsculpture at this site has created further interestand encouraged adjacent development activity.To date, one route has been approved for themovement of High Productivity Motor Vehicle(HPMV’s) for the cartage of quarry material fromTe Matai Road to Maxwells Line following a studyof the pavement integrity. The pavement studyof the proposed routes has been undertaken toidentify areas of weakness which will require tobe addressed before HPMV use. The study of thestructures is still being undertaken.A big effort was put into updating the RoadingActivity asset management plans during the year.These detail the expected operating, renewal anddevelopment costs over the next 50 years thatoptimise the “whole of life” costs whilst maintainingthe existing level of service. The outcomes of thisdocument informed the draft 2012/22 10 Year Plan.A big effort was put into updating theRoading Activity asset managementplans during the year. These detailthe expected operating, renewal anddevelopment costs over the next50 years that optimise the “wholeof life” costs whilst maintaining theexisting level of service.An investment audit was undertaken by the NewZealand Transport Agency (NZTA) to provideassurance that their investment in the Council’sland transport programme was being wellmanaged and is delivering value for money, andto seek assurance that the Council is appropriatelymanaging risk associated with NZTA’s investment.They concluded that the network was in very goodcondition and well managed and presented littlerisk.A number of capital programmes have not beencompleted this year partly as a result of delaysbrought by the community during the consultationphase and partly by insufficient quality time spenton investigation and analysis.94 Palmerston North City Council Annual Report 2011/12

Major issues relating to Roading andParking Activity include:Bus Terminal - The existing Main Street site wasadopted for development to accommodate bothurban and inter-regional services. Consultationand design work was to be undertaken this yearbut a number of concerns were raised during thepublic consultation phase, firstly by the retailersmainly concerned with the loss of car parks,noise and the loss of visual amenity and morerecently by the wider community on a range ofissues. This has required the need to seek furthersubmissions from those businesses and residentswishing to challenge the earlier decisions ofCouncil. Horizons Regional Council, who managesthe urban bus service contract, has indicated thatthey are to undertake a “first principles” review ofthe existing service and the City Council has nowdecided to await the outcome of that review beforecommitting to the construction of a Main Streetsite. This has been scheduled for the 2014/15 year.Strategic Roading and Bridging - Theprogramme and funding of a second bridge overthe Manawatū River were withdrawn from the next10 Year Plan as Council envisages that the trafficlevel increase required to meet NZTA fundingguidelines would be beyond the 10 year periodcovered. The implications of this will need furtherdeliberation by Council and discussion with otheraffected organisations.Parking - The economic downturn has resultedin low occupancy of the City’s parking networkwith revenue budgets not being met. The bayparking sensor technology installed last yearinitially generated huge customer resistance withthe community struggling to use the new systemand a high number of complaints eventuating,as evidenced in a poor performance figure inthe annual Communitrak survey. The changeto alphanumeric keypads has gone some way toaddressing these concerns. Being new technologyunder development in the City, there are still anumber of user concerns that are continuing tosee the technology not being fully supportedresulting in a large number of infringementnotice waiver requests and demands on staff. Itis hoped that these can be addressed in the nearfuture. The introduction of the SuperGold cardparking exemptions for the “over 65’s” continuesto be popular with 768 being issued in the first sixmonths of the calendar year. This scheme allowsfree parking from Monday and Friday between thehours of 9.00am to 11.00am.Challenges facing the Roading ActivityThe national roll out of Ultrafast Broadband withinthe city is creating concern. Due to the speedwith which this has been introduced, a forwardprogramme of works has not been fully developedresulting in a number of recently completedCouncil works being dug up reducing the potentiallife of the pavement.Analysis of the pavements and structures toaccommodate High Productivity Motor Vehicleshas not been completed at this time. It is thereforeunclear as to what damage and/or remedial workwill need to be undertaken once these vehiclesbecome operative.Constrained external funding from the NewZealand Transport Agency, particularly as it relatesto maintenance and renewals, may see levelsof service reduced. Local Government capitalprojects are currently receiving a low investmentprofile with little hope of any projects beingfinancially assisted.Central Government currently has a taskforceinvestigating the costs associated with roadmaintenance with a belief that up to 20% ofmaintenance costs can be removed across thecountry with some of the key ideas being: adaptingbusiness models; improving procurement by local,regional or national collaboration; and improvingthe prioritisation of investment. Also the issueof peak oil and how it may affect the City is nowbeginning to challenge our thinking. Both of theseitems present huge challenges for the Council inthe coming years.What the Council Does Roading And ParkingEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/1295

How did we performEnvironmentalSustainability... What the Council Does Roading And ParkingLevels of ServicePerformance Measures Result CommentThe Council provides a roading network as identified in the Transportation Management Plan that haseasy and comfortable movement for vehicles throughout the City with a high level of safety and a lowlevel of delays.1. SatisfactionResidents’ satisfaction with roads in the City(excluding State Highways) is maintained orincreased. The average of the last three surveysis 81% very or fairly satisfied. (Communitrak)2. Road SmoothnessMaintain the overall “good” rating for thesmoothness of sealed City roads (as measured inan independent audit).3. Intersection DelaysAverage delay at key intersections not to exceed25 seconds per vehicle for all approaches over acontinuous period of two hours.4. Call Out ServiceA contracted 24 hour, 7 day call out service isavailable for system failures.82% Survey done in November 2011.82% very or fairly satisfied.Target metTwo-yearly audit undertaken by NAASRA(National Association of Australian StateRoading Authorities).2010 2012Rural 94 84Urban 101 95(Result based on scale of 10-999, where 10is perfect and 90 to 140 is a good rating.)A full roading network survey has beenundertaken in the 2011/12 financial year.Target met Traffic movement surveys of theCity’s busiest intersections have beenundertaken during June 2012 resulting inan average delay of 16.3 seconds.Target met24/7 call out service provided by road,traffic signal and street light maintenancecontractors.The Council provides footpaths that are smooth and free of hazards, and pram crossings that are safeand easy to negotiate for a wide range of users.5. SatisfactionResidents’ satisfaction with footpaths is maintainedor increased. The average of the last three surveysis 75% very or fairly satisfied. (Communitrak)6. FootpathsReduce the % of footpaths that receive a 4 or 5rating on a 5 point scale. (Measured by a Citywidetwo-yearly footpath survey.)70% Survey done in November 2011.70% very or fairly satisfied and 2% neutralor don’t know.Target met Survey done in November 2011 - 3.27%of footpaths (131 segments out of 4,001)receiving 4 or 5 ratings for “prioritymaintenance”. Previous survey result 3.5%.The Council provides facilities which encourage more travel using active and/or public transportmodes that are consistent with the Manawatū Active Transport Strategy.7. Cyclists TripsThe number of trips by cyclists increases.8. Public Transport TripsThe number of trips made by public transportincreases.Target met271 trips (average of the trips over a 5 dayperiod on each of the twice yearly surveyedstreets), compared to 252 in 2010/11.Target met 1,267,979 trips made, compared to1,198,486 in 2010/11.The Council provides a streetscape that is attractive, safe, clean and well lit at night.9. SatisfactionResidents’ satisfaction with street lighting ismaintained or increased. The average of thelast three surveys is 89% very or fairly satisfied.(Communitrak)(Of these 728,939 were made underthe UCOL and Massey unlimited accessscheme.)86% Survey done in November 2011.86% very or fairly satisfied and 2% neutralor don’t know.The Council maintains and develops the roading system to meet current and future needs in the mostcost effective way.10. Asset Management PlanA 20 year asset management plan is in place forRoading and Parking. This plan is independentlyaudited by asset management consultants and isformally reviewed at three-yearly intervals. Thenext review is due by June 2012.Target metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.96 Palmerston North City Council Annual Report 2011/12

Levels of ServicePerformance Measures Result CommentThe Council provides parking that is conveniently available throughout the City to meet the needs ofretailers, shoppers, commuters and visitors.11. Car ParksProvision of at least 990 off-street car parks in theCBD.12. SatisfactionResidents’ satisfaction with parking is maintainedor increased. The average of the last three surveysis 66% very or fairly satisfied. (Communitrak)Target met Currently 1,014 parks are provided in 23dedicated areas.55% Survey done in November 2011.55% very or fairly satisfied and 3% neutralor don’t know. Poor result indicatesproblems and consumer resistance withthe introduction of bay sensing devices inpaid parking.The Council manages its Roading and Parking Activity in a financially responsible way.13. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.EnvironmentalSustainability...What the Council Does Roading And ParkingPalmerston North City Council Annual Report 2011/1297

Financial ResultsActivity Operational Results: Roading and ParkingRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Footpaths - - - -Parking 4,105 4,289 (184) 4,085 1.Roads 1,354 1,229 125 1,107 2.Street Facilities 233 160 73 180 3.Street Lighting 490 565 (75) 499 4.Traffic Services 460 603 (143) 353 5.Total Revenue 6,642 6,846 (204) 6,224EnvironmentalSustainability... What the Council Does Roading And ParkingExpensesFootpaths 1,859 1,490 (369) 1,512 6.Parking 2,435 2,178 (257) 2,148 7.Roads 11,257 12,188 931 11,956 8.Street Facilities 2,322 2,386 64 2,032 9.Street Lighting 1,543 1,715 172 1,647 10.Traffic Services 1,746 2,317 571 1,858 11.Total Expenses 21,162 22,274 1,112 21,153Net Operating CosT OF ACTiviTY (14,520) (15,428) 908 (14,929)Note1. Reduced parking demand slightly offset byunbudgeted carpark leases at the topdeck of ThePlaza.2. Additional profit from sale of 4 Kelvin Grove sectionsoffset by lower NZTA operating revenue.3. Unbudgeted revenue for Passenger Transport.4. Lower NZTA operating revenue.5. Lower NZTA operating revenue.6. Higher depreciation, maintenance and net personnelcosts than budgeted.7. Higher depreciation, maintenance, promotion costsand net personnel costs.8. Lower depreciation, interest, maintenance expenses(with lower NZTA operating revenue).9. Lower maintenance expenses.10. Lower depreciation, interest, maintenance expenses(with lower NZTA operating revenue).11. Lower depreciation, interest, maintenance expenses(with lower NZTA operating revenue).Note the budget expenses above for Roads and Total Expenses differs to the amounts in the 2011/12Annual Plan. The amounts above are those amounts included in the Groups of Activities Summary and arethe final budget totals.98 Palmerston North City Council Annual Report 2011/12

Significant Activity Capital Projects: Roading and ParkingThe Council is continually monitoring and improving the roading network to ensure the standard is as expected bythe community. Work includes building of new roads as well as upgrades. Parking is also provided and managedin this activity.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalStreet light upgrade 136 149 13 a.City Wide traffic signals upgrades 72 220 148 b.Footpath upgrades 368 450 82 c.City Wide sealed pavement upgrades 904 976 72 d.Street trees renewal 31 32 1City Wide vehicle crossing upgrades 433 382 (51) e.City Wide road drainage upgrades 461 436 (25) f.City Wide asphalt resurfacing 1,742 1,768 26 g.City Wide offstreet parking resurfacing,remarking and signage replacement 1 10 9 h.Replacement of parking meters 105 - (105) i.City Wide bus shelter upgradesand replacements 31 35 4Total Capital Renewal 4,284 4,458 174 4,131Capital NeWParking handheld kit and printer 11 - (11) j.City Wide Roading subdivision contributions 103 218 115 k.Ferguson Street widening (27) - 27 l.City Wide minor road safety improvements 670 876 206 m.Railway Road cycle/pedestrian pathway 218 333 115 n.Railway Road cycle improvements,including overbridge “clip ons” 264 693 429 o.City Wide bus stop improvements 50 53 3City Wide new street tree planting 27 27 -Manawatū RiverTe Matai/Staces Road bridge (135) 2,780 2,915 p.Walding Street traffic safety improvements 10 838 828 q.James Line reconstruction to meeturban roading standards 554 450 (104) r.Future urban growth area “A”new supporting roads - 150 150 s.Mangaone Stream stopbanks constructionof cycle/pedestrian pathway 456 512 56 t.City Centre major upgradeof main bus terminal 37 4,765 4,728 u.Rangitikei Street (SH3) / Tremaine Avenuetraffic signals upgrade - 823 823 v.Rangitikei/Featherston Streets land purchasefor intersection upgrading 842 831 (11) w.Ferguson/Ruahine Streetsround-about installation 271 200 (71) x.Grey/Albert Streets round-about installation 9 - (9) y.City Wide new cycle stands,shelters and lockers 41 42 1City Wide improvements tocycle/pedestrian crossing points 7 53 46 z.Manawatū River (Napier Road drain toMaxwells Line) sealed cycle/pedestrian pathway 327 318 (9) aa.What the Council Does Roading And ParkingEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/1299

EnvironmentalSustainability... What the Council Does Roading And ParkingManawatū River (Ashhurst toNapier Road Drain) sealed cycle/pedestrian pathway 22 318 296 ab.City Wide widening of rural road shoulders 12 127 115 ac.City Wide traffic management model - 250 250 ad.Mulgrave Street, Ashhurst constructionof walkway 6 160 154 ae.Aokautere Drive (Waicola to Titirangi Drives)footpath extension 20 150 130 af.City Wide split rubbish/recycling bins 19 20 1City Wide additional splitrubbish/recycling bins 19 20 1Millricks Line seal extension to turning head 4 70 66 ag.Local business zones andrest homes new street furniture 15 15 -Total Capital NeW 3,852 15,092 11,240 4,165Total Capital ProjeCTs 8,136 19,550 11,414 8,296Significant acquisitions and explanation of variances from Annual Plana. To complete upgrade in Cascade Crescent from2010/11 and King Street.b. At Ruahine, Featherston Streets. Budget was based onreplacing all signal infrastructure however innovationin the design enabled a lot of existing infrastructure tobe reused reducing the cost.c. Some work being carried out in conjunction with ultrafast broadband rollout, under spent to compensate fornecessary related over expenditure in vehicle crossingupgrades.d. Major programmes on Fitzherbert Avenue and GreyStreets. All works completed within budget.e. Some work being carried out in conjunction with ultrafast broadband rollout to leverage opportunities tomaximise cost shares and give better value for Council.Offset by under expenditure in footpath upgrades.f. Additional urgent work carried out in College Streetfollowing gas renewal work and before Council’s reseal(essential for long term asset life).g. All works completed under budget at numerouslocations in the City.h. Only minor signage renewal required.i. New keypads required for parking meters for FrogSystem, with $98k additional budget approved byCouncil. Additional works carried out on off streetmeters.j. To provide capability for additional parking team thatwas not budgeted for.k. Subdivision activity in the City low due to economicdownturn, few opportunities to improve networksidentified resulting in reduced costs.l. Contribution from Ministry of Education for their shareof works carried out in previous year.m. Some work completed 2010/11. Programme reducedas some planned expenditure did not attract matchingsubsidy from NZTA.n. Project underway, with $100k budget to be carriedforward to complete. Expected to be completed underbudget.o. Scope of works changed from on-road path to off-roadpath, resulting in considerable cost savings for similaroutcome.p. Project withdrawn by Council with costs to datetransferred to operating.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000q. Project deferred by Council.r. Considerable extra cost due to poor ground conditionsrequiring additional earthworks and strengthening toensure long term viability of the asset.s. Project deferred by Council.t. Works completed within budget.u. Project deferred by Council until further investigationof requirements are completed.v. Contribution to NZTA led project with projectdeferred, now expected to proceed in 2012/13.w. Final costs slightly higher than budgeted due to termsof negotiations.x. Council has approved an additional $101k budgetto complete this project with a $80k budget carryforward to allow completion.y. Minor planting that could not be completed inprevious year due to weather at that time.z. Project currently underway with $45k budget to becarried forward to complete.aa. This overspend resulted from extra costs arising froman important connection route being upgraded fromAyr Place to the main riverside pathway and an extratrack formation near the Napier Road Drain footbridge.These make a positive contribution to enhancingthe connectivity of the pathway, improve safety andaccessibility for future maintenance vehicles.ab. Works unable to take place due to ongoingnegotiations on securing legal access with landownerswith a $300k budget carry forward to enableconstruction of the pathway.ac. Unable to be completed due to Manawatū Gorgeclosure with planned work on Saddle Road which isbeing used as major detour. A $115k budget carryforward will enable completion when practical.ad. Budget carry forward approved.ae. Unable to be progressed due to land negotiationswith $150k budget carry forward to complete.af. Unable to be progressed due to resource issues andland negotiations with $135k budget carry forward tocomplete.ag. Scope of works greatly reduced following publicconsultation. All agreed works now completed.100 Palmerston North City Council Annual Report 2011/12

Activity - Rubbish and RecyclingWhat the Council doesThe Council collects, disposes or processes refuseand recyclables from households and businessesin the City. Recycling facilities are provided atFerguson Street, the Awapuni landfill site and theAshhurst transfer station.Rubbish collected from kerbside collections inthe City and non-recyclable waste is taken to theprivately owned and managed Bonny Glen landfill.The Activity also includes waste minimisation andpublic education services.The Council reviewed and adopted its WasteManagement and Minimisation Plan in 2009. Oneof the key actions in this Plan has been improvingkerbside collections for recycling by using wheeliebins instead of plastic supermarket bags.The Council develops and implements a Rubbishand Recycling asset management plan to ensurethat these assets can deliver reliable services toexisting and future customers in the most costeffective and sustainable way.One of the key contributions this Activity makesto environmental sustainability is by divertingwaste from the landfill into beneficial uses. Thisis also a key focus of the Waste Management andMinimisation Plan.Gases, such as methane, that are emitted fromthe landfill are captured and used to generateelectricity to assist in running the WastewaterTreatment Plant, thereby avoiding emissions tothe atmosphere.Why the Council does this and itscontribution to Council vision andmajor goalsThe Rubbish and Recycling Activity contributes toall three of the Council’s goals for the City of peoplewanting to live here, attracting and retainingbusinesses and environmental sustainability.People want to live in a place that helps them lookafter the environment by making recycling easy.They want the City to have reliable and efficientwaste and recyclables kerbside collection services.They want to minimise the amount of waste thatgoes into landfills.Businesses also rely on the efficient collection ofwaste from their business.What happened in the yearWith the success of the wheelie bin introductionin 2010, the 2011/12 year saw a focus onoptimisation of the recycling systems. After 18months of operation the Material Recovery Facilityat Awapuni underwent a series of upgrades whichgreatly improved the efficiency of the sortingprocess to enable better quality recycled materialsto be produced as well as reducing the number ofpeople required on the sort line.Work also was undertaken at the Awapunicomposting site to improve the operationalefficiency and to investigate options for thecomposting of more sewage sludge. Work in thisarea will continue in 2012/13 in conjunction withinvestigations into the feasibility of improvedgreen and garden waste collection in the City.People want to live in a placethat helps them look after theenvironment by making recyclingeasy. They want the City to havereliable and efficient waste andrecyclables kerbside collectionservices. They want to minimisethe amount of waste that goes intolandfills.Minor works continued on the landfill gas systemsto maximise the volume of gas collected and theamount of electricity generated. Landfill gasproduction continues to underperform but thepotential financial penalties associated with notfulfilling Council’s obligation to supply carboncredits to the Austrian Government were avertedwith the signing of a variation to the agreementconditions. The landfill gas system will bemonitored in the coming year and options foroperation of the system in the next four yearswill be evaluated. Council sponsored wasteminimisation education programmes continued,with programmes completed in 15 primary schoolsin Palmerston North. The Zero Waste Academy(a joint partnership between Massey Universityand the Council) had a very successful year withMassey University providing consultancy andexpert advice on a number of waste minimisationissues.What the Council Does Rubbish and RecyclingEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/12101

Major issues relating to the Rubbish andRecycling Activity include:Waste Minimisation Plan - The WasteManagement and Minimisation Plan (WMMP) willbe reviewed in the early part of 2012/13, givingthe public opportunity to comment on wasteminimisation activities in the City. The revisedWMMP will focus on consolidating the Council’scurrent activities and aligning future rubbish andrecycling activities with the Council’s SustainableCity Strategy. By adopting a Waste Managementand Minimisation Plan the Council will securea significant waste minimisation levy from theMinistry for the Environment to assist in fundingof key waste minimisation activities.EnvironmentalSustainability... What the Council Does Rubbish and RecyclingRubbish and Recycling Improvements - 2012/13will see a number of improvements to the Rubbishand Recycling Activity. The Council is consideringthe upgrade of the Ferguson Street RecyclingDrop-off Point with work due to commence in late2012. The upgrade works will enable the Drop-offPoint to accept a wider range of recycled productsto further meet the Council’s goal of divertingadditional material from the landfill. The upgradewill coincide with the release of a number offact sheets educating the public about the newproducts that can be recycled.Plans are in place to update the Council websiteto provide more information on where the publiccan re-use and recycle in Palmerston North. Inaddition, there are some changes planned tothe way in which the Council collects rubbishand recycling materials at the kerbside, with theintroduction of new collection trucks, as well assome minor improvements to the Awapuni site.Greenwaste Recycling and Composting - Asignificant investigation will be undertaken in2012/13 to develop options for improving organicwaste recycling for use in producing compost.There is a need to develop a strategy for disposingof sewage sludge from the council’s wastewatertreatment plant and the strategy will include theprocessing of sludge into compost.102 Palmerston North City Council Annual Report 2011/12

How did we performPerformance Measures Result CommentThe Council provides a weekly rubbish and kerbside collection of recyclables.1. Satisfaction89% Survey done in November 2011.Residents’ satisfaction with the Council’s kerbside89% very or fairly satisfied and 3% neutralcollection is increased. The average of the lastor don’t know.three surveys is 74%. (Communitrak)The Council provides a waste transfer station at Ashhurst that is open on Tuesdays, 1pm-3pm, andSaturdays, 10am-4pm.2. Waste Transfer StationThe transfer station is open for the stated hours.Target metThe Transfer Station was open to the publicas advertised throughout the 2011/12 year.The Council provides green waste disposal and recycling facilities, and environmental education.Levels of Service3. CollectionThe household collection of rubbish andrecyclables is provided weekly.4. ComplaintsThe number of complaints about missed rubbishand recycling collection decreases (five-yeartrend).286 received in 2010/11.(Results of this measure had previously includedcomplaints and requests about various aspectsof the service - missed collection, torn bags,collectors themselves. To be able to define thecomplaints correctly, the measure was changed inthe 2011/12 Annual Plan to include “missed” withthe 2011/12 number of complaints to set the basefor future years.)5. LandfillThe volume of waste going to the landfill isreduced.Target met Collection services were carried outsatisfactorily throughout the 2011/12 year.Target not metTarget not met1,157 complaints about missed rubbishand recycling collection.As the new recycling system wasintroduced only two years ago statisticaltrends with regard to performance are stillbeing gathered.This performance measure is currentlybeing evaluated via the Waste Managementand Minimisation Plan which will bereleased late 2012. It should be notedthat Council only collects 14% of rubbishin the City with the rest being collectedby private enterprise. It is therefore notpossible to determine whether the overallvolume of waste in the City going toLandfill is decreasing.The Council provides a twice-weekly rubbish and weekly recycling collection service (for thoseproperties that pay the targeted rates for this service) in the CBD.6. CBDThe collection of rubbish is provided twice-weeklyand recyclables weekly in the CBD.Target met Collection services were carried outsatisfactorily throughout the 2011/12 year.The Council maintains and develops the rubbish and recycling system to meet the current and futureneeds in a cost-effective way.7. Asset Management PlanA 20 year asset management plan is in place forRubbish and Recycling. This plan is independentlyaudited by asset management consultants and isformally reviewed at three-yearly intervals. Thenext review is due by June 2012.Target metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.The Council manages its Rubbish and Recycling Activity in a financially responsible way.8. Cost EffectivenessTarget not met The budget was exceeded due to:The budget set by the Council is not exceeded.• The volume of rubbish collectedthrough the bag collection system wasconsiderably higher.• The cost to collect and processrecycling was higher than expected,combined with a global drop in theprice for the sale of recycled materials,particular plastic and paper.• The amount of electricity generated bythe landfill gas was less than expectedleading to lower revenue for electricitysales and carbon credits.Palmerston North City Council Annual Report 2011/12What the Council Does Rubbish and RecyclingEnvironmentalSustainability...103

Financial ResultsActivity Operational Results: Rubbish and RecyclingRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Recycling 1,809 2,466 (657) 1,591 1.Waste Collection 1,062 666 396 891 2.Total Revenue 2,871 3,132 (261) 2,482ExpensesRecycling 5,808 5,925 117 5,454 3.Waste Collection 1,316 983 (333) 1,290 4.Total Expenses 7,124 6,908 (216) 6,744EnvironmentalSustainability... What the Council Does Rubbish and RecyclingNet Operating CosT OF ACTiviTY (4,253) (3,776) (477) (4,262)Note1. Budgeted revenue not received as revenue originatingfrom a composting capital programme is yet to becompleted, lower emission credits and gas generationrevenue.2. Higher revenue from increased rubbish bag prices (tomeet disposal and service cost increases) towards auser-pay service.3. Lower depreciation.4. Higher disposal and service delivery costs.104 Palmerston North City Council Annual Report 2011/12

Significant Activity Capital Projects: Rubbish and RecyclingIn providing a rubbish collection and recycling service to the community the Council requires assets tohave this capability.Capital expenditure relates to meeting this expanding requirement, closure of the Awapuni landfill andutilisation of the landfill resources.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalAwapuni Landfill roading anddrainage replacements 46 53 7 a.Total Capital Renewal 46 53 7 -Capital NeWAwapuni Landfill resource consentaftercare works 12 165 153 b.Waste Minimisationrecycling sort line improvements 612 - (612) c.Waste Minimisation organic wastecollection and treatment 405 700 295 d.Waste Minimisation community facility toassist diverting waste away from landfill 49 264 215 e.Awapuni Landfill site works 40 144 104 f.Awapuni Landfill commercial leasesite development 24 53 29 g.Total Capital NeW 1,142 1,326 184 4,116Total Capital ProjeCTs 1,188 1,379 191 4,116Significant acquisitions and explanation of variances from Annual Plana. Not all planned work able to be completed.b. Aftercare costs are net of landfill provision transferredto meet these costs.c. Recycling sort line improvements with an additional$650K budget approved by Council.d. For upgrade to compost site facilities. With scopingcommencing late and unfavourable weather unable tocomplete works. $425 budget carry forward approvedto complete.e. Scoping works commenced to upgrade FergusonStreet Recycling Centre. Council require furtherinformation before any further works undertaken.$220k budget carry forward approved to complete.f. Scoping works commenced late with work unableto be completed due to resource availability. $103kbudget to be carried forward to complete.g. Scoping works commenced late with work unableto be completed due to resource availability. $28kbudget to be carried forward to complete.What the Council Does Rubbish and RecyclingEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/12 105

Activity - StormwaterEnvironmentalSustainability... What the Council Does StormwaterWhat the Council doesThe City has developed and operates a network ofdrainage systems throughout the City to provideflood protection for buildings within the urbanarea from a 100 year rainfall event and a collectionand discharge system for the roading network andprivate property land with flood protection fromstreet flooding from a 5 year event.These systems consist of 263 km of piped drains,8 km of culverts, 16 pump stations, 61 flood gatesand 21 km of open drains.Horizons Regional Council is responsible forprotecting the City from flooding of the ManawatūRiver and Mangaone Stream.The Council develops and implements aStormwater asset management plan to ensurethat these assets can deliver reliable services toexisting and future customers in the most costeffective and sustainable way.The Council manages this Activity to ensure that itsenvironmental impacts are minimised. Stormwatercontamination from both urban and rural run-offincreases the environmental impact of stormwaterdischarges. These impacts are managed througheducation, as well as monitoring and throughthe treatment (as appropriate) of the run-off. TheCouncil also works with Horizons Regional Councilto ensure environmental impacts are minimised.Why the Council does this and itscontribution to Council vision andmajor goalsStormwater contributes to all three of theCouncil’s goals for the City of people wanting tolive here, attracting and retaining businesses andenvironmental sustainability.People want to live in a place that has reliableand well maintained stormwater systems so thattheir homes, workplaces and other buildings areprotected from flooding. Business people do notwant their businesses to be disrupted by flooding.Poor infrastructure, such as stormwater, can give acity a negative image, making it harder to attractpeople and businesses.People also want to ensure that discharge fromthe Council’s stormwater system has minimalenvironmental impact.What happened in the year2011/12 was a quiet year for the Stormwateractivity. The absence of any major rainfall eventsmeant that there was no major flooding in the City.Works focused on minor improvements to reducelocalised flooding were carried out in Park Road,Moana and Manuka Streets, and several culverts inAshhurst were upgraded.Rapid flood hazard mapping and investigationswere carried out to determine how stormwater inthe proposed urban growth areas could be dealtwith in future.Work has continued on the renewal of the FergusonStreet stormwater pipe and this programme willcontinue into the next financial year.Stormwater contributes to all threeof the Council’s goals for the Cityof people wanting to live here,attracting and retaining businessesand environmental sustainability.A focus in the coming year will be to reviewthe engineering standards with the aim ofintroducing more sustainable drainage optionsand development of the long term capital worksand renewals programmes for stormwater assets.Major issues relating to theStormwater Activity include:Effects of Climate Change - As climate changeoccurs the frequency and intensity of storms willchange. Council will be undertaking studies toupdate its design standards to take account oflikely changes in storm frequency and rainfallintensities.106 Palmerston North City Council Annual Report 2011/12

How did we performLevels of ServicePerformance Measures Result CommentThe Council provides protection of buildings from internal flooding from major flood events.(Horizons Regional Council is responsible for protecting the City from the Manawatū River andMangaone Stream.)1. SatisfactionResidents’ satisfaction with the Council’s stormwaterservices is maintained or increased. The average ofthe last three surveys is 78%. (Communitrak)78% Survey done in November 2011.78% very or fairly satisfied and 6% neutralor don’t know.The Council provides an efficient collection and disposal system to minimise the impact of major stormevents on access through the City due to flooding.2. Flood ProtectionGreater than 98% of properties are protected froma 100 year flood event.3. ComplaintsMore than 90% of complaints are responded to ina timely fashion (i.e. urgent complaints respondedto within one hour; minor complaints within twohours and non-urgent within five working days).Target met Previous modeling indicates that theperformance measure was met with noreason for this to have changed.Target not met81% of complaints resolved and signed offon time.(11% urgent, 69% minor and 89%non-urgent.)These results use the resolution timerather than the measure requirementfor response as this is more meaningfulwith target resolution times for urgentwithin 9 hours, minor within 27 hours andnon-urgent within 45 hours.The Council provides monitoring of stormwater drains and response capability to minimiseenvironmental impact of contaminated discharges.4. ContaminationNo contaminated discharges that are likely to affectaquatic life or discolour water.Target metNo non-compliance notices were receivedby Council.The Council maintains and develops the stormwater system to meet the current and future needs in acost-effective way.5. Asset Management PlanA 20 year asset management plan is in place forStormwater. This plan is independently auditedby asset management consultants and is formallyreviewed at three-yearly intervals. The next reviewis due by June 2012.Target metThe Council manages its Stormwater Activity in a financially responsible way.6. Cost EffectivenessThe budget set by the Council is not exceeded.Target not metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.Stormwater services provided howeveroperating costs were higher than budget.What the Council Does StormwaterEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/12107

Financial ResultsActivity Operational Results: StormwaterRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Stormwater Collection & Disposal 3 - 3 3Total Revenue 3 - 3 3ExpensesStormwater Collection & Disposal 3,641 3,359 (282) 3,238 1.Total Expenses 3,641 3,359 (282) 3,238Net Operating CosT OF ACTiviTY (3,638) (3,359) (279) (3,235)Note1. Higher rates, net personnel and service delivery costs.Significant Activity Capital Projects: StormwaterEnvironmentalSustainability... What the Council Does StormwaterThe Council provides a stormwater system to protect property from major flooding events. Expenditure is requiredto maintain and expand this system for future needs.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalStormwater pipe upgrades 174 688 514 a.City Wide stormwater pump station upgrades 14 21 7 b.City Wide restoring flood capacityof stormwater channels 102 106 4 c.Total Capital Renewal 290 815 525 647Capital NeWStormwater subdivision contributions 30 235 205 d.Stormwater upgrading in conjunctionwith roading improvements 178 265 87 e.Urban Waterways installationof local treatment devices 54 106 52 f.Upper Kawau Stream catchment diversionpipeline works in Albertand Featherston Streets - 529 529 g.Kawau Stream flow capacity improvements 2 235 233 h.City Wide new pipes to re-directstormwater away from sewer systems 96 106 10 i.Total Capital NeW 360 1,476 1,116 552Total Capital pRojeCTs 650 2,291 1,641 1,199Significant acquisitions and explanation of variances from Annual Plana. Work planned in Ferguson Street deferred with $595kbudget carried forward to complete.b. Less work required than anticipated.c. Work completed in Oxford Street, Ashhurst.d. Less developer work required to be undertaken.e. Scoping works commenced late with work unable tobe completed due to resource availability.f. Work cost less than anticipated.g. Programme has been cancelled due to uncertaintiesregarding overall stormwater catchmentimprovements. Requirement for future programme tobe reviewed.h. Programme deferred as the project is dependentupon development in this area. A commitment hasbeen made to the developer to complete the workwith $233k budget to be carried forward to enablecompletion.i. Works completed in Moana Street.108 Palmerston North City Council Annual Report 2011/12

Activity - WastewaterWhat the Council doesThe Council provides wastewater systems for thesafe and reliable collection, treatment and disposalof wastewater (sewage) from residential, industrialand commercial properties.There are two separate public wastewater systemsservicing Palmerston North City. These cover themain urban area of the City and Ashhurst. Thesystem consists of a treatment plant for the mainurban area, a treatment pond at Ashhurst, 385 kmof pipelines, and 26 pump stations.The Council develops and implements aWastewater asset management plan to ensurethat these assets can deliver reliable services toexisting and future customers in the most costeffective and sustainable way.Key environmental sustainability issues for thisactivity are:• minimising the amount of electricity andchemicals used• investigating and developing, whereeconomic outcomes are favourable, furthergas generation utilisation projects• developing a sustainable solution for sludgedisposal• managing system impacts through an ongoingprogramme of inflow and infiltration reductionto reduce wet weather flows in the seweragenetwork• developing an education programme to reducethe amounts of phosphates in the wastewaterreceived at the Wastewater Treatment Plant.Why the Council does this and itscontribution to Council vision andmajor goalsWastewater helps achieve the Council’s goals forthe City of people wanting to live here, attractingand retaining businesses and environmentalsustainability.People expect modern cities to have reliable,safe and well maintained wastewater systems(sewerage) for residential, industrial andcommercial properties. Wastewater is somethingthat people don’t want to have to think about –it should just “disappear down the drains”. Thewastewater system provides a key public healthfunction in the City.Businesses also rely on reliable and efficientwastewater systems to remove wastewaterfrom their place of business. A lack of reliablewastewater systems can give a city a bad image,which makes it hard to attract businesses.People also want to make sure that wastewater isproperly treated so that discharge from the systemhas minimal environmental impact.Adequate systems for the disposal of wastewaterare a fundamental requirement for the health andgeneral well-being of the community.What happened in the yearFocus for the Wastewater activity this year hasbeen around the discharge from the Totara RoadWastewater Treatment Plant to the ManawatūRiver. The Council was deemed by HorizonsRegional Council to be non-compliant with acondition of the discharge consent, related to thedischarge not having a significant adverse effecton aquatic life within the river. Horizons RegionalCouncil has expressed concern that the levels ofperiphyton (a type of algal growth used to indicatethe health of the river) are higher than expectedin the vicinity of the discharge. In order to betterunderstand the cause of the high periphytonlevels the Council and Horizons Regional Councilundertook a joint investigation to monitor theecology of the river. The results of this study areyet to be finalised and it is hoped that the resultswill enable the two councils to jointly determinea course of action that will serve to improve thequality of the Manawatū River in the vicinity of thewastewater treatment plant.Work has continued this year to develop thewastewater treatment plant sludge digestionsystems to maximise methane production forelectricity generation. It was hoped that theelectricity generator would be operational thisfinancial year, but commissioning of the new planthas taken longer than expected. It is anticipatedthat the plant will be generating electricity beforethe end of 2012.Work has continued on renewal of the sewernetwork with refurbishment of pipes in VictoriaAvenue, Cuba Street and Severn Terrace. A programof lateral connection repairs was also completedon various streets through the city. Other minorworks included an upgrade of works at KensingtonMews and Vogel Street pump stations.What the Council Does WastewaterEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/12109

Work programmed for Ashhurst WastewaterTreatment Plant in 2011/12 was delayed asdecisions were made as to whether to pumpwastewater from Ashhurst to Totara RoadWastewater Treatment Plant in the city or whetherto redevelop and upgrade the existing oxidationponds in Ashhurst. These decisions are beingreached in the knowledge that the existingdischarge consent for the Ashhurst wastewatertreatment plant expires in August 2013. In May2012 the Council decided to pump wastewater fromAshhurst to the main city treatment plant in TotaraRoad. Preliminary design work is now underwayto determine the route and requirements of thenew pipeline. This project will be a major focus forWastewater activity in the coming year.Major issues relating to theWastewater Activity include:Longburn and Bunnythorpe - As a resultof boundary changes between the City andManawatu District Council, responsibility for thewastewater collection and disposal systems inBunnythorpe and Longburn have passed to theCouncil from 1 July 2012. Initially a key focus willbe on better understanding the operations of bothsystems. In the longer term the Council will needto decide the best methods for treatment anddisposal of wastewater from both towns.Discharge to the Manawatū River - Finalisationof the river ecology monitoring study with resultsexpected during the next financial year. Decisionswill then follow as to the best means of mitigatingthe effects of the discharge on the river.EnvironmentalSustainability... What the Council Does WastewaterUrban Growth and Network Capacity - TheCouncil is narrowing its focus on the best locationsfor future residential and industrial growth. Oncethe areas for growth are defined a study will becommenced to determine the upgrading needsof the wastewater system to provide capacityfor future growth, and possible servicing ofsatellite towns such as Bunnythorpe, Longburnand Ashhurst. Part of the study will also focuson providing reliance for critical elements of thenetwork in a major seismic event or other naturaldisaster.110 Palmerston North City Council Annual Report 2011/12

How did we performPerformance Measures Result CommentThe Council provides a safe and reliable collection system for wastewater.The Council provides advance notice of planned work that would affect supply.1. SatisfactionResidents’ satisfaction with the Council’swastewater collection is maintained or increased.The average of the last three surveys is 93% very orfairly satisfied. (Communitrak)2. DisruptionsAt least 24 hours’ notice is given to affected partiesof planned shutdowns.3. ComplaintsThere is a decreasing number of complaintsreceived about sewer overflows (five-year trend).Base: 22 (previous five-year average from measurecommencement)94% Survey done in November 2011.94% very or fairly satisfied and 5% neutralor don’t know.Target met Residents notified of all plannedshutdowns.Target met18 complaints received.Complaints mainly relate to manholecovers overflowing, and leakage caused bypossible broken pipes. 7 complaints werein regards to overflow in private toilets.Levels of ServiceThe Council disposes of wastewater to environmentally acceptable standards.4. ComplianceFull compliance with environmental effectmonitoring conditions in discharge consents.28 consentconditionscomplied with.1 consentconditionin questionconcerning theeffects of thedischarge onaquatic life in theManawatū River.Horizons Regional Council, duringmonitoring of the Manawatū River, foundhigher levels of periphyton growth thanexpected. Further studies are beingconducted jointly with Horizons and PNCCto determine the extent to which thedischarge is having adverse effects on theriver.The Council maintains and develops the wastewater system to meet the current and future needs in acost-effective way.5. Asset Management PlanA 20 year asset management plan is in place forWastewater. This plan is independently auditedby asset management consultants and is formallyreviewed at three-yearly intervals. The next reviewis due by June 2012.Target metThe Council manages its Wastewater Activity in a financially responsible way.6. Cost EffectivenessThe budget set by the Council is not exceeded.Target not metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.The budget was exceeded due to:• The sludge plant not generatingelectricity as planned with reducedrevenue as well as costing Council topurchase electricity from the grid.• Additional costs incurred to undertakethe joint investigation for the WWTPdischarge with HRC.• Higher chemical use due to lower riverflows.What the Council Does WastewaterEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/12111

Financial ResultsActivity Operational Results: WastewaterRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Treatment & Disposal 84 520 (436) 469 1.Wastewater Collection 640 505 135 620 2.Total Revenue 724 1,025 (301) 1,089ExpensesTreatment & Disposal 2,075 2,264 189 2,963 3.Wastewater Collection 4,955 4,375 (580) 4,535 4.Total Expenses 7,030 6,639 (391) 7,498Net Operating CosT OF ACTiviTY (6,306) (5,614) (692) (6,409)EnvironmentalSustainability... What the Council Does WastewaterNote1. Lower electricity generation due to breakdowns ofdigester gas engine and lower sludge sales.2. Higher revenues achieved due to additionaltradewaste revenue from new customers.3. Lower net personnel costs offset by higher operatingexpenses than budgeted, particularly greater chemicalusage due to low river flows and higher energy costsresulting from less on site generation at the landfillrequiring higher imported electricity.4. Higher depreciation, service delivery costs, netpersonnel and consultancies relating to HorizonsWastewater Consents offset by lower interest cost.112 Palmerston North City Council Annual Report 2011/12

Significant Activity Capital Projects: WastewaterThe Council provides a safe and reliable collection system for wastewater and disposes of wastewater toenvironmentally acceptable standards. To do this Council maintains and develops the wastewater system to meetcurrent and future needs in the most cost effective way.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalWastewater reticulation renewals 518 529 11 a.City Wide wastewater pump station renewals 26 32 6 b.Totara Road Wastewater TreatmentPlant renewals 139 212 73 c.Total Capital Renewal 683 773 90 1,204Capital NeWWastewater treatment upgrade 52 53 1 d.Wastewater subdivision contributions 67 212 145 e.Aokautere Village connection to Citysystem to replace sewer pond 103 - (103) f.Totara Road Wastewater Treatment Planthealth and safety improvementsconcerning digester gas 78 159 81 g.Ashhurst Wastewater treatment options 15 1,000 985 h.Total Capital NeW 315 1,424 1,109 676Total Capital pRojeCTs 998 2,197 1,199 1,880Significant acquisitions and explanation of variances from Annual Plana. Major renewal in Victoria Avenue and renewal oflaterals in Cook Street, Moheke Avenue and elsewhere.b. Electrical replacements in Vogel Street and pumpreplacements in Kensington Mews.c. Volume of work less due to deferral of inlet screenreplacements with $50k budget to be carried forwardto complete.d. For required electrical switchboard enhancement tomeet pump requirements.e. Reduced activity as lower developer requirementsundertaken in the year.f. Work carried over from 2010/11 with tender pricehigher than original estimate.g. New gas detection and alarm systems installedwith a $78k budget carry forward made to enablecompletion of boiler replacement.h. Work not complete with $993k budget carriedforward.EnvironmentalSustainability...What the Council Does WastewaterPalmerston North City Council Annual Report 2011/12113

EnvironmentalSustainability... What the Council Does WaterActivity - WaterWhat the Council doesThe Council provides a safe and reliable supplyof water to residential, industrial and commercialproperties.There are three public water supply systems:Palmerston North main urban area, Ashhurst andthe Linton rural area.These systems consist of two dams at Turitea, fourreservoirs, five bores, one full treatment plant, 510km of piped reticulation, and fire hydrants togetherwith valves, tobies and water meters which supplywater to approximately 28,000 properties.The Council develops and implements a Waterasset management plan to ensure that theseassets can deliver reliable services to existing andfuture customers in the most cost effective andsustainable way.Why the Council does this and itscontribution to Council vision andmajor goalsLike the previous Activities, Water contributesto the goals of making Palmerston North acity where people want to be, attracting andretaining businesses and to making it a moreenvironmentally sustainable city.An adequate supply of water suitable for drinkingis a fundamental requirement for the health andgeneral well-being of the community. People wantto live in a city that has clean and safe drinkingwater. They want enough water pressure to havea “decent” shower and for general household use,such as watering gardens. They also want theCouncil to have a water conservation strategy.Businesses and industry also rely on a good supplyof water.Residents and businesses expect the water systemto be reliable, well maintained and that it keeps upwith growth in the City.The Water Activity also supports communitysafety through the fire fighting capability of thewater system.The Council contributes to environmentalsustainability through the Water Activity byimplementing conservation measures to reducethe amount of water that people use (e.g. limitingdemand for garden watering in the summermonths) and by reducing the amount of waterlost through leaks in the system. It also promotesopportunities for the efficient use of water. Aswell as this it ensures that its treatment plant andpumps are efficient. The Council also maintainsthe ecological condition of the water catchment atTuritea Reserve and the Turitea Stream.What happened in the yearWork on replacing the old cast iron water pipes inthe City is largely complete and in future years theamount of money spent on water pipe renewalswill be reduced. This year pipes were renewed inWeston Avenue, Langston Avenue, and Margaret,Rainforth, Vogel, Willis, Fitchett, Manuka and KingStreets.The Council develops and implementsa Water asset management plan toensure that these assets can deliverreliable services to existing andfuture customers in the most costeffective and sustainable way.Work continues in upgrading the waternetwork to provide improved water distributionand redundancy through the network, withconstruction of a new water main along theManawatu River bank and into Albert Street. Thiswork will continue next year with further extensionlater in the 10 Year Plan period.A number of minor upgrades and renewals wereundertaken at the Water Treatment Plant (WTP),the bores and the pump stations including repairsto the WTP access road, pump replacements andturbidity meters replacement.114 Palmerston North City Council Annual Report 2011/12

Several projects were put on hold this year pendinga review of the Council’s long-term water supplyrequirements. Installation of new water storagetanks at Takaro and Papaioea bores were deferred.These tanks were proposed to lift the Council’sMinistry of Health Grading for reticulation from Bto A grade. However, the importance of achievingan A grade for reticulation has reduced in recentyears and it was felt that this project shouldbe deferred. Ashhurst Bore refurbishment wasalso deferred pending a review of the long-termoptions for Ashhurst and other satellite townshipswithin the City boundary, particularly with regardto connecting these townships to the mainPalmerston North water supply. Turitea ValleyRoad/Pacific Drive water supply project has beenpostponed until 2013/14 to allow more urgentprojects to proceed in the coming year.Next year, as well as the ongoing pipe replacementwork, there are programmes for refurbishment ofPapaioea Park water bore, bores and headworksecurity improvements and work on improvingsafety of the dams at Turitea.There have been no major failures to the watersupply system during the year. Last year there weretwo failures to the main trunk over the FitzherbertBridge. These were investigated however nocause was identified. There is no reason to believethese will repeat with remedial action at the timeappearing to remedy the supply system.Major issues relating to theWater Activity include:Longburn and Bunnythorpe - As a result ofboundary changes between the City and ManawatuDistrict Council, responsibility for the water supplysystems in Bunnythorpe and Longburn havepassed to the Council from 1 July 2012. Initiallya key focus will be on better understanding theoperations of both systems. In the longer term theCouncil will need to decide the best methods forsupply and treatment for both towns.Urban Growth and Network Capacity - TheCouncil is narrowing its focus on the best locationsfor future residential and industrial growth. Oncethe areas for growth are defined a study will becommenced to determine the upgrading needsof the water system to provide capacity for futuregrowth, and possible servicing of satellite townssuch as Bunnythorpe, Longburn and Ashhurst.Part of the study will also focus on providingreliance for critical elements of the network ina major seismic event or other natural disaster.Currently provision of fire-fighting capacity to theNE Industrial area is problematic so the study willneed to identify the improvements required to liftpressures and flows for firefighting in the area.What the Council Does WaterEnvironmentalSustainability...Palmerston North City Council Annual Report 2011/12115

How did we performPerformance Measures Result CommentThe Council provides a good quality, safe and reliable water supply at suitable pressure (e.g., for a“decent shower”) for household use with limited supply for garden watering.EnvironmentalSustainability... What the Council Does WaterLevels of Service1. SatisfactionResidents’ satisfaction with the Council’s watersupply is maintained or increased. The average ofthe last three surveys is 81% very or fairly satisfied.(Communitrak)87% Survey done in November 2011.87% very or fairly satisfied and 3% neutralor don’t know.The Council provides a continuous reliable supply at a flow suitable for commercial and industrialneeds and at a quality equal to domestic supply and provision of advance notice of unavoidabledisruptions.2. Discoloured WaterThe number of discoloured water incidents,beyond those caused by notified planned actions,be reduced to no more than four per year. (Newmeasure, and will be revised when the cast ironrenewal project is complete.)3. ComplianceThe Council complies 100% with current DrinkingWater Standards for New Zealand.4. ComplaintsThere is a decreasing number of complaintsreceived about lack of pressure (five year trend).Base: 65 (previous five-year average from measurecommencement)5. DisruptionAt least 24 hours’ notice is given to affected partiesof planned shutdowns.Target metOne incident (in Ashhurst on 12 January2012) related to failure of submersiblepump.(An incident is 10 or more complaints forone event.)Target met Water supply compliant with DWSNZ 2005.Target met36 complaints received.Target met Residents notified of all plannedshutdowns.The Council provides suitable pressure flow and hydrant locations for fire fighting.6. Fire Hydrants100% compliance with New Zealand Fire Servicerequirements for fire hydrants.Target metNo non-compliances notified by the NZFire Service.The Council provides responsible environmental management of water catchments.7. ComplianceTarget metNo non-compliance notices were receivedFull compliance with consent monitoringby Council.conditions that relate to environmental effects.The Council maintains and develops the water system to meet the current and future needs in a costeffectiveway.8. Asset Management PlanA 20 year asset management plan is in place forWater. This plan is independently audited by assetmanagement consultants and is formally reviewedat three-yearly intervals. The next review is due byJune 2012.Target metThe Council manages its Water Activity in a financially responsible way.9. Cost EffectivenessThe budget set by the Council is not exceeded.Target not metAudited Asset Management Plans wereadopted by the Council in April 2012 andare due to be reviewed in 2014.Budget not met due to lower water bymeter revenue and higher operating costs.116 Palmerston North City Council Annual Report 2011/12

Financial ResultsActivity Operational Results: WaterActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000RevenueWater Collection 280 - 280 20 1.Water Distribution 1,369 1,686 (317) 1,407 2.Water Treatment - - - -Total Revenue 1,649 1,686 (37) 1,427ExpensesWater Collection 4,782 4,455 (327) 4,832 3.Water Distribution 993 883 (110) 919 4.Water Treatment 962 1,066 104 960 5.Total Expenses 6,737 6,404 (333) 6,711Net Operating CosT OF ACTiviTY (5,088) (4,718) (370) (5,284)Note1. Unbudgeted access rights fee and power generationsale.2. Water by meter revenue budget was set unrealisticallyhigh, actual revenue in line with 2011.3. Higher net personnel and service delivery costs andcosts from cancelled capital programmes.4. Higher net personnel and service delivery costs.5. Lower net personnel costs offset by higher servicedelivery costs.EnvironmentalSustainability...What the Council Does WaterPalmerston North City Council Annual Report 2011/12117

Significant Activity Capital Projects: WaterThe Council provides households and commercial users with a good quality, safe and reliable water supply at asuitable pressure. To do this Council maintains and develops the water system to meet current and future needs inthe most cost effective way.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalWater collection renewals 134 159 25 a.Water treatment and supply renewals 98 101 3 b.Water reticulation replacements 1,994 2,000 6 c.Total Capital Renewal 2,226 2,260 34 2,674EnvironmentalSustainability... What the Council Does WaterCapital NeWManawatū Riverbank construction ofnew water supply pipeline 66 741 675 d.Water subdivision contributions 45 211 166 e.Turitea dam water supply andCity bore improvements 177 159 (18) f.Turitea Water Treatment Plantservice improvements 54 53 (1)Turitea Valley Road, Pacific Drivewater supply link 10 750 740 g.Takaro and Papaioea Park boresnew storage tanks (8) 500 508 h.Albert Street new water supply pipeline 396 476 80 i.Ashhurst water supply bore replacement (41) 325 366 j.Total Capital NeW 699 3,215 2,516 1,544Total Capital pRojeCTs 2,925 5,475 2,550 4,218Significant acquisitions and explanation of variances from Annual Plana. For minor renewals with higher number of watertobies and meters replacement.b. For minor renewals.c. For the ongoing renewal and upkeep of the existingwater network. Major item is the replacement of oldcorroded pipes to address discoloured water.d. Work was deferred waiting for decision on relatedprojects with $500k budget carry forward to complete.e. Reduced activity as lower developer requirementsundertaken in the year.f. Higher cost due to unforeseen difficulties of the minihydro expansion construction.g. Project reviewed with $235k budget carry forward tostart the land purchase negotiation.h. Project deferred with the previous desire for A gradingwater reticulation now less important (currently Bgrading).i. Some work deferred waiting for decision on relatedprojects.j. Project deferred and reviewed as a part of the satellitetowns strategy and also link to boundary alterationsand NE industrial area.118 Palmerston North City Council Annual Report 2011/12

Support ServicesGroup DescriptionThe Support Services Group of Activities consists of:• Commercial or Strategic Investments• Corporate Support• Customer ServicesPhoto: Removal of logs for sale felled from the Arapuke Forest.These have been grouped together because theysupport the Council’s other Activities. For example,they provide the Council with other income sourcesthat allow it to reduce the amount needed fromratepayers. They provide the Council’s financial,human resources and information systems that allthe other Activities depend upon. They also providea “first point of contact” between residents and theCouncil about the whole range of things that peopletalk to the Council about. In that way they contributeindirectly to all five of the Council’s major goals.SupportServicesWhat the Council DoesPalmerston North City Council Annual Report 2011/12 119

Group of Activities Operational Requirement and Funding SummarySupport Services GroupRevenueActual Budget Variance Actual2012 2012 2012 2011$000 $000 $000 $000Commercial or Strategic Investments 5,681 6,514 (833) 6,455Corporate Support 1,000 975 25 1,159Customer Services - - - -Total Revenue 6,681 7,489 (808) 7,614ExpensesCommercial or Strategic Investments 4,773 4,948 175 4,770Corporate Support 763 742 (21) 860Customer Services - - - -Total Expenses 5,536 5,690 154 5,630Net Operating COST OF ACTIVITY GROUP 1,145 1,799 (654) 1,984Rating AllocationAdd back depreciation 3,162 4,408 (1,246) 3,624Renewal capital expenditure (3,387) (4,030) 643 (2,088)External revenue for renewal capital - - - -Borrowing effect of renewal 3 year averaging 587 587 - (364)Provision for debt reduction (664) (664) - (150)General rates allocation 1,869 (2,100) 3,969 823Funding surplus/(deficit) 2,712 - 2,712 3,829SupportServicesWhat the Council Does120Palmerston North City Council Annual Report 2011/12

Activity - Commercial or Strategic InvestmentsWhat the Council doesThe Council has a range of assets that it owns forcommercial or strategic reasons. These include theLong Term Investment Fund, the Palmerston NorthAirport and the Gordon Kear Forest.The Council also has 96 Public Housing Units atthree locations around the City (Achilles Court,Rakaia Place and Waiheke Court). These are part ofthe Council’s Investment Activity because rents arecharged at market rates.The Council provides some services to otherCouncils on a commercial basis. These include acall centre and building services.Why the Council does this and itscontribution to Council vision andmajor goalsThe Council owns these assets because theygenerate revenue which helps fund the services itprovides to residents. This reduces the amount itneeds in rates.The Council also acts as a “friendly landlord” for thePublic Housing Units by not requiring potentialtenants to have rental references, New Zealandcitizenship or a credit history in this country.This means that there is a social aspect to thishousing that helps new migrants and internationalstudents to get a footing in the housing market inPalmerston North.The Council manages these assets through theLiability Management and Investment Policy andthe Airport Statement of Intent. Hence thereare no external levels of service or performancemeasures.What happened in the yearCommercial or Strategic InvestmentsGordon Kear Forest - The fourth season ofclearfelling has been completed in the GordonKear Forest, which is jointly owned by PalmerstonNorth City and Manawatu District Councils.Clearfelling is scheduled to take nine years in totaland is carried out mainly in summer when groundconditions are dry.The intended harvest programme was cut backthis season due to lower log prices. Proceeds fromlog sales were used to cover harvest costs and torepay further outstanding forestry encouragementloans.Site works have been carried out in preparation forreplanting early in the 2012/13 year.Investment Fund - Consistent with the Council’sstrategy to progressively wind down theInvestment Fund in an orderly manner, $2.59million was distributed back to the Councilduring the year. This compared with the budgetassumption of $3.3 million. The Fund earned $0.89million during the year (compared with the budgetassumption of $1.3 million) and Fund valuesreduced by $0.6 million (budget assumption nil).Investment Property - The commercial propertyportfolio is mostly made up of the Council’sretail properties in George Street, Main Street,two restaurant spaces in The Square next to theCouncil Chamber and the ground floor spaces ofthe Regent Theatre. The main highlight for thisactivity is that all of these properties are beingleased at present apart from one space in MainStreet temporarily being used as a workshop forThe Council manages these assetsthrough the Liability Managementand Investment Policy and theAirport Statement of Intent. Hencethere are no external levels of serviceor performance measures.the Civic Administration re-roofing project. Therehave been a number of enquiries from prospectivetenants about taking up this Main Street spaceonce the re-roofing project is complete. Thesecommercial properties are mostly associatedwith Council properties and help to ensure thatthe spaces at street level are vibrant and active.The shops associated with the Regent Theatreare particularly important in this regard as theycontinue to reinforce a positive image of the retailsector in Broadway Avenue.The office space rental in the fourth and fifth floorof the Civic Administration Building remains largelyvacant. There are some long standing tenants onthe third and fourth floors however there has beenvery little interest in the remaining floor space. Inthe 2012/13 year the Council will continue to tryand lease the vacant spaces on the fourth and fifthfloors.Palmerston North City Council Annual Report 2011/12What the Council Does Commercial or Strategic InvestmentsSupportServices121

What the Council Does Commercial or Strategic InvestmentsSupportServices122The effect of the above, plus higher maintenanceand net personnel costs, meant InvestmentProperty incurred a net deficit of $265k for the yearcompared to $199k in 2010/11.Public Housing - The highlight in the publicrental housing portfolio is that the occupancyrate remains high, averaging over 95 percent, withrental revenue slightly above expected budget.The turnover rate is consistent with previousyears with units being repaired as necessary asthey become vacant. Any vacant units are beingfilled quickly and there is a waiting list of potentialtenants, the strongest demand continues to befor one and two-bedroom units. The dampnessproblems uncovered in some units in recent yearshave been resolved meaning the units are all ingood condition. Tenants in the complexes aremade up from people from over eighteen differentnationalities, many of them international students.Rakaia Place continues to be the preferredcomplex for the international students and theirfamilies because of the location near the CBD andbus routes to Massey University.The effect of the above, plus higher net personneland liaison costs, meant Public Housing incurreda reduced net surplus of $363k for the yearcompared to $414k in 2010/11.External ContractsBuilding Services - A highlight has been thecontinuing delivery of a high standard of buildingservices on behalf of Manawatu District Councilthat has met their needs. The focus for 2012/13will be on continuing to identify cost effectiveservice improvement opportunities. It is expectedthat the likely changes to the Building Act andrelated productivity improvement initiatives bythe Department of Building and Housing will be akey challenge for this period.After Hours Call Centre - The After Hours CallCentre has gone through continued growthduring the year. Three new councils now receiveour services (total 28), growing the service callvolume by more than 25%.A key challenge during the year has beenmanaging the negative consequences arisingfrom implementing changes in work practicesand resource levels. As a result of a number of keyappointments being made the service has nowstabilised.As for any Call Centre a major issue has beenon up skilling staff in a timely manner so as tominimise the impact of change on service levels.Further there is a need to utilise existing and newtechnology such as the workforce planning tool tomaximise the productivity of the service.Palmerston North City Council Annual Report 2011/12The focus for 2012/13 is to investigate andimplement where possible IT integrated solutions,strengthen client relationships and take a moreregional approach to operating the service. It isalso intended to develop and implement a feasibleresourcing model to meet current and futureneeds both in terms of staffing and physical space.Palmerston North International Airport -Parking Enforcement Administration - TheCouncil continued to deliver the administrationelement of this service throughout the year. Akey highlight was a noticeable reduction in thenumber of tickets issued by Airport staff, from899 for 2010/11 down to 556 for 2011/12, with acorresponding impact on administration support.

Financial ResultsActivity Operational Results: Commercial or Strategic InvestmentsRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000External Contracts 2,646 2,710 (64) 2,687 1.Investment Property 398 613 (215) 372 2.Investments (including Investment Fund) 1,201 1,826 (625) 2,017 3.Investments in Companies(including Airport) 211 150 61 143 4.Laboratory (External Contracts) 93 205 (112) 131 5.Print Synergy 138 112 26 130 6.Public Rental Housing 994 898 96 975 7.Total Revenue 5,681 6,514 (833) 6,455ExpensesExternal Contracts 2,423 2,538 115 2,570 8.Investment Property 663 501 (162) 571 9.Investments (including Investment Fund) 274 342 68 347 10.Investments in Companies(including Airport) 573 632 59 551 11.Laboratory (External Contracts) 77 218 141 122 12.Print Synergy 132 102 (30) 48 13.Public Rental Housing 631 615 (16) 561 14.Total Expenses 4,773 4,948 175 4,770Net Operating CosT OF ACTiviTY 908 1,566 (658) 1,685Note1. City Enterprises external revenue down on budgetwith offsetting reduction in expenses, plant recoverydown due to lower utilisation than budgeted. AfterHours Call Centre revenue higher than budget fromadditional customers with related higher expenses.2. Rentals down due to vacancies, in line with2011.3. Lower investment fund income received due to higherwithdrawals from the fund and lower forestry harvestrevenue due to reduction in programme.4. Actual dividend was higher than budgeted dividenddue to higher PNAL profit.5. Lower activity with offsetting lower expenses.6. Higher sales than budgeted matched with higherexpenses.7. Higher rent, in line with 2011.8. Reduced expenses in line with lower revenue.9. Higher maintenance and net personnel costs.10. Lower interest expense.11. Lower interest expense.12. Reduced expenses in line with lower revenue.13. Higher personnel and outwork expenses in line withhigher revenue.14. Higher net personnel, liaison costs.What the Council Does Commercial or Strategic InvestmentsSupportServicesPalmerston North City Council Annual Report 2011/12123

Significant Activity Capital Projects: Commercial or Strategic InvestmentsCapital projects within the Commercial or Strategic Investments area are to resource capability to enable servicedelivery to the community. Major categories are information management, vehicles and plant for communityservices and investments, for example airport development.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalCouncil Wide plant, vehicle andfurniture replacement 1,370 1,677 307 a.Gordon Kear Forest replant 91 106 15 b.Print Synergy renewals 3 - (3)Holiday Park replacements 22 21 (1) c.Public rental housing renewals 90 81 (9) d.Total Capital Renewal 1,576 1,885 309 1,352What the Council Does Commercial or Strategic InvestmentsCapital NeWCouncil’s service developmentnew technology and programmes - 288 288 e.Mobile library fitout 11 300 289 f.Gordon Kear Forest internal roading 32 46 14 g.Additional investment inCivic Assurance shares 196 - (196) h.Total Capital NeW 239 634 395 283Total Capital ProjeCTs 1,815 2,519 704 1,635Significant acquisitions and explanation of variances from Annual Plana. The cyclic upgrading of the Council’s plant, vehicle,furniture and equipment. Minor purchases havebeen expensed. Replacement of mobile library notcompleted and carried forward to 2012/13.b. For replant of trees following harvest.c. For routine renewals. Includes cost for 2012/13programme design completed to enable constructionearly in 2012/13.d. Minor renewals as required and to upgrade asvacancies occur with extra work required to completeleaky home repairs.e. For new technology purchases, budget not requiredcurrent year.f. Deferred to 2012/13 year with $300k budget carryforward.g. Work not complete with $14k budget carry forward.h. Shares subscribed for with additional budget approvalfrom Council.SupportServices124Palmerston North City Council Annual Report 2011/12

Activity - Corporate SupportWhat the Council doesThis Activity is about the Council’s internalservices that support the external services Councilprovides to residents. These are human resources,information management and financial services.The cost of operating and maintaining the CivicAdministration Building is covered by this Activity.There are some one-off discretionary projects thatwill improve the way the Council provides theexternal services to residents.The direct cost of providing these services is spreadover Council’s external services as overheads.Because they are internal services there are no10 Year Plan levels of service or performancemeasures.What happened in the yearInformation ManagementThe Information Management Strategic Plan wasformally adopted at the beginning of the financialyear, and since then good progress has been madeon a number of the initiatives outlined in thestrategy.Identifying system and data migrationrequirements for integration of the propertiestransferring to the City following the boundaryalteration with Manawatu District Councilwas started 12 months ago and will come tofruition with this to occur 1 July 2012. This hasrequired significant resource to identify the detailrequired to actually get the boundary alterationimplemented.Review of information reporting is critical toimprove access, transparency, relevancy andtimeliness of financial and other informationto management. A key area of focus is thedevelopment of financial dashboards, currently inphase one of this project.Compliance and security has been a focus duringthe year, with particular attention to the Council’sown processes and how they can be improved. Asignificant part of these improvements has beenaround access to information and how that accessis managed and communicated. This has seen anew service management and monitoring systemintroduced, which in turn is providing a betteroperational view of the Council’s environment.Civic Administration BuildingThere have been three major projects underwayin the CAB over the year. The first is the renewalprogramme for the heating and ventilation systemin the ground floor spaces between the mainentrance and Main Street. The previous systemwas roof mounted and prone to freezing at varioustimes of the year which rendered it ineffectivewhen it was needed the most. The new systemis connected to the main boiler which servicesthe rest of the Civic Administration Building andtherefore is able to be controlled much moreaccurately. The second project is the re-roofingof the ground floor offices and the retail shopson Main Street which were prone to water leaks.This has been a difficult time for staff on theground floor who have had to work in some tryingconditions as the work continued overhead. Thestaff have now taken the opportunity to move totemporary office space while the remainder of theproject is completed.Compliance and security hasbeen a focus during the year, withparticular attention to the Council’sown processes and how they canbe improved. A significant partof these improvements has beenaround access to information andhow that access is managed andcommunicated.The third project is the lift renewal project.Fortunately the work was programmed for the2011/12 financial year as two of the lifts hadstarted to show signs that they were nearingthe end of their serviceable life. The project wasdelayed due to parts being held up in the portsof Auckland dispute early in 2012. The projectremains underway with the building currentlybeing serviced by two lifts while the other twoare having the lifting and control plant renewed.Once they are completed the remaining two willhave their lifting and control plant renewed.Palmerston North City Council Annual Report 2011/12What the Council Does Corporate SupportSupportServices125

The CAB has been assessed for earthquake risk bya team of engineers looking at all of the Council’spublic buildings. The results of the investigationare inconclusive because the site subsoilclassification is unknown. The subsoil can have amarked effect on the performance of a building inan earthquake. Further investigations are beingcarried out to determine the exact classificationof the subsoil. Once this is known Council willhave a better idea of what the earthquake risk willbe for this building. The building is essentiallymade up of three separate structures with eachpart needing to be assessed individually and thenmodeled as a whole.CommunicationA Strategic Communications Plan was adoptedwith a key focus on ensuring timely mediaresponses and early involvement in developingcommunication plans for projects and issues.The early involvement of communications staff inprojects and handling of issues helps ensure theCouncil communicates directly and clearly withidentified audiences. Communications initiativeshelp the Council in its journey towards PalmerstonNorth being recognised as a vibrant, caring,innovative and sustainable city.The renewals programme for 2012/13 will focus onthe completion of the lift project and assessmentof the ground floor space as a whole taking intoconsideration the best entry points and placementof public meeting rooms. There may be somecapital works required to strengthen the buildingdepending on the results of the earthquake riskmodeling and soil classification investigations.SupportServicesWhat the Council Does Corporate Support126Palmerston North City Council Annual Report 2011/12

Financial ResultsActivity Operational Results: Corporate SupportRevenueActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Civic Administration Building 336 325 11 374Communication 15 20 (5) 20Financial Services 648 629 19 751Human Resources - - - 1Information Services 1 1 - 13Total Revenue 1,000 975 25 1,159ExpensesCivic Administration Building 310 239 (71) 297 1.Communication 362 403 41 562 2.Financial Services 182 83 (99) 52 3.Human Resources 1 - (1) 14Information Services (92) 17 109 (65) 4.Total Expenses 763 742 (21) 860Net Operating COST OF ACTIVITY 237 233 4 299Note1. Higher insurance, cleaning and service delivery costs.2. Lower professional service costs.3. Higher bank fees and professional service costs.4. Broadband development not incurred.Significant Activity Capital Projects: Corporate SupportCapital projects within the Corporate Support area are to manage and develop the Council’s properties to provideresource capability, service the Council’s needs and enhance investments.Actual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000Capital RenewalTelecommunications replacement 109 119 10Computer replacement, softwareand network upgrades 486 521 35 a.Information Managementstrategic plan project 44 320 276 b.Aerial photography 46 46 -Staff cafeteria renewals 1 5 4 c.Civic Administration Buildingvarious floor refurbishments 747 605 (142) d.Civic Administration Building lift upgrade 378 529 151 e.Total Capital Renewal 1,811 2,145 334 736Total Capital ProjeCTs 1,811 2,145 334 736Significant acquisitions and explanation of variances from Annual Plana. The cyclic upgrading of Council’s computers, softwareand information management systems.b. Full budget not required.c. Full budget not required.d. Reroofing the ground floor space and additional minorworks on the ground floor heating and ventilationsystem were planned. The heating and ventilationsystem was in such poor condition that a more majorupgrade was required with additional cost for designand physical construction works. Also unbudgetedwork required to remedy a leak in the CouncilChamber roof.e. Work not complete with $250k budget to be carriedforward.What the Council Does Corporate SupportSupportServicesPalmerston North City Council Annual Report 2011/12127

What the Council Does Customer ServicesSupportServices128Activity - Customer ServicesWhat the Council doesThe Council exists to provide services to people inPalmerston North. Residents and City organisationsare the Council’s customers and the Council aimsto provide all of the services described in theseActivity pages to residents at a high standard. Todo this the Council regularly talks with residentsto understand what services they expect theCouncil to provide and to understand the qualityof services that they are willing to pay for (eitherthrough rates or fees). All staff aim to provide highquality, timely services to the people that use theirservices.Part of this service includes a central CustomerServices Centre on The Square that is the first pointof contact for the public to access the Council. TheCustomer Services Centre provides residents withinformation about Council activities, a means tolog complaints and faults about Council services,to lodge applications for various consents andlicenses, and enables residents to pay their ratesand any fees or charges for Council services. TheCustomer Services Centre is open from 8am to5pm Monday to Friday (except Wednesday whenit opens at 9am).The Council also provides a 24 hours a day, sevendays a week Call Centre service (06 356 8199).Anyone can ring up the Council to log a complaintor fault, or get information about Council services.The Council also provides a website with a widerange of information about Council services, andaccess to public documents and forms (www.pncc.govt.nz).Why the Council does this and itscontribution to Council vision andmajor goalsBy giving people information on all Councilservices, this Activity contributes indirectly to allfive of the Council’s major goals.The Council provides a vast number of services,and many of these happen without anyonetaking much notice. However, when people needinformation or advice, a centralised CustomerServices Centre makes it simple for people toget in touch with the Council. The prominentCustomer Services Centre on The Square is wellknown to residents, and provides an easy wayfor people to find the information they need.The Council provides the Call Centre togive those people who are not able tocome into the physical Customer ServicesCentre a means to contact the Council.Palmerston North City Council Annual Report 2011/12Most services can be provided over the phone,with any forms or documents able to be posted,emailed or faxed out to residents who cannotcome into the Customer Services Centre. The afterhours service ensures that even residents whoare not able to come into the Customer ServicesCentre during business hours have access to theCouncil. The Council provides the website to meetthe changing needs of modern society providing awide range of information.What happened in the yearThe year was highlighted by changes being madein terms of how the Call Centre service operates.Following a review of the service in 2010/11, two keybodies of work were undertaken, namely a changeto the staffing structure and the implementationof a number of new work practices.In October, following the change in work practices,a workforce management tool was introducedto facilitate call volume forecasting and staffThe after hours service ensures thateven residents who are not able tocome into the Customer ServicesCentre during business hours haveaccess to the Council. The Councilprovides the website to meetthe changing needs of modernsociety providing a wide range ofinformation.rostering. Whist the changes had the desiredimpact on the call quality and gave the agentssufficient time to follow the call handling process,service levels and abandonment rates deteriorateddue to insufficient numbers of experienced staff.A number of steps have been taken to addressthese issues, which has resulted in some degree ofimprovement in performance levels.The Call Centre focus for 2012/13 will be oncontinuing to identify opportunities to improveworking practices, refine the resourcing modeland associated cost model. The goal will be toreturn the service to a level of performance thatmeets performance measures.

How did we performLevels of ServicePerformance Measures Result CommentThe Council provides a 24 hours a day, seven days a week phone service for customers.1. Calls Answered95% of all calls received by the Call Centre on a24/7 basis are answered.Target not met 89.5% of calls answered.The Council answers customers’ phone calls promptly.2. Call Wait TimeOf the calls received by the Call Centre, the averagewait time is equal to or less than 20 seconds.Target not metAverage call wait time was 28 seconds.The Council provides a Customer Services Centre from 8am to 5pm, Monday to Friday (exceptWednesday when it opens at 9am) that customers can visit.3. Availability of Customer Services CentreServices are available 99.5% of stated hours.Target metServices were available 99.5% of the timeduring the year.The Council provides customers with the information they are seeking.4. Provision of Information80% of telephone queries made will be answeredby the Customer Services Centre at first point ofcontact.Target met93.8% of 391 telephone queries answeredat first point of contact.The Council provides friendly, professional and knowledgeable service to its customers.5. Satisfaction90% of customers are satisfied with the friendliness,professionalism, and knowledge of the servicethey receive (2011 98.3%). (Annual internallyconducted survey of Front of House, Call Centre,and Regulatory Services.)Target met97.6% of 391 respondents were satisfiedwith the service they received.The Council provides feedback to customers on the results of their requests/complaints.6. Feedback to Customers500 randomly selected customers who lodge faultand service complaints are contacted over a 12month period to determine if the complaint hasbeen resolved to a satisfactory standard (internallyconducted).(91.2% satisfaction in 2010/11)Target met500 customers were phoned over the12 month period, however 81.4% werevery/fairly satisfied with the service theyreceived.The Council manages its Customer Services Activity in a financially responsible way.7. Cost EffectivenessThe budget set by the Council is not exceeded.Target metServices provided on time and withinbudget.SupportServicesWhat the Council Does Customer ServicesPalmerston North City Council Annual Report 2011/12129

Financial ResultsActivity Operational Results: Customer ServicesCustomer Services net costs are allocated to all other Activities.Significant Activity Capital Projects: Customer ServicesCapital NeWActual Budget Variance Actual Note2012 2012 2012 2011$000 $000 $000 $000New equipment for Call Centre 1 - (1) a.Total Capital New 1 - (1) -Total Capital Projects 1 - (1) -Significant acquisitions and explanation of variances from Annual Plana. Unbudgeted new equipment expenditure.SupportServicesWhat the Council Does Customer Services130Palmerston North City Council Annual Report 2011/12

Financial StatementsFinancial StatementsPalmerston North City Council Annual Report 2011/12

Financial StatementsPalmerston North City Council Annual Report 2011/12

Independent Auditor’s ReportTo the readers of Palmerston North City Counciland group’s annual reportfor the year ended 30 June 2012The Auditor-General is the auditor of PalmerstonNorth City Council (the City Council) and group. TheAuditor-General has appointed me, Bede Kearney,using the staff and resources of Audit New Zealand,to carry out the audit of the financial statements,non-financial performance information and otherinformation required by schedule 10 of the LocalGovernment Act 2002 (other information) of theCity Council and group on her behalf.We have audited:• the financial statements of the City Council andgroup on pages 27 to 195, that comprise thestatement of financial position as at 30 June2012, the statement of comprehensive income,statement of changes in equity and statementof cash flows for the year ended on that dateand the notes to the financial statementsthat include accounting policies, explanatoryinformation and other information required byschedule 10 of the Local Government Act 2002;and• the non-financial performance informationof the City Council and group on pages 27to 130 and 189 to 195 that includes otherinformation required by schedule 10 of theLocal Government Act 2002.Opinion on the financial statements,non-financial performance informationand other informationIn our opinion:• The financial statements of the City Counciland group on pages 27 to 195:• comply with generally accepted accountingpractice in New Zealand; and• fairly reflect:• the City Council and group’s financialposition as at 30 June 2012; and• the results of its operations and cashflows for the year ended on that date.• The non-financial performance information ofthe City Council and group on pages 27 to 130and 189 to 195:• complies with generally acceptedaccounting practice in New Zealand; and• fairly reflects the City Council and group’slevels of service for the year ended 30 June2012, including:• the levels of service as measuredagainst the intended levels of serviceadopted in the long-term councilcommunity plan; and• the reasons for any significant variancesbetween the actual service and theexpected service.• The other information of the City Council andgroup contained in the financial statements andthe non-financial performance information,complies with the requirements of Schedule 10of the Local Government Act 2002 applicableto the annual report and fairly reflects therequired information.Our audit was completed on 26 September 2012.This is the date at which our opinion is expressed.The basis of our opinion is explained below. Inaddition, we outline the responsibilities of theCouncil and our responsibilities, and explain ourindependence.Basis of opinionWe carried out our audit in accordance with theAuditor-General’s Auditing Standards, whichincorporate the International Standards onAuditing (New Zealand). Those standards requirethat we comply with ethical requirements andplan and carry out our audit to obtain reasonableassurance about whether the financial statements,non-financial performance information and otherinformation are free from material misstatement.Material misstatements are differences oromissions of amounts and disclosures that wouldaffect a reader’s overall understanding of thefinancial statements, non-financial performanceinformation and other information. If we had foundmaterial misstatements that were not corrected,we would have referred to them in our opinion.An audit involves carrying out procedures toobtain audit evidence about the amounts anddisclosures in the financial statements, nonfinancialperformance information and otherinformation. The procedures selected depend onPalmerston North City Council Annual Report 2011/12Financial Statements Auditor's Report131

Financial Statements Auditor's Reportour judgement, including our assessment of risks ofmaterial misstatement of the financial statements,non-financial performance information andother information whether due to fraud or error.In making those risk assessments, we considerinternal control relevant to the preparation ofthe City Council and group’s financial statements,non-financial performance information and otherinformation that fairly reflect the matters to whichthey relate. We consider internal control in orderto design audit procedures that are appropriatein the circumstances but not for the purpose ofexpressing an opinion on the effectiveness of theCity Council and group’s internal control.An audit also involves evaluating:• the appropriateness of accounting policiesused and whether they have been consistentlyapplied;• the reasonableness of the significantaccounting estimates and judgements madeby the Council;• the adequacy of all disclosures in the financialstatements, non-financial performanceinformation and other information;• determining the appropriateness of thereported non-financial performanceinformation within the Council’s framework forreporting performance; and• the overall presentation of the financialstatements, non-financial performanceinformation and other information.We did not examine every transaction, nor dowe guarantee complete accuracy of the financialstatements, non-financial performance informationand other information. We have obtained all theinformation and explanations we have requiredand we believe we have obtained sufficient andappropriate audit evidence to provide a basis forour audit opinion.Responsibilities of the CouncilThe Council is responsible for preparing:• financial statements and non-financialperformance information that:• comply with generally acceptedaccounting practice in New Zealand;• fairly reflect the City Council andgroup’s financial position, financialperformance and cash flows;• fairly reflect its service performance,including achievements compared toforecast; and• other information in accordance with Schedule10 of the Local Government Act 2002 that fairlyreflects the required information.The Council is responsible for such internalcontrol as it determines is necessary to enable thepreparation of financial statements, non-financialperformance information and other informationthat are free from material misstatement, whetherdue to fraud or error.The Council’s responsibilities arise from the LocalGovernment Act 2002.Responsibilities of the AuditorWe are responsible for expressing an independentopinion on the financial statements, non-financialperformance information and other informationand reporting that opinion to you based on ouraudit. Our responsibility arises from section 15 ofthe Public Audit Act 2001 and section 99 of theLocal Government Act 2002.IndependenceWhen carrying out the audit, we followed theindependence requirements of the Auditor-General, which incorporate the independencerequirements of the New Zealand Institute ofChartered Accountants.Other than the audit and carrying out the auditof long term plan, we have no relationship withor interests in the City Council or any of itssubsidiaries.Bede KearneyAudit New ZealandOn behalf of the Auditor-GeneralPalmerston North, New ZealandMatters relating to the electronic presentation ofthe audited financial statements, non-financialperformance information and the other requirementsThis audit report relates to the financial statements, non-financialperformance information and the other requirements of PalmerstonNorth City Council and group for the year ended 30 June 2012 includedon Palmerston North City Council’s website. The Council is responsiblefor the maintenance and integrity of Palmerston North City Council’swebsite. We have not been engaged to report on the integrity ofPalmerston North City Council’s website. We accept no responsibilityfor any changes that may have occurred to the financial statements,non-financial performance information and the other requirementssince they were initially presented on the website.The audit report refers only to the financial statements, non-financialperformance information and the other requirements named above. Itdoes not provide an opinion on any other information which may havebeen hyperlinked to or from the financial statements, non-financialperformance information and the other requirements. If readers of thisreport are concerned with the inherent risks arising from electronicdata communication they should refer to the published hard copyof the audited financial statements, non-financial performanceinformation and the other requirements as well as the related auditreport dated 26 September 2012 to confirm the information includedin the audited financial statements, non-financial performanceinformation and the other requirements presented on this website.Legislation in New Zealand governing the preparation anddissemination of financial information may differ from legislation inother jurisdictions.132Palmerston North City Council Annual Report 2011/12

Statement of Compliance and ResponsibilityCompliance1. The Council of Palmerston North City Council hereby confirms that all statutory requirementsrelating to the Annual Report have been complied with.Responsibility2. The Council and management of Palmerston North City Council accept responsibility for thepreparation of the annual Financial Statements and the judgements used in them.3. The Council and management of Palmerston North City Council accept responsibility forestablishing and maintaining a system of internal control designed to provide reasonableassurance as to the integrity and reliability of financial reporting.4. In the opinion of the Council and management of Palmerston North City Council, the annualFinancial Statements for the year ended 30 June 2012 fairly reflect the financial position andoperations of Palmerston North City Council.Jono NaylorMayor26 September 2012Paddy CliffordChief Executive26 September 2012Financial Statements Statement of Compliance and ResponsibilityPalmerston North City Council Annual Report 2011/12133

Statement of Comprehensive Incomefor the year ended 30 June 2012Palmerston North City CouncilCouncilGroupActual Budget Actual Actual Actual2012 2012 2011 2012 2011Note $000 $000 $000 $000 $000REVENUERates revenue 3 68,874 68,366 65,690 68,544 65,447Finance income 4 534 1,448 2,612 376 2,553Other revenue 5 30,431 39,263 33,644 36,600 39,697Other gains/(losses) 6 (382) - (1,778) (385) (1,778)TOTAL REVENUE 99,457 109,077 100,168 105,135 105,919Financial Statements Statement of Comprehensive IncomeEXPENSESEmployee benefit expenses 7 34,185 34,755 34,740 37,400 37,952Depreciation and amortisation 15 & 16 24,498 25,833 24,889 25,493 25,755Finance costs 4 15,475 11,121 11,132 15,917 11,598Other expenses 8 36,214 36,053 33,020 36,742 32,878TOTAL EXPENSES 110,372 107,762 103,781 115,552 108,183NET SURPLUS/(DEFICIT) (10,915) 1,315 (3,613) (10,417) (2,264)Increase/(decrease) inoperating property valuations 24 - - 673 - 673Income tax refund / (expense) 9 166 - 139 (25) (73)NET SURPLUS/(DEFICIT) AFTER TAX (10,749) 1,315 (2,801) (10,442) (1,664)OTHER COMPREHENSIVE INCOMEIncrease/ (decrease) inoperating property valuations 24 - 6,870 45,508 1,675 45,698Financial assets at fair value throughother comprehensive income 24 29 - (322) 29 (322)Movement in deferredtax on revaluations 24 - - - 242 -TOTAL OTHER COMPREHENSIVE INCOME 29 6,870 45,186 1,946 45,376TOTAL COMPREHENSIVE INCome (10,720) 8,185 42,385 (8,496) 43,712◊Management is not aware of conditions orevents that cast doubt over the ability of Councilto continue as a going concern.◊◊Explanations of significant variances againstbudget are detailed in Note 2.The accompanying notes form part of thesefinancial statements.134Palmerston North City Council Annual Report 2011/12

Statement of Financial PositionAS AT 30 June 2012Palmerston North City CouncilCouncilGroupActual Budget Actual Actual Actual2012 2012 2011 2012 2011Note $000 $000 $000 $000 $000ASSETSCURRENT ASSETSCash and cash equivalents 10 369 2,000 112 2,015 1,929Trade and other receivables 11 7,742 4,563 8,106 8,197 8,830Inventories 12 532 - 535 582 560Other financial assets 13 - - - 108 211Derivative financial instruments 14 123 - - 123 -TOTAL CURRENT ASSETS 8,766 6,563 8,753 11,025 11,530NON-CURRENT ASSETSProperty, plant and equipment 15 1,280,460 1,378,681 1,281,950 1,338,588 1,337,819Intangible assets 16 2,371 - 2,864 2,377 2,872Forestry assets 17 1,229 - 1,601 1,229 1,601Investment property 18 15,541 16,040 15,468 15,541 15,468Other financial assets 13 31,466 31,366 33,398 20,624 22,556Derivative financial instruments 14 2,215 - 2,557 2,215 2,557TOTAL NON-CURRENT ASSETS 1,333,282 1,426,087 1,337,838 1,380,574 1,382,873TOTAL ASSETS 1,342,048 1,432,650 1,346,591 1,391,599 1,394,403LIABILITIESCURRENT LIABILITIESTrade and other payables 20 13,486 17,156 12,410 14,359 13,267Provisions 21 800 - 1,195 800 1,195Employee benefit liabilities 22 4,688 - 4,545 4,927 4,833Borrowings 23 23,058 - 41,662 24,258 42,962Derivative financial instruments 14 - - 194 - 194TOTAL CURRENT LIABILITIES 42,032 17,156 60,006 44,344 62,451NON-CURRENT LIABILITIESProvisions 21 1,047 2,467 1,296 1,047 1,296Employee benefit liabilities 22 1,052 837 927 1,056 930Borrowings 23 116,857 165,478 98,010 121,057 102,310Deferred tax liability 9 - - - 2,752 3,005Derivative financial instruments 14 10,640 - 5,212 10,640 5,212TOTAL NON-CURRENT LIABILITIES 129,596 168,782 105,445 136,552 112,753TOTAL LIABILITIES 171,628 185,938 165,451 180,896 175,204EQUITY ATTRIBUTABLE TO PNCCRetained earnings 24 970,962 989,599 981,477 996,653 1,006,747Other reserves 24 199,458 257,113 199,663 214,050 212,452TOTAL EQUITY 1,170,420 1,246,712 1,181,140 1,210,703 1,219,199Financial Statements Statement of Financial Position◊In respect to the carrying amounts of both assetsand liabilities, management is not aware or haveany expectations of any significant risk thatmay cause a material adjustment to the carryingamounts within the next twelve months.◊The accompanying notes form part of thesefinancial statements.Palmerston North City Council Annual Report 2011/12135

Statement of Changes in Equityfor the year ended 30 June 2012Palmerston North City CouncilCouncilGroupActual Budget Actual Actual Actual2012 2012 2011 2012 2011$000 $000 $000 $000 $000BALANCE AT 1 JULY 1,181,140 1,238,527 1,138,755 1,219,199 1,175,487Total comprehensiveincome previously reported (10,720) 8,185 42,385 (8,496) 43,712BALANCE AT 30 JUNE 1,170,420 1,246,712 1,181,140 1,210,703 1,219,199Financial Statements Statement of Changes in Equity◊The accompanying notes form part of thesefinancial statements.136Palmerston North City Council Annual Report 2011/12

Statement of Cash Flowsfor the year ended 30 June 2012Palmerston North City CouncilCouncilGroupActual Budget Actual Actual Actual2012 2012 2011 2012 2011Note $000 $000 $000 $000 $000CASH FLOWS FROM OPERATING ACTIVITIESReceipts from rates revenue 69,028 68,366 65,554 68,698 65,311Interest received 927 1,298 1,997 981 2,078Dividends received 211 150 143 - -Receipts of grants 408 - 345 428 1,122Receipts from other revenue 26,626 27,551 25,099 32,758 30,272Revenue for capital expenditure 3,649 5,711 4,113 3,649 4,113Receipts from taxation losses 166 - 139 166 139Payments to suppliers and employees (69,719) (70,807) (68,527) (73,428) (71,535)Interest paid (9,991) (11,121) (10,086) (10,433) (10,552)Income tax paid (net) - - - (179) (167)Goods and services tax (net) (156) - 214 (60) 120NET CASH FROMOPERATING ACTIVITIES 25 21,149 21,148 18,991 22,580 20,901CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of property 732 - 669 733 672Proceeds from sale of biological assets 280 513 796 280 796Purchase of intangible assets (188) - (136) (189) (143)Purchase of property, plant and equipment (23,315) (49,139) (31,087) (24,820) (33,045)Purchase of investment property (1) - (68) (1) (68)Other advances made, repayment received (147) - 177 (147) 177Repayment, acquisition of investments (196) - - (93) (47)NET CASH FROM INVESTING ACTIVITIES (22,835) (48,626) (29,649) (24,237) (31,658)CASH FLOWS FROM FINANCING ACTIVITIESProceeds from borrowings 650 29,683 - 1,750 800Reduction in investment fund 1,700 2,000 13,966 1,700 13,966Repayment of borrowings (406) (4,205) (3,565) (1,706) (4,865)Payment of finance lease liabilities (1) - (4) (1) (4)NET CASH FROM FINANCING ACTIVITIES 1,943 27,478 10,397 1,743 9,897Net (decrease)/increase in cash,cash equivalents and bank overdrafts 257 - (261) 86 (860)Cash, cash equivalents and bankoverdrafts at the beginning of the year 112 2,000 373 1,929 2,789CASH, CASH EQUIVALENTSAND BANK OVERDRAFTSAT THE END OF THE YEAR 10 369 2,000 112 2,015 1,929Financial Statements Statement of Cash Flows◊The income tax paid (net) and GST (net)component of operating activities reflects therespective net amounts paid and received withthe Inland Revenue Department. These havebeen presented on a net basis, as the grossamounts do not provide meaningful informationfor financial statement purposes.◊The accompanying notes form part of thesefinancial statements.Palmerston North City Council Annual Report 2011/12137

Notes to the Financial StatementsPalmerston North City CouncilNote 1Statement of accounting policiesfor the year ended 30 June 2012Financial Statements Note 1REPORTING ENTITYPalmerston North City Council (PNCC) is a territorial localauthority governed by the Local Government Act 2002 andis domiciled in New Zealand.The parent ‘council’ financial statements are the Council asa separate legal entity. The Palmerston North City Council‘group’ financial statements incorporate the PalmerstonNorth City Council, its 100% share of its subsidiaryPalmerston North Airport Limited (PNAL) and the followingCouncil Controlled Organisations (CCO’s):• Caccia Birch Trust Board,• Globe Theatre Trust Board,• Palmerston North Performing Arts Trust Board,• Regent Theatre Trust Board, and• Te Manawa Museums Trust Board.The primary objective of PNCC is to provide goodsor services for the community or social benefit ratherthan making a financial return. Accordingly, PNCC hasdesignated itself and the group as public benefit entities forthe purposes of New Zealand equivalents to InternationalFinancial Reporting Standards (NZ IFRS).The financial statements of PNCC are for the year ended30 June 2012. The financial statements were authorised forissue by Council on 26 September 2012.BASIS OF PREPARATIONStatement of complianceThe financial statements of PNCC have been prepared inaccordance with the requirements of the Local GovernmentAct 2002, which includes the requirement to comply withNew Zealand generally accepted accounting practice (NZGAAP).These financial statements have been prepared inaccordance with NZ GAAP. They comply with NZ IFRS,and other applicable Financial Reporting Standards, asappropriate for public benefit entities.Measurement baseThe financial statements have been prepared on a historicalcost basis, modified by the revaluation of land and buildings,infrastructural assets, investment property, biological assetsand certain financial instruments (including derivativeinstruments).Functional and presentation currencyThe financial statements are presented in New Zealanddollars and all values are rounded to the nearest thousanddollars ($’000). The functional currency of PNCC is NewZealand dollars.Changes in accounting policiesThere have been no changes in accounting policies duringthe financial year.138Palmerston North City Council Annual Report 2011/12PNCC has adopted the following revisions to accountingstandards during the financial year, which have had only apresentational or disclosure effect:• NZ IAS 24 Related Party Disclosures (revised 2009) iseffective for reporting periods beginning on or after1 January 2011. The revised standard amends thedefinition of a related party, clarifies that commitmentsbetween related parties are required to be disclosedand makes some information disclosure concessionsavailable to local government.Standards, amendments and interpretationsissued that are not yet effective and have notbeen early adoptedStandards, amendments, and interpretations, issued butnot yet effective that have not been early adopted, andwhich are relevant to PNCC include:• NZ IFRS 9 Financial Instruments (issued 2009) iseffective for reporting periods beginning on or after 1January 2013. The standard is the first phase of a threephase review to replace NZ IAS 39 Financial InstrumentsRecognition and Measurement. NZ IFRS 9 uses a singleapproach to determine whether a financial asset ismeasured at amortised cost or fair value based on howthe financial instrument is managed and contractualcash flow plus requires a single impairment method tobe used. PNCC will adopt NZ IFRS 9 for the year ending30 June 2014 and has not yet quantified the potentialimpact of the new standard.• The External Reporting Board and the New ZealandAccounting Standards Board have issued for comment41 Exposure Drafts of new accounting standards. It isproposed that these will apply to Public Benefit Entitiesfrom the period commencing 1 July 2014 and willreplace currently applied standards. PNCC will adoptthe proposed new standards, once adopted, and hasnot yet quantified the potential impact of the newstandards.SIGNIFICANT ACCOUNTING POLICIESBasis of consolidationThe purchase method is used to prepare the consolidatedfinancial statements, which involves adding together likeitems of assets, liabilities, equity, income and expenses ona line-by-line basis. All significant intra-group balances,transactions, income and expenses are eliminated onconsolidation.SubsidiariesPNCC consolidates as subsidiaries in the group financialstatements all entities where PNCC has the capacityto control their financing and operating policies so asto obtain benefits from the activities of the entity. Thispower exists where PNCC controls the majority votingpower on the governing body or where such policieshave been irreversibly predetermined by PNCC or wherethe determination of such policies is unable to materiallyimpact the level of potential ownership benefits that arisefrom the activities of the subsidiary.

PNCC measures the cost of a business combination as theaggregate of the fair values, at the date of exchange, ofassets given, liabilities incurred or assumed, in exchange forcontrol of the subsidiary.Any excess of the cost of the business combination overPNCC’s interest in the net fair value of the identifiableassets, liabilities and contingent liabilities is recognisedas goodwill. If PNCC’s interest in the net fair value of theidentifiable assets, liabilities and contingent liabilitiesrecognised exceeds the cost of the business combination,the difference will be recognised immediately in the surplusor deficit.Investment in subsidiaries are carried at cost in PNCC’s own“parent entity” financial statements.Joint venturesA joint venture is a contractual arrangement whereby twoor more parties undertake an economic activity that issubject to joint control.Dividends are recognised when the right to receivepayment has been established.Development contributionsDevelopment and financial contributions are recognisedas revenue when PNCC provides, or is able to provide, theservice for which the contribution was charged. Otherwisedevelopment and financial contributions are recognised asliabilities until such time that PNCC provides, or is able toprovide, the service.Development contributions are classified as part of “OtherRevenue”.Borrowing costsPNCC has deferred adoption of NZ IAS 23 Borrowing Costsin accordance with its transitional provisions applicable topublic benefit entities.Consequently, all borrowing costs are recognised as anexpense in the period in which they are incurred.For jointly controlled assets, PNCC recognises in its financialstatements its share of jointly controlled assets, theliabilities and expenses it incurs, its share of liabilities andexpenses incurred jointly, and income from the sale or useof its share of the output of the joint venture.RevenueRevenue is measured at the fair value of considerationreceived or receivable. Where revenue is derived by actingas an agent for another party, the revenue that is recognisedis the commission or fee on that transaction.Rates revenueRates are set annually by a resolution of the Council andrelate to a financial year. All ratepayers are invoiced withinthe financial year to which the rates have been set. Ratesrevenue is recognised when payable.Revenue from water rates by meter is recognised on anaccrual basis. Unbilled usage, as a result of unread metersat year end, is accrued on an average usage basis.Government subsidiesPNCC receives government subsidies from New ZealandTransport Agency, which subsidises part of PNCC’s costs inmaintaining the local roading infrastructure. The subsidiesare recognised as revenue upon entitlement as conditionspertaining to eligible expenditure have been fulfilled.Provision of servicesRevenue from the rendering of services is recognised byreference to the stage of completion of the transaction atbalance date, based on the actual service provided as apercentage of the total services to be provided.Sale of goodsSales of goods are recognised when a product is sold to thecustomer. Sales are usually in cash or by credit card. Therecorded revenue is the gross amount of the sale, includingcredit card fees payable for the transaction. Such fees areincluded in other expenses.Traffic and parking infringementsTraffic and parking infringements are recognised whentickets are issued, less assessed impairment losses.Vested assetsWhere a physical asset is acquired for nil or nominalconsideration the fair value of the asset received isrecognised as revenue. Assets vested in PNCC are recognisedas revenue when control over the asset is obtained.Grant expenditureNon-discretionary grants are those grants that are awardedif the grant application meets the specified criteria and arerecognised as expenditure when an application that meetsthe specified criteria for the grant has been received.Discretionary grants are those grants where PNCC has noobligation to award on receipt of the grant application andare recognised as expenditure when a successful applicanthas been notified of PNCC’s decision.Income TaxIncome tax expense comprises both current tax anddeferred tax, and is calculated using tax rates that havebeen enacted or substantively enacted by balance date.Current tax is the amount of income tax payable basedon the taxable surplus for the current year, plus anyadjustments to income tax payable in respect of prior years.Deferred tax is the amount of income tax payable orrecoverable in future periods in respect of temporarydifferences and unused tax losses. Temporary differencesare differences between the carrying amount of assets andliabilities in the financial statements and the correspondingtax bases used in the computation of taxable surplus.The measurement of deferred tax reflects the taxconsequences that would follow from the manner in whichthe group expects to recover or settle the carrying amountof its assets and liabilities.Deferred tax liabilities are generally recognised for alltaxable temporary differences. Deferred tax assets arerecognised to the extent that it is probable that taxablesurpluses will be available against which the deductibletemporary differences or tax losses can be utilised.Deferred tax is not recognised if the temporary differencearises from the initial recognition of goodwill or from theinitial recognition of an asset and liability in a transactionthat is not a business combination, and at the time of thetransaction, affects neither accounting surplus nor taxablesurplus.Current tax and deferred tax is recognised against thesurplus or deficit for the period, except to the extent thatit relates to a business combination, or to transactionsrecognised in other comprehensive income or directly inequity.Financial Statements Note 1Interest and dividendsInterest income is recognised using the effective interestmethod.Palmerston North City Council Annual Report 2011/12139

Financial Statements Note 1LeasesFinance leasesA finance lease is a lease that transfers to the lesseesubstantially all the risks and rewards incidental toownership of an asset, whether or not title is eventuallytransferred.At the commencement of the lease term, PNCC recognisesfinance leases as assets and liabilities in the statement offinancial position at the lower of the fair value of the leaseditem or the present value of the minimum lease payments.The finance charge is charged to the surplus or deficit overthe lease period so as to produce a constant periodic rate ofinterest on the remaining balance of the liability.The amount recognised as an asset is depreciated over itsuseful life. If there is no certainty as to whether PNCC willobtain ownership at the end of the lease term, the asset isfully depreciated over the shorter of the lease term and itsuseful life.Operating leasesAn operating lease is a lease that does not transfersubstantially all the risks and rewards incidental toownership of an asset. Lease payments under an operatinglease are recognised as an expense on a straight-line basisover the lease term.Cash and cash equivalentsCash and cash equivalents includes cash on hand, depositsheld at call with banks, other short-term highly liquidinvestments with original maturities of three months orless, and bank overdrafts.Bank overdrafts are shown within borrowings in currentliabilities in the statement of financial position.Trade and other receivablesTrade and other receivables are initially measured atfair value and subsequently measured at amortised costusing the effective interest method, less any provision forimpairment.Financial assetsFinancial assets and liabilities are initially recognised atfair value plus transaction costs unless they are carriedat fair value through surplus or deficit in which case thetransaction costs are recognised in the surplus or deficit.Purchases and sales of financial assets are recognised ontrade-date, the date on which PNCC commits to purchaseor sell the asset. Financial assets are derecognised when therights to receive cash flows from the financial assets haveexpired or have been transferred and PNCC has transferredsubstantially all the risks and rewards of ownership.PNCC classifies its financial assets into the followingcategories:• fair value through surplus or deficit,• loans and receivables,• held-to-maturity investments, and• fair value through other comprehensive income.The classification depends on the purpose for which theinvestment was acquired. Management determines theclassification of its investments at initial recognition.Financial assets at fair value through surplus or deficitFinancial assets at fair value through surplus or deficitinclude financial assets held for trading. A financial asset isclassified as held for trading if acquired principally for thepurpose of selling in the short term or it is part of a portfolioof identified financial instruments that are managedtogether and for which there is evidence of short-termprofit taking. Derivatives are also categorised as held fortrading unless they are designated as hedges (PNCC doesnot apply hedge accounting).Assets in this category are classified as current assets unlesssettlement is beyond twelve months and in management’sassessment they are likely to be held to maturity or are notexpected to be realised within 12 months of the balancesheet date.After initial recognition they are measured at their fairvalues with gains or losses on remeasurement recognisedin the surplus or deficit.Loans and receivablesLoans and receivables are non-derivative financial assetswith fixed or determinable payments that are not quoted inan active market. They are included in current assets, exceptfor maturities greater than 12 months after the balancedate, which are included in non-current assets. PNCC’sloans and receivables comprise cash and cash equivalents,trade and other receivables, term deposits, community andrelated party loans.After initial recognition they are measured at amortisedcost, using the effective interest method, less impairment.Gains and losses when the asset is impaired or derecognisedare recognised in the surplus or deficit.Loans to community organisations made by PNCC at nil,or below market interest rates are initially recognisedat the present value of their expected future cash flows,discounted at the current market rate of return for a similarfinancial instrument. The loans are subsequently measuredat amortised cost using the effective interest method. Thedifference between the face value and present value of theexpected future cash flows of the loan is recognised in thesurplus or deficit as a grant.Held to maturity investmentsHeld to maturity investments are non-derivative financialassets with fixed or determinable payments and fixedmaturities that PNCC has the positive intention and abilityto hold to maturity.After initial recognition they are measured at amortisedcost, using the effective interest method, less impairment.Gains and losses when the asset is impaired or derecognisedare recognised in the surplus or deficit.Assets in this category did include the directly held NZbonds as part of the Long Term Investment Fund howeverall bonds are now categorised at fair value through surplusor deficit.Financial assets at fair value through othercomprehensive incomeFinancial assets at fair value through other comprehensiveincome are those that are designated at initial recognitionor are not classified in any of the other categories above.They are included in non-current assets unless managementintends to dispose of the investment within 12 monthsof the balance date. PNCC’s financial assets at fair valuethrough other comprehensive income include:• investments that PNCC intends to hold long-term butwhich may be realised before maturity (i.e. unlistedshares held in Civic Assurance), and• shareholdings that PNCC holds for strategic purposes.140Palmerston North City Council Annual Report 2011/12

PNCC’s investments in its subsidiary companies are notincluded in this category as they are held at cost (asallowed by NZ IAS 27 Consolidated and Separate FinancialStatements and NZ IAS 28 Investments in Associates)whereas this category is to be measured at fair value.After initial recognition these investments are measured attheir fair value, with gains and losses recognised in othercomprehensive income, except for impairment losses,which are recognised in the surplus or deficit.On derecognition the cumulative gain or loss previouslyrecognised in other comprehensive income is reclassifiedfrom equity to the surplus or deficit.Fair valueThe fair value of financial instruments traded in activemarkets is based on quoted market prices at the balancesheet date. The quoted market price used is the current bidprice.The fair value of financial instruments (including financialassets at fair value through surplus or deficit) that are nottraded in an active market is determined using valuationtechniques. PNCC uses a variety of methods and makesassumptions that are based on market conditions existingat each balance date. Quoted market prices or dealerquotes for similar instruments are used for long-term debtinstruments held. Other techniques, such as discountedexpected cash flows, are used to determine fair value forthe remaining financial instruments.Impairment of financial assetsAt each balance sheet date PNCC assesses whether thereis any objective evidence that a financial asset or groupof financial assets is impaired. Any impairment losses arerecognised in the surplus or deficit.Impairment of a loan or receivable is established whenthere is objective evidence that PNCC will not be able tocollect all amounts due according to the original terms. Theamount of the impairment is the difference between theasset’s carrying amount and the present value of estimatedfuture cash flows, discounted using the original effectiveinterest rate.Any impairment losses for write-downs of non-currentassets held for sale are recognised in the surplus or deficit.Any increases in fair value (less costs to sell) are recognisedup to the level of any impairment losses that have beenpreviously recognised.Non-current assets (including those that are part of adisposal group) are not depreciated or amortised whilethey are classified as held for sale.Property, plant and equipmentProperty, plant and equipment consists of:Operational assets - These include land, buildings,recreation and community facilities, landfill post closure,library books, heritage and art collections, plant andequipment, and motor vehicles.Restricted assets - Restricted assets are parks and reservesowned by PNCC which provide a benefit or service to thecommunity and cannot be disposed of because of legal orother restrictions.Infrastructure assets - Infrastructure assets are the fixedutility systems owned by PNCC. The infrastructure networksowned by PNCC include roading and parking, water,wastewater and stormwater networks, waste managementand airport utility assets (PNAL). Each asset class includesall items that are required for the network to function, forexample, wastewater reticulation includes reticulationpiping and sewer pump stations.Property, plant and equipment is shown at cost or valuation,less accumulated depreciation and impairment losses.RevaluationThe following plant, property and equipment asset groupsare revalued at least every three years to ensure theircarrying amount does not differ materially from fair value:1. roading (except land under roads) and parkingnetwork,2. water, wastewater and stormwater networks, and3. parks, building property, recreation, sportsfieldsand community facilities.Financial Statements Note 1Impairment for all other financial assets is establishedwhen there is objective evidence that PNCC will not beable to collect amounts due on original terms or thereis a significant or prolonged decline in fair value of aninvestment. Any impairment losses are recognised in thesurplus or deficit.InventoriesInventories (such as spare parts and other items) held fordistribution or consumption in the provision of services aremeasured at cost adjusted for any loss of service potential.The amount of any write down from cost for any loss ofservice potential is recognised in the surplus or deficit.When land held for development and future resale istransferred from property, plant and equipment toinventory, the fair value of the land at the date of transfer isits deemed cost.Costs directly attributable to the developed landare capitalised to inventory, with the exception ofinfrastructural assets which are capitalised to property,plant and equipment.Non-current assets held for saleNon-current assets held for sale are classified as held forsale if their carrying amount will be recovered principallythrough a sale transaction, rather than through continuinguse. Non-current assets held for sale are measured at thelower of their carrying amount and fair value less costs tosell.All other asset classes are carried at depreciated historicalcost.PNCC assesses the carrying values of its revalued assetsannually to ensure that they do not differ materially fromthe assets’ fair values. If there is a material difference, thenthe off-cycle asset classes are revalued.PNCC accounts for revaluations of property, plant andequipment on a class of asset basis.Land under roads are generally considered ‘non tradable’due to the perpetual nature of community use. As there isno generally accepted methodology for the valuation ofland under roads, PNCC is not revaluing this land and willcarry this at deemed cost. Under NZ IFRS PNCC has electedto use the fair value of land under roads as at 1 July 2005 asdeemed cost.Accounting for revaluationThe results of revaluing are included in other comprehensiveincome and credited or debited to an asset revaluationreserve for that class of asset. Where this results in a debitbalance in the asset revaluation reserve, this balance isexpensed in the surplus or deficit. Any subsequent increaseon revaluation that reverses a previous decrease in valuerecognised in the surplus or deficit will be recognisedfirst in the surplus or deficit up to the amount previouslyexpensed, and then included in other comprehensiveincome and credited to the revaluation reserve for thatclass of asset.Palmerston North City Council Annual Report 2011/12141

Financial Statements Note 1AdditionsThe cost of an item of property, plant and equipment isrecognised as an asset if, and only if, it is probable thatfuture economic benefits or service potential associatedwith the item will flow to PNCC and the cost of the item canbe measured reliably.In most instances, an item of property, plant and equipmentis recognised at its cost. Where an asset is acquired at nocost, or for a nominal cost, it is recognised at fair value as atthe date of acquisition.DisposalsGains and losses on disposals are determined by comparingthe proceeds with the carrying amount of the asset. Gainsand losses on disposals are reported net in the surplusor deficit. When revalued assets are sold, the amountsincluded in asset revaluation reserves in respect of thoseassets are transferred to retained earnings.Subsequent costsCosts incurred subsequent to initial acquisition arecapitalised only when it is probable that future economicbenefits or service potential associated with the item willflow to PNCC and the cost of the item can be measuredreliably.DepreciationDepreciation is provided on a straight-line basis on allproperty, plant and equipment (except as referred to in thefollowing paragraph), at rates that will write off the cost (orvaluation) of the assets to their estimated residual valuesover their useful lives.Land, land under roads, restricted assets, assets underconstruction, investment properties, biological assets,and the museum, art gallery and heritage assets are notdepreciated.The heritage and art collection assets of Te ManawaMuseums Trust have not been depreciated, as it is theTrust’s Policy to maintain the collections in its currentstate, in accordance with the Trust’s Conservation Policy.Donated objects are recorded at fair value, or depreciatedreplacement cost, or nil value if considered unrealisableor irreplaceable. There is a portion of the heritage and artcollection that is not formally owned by the Te ManawaMuseums Trust. These assets are held and maintained bythe Trust by agreement with the owners.The useful lives and associated depreciation rates of majorclasses of assets have been estimated as follows:OPERATING ASSETSYearsBuildings 50-100Building fit-out 10-50Plant and equipment 4-25Furniture and fittings 4-25Motor vehicles 3-18Computer equipment 2-7Library books 3-10Exhibitions 1-5Leasehold improvements 1-30INFRASTRUCTURAL ASSETSRoadingBridges and culverts 25-125Sub base and base course 100Surfaces 1-20Footpaths 15-99Kerb and channel 80Signage 20Signals, streetlights 5-80Trees 100Vehicle crossing 80CarparksCarpark buildings 50Sub base and base course 100Surfaces 20-40Waste ManagementBuildings 50-100Safety fence, portable screens 40Pumps 30Sumps, drainage 100Machinery 15-35Wheelie bins 15StormwaterPipework 120-175Sumps 150Laterals, manholes 120-150Pumping station/pumps 10-100WastewaterPipeworks, laterals, manholes 120Pumps 15-30Pumping stations 30-100Buildings 50-100Treatment plants 15-120WaterPipeworks, laterals 50-120Hydrants 80Tobies 55-70Valves 80Water meters 15-25Pumping stations 15-100Dams 15-1000Reservoirs 100AirportRunway, taxiways, and aprons 2-99The residual value and useful life of an asset is reviewed,and adjusted if applicable, at each financial year end.Intangible assetsGoodwillGoodwill represents the excess of the cost of an acquisitionover the fair value of PNCC‘s share of the identifiableassets, liabilities and contingent liabilities of the acquiredsubsidiary/associate at the date of acquisition. Goodwill onacquisition of subsidiaries is included in “Intangible Assets”.Separately recognised goodwill is tested for impairmentannually and carried at cost less accumulated impairmentlosses. An impairment loss recognised for goodwill is notreversed in any subsequent period.Goodwill is allocated to cash generating units for thepurposes of impairment testing. The allocation is made tothose cash generating units or groups of cash generatingunits that are expected to benefit from the businesscombination in which the goodwill arose.Software acquisition and developmentAcquired computer software licenses are capitalised on thebasis of the costs incurred to acquire and bring to use thespecific software.Costs that are directly associated with the developmentof software for internal use by PNCC are recognised asan intangible asset. Direct costs include the softwaredevelopment employee costs and an appropriate portionof relevant overheads.Costs associated with maintaining computer software andstaff training costs are recognised as an expense whenincurred.Other intangible assetsCosts incurred are capitalised on assets constructed onthird party land, such as an athletic track, which have longterm access available to residents.142Palmerston North City Council Annual Report 2011/12

Carpark leasesAcquired carpark leases are capitalised on the basis ofthe costs incurred to acquire and bring to use the specificcarparks.AmortisationThe carrying value of an intangible asset with a finite lifeis amortised on a straight-line basis over its useful life.Amortisation begins when the asset is available for useand ceases at the date that the asset is derecognised. Theamortisation charge for each period is recognised in thesurplus or deficit.The useful lives and associated amortisation rates of majorclasses of intangible assets have been estimated as follows:Computer software and licencesAthletic trackCarpark leases3-7 years9 years50 yearsImpairment of property, plant and equipmentand intangible assetsIntangible assets that have an indefinite useful life, or notyet available for use, are not subject to amortisation andare tested annually for impairment. Assets that have a finiteuseful life are reviewed for indicators of impairment at eachbalance date. When there is an indicator of impairment theasset’s recoverable amount is estimated. An impairment lossis recognised for the amount by which the asset’s carryingamount exceeds its recoverable amount. The recoverableamount is the higher of an asset’s fair value less costs to selland value in use.Value in use is optimised depreciated replacement costfor an asset where the future economic benefits or servicepotential of the asset are not primarily dependent on theasset’s ability to generate net cash inflows and where PNCCwould, if deprived of the asset, replace it’s remaining futureeconomic benefits or service potential.The value in use for cash generating assets and cashgenerating units is the present value of expected futurecash flows.If an asset’s carrying amount exceeds its recoverableamount, the asset is impaired and the carrying amountis written down to the recoverable amount. For revaluedassets the impairment loss is recognised in othercomprehensive income and against the revaluation reservefor that class of asset. Where that results in a debit balancein the revaluation reserve, the balance is recognised in thesurplus or deficit.For assets not carried at a revalued amount, the totalimpairment loss is recognised in the surplus or deficit.The reversal of an impairment loss on a revalued asset isincluded in other comprehensive income and creditedto the revaluation reserve. However, to the extent thatan impairment loss for that class of asset was previouslyrecognised in the surplus or deficit, a reversal of theimpairment loss is also recognised in the surplus or deficit.For assets not carried at a revalued amount (other thangoodwill) the reversal of an impairment loss is recognisedin the surplus or deficit.Forestry assetsStanding investment forestry assets are independentlyrevalued annually at fair value less estimated costs to sellfor one growth cycle. Fair value is determined based onthe present value of expected net cash flows discountedat a current market determined pre-tax rate. Thiscalculation is based on existing sustainable felling plansand assessments regarding growth, timber prices, fellingcosts and silvicultural costs and takes into considerationenvironmental, operational and market restrictions.Gains or losses arising on initial recognition of biologicalassets at fair value less estimated costs to sell and froma change in fair value less estimated costs to sell arerecognised in the surplus or deficit.The costs to maintain the forestry assets are included in thesurplus or deficit when incurred.Compensating emission units relating to pre-1990 forestland are recorded at a nil cost. Possible deforestationpenalties relating to pre-1990 forest land are not recognised.Refer Note 27 for details.Investment propertyProperties leased to third parties under operating leasesare classified as investment property unless the property isheld to meet service delivery objectives, rather than to earnrentals or for capital appreciation.Investment property is measured initially at its cost,including transaction costs.After initial recognition, PNCC measures all investmentproperty at fair value as determined annually by anindependent valuer.Gains or losses arising from a change in the fair value ofinvestment property are recognised in the surplus or deficit.Trade and other payablesTrade and other payables are initially measured at fair valueand subsequently measured at amortised cost using theeffective interest method.Employee benefitsShort-term employee benefitsEmployee benefits that PNCC expects to be settled within12 months of balance date are measured at nominal valuesbased on accrued entitlements at current rates of pay.These include salaries and wages accrued up to balancedate, annual leave earned, but not yet taken at balancedate, retiring and long service leave entitlements expectedto be settled within 12 months, time in lieu and sick leave.PNCC recognises a liability for sick leave to the extent thatcompensated absences in the coming year are expectedto be greater than the sick leave entitlements earned inthe coming year. The amount is calculated based on theunused sick leave entitlement that can be carried forwardat balance date, to the extent that PNCC anticipates it willbe used by staff to cover those future absences.Long-term employee benefitsEntitlements that are payable beyond 12 months, such aslong service leave and retiring leave, have been calculatedon an actuarial basis. The calculations are based on:• likely future entitlements accruing to staff, based onyears of service, years to entitlement, the likelihoodthat staff will reach the point of entitlement andcontractual entitlements information, and• the present value of the estimated future cash flowsdiscounted at a current market determined rate.Superannuation schemesDefined contribution schemes - Obligations forcontributions to defined contribution superannuationschemes are recognised as an expense in the surplus ordeficit as incurred.Defined benefit schemes - PNCC belongs to the DefinedBenefit Plan Contributors Scheme (the scheme), which ismanaged by the Board of Trustees of the National ProvidentFund. The scheme is a multi-employer defined benefitscheme.Financial Statements Note 1Palmerston North City Council Annual Report 2011/12143

Financial Statements Note 1Insufficient information is available to use defined benefitaccounting, as it is not possible to determine from theterms of the scheme the extent to which the scheme’ssurplus/deficit will affect future contributions by individualemployers, as there is no prescribed basis for allocation. Thescheme is therefore accounted for as a defined contributionscheme. Further information on this scheme is disclosed innote 27.ProvisionsPNCC recognises a provision for future expenditure ofuncertain amount or timing when there is a presentobligation (either legal or constructive) as a result of a pastevent, it is probable that expenditures will be required tosettle the obligation, and a reliable estimate can be madeof the amount of the obligation.Provisions are measured at the present value of theexpenditures expected to be required to settle theobligation using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and therisks specific to the obligation. The increase in the provisiondue to the passage of time is recognised as an interestexpense and is included in “finance costs”.Financial guarantee contractsA financial guarantee contract is a contract that requiresPNCC to make specified payments to reimburse the holderfor a loss it incurs because a specified debtor fails to makepayment when due.Financial guarantee contracts are initially recognised atfair value. If a financial guarantee contract was issued in astand-alone arm’s length transaction to an unrelated party,its fair value at inception is equal to the considerationreceived. When no consideration is received a provision isrecognised based on the probability PNCC will be requiredto reimburse a holder for a loss incurred discounted topresent value. The portion of the guarantee that remainsunrecognised, prior to discounting to fair value, is disclosedas a contingent liability.Financial guarantees are subsequently measured at theinitial recognition amount less any amortisation, howeverif PNCC assesses that it is probable that expenditure will berequired to settle a guarantee, then the provision for theguarantee is measured at the present value of the futureexpenditure.BorrowingsBorrowings are initially recognised at their fair value netof transaction costs incurred. After initial recognition, allborrowings are measured at amortised cost using theeffective interest method.Borrowings are classified as current liabilities unless PNCChas an unconditional right to defer settlement of theliability for at least 12 months after the balance date.EquityEquity is the community’s interest in PNCC and is measuredas the difference between total assets and total liabilities.Equity is disaggregated and classified into the followingcomponents:• retained earnings,• special funds reserves,• asset revaluation reserves,• investment revaluation reserve, and• fair value through other comprehensive income.Special funds reserves are those subject to specificconditions accepted as binding by PNCC and which maynot be revised by PNCC without reference to the Courts or athird party. Transfers from these reserves may be made onlyfor certain specified purposes or when certain specifiedconditions are met.Also included in special funds reserves are reservesrestricted by Council decision. The Council may alter themwithout reference to any third party or the Courts. Transfersto and from these reserves are at the discretion of theCouncil.PNCC’s objectives, policies and processes for managingcapital are described in note 35.Asset revaluation reservesAsset revaluation reserves relates to the revaluation ofproperty, plant and equipment to fair value.Investment revaluation reserveInvestment revaluation reserve relates to the cumulativenet change of fair value of financial assets at fair valuethrough other comprehensive income.Goods and Services Tax (GST)All items in the financial statements are stated exclusive ofGST, except for trade and other receivables and trade andother payables, which are stated on a GST inclusive basis.Where GST is not recoverable as input tax it is recognised aspart of the related asset or expense.The net amount of GST recoverable from, or payable to,the Inland Revenue Department (IRD) is included as partof receivables or payables in the statement of financialposition.The net GST paid to, or received from the IRD, includingthe GST relating to investing and financing activities, isclassified as an operating cash flow in the statement of cashflows.Commitments and contingencies are disclosed exclusive ofGST.Budget figuresThe budget figures are those approved by the Council atthe beginning of the year in the Long Term Plan or AnnualPlan. The budget figures have been prepared in accordancewith NZ GAAP, using accounting policies that are consistentwith those adopted by PNCC for the preparation of thesefinancial statements.Cost allocationPNCC has derived the cost of service for each significantactivity of PNCC using the cost allocation system outlinedbelow.Direct costs are those costs directly attributable to asignificant activity. Indirect costs are those costs whichcannot be identified in an economically feasible mannerwith a specific significant activity.Direct costs are charged directly to significant activities.Indirect costs are charged to significant activities usingappropriate cost drivers such as actual usage, staff numbersand floor area.144Special funds reservesSpecial funds reserves are a component of equity generallyrepresenting a particular use to which various parts ofequity have been assigned. Special funds reserves may belegally restricted or created by PNCC.Palmerston North City Council Annual Report 2011/12

Critical accounting estimates and assumptionsIn preparing these financial statements PNCC has madeestimates and assumptions concerning the future. Theseestimates and assumptions may differ from the subsequentactual results. Estimates and assumptions are continuallyevaluated and are based on historical experience and otherfactors, including expectations of future events that arebelieved to be reasonable under the circumstances. Theestimates and assumptions that have a significant risk ofcausing a material adjustment to the carrying amountsof assets and liabilities within the next financial year arediscussed below.Landfill aftercare provisionNote 21 discloses an analysis of the exposure of PNCC inrelation to the estimates and uncertainties surrounding thelandfill aftercare provision.Infrastructural assetsThere are a number of assumptions and estimates usedwhen performing Depreciation Replacement Cost (DRC)valuations over infrastructural assets. These include:• the physical deterioration and condition of an asset,for example PNCC could be carrying an asset at anamount that does not reflect its actual condition. Thisis particularly so for those assets which are not visible,for example stormwater, wastewater and water supplypipes that are underground. This risk is minimisedby PNCC performing a combination of physicalinspections and condition modelling assessments ofunderground assets.• estimating any obsolescence or surplus capacity of anasset.• estimates are made when determining theremaining useful lives over which the asset will bedepreciated. These estimates can be impacted bythe local conditions, for example weather patternsand traffic growth. If useful lives do not reflect theactual consumption of the benefits of the asset, thenPNCC could be over or under estimating the annualdeprecation charge recognised as an expense inthe surplus or deficit. To minimise this risk PNCC’sinfrastructural asset useful lives have been determinedwith reference to the NZ Infrastructural Asset Valuationand Depreciation Guidelines published by the NationalAsset Management Steering Group, and have beenadjusted for local conditions based on past experience.Asset inspections, deterioration and conditionmodelling are also carried out regularly as part ofthe PNCC’s asset management planning activities,which gives PNCC further assurance over its useful lifeestimates.Financial Statements Note 1Experienced staff engineers perform PNCC’s infrastructuralasset revaluations which are certified by independentvaluers.Critical judgements in applying PNCC’saccounting policiesManagement has exercised the following criticaljudgements in applying the PNCC’s accounting policies forthe period ended 30 June 2012:Classification of propertyPNCC owns a number of residential rental properties(community housing), which are maintained primarily toprovide housing to pensioners and people with specialneeds. The receipt of market-based rental from theseproperties is incidental to holding these properties. Theseproperties are held for service delivery objectives as partof PNCC’s social housing policy. These properties areaccounted for as property, plant and equipment and notinvestment property.Palmerston North City Council Annual Report 2011/12145

Note 2Summary cost of services and explanation of major variancesagainst budgeTExplanations for major variations from PNCC’s budget figures in the 2011/2012 Annual Plan are as follows:Actual Budget Variance Variance Actual2012 2012 2012 2012 2011$000 $000 $000 % $000ExplanationActivity StatementFinancial Statements Note 2ACTIVITY REVENUELeadership 50 113 (63) (56%) 141 1.Community Support 2,307 1,832 475 26% 2,064 2.Economic Development 972 1,018 (46) (5%) 831 3.Leisure 2,879 2,491 388 16% 2,833 4.Environmental Sustainabilityand Health 15,274 16,569 (1,295) (8%) 14,919 5.Support Services 6,401 6,976 (575) (8%) 7,614 6.Total Activity Revenue 27,883 28,999 (1,116) (4%) 28,402External general rates 54,520 54,346 174 - 51,277Targeted rates 13,764 13,620 144 1% 13,836Rates penalties 590 400 190 48% 577 7.Total Operating Revenue 96,757 97,365 (608) (1%) 94,092ACTIVITY EXPENDITURELeadership 6,718 7,282 564 8% 6,005 8.Community Support 5,701 5,673 (28) - 5,419 9.Economic Development 4,608 4,704 96 2% 4,207 10.Leisure 30,437 31,470 1,033 3% 29,391 11.Environmental Sustainabilityand Health 51,897 52,942 1,045 2% 52,567 12.Support Services 5,536 5,690 154 3% 5,630 13.Total Activity Expenditure 104,897 107,761 2,864 3% 103,219Operating Surplus / (Deficit) (8,140) (10,396) 2,256 22% (9,127)Derivative financialinstrument valuation (5,453) - (5,453) - (467) 14.Long term investment fund valuation (604) - (604) - 472 15.Asset valuation andfair value adjustments (348) - (348) - 13 16.Gain/(loss) on disposal of fixed assets (88) - (88) - (1,399) 17.Investment forest harvest revenue 54 - 54 - 281 18.Development contributions 1,094 1,300 (206) (16%) 910 19.NZ Transport Agency capex subsidies 2,049 4,221 (2,172) (51%) 2,191 20.Revenue for capital expenditure 506 190 316 166% 2,429 21.Vested assets 15 6,000 (5,985) (100%) 1,757 22.Taxation losses received 166 - 166 - 139 23.Net Result - Surplus / (Deficit) (10,749) 1,315 (12,064) (917%) (2,801)146Palmerston North City Council Annual Report 2011/12

Comprehensive detail of both financial and nonfinancialperformance of each activity is providedin the ‘What the Council Does’ section of this annualreport.Key VariancesOverall services provided by PNCC have tracked closeto budget. Some variances have occurred during theyear and the significant variances are detailed below.Significant Variances within the Operating Result:Significant operating revenue variances:1. Leadership - lower revenues from reducednumber of private plan change requests.2. Community Support - higher rental revenuesfrom community housing were received,revenue received for contract management(offset by same amount of expenses) andunbudgeted rental for Community House.3. Economic Development - recovery of RugbyWorld Cup costs offset by lower revenuesachieved by the Convention Centre withoffsetting lower expenses.4. Leisure - Library lower revenues. ArenaManawatu higher revenues, including recoveryof Rugby World Cup costs and unbudgetedrevenue from harvest of Arapuke Forest.5. Environmental Sustainability and Health- Regulatory had lower building consentrevenue offset by higher animal licenserevenues. Roading and Parking lower revenueswere received than budget for NZTA roadingsubsidies and lower parking revenue offsetby gain on sale of land. For Water and Wasteactivities , lower water by meter revenue,lower electricity generation, carbon creditrevenue from reduced landfill gas availabilityand recycling revenues with higher collectionrevenues, unbudgeted revenue from sale ofaccess rights.6. Support Services - lower investment propertyrentals received, lower external servicerevenues (with decrease in expenses to offset),lower investment fund earnings followingwithdrawals from investment fund, offset byhigher public rental housing revenues.7. Rates penalties - more penalties were chargedthan was budgeted with total outstandingsimilar to previous year.Significant operating expenditure variances:8. Leadership - reduced costs incurred forprofessional services and operating costs(partly related to the lower revenue).9. Community Support - expenses incurredagainst contract management revenue, offsetby lower grants paid, lower net personnel costsand reduced maintenance required.10. Economic Development - lower levels ofexpenses incurred by the Convention Centre,consistent with the lower revenues.11. Leisure - Library lower operating costs offsetby higher depreciation. Parks and Recreationlower operating costs, interest, depreciationoffset by charge for programme budgeted ascapital charged to operating.12. Environmental Sustainability and Health - forRegulatory lower net personnel and operatingcosts in line with lower revenue offset byhigher legal litigation costs. For Roading andParking lower maintenance (with lower NZTAsubsidy revenue), depreciation, interest. ForWater and Waste activities higher operatingcosts, higher chemical use, other operatingcosts, depreciation offset by lower financecost.13. Support Services - lower expenses withthe lower external services revenue above,depreciation offset by higher net personnelcosts.Significant variances within the net result:14. Derivative financial instruments - fordownward revaluations of derivatives. Thisis a non-cash write down of the fair value ofthe derivatives and during the period of thecontracts will be offset by cash transactionsfrom delivery of settlements being included ininterest expense.15. Long term investment fund valuation - fordownward revaluations of the investment fund.This is a non-cash write down of the fair valueof the investment fund.16. Asset valuation and fair value adjustments- annual revaluation of operating investmentassets. These are non-cash.17. Gain/(loss) on disposal of fixed assets - thisis the net difference on disposal of assets frombook value largely not charged as depreciation.For prior year the majority related todecommissioning of infrastrusture assets asupgraded as part of essential capital work.18. Investment forest harvest revenue - for theharvest of part of Gordon Kear Forest duringthe year. Proceeds used to repay part of theforestry loan and therefore unbudgeted as noimpact on rates.19. Development contributions - this year-endvariance reflects the development slowdownand is an inter-period timing issue as it cantake upward of eight years for PNCC to collectcontributions from developers and thereforecan be inherently difficult to budget.20. NZ Transport Agency capex subsidies -reduction due to programmes planned notbeing approved by NZTA and not beingcompleted or deferred.21. Revenue for capital expenditure - this isinherently difficult to budget and includesamounts received as contributions towardscapital projects undertaken. Includesadditional amounts received in relation to2010/11 projects.22. Vested assets - for infrastructure assets vestedto Council during the year. As for developmentcontributions this reflects the developmentslowdown and can be inherently difficult tobudget.23. Taxation losses received - PNCC was ableto convert to cash, (through a transactioninvolving PNCC, Palmerston North Airport Ltdand the Inland Revenue Department), $166kof previously unrecognised tax loss creditsowed to PNCC by the IRD. This non-operatingrevenue is recognised after the net result.Financial Statements Note 2Palmerston North City Council Annual Report 2011/12147

Actual Budget Variance Variance2012 2012 2012 2012$000 $000 $000 %ExplanationCapital Expenditure StatemenTLeadership 162 280 118 42% 1.Community Support 526 1,659 1,133 68% 2.Economic Development 65 66 1 2% 3.Leisure 5,406 11,560 6,154 53% 4.Environmental Sustainability and Health 13,914 30,910 16,996 55% 5.Support Services 3,627 4,664 1,037 22% 6.Total Activity Capital Expenditure 23,700 49,139 25,439 52%Financial Statements Note 2Significant capital expenditure variances:1. Leadership - expenditure lower as suitablesustainable city projects were not identified.2. Community Support - expenditure lowerdue to deferral of Papaioea Place communityhousing replacement and less communitycentre upgrades completed.3. Economic Development - for ConventionCentre required equipment.4. Leisure - expenditure was lower than budgetdue to the deferral of the Globe Theatreexpansion project, some Library projects yetto be completed with budget for others notall required, several Parks and Recreationprogrammes yet to be completed, thevelodrome programme not being required,minor cost variances in others offset byadditional programme expenditure authorisedby Council during the year.5. Environmental Sustainability and Health -Roading and Parking lower than budget dueto projects to be completed, deferral of someprojects, including main bus terminal upgradeand withdrawal of second bridge development.For Water and Waste, expenditure is lowerthan budget with projects yet to be completedor deferred for further investigation. Councilapproved additional amount for recycling sortline improvements.6. Support Services - library bus replacementyet to be completed, with some programmesincomplete, or not required. Council approvedadditional amount for share investment.148Palmerston North City Council Annual Report 2011/12

Note 3Rates RevenueCouncilActual Actual2012 2011$000 $000General rates (including UAGC) 55,286 52,029Rates penalties 590 577Targeted rates attributable to activities:Water 5,268 6,125Wastewater 4,823 4,287Rubbish and recycling 3,673 3,42469,640 66,442Less internal rates (766) (752)Total revenue from RATES 68,874 65,690Rates remissionsRates revenue is shown net of rates remissions. PNCC has adopted rates remission policies that provide forrates to be remitted for a variety of purposes. During the year the following sums have been remitted inaccordance with these policies.CouncilActual Actual2012 2011$000 $000Community organisations 102 89Arts, recreation and sporting organisations 86 67Wastewater charges for non-residential properties 3 -Penalties 157 176Wastewater charges for educational establishments 76 68Residential land in commercial or industrial areas 14 14Total remissions 438 414◊In accordance with the Local Government(Rating) Act 2002 certain properties cannot berated for general rates. This includes schools,universities, hospitals, places of religiousworship, public gardens and reserves.These non-rateable properties, where applicable,may be subject to targeted rates in respect ofwastewater, water, rubbish and recycling. Nonrateableland does not constitute a remissionunder PNCC’s rates remission policy.Financial Statements Note 3Palmerston North City Council Annual Report 2011/12149

Note 4Finance income and finance costs Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Finance incomeInterest income 38 33 91 117Dividend income 211 143 - -Income from financial assets atfair value through surplus or deficit:Income from Long Term Investment Fund 889 1,964 889 1,964Fair value movement of Long TermInvestment Fund (604) 472 (604) 472Total finance income 534 2,612 376 2,553Financial Statements Note 4Finance costsInterest on borrowings:Secured loans 9,951 10,587 10,393 11,053Finance lease liabilities 1 - 1 -Effect on provisions of discountunwind (note 21) 70 78 70 78Fair value movement through surplus or deficit:Loss/(gain) on derivative financialinstruments 5,453 467 5,453 467Total finance costs 15,475 11,132 15,917 11,598Net finance income (costs) (14,941) (8,520) (15,541) (9,045)Note 5Other Revenue Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Regulatory user charges and fees 3,326 3,623 3,326 3,623Rendering of services and other income(includes water by meter) 16,364 16,059 22,149 21,306Rental income from investment properties 1,391 1,347 1,363 1,319Rental income from operating properties 2,698 2,560 2,698 2,560Petrol tax 555 558 555 558Receipt of grants 425 345 722 1,072NZ Transport Agency subsidies 4,057 4,056 4,057 4,056Vested assets 15 1,757 98 1,864Revenue for capital expenditure 506 2,429 538 2,429Development contributions, subdivisions,and other contributions 1,094 910 1,094 910Total other revenue 30,431 33,644 36,600 39,697◊◊There are no unfulfilled conditions and othercontingencies attached to government grantsrecognised.Regulatory user charges and fees - for 2012 thishas been reviewed so that revenue includesthose items with a regulatory basis with otherrevenue previously included now in “Renderingof services and other income (includes waterby meter)”. Comparatives for 2011 have beenrestated.150Palmerston North City Council Annual Report 2011/12

Note 6Other gains/(losses)CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Gain/(loss) on changes in fair value of forestry assets(note 17) (236) 147 (236) 147Gain/(loss) on harvest of investment forest 54 281 54 281Gain /(loss) on changes in fair value of investmentproperty (note 18) 72 (640) 72 (640)Reduction in fair value of motor vehicles and plant (184) (167) (184) (167)Gain/(loss) on disposal of property,plant and equipment (88) (1,399) (91) (1,399)Total gains/(losses) (382) (1,778) (385) (1,778)◊Gains/(losses) on changes in fair value arisesfrom the annual revaluation of investmentproperties, forestry assets and other valuationchanges.Note 7Employee benefit expensesIn accordance with NZ IFRS, all changes in thefair value of these assets must be recognised insurplus or deficit.CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Salaries, wages and earned compensation 32,999 33,370 36,235 36,442Employer contributions to multi-employerdefined contribution plans 918 987 945 1,010Employer contributions to multi-employerdefined benefit plans - 25 - 25Increase/(decrease) in employee benefit liabilities 268 358 220 475Total employee benefit expenses 34,185 34,740 37,400 37,952Financial Statements Note 6◊Employer contributions to superannuationplans include those required as an employer,for example to Kiwisaver, plus contributionspaid by the employer as part of the employeesremuneration package, excluding any employeesalary contribution.Note 8Other expenses Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Fees to principal auditor:Audit fees for financial statement audit 180 186 260 255Audit fees for long term plan audit 107 - 107 -Impairment of receivables 23 37 60 43Minimum lease payments under operating leases 744 687 744 708Direct expenses from investment property 902 757 902 757Other operating expenses 34,258 31,353 34,669 31,115Total other expenses 36,214 33,020 36,742 32,878◊◊Audit fees above exclude disbursements.In the context of reporting by local authorities,donations are interpreted as per their commonusage, that is, discretionary charitable gifts,and exclude any grants made in terms of PNCC’snormal funding programme that seek to achievethe objectives of the Council. There have beenno donations during the year.Palmerston North City Council Annual Report 2011/12151

Note 9Tax Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Components of tax expenseCurrent tax expense - - (198) (185)Adjustments to current tax in prior years 166 139 184 157Deferred tax expense - - (11) (45)Income tax refund/ (expense) 166 139 (25) (73)Relationship between tax expense and accounting profit:Surplus/(deficit) before tax (10,915) (3,613) (10,417) (2,264)Financial Statements Note 9Tax at 28% (2011 30%) 3,056 1,084 2,917 681Non-deductible expenditure - - 19 (6)Non-taxable income (3,056) (1,084) (3,109) (905)Prior year adjustment 166 139 148 157Tax refund / (expense) 166 139 (25) (73)Property, plant Employee OtherDeferred Tax Assets/(Liabilities) and equipment entitlements provisions TotalGROUPBalance at 1 July 2010 (2,972) 10 2 (2,960)Charged to surplus or deficit (44) (2) 1 (45)Balance at 30 June 2011 (3,016) 8 3 (3,005)Charged to surplus or deficit 7 (2) 6 11Charged to equity - revaluation surplus 242 - - 242Balance at 30 June 2012 (2,767) 6 9 (2,752)Additional disclosures◊◊During the year, tax losses were transferred toPNAL by tax loss offset with payment of $166,000and loss effect of $555,000.A deferred tax asset has not been recognised inrelation to unused tax losses of $799,000 (2011$722,000) with a tax effect of $223,000 (2011$216,000).◊Imputation credits of $2,155,000 (PNAL)are available to impute distributions fromsubsidiaries.152Palmerston North City Council Annual Report 2011/12

Note 10Cash and cash equivalentsCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Cash at bank and on hand 369 112 1,406 1,421Short term bank deposits with maturitiesof less than three months - - 609 508Total cash and cash equivalents 369 112 2,015 1,929◊The carrying value of short term depositswith maturity dates of three months or lessapproximates their fair value.◊The total value of cash and cash equivalentsthat can only be used for a specified purpose asoutlined in the relevant trust deeds is $nil (2011$nil).Cash and bank overdrafts include the following for the purposes of the cash flow statement:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Cash at bank and on hand 369 112 1,406 1,421Short term bank deposits with maturitiesof less than three months - - 609 508Bank overdrafts (note 23) - - - -369 112 2,015 1,929Financial Statements Note 10Palmerston North City Council Annual Report 2011/12153

Note 11Trade and other receivablesCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Rates receivables 1,527 1,575 1,527 1,575Other receivables 2,323 1,712 2,763 2,272Related party receivables (note 28) 18 12 - -Water debtors 116 138 116 138Tax receivable (includes GST receivables) 1,024 868 1,031 923Prepayments and accruals 2,763 3,821 2,825 3,9487,771 8,126 8,262 8,856Less provision for impairment of receivables (29) (20) (65) (26)Total current trade and other receivables 7,742 8,106 8,197 8,830Financial Statements Note 11◊◊The carrying value of trade and other receivablesapproximates their fair value.PNCC does not provide for any impairment onrates receivable as it has various powers underthe Local Government (Rating) Act 2002 torecover any outstanding debts.Rates and penalties receivable and overdue at balance date comprise the following:◊ PNCC has consistently collected more than 50%of rates receivable at balance date within twomonths and 95% within six months of balancedate. No forced sales have been necessary in thecurrent year.◊These powers allow PNCC to commence legalproceedings to recover any rates that remainunpaid 4 months after the due date for payment.If payment has not been made within 3 monthsof the Court’s judgment, then PNCC can applyto the Registrar of the High Court to have thejudgment enforced by sale or lease of the ratingunit.CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Current year 1,501 1,543 1,501 1,543Past due one year 23 28 23 28Past due two years 3 4 3 4Carrying amount 1,527 1,575 1,527 1,575The status of receivables, excluding rates receivables, as at 30 June 2012 and 2011 are detailed below:ActualActual2012 2011$000 $000Gross Impairment Net Gross Impairment NetCOUNCILNot past due 1,594 - 1,594 1,051 - 1,051Past due 1-30 days 310 - 310 315 - 315Past due 31-60 days 78 - 78 102 - 102Past due > 61 days 341 29 312 244 20 2242,323 29 2,294 1,712 20 1,692ActualActual2012 2011$000 $000Gross Impairment Net Gross Impairment NetGroupNot past due 1,594 - 1,594 1,172 - 1,172Past due 1-30 days 541 - 541 709 - 709Past due 31-60 days 159 - 159 117 - 117Past due > 61 days 469 65 404 274 26 2482,763 65 2,698 2,272 26 2,246154Palmerston North City Council Annual Report 2011/12

◊As of 30 June 2012 and 2011, all overduereceivables, except for rates receivable, havebeen assessed for impairment and appropriateprovisions applied, as detailed below. PNCCholds no collateral as security or other creditenhancements over receivables that are eitherpast due or impaired.◊The impairment provision has been calculatedbased on expected losses for PNCC’s debtorsdetermined based on a review of specific debtors.No collective impairment provision is considerednecessary.Movements in the provision for impairment of receivables and community loans are as follows:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000At 1 July 20 112 26 113Additional provisions made during the year 23 37 82 43Provisions reversed during the year (3) - (25) -Receivables written-off during the period (11) (129) (18) (130)At 30 June 29 20 65 26Note 12Inventories Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Depot Store - roading, water, stormwater andwastewater reticulation spares and various network parts 385 199 435 211Plant nursery 140 125 140 125Fuel and other consumables 7 9 7 22Land being developed for sale - 202 - 202Total inventories 532 535 582 560◊◊All inventory is valued at cost. The write-downof inventories for loss of service potentialamounted to $nil (2011 $nil).No inventories are pledged as security forliabilities (2011 $nil).◊In 2011 PNCC had land being developed forfuture sale with land and other costs capitalisedof $202,000. During the year this land was soldand costs recovered.Financial Statements Note 12Palmerston North City Council Annual Report 2011/12155

Note 13Other financial assetsCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000CURRENT PORTIONShort term bank deposits with maturities of 4-12 months - - 108 211Total current portion - - 108 211NON-CURRENT PORTIONSecurities, stocks, bonds and shares forLong Term Investment Fund 19,735 22,039 19,735 22,039Other advances 395 248 395 248Unlisted shares (Civic Assurance) 494 269 494 269Shares in subsidiaries (Palmerston North Airport Ltd) 10,842 10,842 - -Total non-current portion 31,466 33,398 20,624 22,556Financial Statements Note 13Total other financial assets 31,466 33,398 20,732 22,767Impairment◊There are no impairment provisions for otherfinancial assets. None of the financial assets areeither past due or impaired.Fair value◊ The carrying value of loans and receivables,short term bank deposits and other advancesapproximates their fair value, except as detailedbelow.PNCC manages a Long Term Investment Fund in accordance with the Treasury Policy. The Fund was invested as follows:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000SSgA (Overseas shares) 5,803 6,406 5,803 6,406Directly held NZ bonds 13,932 15,633 13,932 15,63319,735 22,039 19,735 22,039◊◊The Long Term Investment Fund comprises aportion invested in shares which is managedon behalf of PNCC by mandate with State StreetGlobal Advisors and a portion invested in bondsmanaged directly by PNCC. The portion managedon behalf of PNCC do not have contractual repricingor maturity dates. Fair value of overseasshares have been determined by the investmentmanager by reference to quoted market pricesconverted at rates of forward exchange coveror year end exchange rates if no cover exists.Fair value of NZ bonds has been determinedby the investment advisor by discounting cashflows from the instruments using a discount ratederived from relevant market inputs.During 2007/08 the Council resolved thatthe Long Term Investment Fund would beprogressively wound down and used to retirepresent debt or in substitution for new debt. Inaccordance with this decision total distributionsfrom the Fund for the year amounted to $2.6m(2011 $15.9m) compared with the originalbudget of $3.3m (2011 $4.0m).◊During the 2008 year PNCC provided a loan of$2.5m to the Manfeild Park Trust to assist withthe construction of a multi-purpose indoor/outdoor stadium at Manfeild Park. Underthe terms of the loan agreement principalrepayments were deferred for five years andthen were to be repayable monthly over thenext 20 years. Interest was to accrue at theaverage borrowing rate incurred by PNCC andbe deferred for the first two years with thetotal sum accrued to be payable on a monthlybasis over the following five years in additionto ongoing interest. During 2010 it was agreedthat the interest accrued would be capitalisedto the loan and that no interest shall accrueor be payable for the next five years. It wasfurther agreed that there will be no principalrepayments during that period.156Palmerston North City Council Annual Report 2011/12

Accounting policies require that loans be stated at their fair value, being the present value of expected futurecash flows, where interest rates are different to market rates. It is intended that fair value will be assessed eachyear. For Manfeild Park Trust as there are no expected cashflows in the next three years, and cashflows beyondthat are uncertain, PNCC has assessed the fair value of expected future cashflows as:CouncilActual Actual2012 2011$000 $000Loan to Manfeild Park Trust and accumulated interest 2,993 2,993less reduction to fair value of future cashflows (2,993) (2,993)Net fair value - -◊Civic Assurance is the trading name ofNew Zealand Local Government InsuranceCorporation Limited, which provides insuranceproducts and other financial services primarilyto New Zealand local government. PNCCholds a 3.73% (2011 3%) shareholding in theentity. There is no intention to dispose of thisinvestment and there has not been a businessvaluation to establish fair value. As the holdingis not material, net asset backing has been usedas a proxy to assess fair value. During the yearPNCC subscribed for additional new sharesissued with a cost of $196k.Note 14◊◊Palmerston North Airport Limited owns andoperates Palmerston North International Airport.As at 30 June 2012 PNCC owned 100% (2011100%) of the issued and paid up share capital ofthe Company.Palmerston North Airport Limited’s share capitalat 30 June 2012 comprised 9,195,000 fullypaid ordinary shares (2011 9,195,000 fully paidordinary shares). All shares carry equal votingrights and the right to any share in surplus onthe winding up of the company. None of theshares carry fixed dividend rights.Derivative financial instruments Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000CURRENT ASSET PORTIONInterest rate swaps 123 - 123 -Total current asset portion 123 - 123 -NON-CURRENT ASSET PORTIONInterest rate swaps 2,215 2,557 2,215 2,557Total non-current asset portion 2,215 2,557 2,215 2,557Financial Statements Note 14CURRENT LIABILITY PORTIONInterest rate swaps - 194 - 194Total current liability portion - 194 - 194NON-CURRENT LIABILITY PORTIONInterest rate swaps 10,640 5,212 10,640 5,212Total non-current liability portion 10,640 5,212 10,640 5,212◊All derivative financial instruments arecategorised as held for trading at fair valuethrough surplus or deficit. The fair value ofinterest rate swaps have been determined usingdiscounted cash flow valuation techniques basedon quoted market prices.Outstanding interest rate swap contracts at 30 June2012 comprised the following:◊$5.0m notional value of swaps in which PNCCwill pay fixed interest of 4.9% (2011 5.7% to6.9%) and receive floating on a monthly basis(2011 $6.5m).◊◊$86m notional value of swaps in which PNCCwill pay fixed interest varying from 4.5% to 6.4%(2011 5.0% to 6.4%) and receive floating on aquarterly basis (2011 $76m).$36m notional value of swaps in which PNCC willreceive fixed interest varying from 4.9% to 8.1%(2011 4.9% to 8.1%) on a semi-annual basis andpay floating on a quarterly basis (2011 $36m).Palmerston North City Council Annual Report 2011/12157

Note 15Property, plant and equipmenTNote: Pages 158-159 (Property, plant and equipment) table should be read as one continuous table across bothpages.Financial Statements Note 15Cost/ Accumulated Carrying Currentrevaluation depreciation & amount yearimpairmentadditionscharges1-Jul-11 1-Jul-11 1-Jul-11$000 $000 $000 $0002012COUNCIL OPERATIONAL ASSETSLand 85,936 - 85,936 568Buildings 171,146 6,616 164,530 4,160Improvements 31,130 1,332 29,798 1,433Office equipment, furniture and fittings 21,077 17,157 3,920 1,216Library books 12,914 9,126 3,788 659Motor vehicles and plant 18,040 11,077 6,963 1,407Total operational assets 340,243 45,308 294,935 9,443COUNCIL INFRASTRUCTURAL ASSETSWaste management 19,989 - 19,989 1,188Wastewater 129,429 - 129,429 999Water 106,672 - 106,672 3,075Stormwater 137,841 - 137,841 1,002Roading network 230,444 - 230,444 6,233Land under roads 349,640 - 349,640 1,300Total infrastructural assets 974,015 - 974,015 13,797COUNCIL RESTRICTED ASSETSLand 13,000 - 13,000 -Total restricted assets 13,000 - 13,000 -Total PNCC property, plant and equipment 1,327,258 45,308 1,281,950 23,240COUNCIL CONTROLLED ORGANISATIONSPROPERTY, PLANT AND EQUIPMENTLand 21,351 - 21,351 -Buildings 14,242 2,637 11,605 552Improvements 814 562 252 10Infrastructural assets 14,286 4,614 9,672 287Plant and equipment 4,328 2,382 1,946 506Office equipment, furniture and fittings 1,189 841 348 146Collection assets 10,695 - 10,695 78Motor vehicles 10 10 - -Total CCO property, plant and equipment 66,915 11,046 55,869 1,579Total Group property, plant and equipment 1,394,173 56,354 1,337,819 24,819158Palmerston North City Council Annual Report 2011/12

Current Reversal of Current year Current year Revaluation Cost/ Accumulated Carryingyear accumulated impairment depreciation surplus revaluation depreciation amountdisposals depreciation charges & impairmenton disposalcharges30-Jun-12 30-Jun-12 30-Jun-12$000 $000 $000 $000 $000 $000 $000 $000269 - - - - 86,235 - 86,23533 1 - 5,907 - 175,273 12,522 162,751194 4 - 1,471 - 32,369 2,799 29,5701 - - 1,028 - 22,292 18,185 4,107- - - 988 - 13,573 10,114 3,459802 654 (184) 1,287 - 18,461 11,710 6,7511,299 659 (184) 10,681 - 348,203 55,330 292,873- - - 403 - 21,177 403 20,7742 - - 2,121 - 130,426 2,121 128,30587 - - 1,935 - 109,660 1,935 107,725- - - 1,146 - 138,843 1,146 137,697- - - 7,531 - 236,677 7,531 229,146- - - - - 350,940 - 350,94089 - - 13,136 - 987,723 13,136 974,587- - - - - 13,000 - 13,000- - - - - 13,000 - 13,000Financial Statements Note 151,388 659 (184) 23,817 - 1,348,926 68,466 1,280,460- - - - - 21,351 - 21,351- - - 224 (866) 11,067 - 11,0679 9 - 41 - 815 594 221- - - 315 - 14,573 4,929 9,64437 36 - 336 - 4,797 2,682 2,115114 112 - 76 - 1,221 805 416- - - - 2,541 13,314 - 13,314- - - - 10 10 -160 157 - 992 1,675 67,148 9,020 58,1281,548 816 (184) 24,809 1,675 1,416,074 77,486 1,338,588Palmerston North City Council Annual Report 2011/12159

*****Note: Pages 160-161 (Property, plant and equipment) table should be read as one continuous table across bothpagesFinancial Statements Note 15Cost/ Accumulated Carrying Currentrevaluation depreciation & amount yearimpairmentadditionscharges1-Jul-10 1-Jul-10 1-Jul-10$000 $000 $000 $0002011COUNCIL OPERATIONAL ASSETSLand 78,412 - 78,412 7,740Buildings 164,932 - 164,932 6,214Improvements 29,055 - 29,055 2,234Office equipment, furniture and fittings 20,453 16,208 4,245 1,157Library books 12,130 8,221 3,909 784Motor vehicles and plant 17,822 10,288 7,534 1,003Total operational assets 322,804 34,717 288,087 19,132COUNCIL INFRASTRUCTURAL ASSETSWaste management 21,608 939 20,669 (1,077)Wastewater 121,105 3,376 117,729 6,392Water 110,295 3,671 106,624 4,591Stormwater 121,721 1,945 119,776 2,079Roading network 221,490 14,395 207,095 8,461Land under roads 348,850 - 348,850 790Total infrastructural assets 945,069 24,326 920,743 21,236COUNCIL RESTRICTED ASSETSLand 20,583 - 20,583 (7,583)Total restricted assets 20,583 - 20,583 (7,583)Total PNCC property, plant, and equipment 1,288,456 59,043 1,229,413 32,785COUNCIL CONTROLLED ORGANISATIONSPROPERTY, PLANT AND EQUIPMENTLand 21,351 - 21,351 -Buildings 13,630 2,418 11,212 612Improvements 722 526 196 92Infrastructural assets 14,061 4,298 9,763 225Plant and equipment 3,484 2,165 1,319 850Office equipment, furniture and fittings 957 773 184 240Collection assets 10,448 - 10,448 57Motor vehicles 10 10 - -Total CCO property, plant and equipment 64,663 10,190 54,473 2,076Total Group property, plant and equipment 1,353,119 69,233 1,283,886 34,861* In 2010 restricted land was reviewed to includeonly that land with title restrictions. Landpreviously included without title restrictionswas transferred to operating land, using averagevalues. Subsequently the average values appliedhave been reviewed with amendment made toreflect the actual value related to each title. Thisresulted in a further transfer from restricted landto operational land of $7,583k.** Waste management included a gas engineinstalled to convert landfill gas into electricity.As this is now primarily utilising wastewatertreatment plant digester gas the associatedassets of $2,882k at 30 June 2010 have beentransferred to wastewater.160Palmerston North City Council Annual Report 2011/12

Current Reversal of Current year Current year Revaluation Cost/ Accumulated Carryingyear accumulated impairment depreciation surplus revaluation depreciation amountdisposals depreciation charges & impairmenton disposalcharges30-Jun-11 30-Jun-11 30-Jun-11$000 $000 $000 $000 $000 $000 $000 $000216 - - - - 85,936 - 85,936- - - 6,616 - 171,146 6,616 164,530159 - - 1,332 - 31,130 1,332 29,798533 311 - 1,260 - 21,077 17,157 3,920- - - 905 - 12,914 9,126 3,788618 446 (167) 1,235 - 18,040 11,077 6,9631,526 757 (167) 11,348 - 340,243 45,308 294,935- - - 307 704 19,989 - 19,989153 5 - 1,829 7,285 129,429 - 129,429375 14 - 1,971 (2,211) 106,672 - 106,672635 18 - 998 17,601 137,841 - 137,841173 - - 7,741 22,802 230,444 - 230,444- - - - - 349,640 - 349,6401,336 37 - 12,846 46,181 974,015 - 974,015- - - - - 13,000 - 13,000- - - - - 13,000 - 13,000Financial Statements Note 152,862 794 (167) 24,194 46,181 1,327,258 45,308 1,281,950- - - - - 21,351 - 21,351- - - 219 - 14,242 2,637 11,605- - - 36 - 814 562 252- - - 316 - 14,286 4,614 9,6726 6 - 223 - 4,328 2,382 1,9468 2 - 70 - 1,189 841 348- - - - 190 10,695 - 10,695- - - - - 10 10 -14 8 - 864 190 66,915 11,046 55,8692,876 802 (167) 25,058 46,371 1,394,173 56,354 1,337,819Palmerston North City Council Annual Report 2011/12161

Assets under constructionIncluded in property, plant and equipment are the following assets under construction:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000OPERATIONAL ASSETSLand 445 8 445 8Buildings 3,408 994 3,416 2,012Improvements 638 1,410 638 1,410Office equipment, furniture and fittings 504 471 518 548Library books 136 76 136 76Motor vehicles and plant 176 571 277 6665,307 3,530 5,430 4,720Financial Statements Note 15162INFRASTRUCTURAL ASSETSWaste management 1,137 152 1,137 152Wastewater 519 713 519 713Water 1,797 1,133 1,797 1,133Stormwater 417 602 417 602Roading network 3,612 3,685 3,612 3,685Infrastructure - CCO’s - - 178 267Revaluation of assets◊◊◊Property, plant and equipment have been valuedin accordance with the accounting policy set outin the Statement of Accounting Policy, under the‘asset revaluation’ section (note 1).Assets are valued to ‘fair value’ under the highestand best use scenario. Fair value is the amountfor which an item could be exchanged or settledbetween knowledgeable willing parties in anarm’s length transaction.Where the fair value of the asset can bedetermined by reference to the price in an activemarket for the same asset or similar asset, thefair value of the asset is determined using thisinformation. Where direct evidence of value isnot available from an active market, fair valueis determined from market-based evidenceby appraisal, undertaken by a professionallyqualified valuer. If there is no market-basedevidence of fair value because of the specialisednature of the asset and the asset is rarely sold,fair value will be determined using the optimiseddepreciated replacement cost approach.Operational land, buildings, sportsfields andrecreational and community facilities◊◊◊Fair value of land and buildings was determinedfrom market-based evidence by an independentvaluer. The most recent valuation was performedby Paul van Velthooven (FPINZ, FNZIV, BA,BComm) of Morgans Property Advisors, effective30 June 2010.For site improvements valuation at fair valueis determined by optimised depreciatedreplacement cost basis.The most recentvaluation was performed by Paul van Velthooven(FPINZ, FNZIV, BA, BComm) of Morgans PropertyAdvisors, effective 30 June 2010.Land and buildings owned by Palmerston NorthAirport Ltd are recorded at fair value based onmarket evidence. An independent registeredPalmerston North City Council Annual Report 2011/12valuer, Mr BD Mainwaring (ANZIV, SPINZ) and MrHG Thompson (ANZIV, SPINZ) of Blackmore andAssociates, re-valued the assets as at 30 June2012.Restricted land and buildings◊ Fair value was determined from market-basedevidence by an independent valuer. The mostrecent valuation was performed by Paul vanVelthooven (FPINZ, FNZIV, BA, BComm) ofMorgans Property Advisors, effective 30 June2010.Infrastructural Asset Classes: roads, waterreticulation, wastewater reticulation, stormwaternetworks and waste management◊ Infrastructure assets were last valued effective30 June 2011.◊◊7,482 6,285 7,660 6,552Total assets under construction 12,789 9,815 13,090 11,272The fair value of infrastructure assets excludingland, was determined on an optimiseddepreciated replacement cost basis. Thevaluation was prepared by staff engineersemployed by PNCC (led by Eng Lim - BE, ME,MIPENZ, PGDipBusAdmin) and was carried outusing the New Zealand Infrastructure AssetValuation and Depreciation Guidelines producedby New Zealand Asset Management Steering(NAMS) Group. The valuation was reviewed byGraeme Hughson (BE, MIPENZ), a RegisteredEngineer from AECOM New Zealand Limited, whoconfirmed that the valuation basis is appropriatefor external reporting purposes.Infrastructure land (excluding land under roads)was last valued in 2011 on the basis of ‘openmarket value’ derived from sales evidenced for17 urban localties in Palmerston North, Ashhurstand Aokautere and one rate for rural area. Theopen market value was in turn discounted toprovide the specific rates for undeveloped land.While some infrastructure land (particularly offstreetparking land) has independent certificatesof title and therefore can be disposed of, the

◊reality is that infrastructure land is required tobe retained by PNCC for community use. The fairvalue was determined by Paul van Velthooven(FPINZ, FNZIV, BA, BComm) of Morgans PropertyAdvisors.Additions and acquisitions to infrastructureassets since valuation date are valued at cost.Land under roads (road reserves), infrastructureland and off-street parking land◊◊◊Valuation of infrastructure land is generallyconsidered ‘non tradable’ due to the perpetualnature of community use. It was last valued at30 June 2011 based on the undeveloped landvalue of the adjoining land with a discountapplied to recognise the non-tradable nature ofthe asset. This asset class is re-valued as part ofthe infrastructural assets revaluation. The fairvalue was determined by Paul van Velthooven(FPINZ, FNZIV, BA, BComm) of Morgans PropertyAdvisors.Land for off-street carparks, that haveindependent ‘certficates of title’ and can bedisposed of, have been individually valuedby registered valuer on an open market valuebasis, which is the price for which the propertymight reasonably be expected to be sold at theoperative date between a willing buyer andwilling seller in an arms length transaction.The fair value was determined by Paul vanVelthooven (FPINZ, FNZIV, BA, BComm) ofMorgans Property Advisors.Land under roads was valued based on the fairvalue of adjoining undeveloped land determinedby Chris Leahy (Registered Valuer FNZIV, FNZPI)of CL Property Solutions Ltd, effective 30 June2005. On transition to NZ IFRS PNCC has electedto use the fair value of land under roads as at 30June 2005 as deemed cost. Land under roads isno longer revalued.Library collections◊ Library books were valued as at 30 June 1993, attheir deemed cost. The NZ Pacific collection isvalued at cost. All other books are valued at costless accumulated depreciation. Additions sincevaluation date are stated at cost.Heritage and art collection◊ The art collection assets are re-valued everythree years and the heritage collection assetsevery four years.◊◊◊The entire art collection (owned and custodial)was valued as at 30 June 2012 by Mr JamesParkinson of Art and Object, Auckland, on thebasis of a fair, minimum value realisable.In 2011, a full revaluation of the owned andcustodial heritage collections were conductedby R J Watt and Associates, with the exceptionof the library collection which was valued by MrJohn Atkinson.Dr Robin J Watt (MA (First Class Hons), PhD)valued the collection based upon market,replacement, comparative and comparativeinstitutional values. Mr John Atkinson,Atkinson’s Books Wellington, with 19 yearsexperience in bookselling, valued the heritagelibrary collection based upon fair, minimumvalue realisable.Financial Statements Note 15ValuationThe total fair value of property, plant and equipment valued by each valuer was:Council GroupActual Actual2012 2012$000 $000Mr BD Mainwaring and Mr HG Thompson of Blackmore and Associates - 32,418Mr James Parkinson of Art and Object - 8,145Assets pledged as security◊◊The net carrying amount of plant and equipmentheld under finance leases is $nil (2011 $1k).Except for assets subject to finance leases and thehousing improvement suspensory loan of $480k(2011 $480k) secured by mortgage against therelevant housing units, PNCC does not have anyassets pledged as security for liabilties.A registered first debenture and mortgage issecured over assets and property owned byPalmerston North Airport Ltd. The borrowingsare from the Bank of New Zealand and at 30 June2012 land and buildings with a carrying value of$27.9m has been pledged as security.Significant acquisitions and replacement of assets◊ In accordance with the provisions of Section 24Part 3 Schedule 10 of the Local Government Act2002, the What the Council Does section containsmore information on the significant acquisitionsand renewals of assets on an activity basis.Palmerston North City Council Annual Report 2011/12163

Note 16Intangible assetsCouncilGroupComputer Computer Athletic Carpark Total TotalSoftware Licences Track Leases$000 $000 $000 $000 $000 $0002012BALANCE AT 1 JULY 2011Cost 3,859 156 675 1,016 5,706 5,800Accumulated amortisationand impairment (2,040) (66) (675) (61) (2,842) (2,928)Opening carrying amount 1,819 90 - 955 2,864 2,872Financial Statements Note 16YEAR ENDED 30 JUNE 2012Additions 119 69 - - 188 189Amortisation charge (607) (54) - (20) (681) (684)Disposals cost - - - - - (12)Disposal accumulated amortisation - - - - - 12Closing carrying amount 1,331 105 - 935 2,371 2,377BALANCE AT 30 JUNE 2012Cost 3,978 225 675 1,016 5,894 5,977Accumulated amortisationand impairment (2,647) (120) (675) (81) (3,523) (3,600)Closing carrying amount 1,331 105 - 935 2,371 2,3772011BALANCE AT 1 JULY 2010Cost 3,794 85 675 1,016 5,570 5,657Accumulated amortisationand impairment (1,476) (31) (600) (40) (2,147) (2,231)Opening carrying amount 2,318 54 75 976 3,423 3,426YEAR ENDED 30 JUNE 2011Net additions 65 71 - - 136 143Amortisation charge (564) (35) (75) (21) (695) (697)Closing carrying amount 1,819 90 - 955 2,864 2,872BALANCE AT 30 JUNE 2011Cost 3,859 156 675 1,016 5,706 5,800Accumulated amortisationand impairment (2,040) (66) (675) (61) (2,842) (2,928)Closing carrying amount 1,819 90 - 955 2,864 2,872◊Computer software includes software andsystems under development of $nil (2011 $nil).◊No intangible assets are pledged as security forliabilities (2011 $nil).◊The carpark leases are for the lease of carparksfor a period of 999 years with amortisation overthe life of the carpark.◊There are no restrictions over the title ofintangible assets except for the athletic track.The athletic track is on third party land with thecost reflecting PNCC construction cost. PNCC hasa long term access agreement for residents.164Palmerston North City Council Annual Report 2011/12

Note 17Forestry assets Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Balance at 1 July 1,601 1,909 1,601 1,909Increases due to purchases, replanting 90 60 90 60Gains/(losses) arising from changes in fair valueless estimated point of sale costs (236) 147 (236) 147Decreases due to harvest (226) (515) (226) (515)Balance at 30 June 1,229 1,601 1,229 1,601◊◊◊◊PNCC owns two investment forests; Turitea andGordon Kear. The forest assets referred to in thisnote are limited to the biological asset, beingthe forest crop (and do not include forest land orsite improvements).Turitea Forest is located within the watercatchment reserve in two distinct blocks of pinusradiata, and comprises of the west and eastblocks totalling 63.2 hectares. The west blockwas planted in 43.4 hectares of pinus radiata,which are at varying stages of maturity rangingfrom 17 to 37 years. The east block consists of19.8 hectares of mature pinus radiata which arecurrently uneconomic to harvest and have beenwritten off.Gordon Kear Forest is a joint venture withManawatu District Council, with PNCC owning76.7% of the remaining 183.2 hectares of pinusradiata forest, which are at varying stages ofmaturity ranging from 18 to 35 years (see note19 for detail of the joint venture). Harvest of theforest is expected to continue over the next fiveyears.PNCC own 100% of the Gordon Kear Forest landand site improvements. As the joint ventureforest is harvested the forest is being replantedwith a second rotation tree crop. To date 116.9hectares have been planted with this rotation100% owned by PNCC.◊◊During the 2012 period 26.5 hectares of forestwere harvested from Gordon Kear Forest.Forestry assets (biological assets) were valuedas at 30 June 2012 by an independent registeredforestry consultant Alan Bell (Registered ForestryConsultant - NZ Institute of Forestry) of AlanBell & Associates. A pre-tax discount rate of10% (2011 10%) has been used in discountingthe present value of expected cash flows todetermine fair value of the forestry crops.Valuation has been on a going concern basisand only includes the value of the current crop,based on current average costs and three yearhistorical rolling average sales prices. The forestcrops are valued on an annual basis.Financial risk management strategies◊ PNCC is exposed to financial risks arising fromchanges in timber prices. PNCC is a long-termforestry investor and does not expect timberprices to decline significantly in the foreseeablefuture, therefore, has not taken any measures tomanage the risks of a decline in timber prices.PNCC reviews its outlook for timber pricesregularly in considering the need for activefinancial risk management.Financial Statements Note 17Note 18Investment property Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Balance at 1 July 15,468 16,040 15,468 16,040Additions and acquisitions 1 68 1 68Fair value gains/(losses) on valuation (note 6) 72 (640) 72 (640)Balance at 30 June 15,541 15,468 15,541 15,468◊PNCC’s investment properties are valuedannually at fair value effective 30 June. Allinvestment properties were valued basedon open market evidence to determine fairvalue. The valuation was performed by Paulvan Velthooven (FPINZ, FNZIV, BA, BComm) ofMorgans Property Advisors.◊Whilst PNCC does not have any contractualcommitment for capital expenditure, there isan intention (as detailed in the Property AssetManagement Plan) to maintain and renew allinvestment property.◊There are no contractual obligations in relationto investment properties at balance date but notrecognised in the financial statements for eithercapital expenditure or operating expenditure.Palmerston North City Council Annual Report 2011/12165

Note 19Joint venturePNCC and the Manawatu District Council (MDC) jointly own the Gordon Kear Forest first rotation crop. PNCC’sinterest in the Gordon Kear Forest crop joint venture is accounted for as a jointly controlled asset, where PNCCcurrently owns 76.7% and MDC own the remaining 23.3%. PNCC own 100% of the Gordon Kear Forest land, siteimprovements (these assets are not part of the joint venture) and second rotation tree crop.PNCC’s interest in the jointly controlled asset is as follows:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Non-current assets 935 1,343 935 1,343Current liabilities 85 67 85 67Non-current liabilities 55 453 55 453Income from harvest sales 280 796 280 796Expenses 226 515 226 515Financial Statements Note 19Non-current asset value◊ Gordon Kear Forest crop was valued as at 30June 2012 at $1.2m (2011 $1.8m). PNCC’sinterest in the forest at that date was a 76.7%share, which is worth $0.9m (2011 $1.3m). Thereare amounts payable to MDC for net harvestproceeds of $85k (2011 $67k) included in tradeand other payables.◊PNCC’s share of the Gordon Kear Forest crop hasalso been included within Note 17 - ForestryAssets.Note 20Current and non-current liabilities◊ The JV forestry encouragement loans totalling$55k as at 30 June 2012 were drawn down solelyby PNCC. Manawatu District Council’s portion ofthe loan was repaid during 2011.Joint venture commitments and contingencies◊ There are no commitments or contingentliabilities arising from the group’s involvement inthe joint venture.Trade and other payables Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Trade payables 5,750 4,231 6,171 4,611Deposits and bonds 1,185 1,145 1,185 1,166Accruals and capital creditors 3,745 4,147 3,959 4,375Amounts due to related parties (note 28) 7 15 - -Fees and grants in advance 580 637 718 788Rates in advance 792 698 792 698Retentions 814 895 814 895Tax payable (includes GST payables) - - 107 47Other payables 613 642 613 687Total trade and other payables 13,486 12,410 14,359 13,267◊Trade and other payables are non-interestbearing and are normally settled on 30 dayterms, therefore the carrying value of trade andother payables approximates their fair value.166Palmerston North City Council Annual Report 2011/12

Note 21Provisions Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000CURRENTLandfill aftercare provision 285 243 285 243Building weather tightness claims 442 688 442 688Revenue received in advance 73 96 73 96Restructuring provision - 168 - 168Total current provisions 800 1,195 800 1,195NON-CURRENTLandfill aftercare provision 913 1,092 913 1,092Revenue received in advance 134 204 134 204Total non-current provisions 1,047 1,296 1,047 1,296Council & GroupLandfill Building Revenue Restructuringaftercare weather received in provisiontightness claims advance$000 $000 $000 $000Balance at 1 July 2010 1,505 540 422 -Additional provisions made during the year - 225 - 168Amounts used during the year (248) (77) (122) -Discount unwind (note 4) 78 - - -Balance at 30 June 2011 1,335 688 300 168Additional provisions made during the year - 150 13 -Amounts used during the year (207) (396) (106) (168)Discount unwind (note 4) 70 - - -Balance at 30 June 2012 1,198 442 207 -Landfill aftercare provision◊◊◊◊PNCC, as owner and operator of the Awapunilandfill since 1952, has a legal obligationunder resource consent to provide ongoingmaintenance and monitoring of its landfill postclosure.The landfill closed at the end of January2007. Post closure activities include leachate,water, gas monitoring and remedial measuressuch as ongoing site maintenance, drainagesystems and wastewater treatment, final claycapping, soil covering and vegetation.Estimates of future monitoring costs andremedial works have been made by councilengineers. These engineering estimates arethe basis upon which PNCC has established thisfinancial provision. The provision includes allexpected future costs and obligations associatedwith landfill post-closure.The provision has been estimated taking intoaccount and based upon known technology,existing knowledge and current legalrequirements for the remaining closure andongoing maintenance and monitoring costs. Theamount of the provision is the present valueof future cash flows expected to be incurred,using a discount rate of 4.75% and 6.0%. PNCCengineers and accountants review the amountof the landfill provision at least once a year.The long term nature of the landfill liabilitymeans that there are inherent uncertainties inestimating costs that will be incurred.Cash outflows for post-closure remedial workshave already begun and are expected to◊◊◊continue over the next year (until 2013), withconsent monitoring costs expected to continuefor up to 17 years (until 2029).Landfill post-closure remedial works arecapitalised to the landfill asset where they giverise to future economic benefits. Componentsof the capitalised landfill asset are thendepreciated over their useful lives.The landfill provision of $1.198m (2011 $1.335m)is made up of closure costs $0.195m (2011$0.298m) and aftercare costs $1.003m (2011$1.037m).No reimbursement from other sources outside ofPNCC is expected.Building weather tightness claims◊ PNCC has unresolved weather tightness claims.Refer to note 27 for further details. PNCC isunable to assess it’s exposure to these claimswith the cost of any successful claims againstPNCC expected to be substantially coveredunder PNCC’s insurance policies.◊PNCC also has exposure to possible calls relatingto professional indemnity insurance cover,mainly relating to weather tightness claims.Refer to note 27 for further details. PNCC hasbeen advised that further calls may be requiredfor past pool periods.◊ PNCC has made a provision of $442,000 (2011$688,000) to cover future weather tightnessclaims and future insurance pool calls, althoughthe potential liability and timing of any paymentFinancial Statements Note 21Palmerston North City Council Annual Report 2011/12167

is uncertain. In addition PNCC has madebudgetary provision in future years for anypotential liability.Revenue received in advance◊ Arena Manawatu has received some income inadvance which relates to services to be providedin future years. The portion relating to thosefuture years is provided for as revenue receivedin advance.Restructuring provision◊ The restructuring provision in 2011 was to meetthe possible cost of a proposal to restructure theCustomer Services unit.Note 22Employee Benefit Liabilities Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Financial Statements Note 22Accrued pay (includes time in lieu and deductions payable) 611 554 696 687Annual leave 3,517 3,394 3,662 3,540Long service leave 473 411 484 420Retirement gratuities 992 927 992 927Sick leave 147 186 149 189Total employee benefit liabilities 5,740 5,472 5,983 5,763COMPRISING:Current 4,688 4,545 4,927 4,833Non-current 1,052 927 1,056 930Total employee benefit liabilities 5,740 5,472 5,983 5,763◊Entitlements for long service leave andretirement gratuities that are payable beyond12 months have been calculated on an actuarialbasis.The amount of the provision is the present valueof future cash flows expected to be incurred,using a discount rate of 3.25% and 4.75%(2011 4.00% and 5.10%). The long term natureof the liability means that there are inherentuncertainties in estimating costs that will beincurred.168Palmerston North City Council Annual Report 2011/12

Note 23BorrowingsCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000CURRENTBank overdraft - - - -Secured loans 23,058 41,661 24,258 42,961Finance lease liabilities - 1 - 1Total current borrowings 23,058 41,662 24,258 42,962NON-CURRENTSecured loans 116,857 98,010 121,057 102,310Total non-current borrowings 116,857 98,010 121,057 102,310Totl borrowings 139,915 139,672 145,315 145,272Secured Loans◊◊◊PNCC has a total bank overdraft facility of $0.5m(2011 $0.5m) with interest being charged at thebank’s prime lending rate.PNCC has bank loans drawn under multi-optioncredit lines totalling $80 million. Of the $41.9million drawn at 30 June 2012, $30 million isreset monthly at the bank rate plus 1.10%, withthe remainder, $11.9 million, drawn at call atthe bank rate plus 0.83%. Interest is payable inarrears.The interest rate on PNCC’s fixed rate debenturestock is payable semi-annually in arrears.◊ Although effective interest rates are 6.77% (20117.04%) PNCC manages interest rate risk by use ofinterest rate swaps.◊◊◊There are no conditions or covenants which, ifcontravened, would significantly alter the termsof the borrowing instruments or arrangements.Interest accrued on the forestry encouragementloans is added to the outstanding principal eachyear. During 2011/12 all of the loan terms weremet.PNCC manages its borrowings in accordancewith its funding and financial policies, whichincludes a Treasury Policy. These policies havebeen adopted as part of the PNCC’s Long TermPlan.Security◊ All of PNCC’s secured loans plus the overdraftare secured under the terms of the DebentureTrust Deed between the PNCC and PerpetualTrust, as Trustee. Security is by a charge overthe Council’s ability to levy rates in favour ofthe Trustee. Pursuant to the Debenture TrustDeed PNCC has issued to its bankers securitycertificates totalling $98m to secure the variousbank loan facilities, bank overdraft, guaranteesissued on behalf of PNCC and other generalbanking facilities.◊◊◊In 2010 and 2011 PNCC received a total of$480,000 as part of a housing improvementscheme operated by Housing New Zealand. Thisloan has been utilised in improving communityhousing, is interest free and secured againstthose housing units. The loan is suspensoryproviding PNCC continues to own the units for20 years, as is intended. PNCC has treated this asa grant and included this in revenue for capitalexpenditure as it intends to own these unitsindefinitely.PNAL’s borrowing is secured by a registeredfirst debenture and mortgage over the assetsand property of the Company. The balanceoutstanding is $5.4m (2011 $5.6m).Lease liabilities are effectively secured as therights to the leased asset revert to the lessor inthe event of default.Financial Statements Note 23Palmerston North City Council Annual Report 2011/12169

Fair ValueFair values of the secured loans (determined on a discounted cash flow basis using observable market interestrates) are as follows:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Floating rate bank loans 41,850 41,200 41,850 41,200Fixed rate bank loans - - 5,400 5,600Fixed rate debenture stock 98,000 98,000 98,000 98,000Floating rate debenture stock - - - -Fixed rate table loan 10 18 10 18Housing improvement suspensory loan - - - -Forestry encouragement loans 55 453 55 453Total 139,915 139,671 145,315 145,271Financial Statements Note 23Current portion 23,058 41,661 24,258 42,961Non-current portion 116,857 98,010 121,057 102,310◊The carrying amounts of the short termborrowings and finance lease liabilitiesapproximate their fair values.Analysis of Finance LeasesCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Total minimum lease payments are payableNot later than one year - 1 - 1Later than one year and not later than five years - - - -Later than five years - - - -Total minimum lease payments - 1 - 1Future finance charges - - - -Present value of minimum lease payments - 1 - 1Present value of minimum lease payments payableNot later than one year - 1 - 1Later than one year and not later than five years - - - -Later than five years - - - -Total present value of minimumlease payments payable - 1 - 1Represented by:Current - 1 - 1Non-current - - - -Total finance leases - 1 - 1170Palmerston North City Council Annual Report 2011/12

Note 24Equity Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000RETAINED EARNINGSAs at 1 July 981,477 984,121 1,006,747 1,008,123Transfers from/(to) special funds - - 114 131Transfer from/(to) Group on CCO transfer to Council - - - -Transfers from asset revaluation reserve ondisposal of property 234 157 234 157Surplus/(deficit) for the year (10,749) (2,801) (10,442) (1,664)As at 30 June 970,962 981,477 996,653 1,006,747SPECIAL FUNDSAs at 1 July - - 201 332Transfers (to)/from retained earnings - - (114) (131)As at 30 June - - 87 201FINANCIAL ASSETS AT FAIR VALUETHROUGH OTHER COMPREHENSIVE INCOMEAs at 1 July 75 397 75 397Revaluation of shares in Civic Assurancerecognised in other comprehensive income 29 (322) 29 (322)As at 30 June 104 75 104 75ASSET REVALUATION RESERVETHROUGH OTHER COMPREHENSIVE INCOMEAs at 1 July 199,588 154,237 212,176 166,635Revaluation gains/(losses) recognisedin other comprehensive income (net of deferred tax) - 45,508 1,917 45,698Transfer to retained earnings on disposal of property (234) (157) (234) (157)As at 30 June 199,354 199,588 213,859 212,176ASSET REVALUATION RESERVE CONSISTS OF:Operational assetsLand 1,241 1,469 10,563 10,791Buildings 60,619 60,616 61,430 62,051Improvements - - - -Heritage collection - - 1,374 1,374Art collection - - 2,998 457Financial Statements Note 24Infrastructural assetsWastewater system 25,566 25,567 25,566 25,567Water system 9,215 9,223 9,215 9,223Stormwater system 32,844 32,844 32,844 32,844Roading network 63,608 63,608 63,608 63,608Waste management 92 92 92 92Restricted assetsLand 6,169 6,169 6,169 6,169Total Revaluation Reserve 199,354 199,588 213,859 212,176TOTAL EQUITY 1,170,420 1,181,140 1,210,703 1,219,199Palmerston North City Council Annual Report 2011/12171

Note 25Reconciliation of net surplus/(deficit) after tax to net cash flowfrom operating activitiesCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Surplus/(Deficit) after Tax (10,749) (2,801) (10,442) (1,664)Financial Statements Note 25Add/(less) non-cash items:Depreciation and amortisation 24,498 24,889 25,493 25,755Impairment charges 193 259 193 259Vested assets (15) (1,757) (98) (1,864)Provision movement (714) 194 (714) 194(Gains)/losses in fair value of biological assets 236 (147) 236 (147)(Gains)/losses in fair value of investment property (72) 640 (72) 640(Increase)/decrease in operating property valuation - (673) - (673)(Gains)/losses in fair value of investment fund 604 (472) 604 (472)(Gains)/losses in fair value ofderivative financial instruments 5,453 467 5,453 467Effect of change in discount rate onprovisions and discount unwind 70 78 70 78Loan recognised as grant - (240) - (240)Effective interest (39) (19) (39) (21)Deferred tax movement - - (11) 45Add/(less) items classified as investingor financing activities:(Gains)/losses on disposal ofproperty, plant and equipment (57) 1,118 (54) 1,122Add/(less) movements in working capital items:Accounts receivable 511 (2,169) 736 (2,296)Goods and Services Tax (net) (156) 214 (156) 120Inventories 3 495 (23) 487Accounts payable (inclusive of employee benefits) 1,383 (1,085) 1,290 (883)Provision for taxation - - 114 (6)Net Cash inflow/(outflow)from operating activities 21,149 18,991 22,580 20,901172Palmerston North City Council Annual Report 2011/12

Note 26Capital commitments and operating leasesCapital CommitmentsCouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Capital expenditure contracted for at balance datebut not yet incurred for property, plant and equipment 754 1,007 754 1,509◊◊PNCC currently has no construction contracts.PNCC currently has no non-current assets thatare held for sale.◊There are no capital commitments in relationto PNCC’s interest in Gordon Kear Forest jointventure and investment properties (note 18).Operating Leases as LesseePNCC leases property, plant and equipment in the normal course of its business. The majority of these leaseshave a non-cancellable term of 36 months. The future aggregate minimum lease payments to be paid under noncancellableoperating leases are as follows:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Non-cancellable Operating Leases as LesseeNot later than one year 458 458 1,087 1,050Later than one year and not later than five years 1,382 1,550 2,641 3,238Later than five years - 291 - 291Total non-cancellable operating leases 1,840 2,299 3,728 4,579◊◊The total minimum future sublease paymentsexpected to be received under non-cancellablesubleases at balance date is $nil (2011 $nil).Lease amounts payable have been determinedon the basis of current annual rent payable andhave not been discounted or inflation adjusted.◊◊Leases can be renewed at PNCC’s option, withrents set by reference to current market ratesfor items of equivalent age and condition. PNCCdoes have the option to purchase some of theleased assets at the end of the lease term.There are no restrictions placed on PNCC by anyof the leasing arrangements.Financial Statements Note 26Operating Leases as LessorPNCC leases its investment property and some operational assets under operating leases. The majority of theseleases have a non-cancellable term of 24 or 36 months. For some leases the lessee has the right for furtherrenewal periods. The future aggregate lease payments to be collected under non-cancellable operating leasesare as follows:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Non-cancellable Operating Leases as LessorNot later than one year 1,235 1,260 2,199 2,394Later than one year and not later than five years 3,629 4,091 5,385 6,589Later than five years 4,903 5,889 8,012 9,315Total non-cancellable operating leases 9,767 11,240 15,596 18,298◊No contingent rents have been recognised in thestatement of comprehensive income during theperiod.Non-cancellable Energy Contracts◊ PNCC has a contract with Mighty River PowerLtd to supply electricity to all its complexes withthe contract expiring on 30 November 2013.Electricity is charged on an actual usage basis.◊PNCC has a contract with Energy Direct NZ Ltd tosupply gas to all its complexes with the contractexpiring on 30 June 2013. Gas is charged on anactual usage basis.Other Non-cancellable Contracts◊ Arena Manawatu have a lease agreement withMarist Club (PN) in relation to the carpark infront of the Marist Clubrooms in Pascal Streetalongside Arena 2. This is for a term of 15 yearswhich expires on 11 June 2019 with a right ofrenewal for a further term of 15 years.Palmerston North City Council Annual Report 2011/12173

Note 27Contingencies Council GroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Contingent liabilitiesBuilding Act claims and RiskPool insurance (net of provision) 1,054 546 1,054 546Financial guarantees 32 59 32 59Other legal proceedings 10 - 10 -Uncalled share capital - - - -Housing improvement suspensory loan 480 480 480 480Total contingent liabilities 1,576 1,085 1,576 1,085Financial Statements Note 27Litigation◊As at 30 June 2012, there was one legal actionbeing taken against PNCC for which notice ofan action had been received totalling $500k(2011 $218k). This claim is being contested withany liabiliity uncertain and will be substantiallycovered by PNCC’s public liability or professionalindemnity insurance policies which have anexcess payment requirement against all claims.Building Act Claims◊ The Building Act 2004 imposes certainobligations and liabilities on local authoritiesin respect to the issue of building consents andinspection of work done.◊◊PNCC has 13 claims unresolved including oneclaim lodged with the Weathertight HomesResolution Service (WHRS), four claims withthe Financial Assistance Programme, and oneother weather tightness claim as at 30 June2012 (2011, 15). These claims relate to weathertightness issues of homes in the PalmerstonNorth area and name PNCC as well as otherparties. It is not yet certain whether theseclaims are valid and whom will be liable for thebuilding defects, therefore, PNCC is unable toassess it’s exposure to the claims and the timingof any payment is uncertain. The costs of anysuccessful claims against PNCC are expectedto be substantially covered under PNCC’sinsurance policies with a maximum potentialliability for the weather tightness claims toPNCC of $560,000 (2011 $620,000) and $150,000(2011 $90,000) for seven other building claims.A provision has been recognised for weathertightness claims, refer note 21. In addition PNCChas made budgetary provision in future years forany potential liability.PNCC is also exposed to potential future claimswhich have not been advised. The amount ofthese claims and any potential liability are notable to be reliably measured and are thereforenot quantifiable.RiskPool Insurance◊ PNCC obtains public liability and professionalindemnity insurance cover from New ZealandMutual Liability RiskPool. This operates as amutual fund where each member makes anannual contribution to obtain cover, howevershould claims exceed contributions then callscan be made on the members of that fund year,for the shortfall amount. RiskPool have advisedthat a further call of a similar amount to the$262,000 incurred in 2011 will be required incalender 2012 for past pool periods due toweather tightness claims with the potential offuther calls. PNCC has recognised a provision tocover RiskPool calls, refer note 21, however asthe amount and timing is uncertain the actualpotential liability remains unknown. In additionPNCC has made budgetary provision in futureyears for any potential liability.Financial Guarantees◊ The value of guarantees disclosed as contingentliabilities reflects PNCC’s assessment of theundiscounted portion of financial guaranteesthat are not recognised in the statement offinancial position. PNCC is the guarantor of thebank loans for a small number of communityorganisations within facilities built on PNCCland. PNCC is obligated under the guaranteesto make loan repayments in the event theorganisation defaults on a loan arrangement.◊◊NZ IAS 39 requires financial guarantees to berecognised at their fair value based on theprobability PNCC will be required to reimburse aguarantee holder for a loss incurred, discountedto present value. The portion that remainsunrecognised, prior to discounting to fair value,is disclosed as a contingent liability. The valueof financial guarantees recognised has beenassessed as $0, because PNCC believes that theprobability of being called upon to honour anyguarantees given is currently unlikely.PNCC is a participating employer in a DefinedBenefit Plan Contributors Scheme (“thescheme”), which is a multi-employer definedbenefit scheme. If the other participatingemployers ceased to participate in the scheme,PNCC could be responsible for the entiredeficit of the scheme. Similarly, if a number ofemployers ceased to participate in the scheme,PNCC could be responsible for an increasedshare of the deficit.Housing improvement suspensory loan◊ In 2010 and 2011 PNCC received a total of$480,000 as part of a housing improvementscheme operated by Housing New Zealand. Thisloan has been utilised in improving communityhousing, is interest free and secured againstthose housing units. The loan is suspensoryproviding PNCC continues to own the units for20 years, as is intended. PNCC has treated thisas a grant and not a loan and included this inrevenue for capital expenditure as it intendsto own these units indefinitely. Should any ofthese units be sold within the 20 year period therelated loan would be repayable.174Palmerston North City Council Annual Report 2011/12

Carbon Credits◊◊PNCC has an agreement with the Crown toreduce carbon-dioxide equivalent (methane)emissions from 2006 to December 2012 in returnfor being awarded carbon credits. This will beachieved through the use of the cogenerationplant at the City’s landfill. PNCC is required tomonitor the methane destruction and electricitygeneration (which determines the credits) usingan approved methodology. From 2008 to 2012this will be independently audited in arrears by aUN-certified climate change auditor.Under a Kyoto mechanism PNCC has soldexpected carbon credits from 2008 to December2012 to the Austrian Government in a contractbetween PNCC and KummunalKredit (asagent for the Austrian Government). Duringthe year carbon credits have been generatedand included in income. The agreementincluded minimum required carbon creditsto be generated. During the year it has beenagreed that should these minimum levels notbe achieved no consequential remedies will beenforced and therefore no provision is requiredfor any future generation shortfall.Emission Units◊ PNCC owns land and forests subject to theNew Zealand emissions trading scheme. Thishas implications should the land be deforestedwith the Government providing compensationemission units for this restriction. PNCC hasreceived 13,220 compensating emission unitsrelating to qualifying pre-1990 forests whichare recorded at a nil value. No provision hasbeen made for the remaining possible creditentitlement that may be received.◊Should forest land be deforested, PNCC may beliable for deforestation penalties relating to pre-1990 forest land of approximately 620 hectares.As it is intended to re-plant this land in forests,with no current intention of deforestation, noliability is provided.Unquantified contingent liabilities◊ There are various claims that PNCC are currentlycontesting which have not been quantified dueto the nature of the issues, the uncertainty of theoutcome and/or the extent to which PNCC havea responsibility to the claimant. The possibilityof any outflow in settlement in these cases isassessed as remote.Contingent assets◊ PNCC enables sports clubs to construct facilities(eg club rooms) on reserve land. These clubscontrol the use of these facilities and PNCC willonly gain control of the asset if the club vacatesthe facility. Until this event occurs these assetsare not recognised as assets in the Statement ofFinancial Position.Financial Statements Note 27Palmerston North City Council Annual Report 2011/12175

Note 28Related Party TransactionsIn this section PNCC disclose the related partytransactions between the parent PNCC, its fiveCouncil Controlled Organisations (CCO’s), andthose transactions involving Councillor’s and keymanagement personnel.PNCC is the ultimate parent of the group and controlsfive entities, being Caccia Birch Trust Board, GlobeTheatre Trust Board, Palmerston North AirportLimited, Regent Theatre Trust Board, and Te ManawaMuseums Trust Board and had significant influenceover the forestry joint venture with ManawatuDistrict Council (Note 17 and 19).Key management personnel of PNCC includethe Mayor, Councillors, Chief Executive and theseven General Managers who make up the seniormanagement team.CouncilActual Actual2012 2011$000 $000Financial Statements Note 28Related party transactions with subsidiaries and CCO’sCaccia Birch Trust BoardGrants provided by PNCC 75 67Services provided by PNCC 8 5Services provided to PNCC 5 5Accounts payable by PNCC 1 -Globe Theatre Trust BoardGrants provided by PNCC 51 50Services provided by PNCC 2 2Palmerston North Airport LimitedDividends paid to PNCC 211 143Services provided by PNCC 20 76Services provided to PNCC 22 45Rates paid to PNCC 330 241Accounts payable by PNCC 1 15Accounts receivable by PNCC 1 2Tax loss offset paid to PNCC 166 139Regent Theatre Trust BoardGrants provided by PNCC 130 103Services provided by PNCC 10 29Rent paid to PNCC 28 28Services provided to PNCC 9 -Accounts payable by PNCC 5 -Te Manawa Museum Trust BoardGrants provided by PNCC 2,965 2,919Services provided by PNCC 200 155Services provided to PNCC 18 69Rates paid to PNCC - 2Accounts receivable by PNCC 17 10◊In addition to the above transactions PNCCalso owns the premises used by Caccia Birch,Globe Theatre, Regent Theatre and Te ManawaMuseum. While some are used pursuant toleases, the premises are effectively provided asan additional grant.◊Manawatu District Council is also a relatedparty due to the forestry joint venture. Detailsof transactions and balances due to MDC aredetailed in notes 17 and 19. In addition PNCCprovides other services to MDC on normalcommercial terms.◊No doubtful debt provision has been requiredfor any advances made.176Palmerston North City Council Annual Report 2011/12

Transactions with Councillors and KeyManagement◊ During the year Councillors and keymanagement, as part of normal customerrelationships, were involved in minortransactions with PNCC, such as payments ofrates and purchase of rubbish bags etc.◊◊There are close family members of some keymanagement personnel employed by PNCC. Theterms and conditions of these arrangementsare no more favourable than PNCC would haveadopted if there were no relationship to keymanagement personnel.During the year PNCC purchased services froma sports club of which Ray Swadel, a member ofthe key management personnel, is Vice Presidentamounting to $750. These were suppliedon normal commercial terms. No balance isoutstanding at year end.The amounts paid by PNCC to entities in whichCouncillors have an interest were:Councillor Linklater’s interests:◊ As a director until November 2011 of FarmlandsTrading Society provided goods and servicestotalling $11,342 (2011 $21,219). There is nobalance owing at year end (2011 $1,019).Councillor Nixon’s interests:◊ Whose son-in-law as a director until 1 June 2012of Blackley Construction Limited provided goodsand services negotiated on normal commercialterms totalling $100,395 (2011 $511,196). Thereis a balance owing on normal commercial termsat year end of $23,349 (2011 $37,505).◊Whose son as a director of Nixon BuildingServices Limited provided goods and servicesnegotiated on normal commercial terms totalling$2,021 (2011 $nil). There is no balance owing atyear end.In addition (outside the requirements of Councillors interests) there are some Councillors who are trusteesor officers of organisations who receive grants from PNCC. These grants were approved by Council on thesame basis as other grant recipients after considering all requests for grants. Amounts paid by Council toorganisations in which Councillors have an interest were:CouncilActual Actual2012 2011Councillor Organisation $000 $000Councillor Barnett Palmerston North Community Arts Council 83 82Councillors Broad and Findlay Palmerston North Street Van 3 1Councillor Dennison YMCA Central Inc 6 -Councillor Dennison Best Care (Whakapai Hauora) Charitable Trust 4 3Councillor Nixon Te Whare Akonga Open Learning Centre 20 20Councillor Nixon The Parish of St Mark’s and St Andrew’s 3 -Financial Statements Note 28Palmerston North City Council Annual Report 2011/12177

Note 29RemunerationELECTED REPRESENTATIVESFinancial Statements Note 29Elected representatives received the following remuneration:Annual Non Total Annual Non TotalSalary Salary Remuneration Salary Salary Remuneration2012 2012 2011 2011MEMBER POSITION $ $ $ $ $ $Current Elected RepresentativesNaylor J Mayor 109,688 - 109,688 100,858 - 100,858Barnett J M Councillor 34,502 748 35,250 34,129 492 34,621Baty S Councillor 34,502 2,028 36,530 23,485 492 23,977Broad A Councillor 34,502 748 35,250 23,485 492 23,977Dennison V Councillor 34,502 748 35,250 34,129 492 34,621Findlay L Councillor 37,953 748 38,701 36,853 492 37,345Guy N Councillor 34,502 2,028 36,530 23,485 968 24,453Jefferies J Deputy Mayor 39,678 748 40,426 37,949 492 38,441Kelly P Councillor 34,502 748 35,250 34,129 492 34,621Linklater R I Councillor 37,953 2,348 40,301 36,321 6,085 42,406McCann D Councillor 34,502 748 35,250 23,485 492 23,977Meehan B Councillor 34,502 748 35,250 23,485 492 23,977Nixon A L Councillor 37,953 748 38,701 36,321 3,994 40,315Teo-Sherrell C Councillor 34,502 748 35,250 34,129 3,059 37,188Utikere T Councillor 34,502 748 35,250 23,485 492 23,977Wilson B Councillor 36,228 748 36,976 35,225 8,078 43,303Elected Representatives to 17 October 2010Cruden G Councillor - - - 10,644 - 10,644Feyen M H Councillor - - - 10,644 - 10,644Hornblow J Deputy Mayor - - - 11,176 - 11,176Ireland D J Councillor - - - 10,644 - 10,644Podd A Councillor - - - 11,176 - 11,176Wheeler P Councillor - - - 10,644 - 10,644Elected representatives appointed to CCO’s also received remuneration from those organisations:2012 2011$ $Cruden G - Director, Palmerston North Airport Limited (to 17 October 2010) - 3,281Podd A - Trustee, Te Manawa Museums Trust Board (to 17 October 2010) - 497178Palmerston North City Council Annual Report 2011/12

SalaryWith the enactment of the Local Government Act2002, the Remuneration Authority is now responsiblefor setting the remuneration levels for electedmembers. The PNCC monetary remuneration (salary)detailed above was determined by the RemunerationAuthority. As permitted under the Authority’sguidelines PNCC has chosen for its elected membersto receive an annual salary for the 2011/12 financialyear rather than the alternative option of acombination of meeting fee payments and annualsalary.Non-salaryThe determination issued by the RemunerationAuthority also provides for the payment of hearingfees for those Councillors who sit as members onhearings of resource consent applications lodgedunder the Resource Management Act 1991. Thefees for members who act in this capacity are paidat the rate of $100 per hour for the Chair and $80per hour for other members of the Committee. Thelevel of fees received by Councillors who have sat onresource consent hearings for the 2011/12 financialyear is included under the heading MonetaryRemuneration - Non-salary.Councillors are also able to claim an allowancefor mileage. This allowance is also set by theRemuneration Authority and is paid to Councillorswhen using their personal vehicle to travel from theirnormal place of residence to official PNCC meetings.The mileage allowance paid to individual Councillorsis not included under this disclosure as it is areimbursement of costs incurred and not consideredremuneration.Non-monetaryIn addition, the Mayor and Councillors receive nonmonetaryremuneration in relation to car parkingspace provided. The Councillors have shared workingspace available for use and access to computers.The Mayor, Jono Naylor, is also provided with amotor vehicle for use on PNCC business and privateuse in addition to the Mayors remuneration above.Professional indemnity and trustee liability insuranceis also provided to Councillors against any potentiallegal litigation which may occur while undertakingPNCC business.CHIEF EXECUTIVEThe Chief Executive of PNCC is appointed under section 42 of the Local Government Act 2002 and received thefollowing remuneration:2012 2011$ $Salary 322,011 322,011Superannuation subsidy 6,447 6,447Vehicle 7,789 7,789Telephone 589 589Total 336,836 336,836KEY MANAGEMENT PERSONNEL REMUNERATIONThe table below includes the remuneration of the Councillors, Chief Executive and members of the senior managementteam.2012 2011$ $Salaries and other short term employee benefits 2,261,140 2,200,719Post employment benefits 84,812 87,448Other long term benefits - -Termination benefits - -Share-based payments - -Total 2,345,952 2,288,167Financial Statements Note 29Palmerston North City Council Annual Report 2011/12179

Note 30Severance payments◊◊For the year ended 30 June 2012, PNCC madetwo severance payments (2011, nil) to employeestotalling $16,500 (2011 $nil). The value of eachof the severance pays were $12,500, and $4,000.The term severance payment includes nonmonetarybenefits but excludes salary, holidaypay, superannuation contributions and any othercontractural entitlements to which the employeewas already entitled.The precise amount of each severance payableto each individual is required to be disclosed.Employees are not required to be named,however, section 33 of schedule 10 of the LocalGovernment Act 2002 requires the disclosures ofthe severance paid to a Chief Executive.Note 31Events after the balance sheet dateFinancial Statements Note 30◊Effective 1 July 2012 the boundary betweenPNCC and Manawatu District Council (“MDC”)will be altered. This will bring some additionalareas into PNCC together with the transfer ofassets and liabilities related to those areas. Theamounts to be transferred are not expected tobe material and being effective 1 July 2012 willbe included in the 2012/13 financial year.Note 32Financial instrument categoriesThe accounting policies for financial instruments have been applied to the category items below:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000FINANCIAL ASSETSLoans and receivablesCash and cash equivalents 369 112 2,015 1,929Trade and other receivables 7,742 8,106 8,197 8,830Other financial assets 395 248 503 459Total loans and receivables 8,506 8,466 10,715 11,218◊PNCC are not aware of any other eventssubsequent to balance date which wouldmaterially affect the amounts included in thesefinancial statements or disclosures made.Fair value through surplus or deficit - held for tradingLong term investment fund - securities and bonds 13,932 15,633 13,932 15,633Long term investment fund - overseas shares 5,803 6,406 5,803 6,406Derivative financial instruments assets 2,338 2,557 2,338 2,557Total fair value through surplus or deficit 22,073 24,596 22,073 24,596Fair value through other comprehensive incomeUnlisted shares (Civic Assurance) 494 269 494 269FINANCIAL LIABILITiesFinancial liabilities at amortised costTrade and other payables 13,486 12,410 14,299 13,267Borrowings 139,915 139,672 145,315 145,272Total financial liabilities at amortised cost 153,401 152,082 159,614 158,539Fair value through surplus or deficit - held for tradingDerivative financial instruments liabilities 10,640 5,406 10,640 5,406180Palmerston North City Council Annual Report 2011/12

Note 33Fair value hierarchy disclosuresFor those instruments recognised at fair value inthe statement of financial position, fair values aredetermined according to the following hierarchy:◊◊quoted market price (level 1) for financialinstruments with quoted prices for identicalinstruments in active markets.valuation technique using observable inputs(level 2) for financial instruments with quotedprices for similar instruments in active marketsor quoted prices for identical or similar◊instruments in inactive markets and financialinstruments valued using models where allsignificant inputs are observable.valuation techniques with significant nonobservableinputs (level 3) for financialinstruments valued using models where one ormore significant inputs are not observable.The following table analyses the basis of the valuation of classes of financial instruments measured at fairvalue in the statement of financial position:Valuation techniquETotal Quoted Observable Significantmarket price inputs non-observableinputs$000 $000 $000 $000Council and Group 2012Financial assetsNZ securities and bonds 13,932 13,932 - -Quoted overseas share investments 5,803 5,803 - -Unlisted shares 494 - - 494Derivative financial instruments 2,338 - 2,338 -Financial liabilitiesDerivative financial instruments 10,640 - 10,640 -Council and Group 2011Financial assetsNZ securities and bonds 15,633 15,633 - -Quoted overseas share investments 6,406 6,406 - -Unlisted shares 269 - - 269Derivative financial instruments 2,557 - 2,557 -Financial liabilitiesDerivative financial instruments 5,406 - 5,406 -◊ There were no transfers between the differentlevels of the fair value hierarchy.Financial Statements Note 33Valuation techniques with significant non-observable inputs (level 3)The table below provides a reconciliation from the opening balance to the closing balance for the level 3fair value measurements:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Balance at 1 July 269 591 269 591Additional new shares purchased 196 - 196 -Gains and losses recognised in other comprehensive income 29 (322) 29 (322)Balance at 30 June 494 269 494 269Palmerston North City Council Annual Report 2011/12181

Note 34Financial instrument risksFinancial Statements Note 34PNCC has adopted a Treasury Policy which prescribesthe framework within which the financial assetsand liabilities will be managed. The policy has aparticular focus on risks associated with financialinstruments. It does not allow any transactions whichare speculative in nature to be entered into.MCA NZ Limited is retained as investment advisorsfor the Long Term Investment Fund with Asia PacificRisk Management Limited engaged as advisors inrelation to PNCC’s term borrowings.PNCC has financial assets and liabilities as outlinedin note 10 (cash and cash equivalents), note 11 (tradeand other receivables), note 13 (other financialassets), note 14 (derivative financial instruments),note 20 (trade and other payables) and note 23(borrowings).The level of borrowing is determined by the Councilthrough the 10 Year Plan as modified each year bythe Annual Plan. All external debt must be authorisedby resolution of the Council. The Treasury Policycontains not only guidelines aimed at minimisingthe impact of various types of risk but also sets whatare assessed as being prudent maximum borrowinglimits.Investment policies and objectives for the Long TermInvestment Fund are included in the Treasury Policy.This incorporated PNCC’s risk and return objectives,the investment strategy (including acceptable classesof assets to be invested in), prudential guidelines, themanagement structure for the Fund and the processby which Fund performance will be measured. Riskmanagement policies aim to reduce the potentialnegative effects of the different investment riskson PNCC’s liabilities and distribution policies.Professional fund managers are mandated to managesignificant portions of the Fund within the frameworkdetermined by the Council.Market risksPrice riskPrice risk is the risk that the fair value of a financialinstrument will fluctuate as a result of changes inmarket prices. PNCC is exposed to equity securitiesprice risk on its equity investments, held as partof the Long Term Investment Fund, and in shareinvestments intended to be held long term. Thisprice risk arises due to market movements in listedsecurities or unlisted shares. This price risk ismanaged by diversification of PNCC’s investmentportfolio in accordance with the limits set out inPNCC’s investment policy.Currency riskCurrency risk is the risk that the fair value of afinancial instrument will fluctuate due to changesin foreign exchange rates. PNCC has exposure tocurrency risk through investment of a portion of itsLong Term Investment Fund in overseas shares.Fair value interest rate risksFair value interest rate risk is the risk that the valueof a financial instrument will fluctuate due tochanges in market interest rates. Borrowing issuedat fixed rates expose PNCC to fair value interest raterisk. PNCC’s Treasury Policy prescribes that no morethan 45% of the total borrowings will have a floatingrate profile. Fixed to floating interest rate swaps areentered into to hedge the fair value interest rate riskarising where PNCC has borrowed at fixed rates. Inaddition investments at fixed interest rates exposePNCC to fair value interest rate risk.Cash flow interest rate risksCash flow interest rate risk is the risk that cash flowsfrom a financial instrument will fluctuate becauseof changes in market interest rates. Borrowings andinvestments issued at variable interest rates exposePNCC to cash flow interest rate risk. PNCC managesits cash flow interest rate risk on borrowings by usinginterest rate swaps. Such interest rate swaps havethe economic effect of converting borrowings atfloating rates into fixed rates that are generally lowerthan those available if PNCC borrowed at fixed ratesdirectly. Under interest rate swaps, PNCC agrees withother parties to exchange, at specified intervals, thedifference between fixed contract rates and floatingrate interest amounts calculated by reference to theagreed notional principal amounts.Some financial instruments (in particular managedfunds and overseas shares forming part of the LongTerm Investment Fund) are not directly exposed tointerest rate risk.Credit riskCredit risk is the risk that a third party will default onits obligation to PNCC, causing PNCC to incur a loss.Financial instruments will potentially subject PNCC tocredit risk.Credit risk is minimised as a result of several keycontrols including maintaining maximum limits foreach broad class of counterparty and individualcounterparties, limiting investments to organisationswith a Standard and Poor’s investment grade ratingor equivalent, and controlling the level and spread oftrade and other receivables outstanding. As a resultthere are no significant concentrations of credit risk.The maximum exposure to credit risk is representedby the carrying amount of each financial asset in theStatement of Financial Position and the face value ofoff-balance sheet guarantees to community groups(refer Note 27).PNCC has no collateral or other credit enhancementsfor financial instruments that give rise to credit risk.182Palmerston North City Council Annual Report 2011/12

PNCC’s maximum credit exposure for each class of financial instrument is as follows:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000Cash and cash equivalents and bank deposits 369 112 2,123 2,140Trade and other receivables 7,742 8,106 8,197 8,830Financial guarantees 32 59 32 59Derivative financial instruments 2,338 2,557 2,338 2,557Other advances 395 248 395 248Securities, stocks, bonds and shares 19,735 22,039 19,735 22,039The credit quality of financial assets that are neither past due nor impaired can be assessed by reference toStandard and Poor’s credit ratings (if available) or to historical information about counterparty default rates:CouncilGroupActual Actual Actual Actual2012 2011 2012 2011$000 $000 $000 $000COUNTERPARTIES WITH CREDIT RATINGSCash and cash equivalentsAA - 112 626 2,140AA- 369 - 1,497 -NZ bondsAA- or better 2,010 2,641 2,010 2,641A+ 1,022 1,048 1,022 1,048A 322 600 322 600BBB+ 1,838 1,821 1,838 1,821BBB 1,720 1,890 1,720 1,890BBB- - 1,024 - 1,024Derivative financial instrument assetsAA- 2,338 2,557 2,338 2,557COUNTERPARTIES WITHOUT CREDIT RATingsOther advancesExisting counterparty with no defaults in the past 395 248 395 248Investments of long term investment fundExisting counterparty with no defaults in the past 12,823 13,015 12,823 13,015Financial Statements Note 34Trade and other receivables mainly arise fromPNCC’s statutory functions, therefore there areno procedures in place to monitor or report thecredit quality of debtors and other receivables withreference to internal or external credit ratings. PNCChas no significant concentrations of credit risk inrelation to receivables as it has a large number ofcredit customers, mainly ratepayers, and PNCC haspowers under the Local Government (Rating) Act2002 to recover outstanding debts from ratepayers.Palmerston North Airport Limited is exposed tocredit risk as there is a limited base of customers forthe services provided by the Company. Althoughconsidered fully recoverable 71% of receivables at 30June 2012 are from 11 customers.PNCC manages its borrowings in accordance withits funding and financial policies, which includes aLiability Management policy. These policies havebeen adopted as part of PNCC’s Treasury Policy.Liquidity riskLiquidity risk is the risk that PNCC will encounterdifficulty raising liquid funds to meet commitmentsas they fall due. Prudent liquidity risk managementimplies maintaining sufficient cash, the availability offunding through an adequate amount of committedcredit facilities and the ability to close out marketpositions. PNCC aims to maintain flexibility infunding by keeping committed credit lines available.Palmerston North City Council Annual Report 2011/12183

The table below analyses PNCC’s financial liabilities into relevant maturity groupings based on the remainingperiod at the balance date to the contractual maturity date. Future interest payments on floating rate debt arebased on the floating rate on the instrument at the balance date. The amounts disclosed are the contractualundiscounted cash flows and include interest payments.Carrying Contractual Less than 1-2 years 3-5 years More thanamount cash flows 1 year 5 years$000 $000 $000 $000 $000 $000Council 2012Trade and other payables 13,486 13,486 13,486 - - -Secured loans 41,915 48,650 1,684 1,627 45,339 -Debentures 98,000 113,006 29,279 42,392 41,335 -Total 153,401 175,142 44,449 44,019 86,674 -Group 2012Trade and other payables 14,299 14,299 14,299 - - -Secured loans 47,315 55,454 3,272 3,063 47,921 1,198Debentures 98,000 113,006 29,279 42,392 41,335 -Total 159,614 182,759 46,850 45,455 89,256 1,198Financial Statements Note 34Council 2011Trade and other payables 12,410 12,410 12,410 - - -Secured loans 41,671 42,771 42,760 4 4 3Debentures 98,000 119,769 6,763 29,279 72,988 10,739Finance leases 1 1 1 - - -Total 152,082 174,951 61,934 29,283 72,992 10,742Group 2011Trade and other payables 13,267 13,267 13,267 - - -Secured loans 47,271 49,598 44,448 1,607 2,658 885Debentures 98,000 119,769 6,763 29,279 72,988 10,739Finance leases 1 1 1 - - -Total 158,539 182,635 64,479 30,886 75,646 11,624The table below analyses PNCC's derivative financial instrument liabilities to be settled on a net basis in relevantmaturity groupings based on the remaining period at balance date to the contractual maturity date. Theamounts disclosed are the contractual undiscounted cash flows.Carrying Contractual Less than 1-2 years 3-5 years More thanamount cash flows 1 year 5 years$000 $000 $000 $000 $000 $000Council and Group 2012Net settled derivative liabilities 10,640 12,710 - - 4,321 8,389Council and Group 2011Net settled derivative liabilities 5,406 7,447 199 - 622 6,626184Palmerston North City Council Annual Report 2011/12

The table below analyses PNCC’s financial assets into relevant maturity groupings based on the remaining periodat the balance date to the contractual maturity date. The amounts disclosed are the contractual undiscountedcash flows and include interest payments.Carrying Contractual Less than 1-2 years 3-5 years More thanamount cash flows 1 year 5 years$000 $000 $000 $000 $000 $000Council 2012Cash and cash equivalentsand bank deposits 369 369 369 - - -Trade and other receivables 7,742 7,742 7,742 - - -Derivative financial instruments 2,338 2,089 121 343 1,625 -Other advances 395 512 147 81 89 195Securities, stocks, bondsand shares 19,735 24,660 2,684 617 6,696 14,663TOTAL 30,579 35,372 11,063 1,041 8,410 14,858Group 2012Cash and cash equivalentsand bank deposits 2,123 2,123 2,123 - - -Trade and other receivables 8,197 8,197 8,197 - - -Derivative financial instruments 2,338 2,089 121 343 1,625 -Other advances 395 512 147 81 89 195Securities, stocks, bondsand shares 19,735 24,660 2,684 617 6,696 14,663TOTAL 32,788 37,581 13,272 1,041 8,410 14,858Council 2011Cash and cash equivalentsand bank deposits 112 112 112 - - -Trade and other receivables 8,106 8,106 8,106 - - -Derivative financial instruments 2,557 2,126 - 647 408 1,071Other advances 248 373 30 30 90 223Securities, stocks, bondsand shares 22,039 28,822 2,084 2,895 4,509 19,334TOTAL 33,062 39,539 10,332 3,572 5,007 20,628Group 2011Cash and cash equivalentsand bank deposits 2,140 2,140 2,140 - - -Trade and other receivables 8,830 8,830 8,830 - - -Derivative financial instruments 2,557 2,126 - 647 408 1,071Other advances 248 373 30 30 90 223Securities, stocks, bondsand shares 22,039 28,822 2,084 2,895 4,509 19,334TOTAL 35,814 42,291 13,084 3,572 5,007 20,628Financial Statements Note 34Palmerston North City Council Annual Report 2011/12185

Sensitivity analysisThe tables below illustrate the potential effect on surplus or deficit and equity (excluding retained earnings)for reasonably possible market movements, with all other variables held constant, based on PNCC’s financialinstrument exposures at balance date. For interest rate movement the potential effect assumes a fullyear movement.2012 2011$000 $000 $000 $000 $000 $000 $000 $000-100bp +100bp -100bp +100bpCOUNCIL Profit Equity Profit Equity Profit Equity Profit EquityINTEREST RATE RISKFinancial assetsInvestment fund NZsecurities and bonds 479 - (462) - 387 - (376) -Derivatives - held for trading 643 - (613) - 998 - (869) -Financial liabilitiesSecured loans 419 - (419) - 412 - (412) -Derivatives - held for trading (4,631) - 4,335 - (4,380) - 3,682 -Financial Statements Note 34Total sensitivity tointerest rate risk (3,090) - 2,841 - (2,583) - 2,025 --10% +10% -10% +10%Profit Equity Profit Equity Profit Equity Profit EquityFOREIGN EXCHANGE RISKFinancial assetsOther financial assets- quoted share investments 644 - (528) - 711 - (583) -Total sensitivity toforeign exchange risk 644 - (528) - 711 - (583) -EQUITY PRICE RISKFinancial assetsOther financial assets- quoted share investments (580) - 580 - (641) - 641 -Unlisted shares (49) - 49 - (27) - 27 -Total sensitivity toequity price risk (629) - 629 - (668) - 668 -186Palmerston North City Council Annual Report 2011/12

2012 2011$000 $000 $000 $000 $000 $000 $000 $000-100bp +100bp -100bp +100bpGROUP Profit Equity Profit Equity Profit Equity Profit EquityINTEREST RATE RISKFinancial assetsCash and cash equivalents (1) - 1 - (2) - 2 -Investment fund NZsecurities and bonds 479 - (462) - 387 - (376) -Derivatives - held for trading 643 - (613) - 998 - (869) -Financial liabilitiesSecured loans 419 - (419) - 412 - (412) -Derivatives - held for trading (4,631) - 4,335 - (4,380) - 3,682 -Total sensitivity tointerest rate risk (3,091) - 2,842 - (2,585) - 2,027 --10% +10% -10% +10%Profit Equity Profit Equity Profit Equity Profit EquityFOREIGN EXCHANGE RISKFinancial assetsOther financial assets- quoted share investments 644 - (528) - 711 - (583) -Total sensitivity toforeign exchange risk 644 - (528) - 711 - (583) -EQUITY PRICE RISKFinancial assetsOther financial assets- quoted share investments (580) - 580 - (641) - 641 -Unlisted shares (49) - 49 - (27) - 27 -Total sensitivity toequity price risk (629) - 629 - (668) - 668 -Explanation of interest rate risk sensitivityThe interest rate sensitivity is based on a reasonablepossible movement in interest rates, with all othervariables held constant, measured as a basis points(bps) movement. For example, a decrease of 100bpsis equivalent to a decrease in interest rates of 1.0%.The sensitivity for derivatives (interest rate swaps)has been calculated using a derivative valuationmodel based on a parallel shift in interest rates of-100bps/+100bps.Explanation of foreign exchange risksensitivityThe foreign exchange sensitivity is based on areasonable possible movement in foreign exchangerates, with all other variables held constant,measured as a percentage movement in the foreignexchange rate.Explanation of other price risk sensitivityThe sensitivity for listed shares has been calculatedbased on a -10%/+10% movement in the quoted bidshare price at year end for the listed shares.Financial Statements Note 34Palmerston North City Council Annual Report 2011/12187

Note 35Financial Statements Note 35Capital managemenT◊◊◊PNCC’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 PNCC to manage its revenues, expenses,assets, liabilities, investments, and generalfinancial dealings prudently and in a mannerthat promotes the current and future interestsof the community. Ratepayers’ funds are largelymanaged as a by-product of managing revenues,expenses, assets, liabilities, investments, andgeneral financial dealings.The objective of managing these items is toachieve intergenerational equity, which is aprinciple promoted in the Act and applied byPNCC. Intergenerational equity requires today’s◊ratepayers to meet the costs of utilising PNCC’sassets and not expecting them to meet thefull cost of long term assets that will benefitratepayers in future generations. Additionally,PNCC has in place asset management plans formajor classes of assets detailing renewal andmaintenance programmes, to ensure ratepayersin future generations are not required to meetthe costs of deferred renewals and maintenance.The Act requires PNCC to make adequate andeffective provision in its Long Term Plan (LTP)and in its Annual Plan (where applicable) tomeet the expenditure needs identified in thoseplans. The Act also sets out the factors that PNCCis required to consider when determining themost appropriate sources of funding for each ofits activities. The sources and levels of fundingare set out in the funding and financial policiesin PNCC’s LTP.188Palmerston North City Council Annual Report 2011/12

Council Controlled OrganisationsCouncil Controlled OrganisationsPalmerston North City Council Annual Report 2011/12

Council Controlled OrganisationsPalmerston North City Council Annual Report 2011/12

Council Controlled OrganisationsThe Council does some of its work through Council Controlled Organisations (CCOs).A CCO is any organisation in which the Council owns or controls at least 50 percent of the votingrights or has the right to appoint at least 50 percent of the directors or trustees. CCOs are mostlyset up to independently manage Council facilities, or deliver specific services and developmentson behalf of local residents.The Council has four reporting CCOs:• Caccia Birch Trust Board• Globe Theatre Trust Board• Regent Theatre Trust Board• Te Manawa Museums Trust Board.A Council Controlled Trading Organisation (CCTO)is a CCO that is set up to make a profit for theCouncil and hence for the ratepayers.The Council has one CCTO:• Palmerston North Airport Limited.CCOs and CCTOs operate at arms length to theCouncil. They are run by their Boards, not by theCouncil. Each year the Council and the Boardagree on what services that Board will provide.This agreement is called the Statement of Intent.The Council then provides funding so that theBoard can implement the Statement of Intent.The Council works through CCOs and CCTOsbecause they bring business and communityexpertise that the Council may not be able toeasily access otherwise.They can also attract funding from sources otherthan ratepayers.All the CCOs (other than the Airport) particularlycontribute to the Council’s goal of makingPalmerston North a socially sustainable city wherepeople want to live because of its safe and easylifestyle and its many social, cultural and leisureopportunities. They do this by providing a rangeof leisure opportunities for both performers andaudiences. They also do this by making the Citymore attractive by preserving and promoting itsheritage.By attracting visitors to Palmerston North theyalso contribute to economic development in theCity. Te Manawa, especially, also adds to the City’sscience, education and research base.Palmerston North Airport Limited contributesto the Council’s goal of being an economicallysustainable city which attracts, fosters and retainsbusinesses and jobs to create a prosperouscommunity.The Council can exempt small CCOs from theplanning and reporting requirements of the LocalGovernment Act. These are called exemptedorganisations and the Council has three of them:FreightGate Ltd (associated with the airport) thePalmerston North Performing Arts Trust Fund, andthe Manawatu-Wanganui Regional Disaster ReliefFund Trust.Council Controlled Organisations OverviewPalmerston North City Council Annual Report 2011/12189

Caccia Birch Trust BoardCouncil Controlled Organisations Caccia Birch Trust BoardObjectivesCaccia Birch, as a heritage building, is a significanthistorical property run for the Council by the Caccia BirchTrust Board. It operates as a meeting and conferencecentre for functions, social events and weddings. Thisactivity is to help fund the preservation of the building.Caccia Birch’s restoration and maintenance has beenoverseen by the Trust Board since 1992.What does the Board do?The Board preserves and protects the Category 1Historic Caccia Birch Homestead for public use andfuture generations. To do this it manages a programmeof internal refurbishment and redecoration agreed withthe Council as landlord to enable asset managementand development.What does Caccia Birch do?Caccia Birch provides the local community with asignificant historical property, giving a direct link withliving history.Key Performance MeasuresTargetMaintain category 1 heritage listing.ActionsThis year the Board intended to complete thedevelopment of the Coach House Archive as a localhistorical resource which is then to be continuallyupdated and improved.The Board will maintain the cycle of internal and externalimprovements and refurbishment and the programmeof asset management as outlined in the Council’s assetmanagement plan.To help fund this, the Trust Board will:• continue to develop the conference andfunction venue• develop the customer base to maximise the heritagevalue of the facility and community access.ResultsTarget met.Occupancy rate of 68.5% or 250 usage days. Target not met - 67%.Receive non-Council revenue of at least $110,000. Target not met - $104,200At least 10 open afternoons free to the public with400 people attending over the year.Report the number of community groups usingCaccia Birch House.Target met - 12 afternoons, with between 30 and50 attending each; three organised tours; studentgroups; numerous private individual visitors.Two regular groups and several others on an ad-hocbasis.190Palmerston North City Council Annual Report 2011/12

Globe Theatre Trust BoardObjectivesThe Globe Theatre is a community theatre run for theCouncil by the Globe Theatre Trust Board. It controls,develops, promotes, enhances and maintains the GlobeTheatre so that it may be used and enjoyed by thepeople of the Manawatū area.What does the Board do?The Board develops, promotes, enhances and maintainsthe Globe Theatre so it may be used and enjoyed bylocal citizens.The Theatre provides the primary venue and is the homefor the Manawatu Theatre Society.What does the Globe Theatre do?The Theatre offers a professionally equipped, affordablevenue for community-based amateur theatre groups tohire.It also offers an intimate performance space inPalmerston North for professional theatre groups andother performers to hire.In doing this the Theatre contributes to the developmentof the Cultural Village complex for the Community toenjoy.Key Performance MeasuresTarget65 performance nights allocated to publicperformances and 120 usage nights (pro rata withsix months closure).80:20 split in usage between community andcommercial groups with between 60% and 80%community usage.No more than 50% revenue generated from theCouncil’s operating grant.“Friends of the Globe Theatre” has 150 contactnames, donating at least $10 a month each.ActionsThe Board will develop the customer base:• To maintain and develop current usage.• By further examining the promotional andmarketing plan along with technologicaldevelopments to assist users to maximise thehireage experience, e.g. electronic on-siteadvertising.The Board will seek further organisational and businessdevelopment by:• Continuing to examine ways to enhance theexisting performance and customer facilities,thereby improving the theatre going experienceat the Globe, eg. foyer, café/bar and auditoriumfacilities.• Contributing to the developments at Te Manawa, asand when possible and appropriate, reflecting theparticular needs of the Globe Theatre.• Continuing to review and monitor current technicalinventory to prioritise further development.• Preparing a Strategic Business Plan.ResultsTarget met – 154 performance nights, 252 totalusage nights.Target met – 75:25 split.Target not met – 54%.Target not met – still under development.Note the Statement of Intent assumed theatre closure for six months to allow the theatre re-development. This did notoccur.Council Controlled Organisations Globe Theatre Trust BoardPalmerston North City Council Annual Report 2011/12191

Regent Theatre Trust BoardCouncil Controlled Organisations Regent Theatre Trust BoardObjectivesThe Regent Theatre is one of the Council’s major artsand cultural facilities. It consists of a civic auditoriumand regional centre for the performing arts and is runfor the Council by the Regent Theatre Trust Board.It develops, promotes, enhances and maintains theRegent as a venue for live performances, communityevents, graduations and the performing arts, attractinginternational, national and local performances.What does the Board do?The Board operates, develops, enhances and maintainsthe Regent on Broadway as a recognised heritagebuilding and world class 1,400 seat performing artsvenue and civic auditorium to provide the communitywith fun things to do.What does the Regent Theatredo?The Theatre will promote and operate the Regent soit will remain New Zealand’s most vibrant provincialtheatre. In doing this it will contribute to the City’sattractiveness by providing an exciting and innovativeprogramme of cultural and community events withbroad appeal.Key Performance MeasuresTargetNot less than 55% annual auditorium hireagerevenue is generated from commercial (noncommunity)use.Communitrak Survey for the year will confirmcommunity satisfaction ratings over 90%.Annual gross operating revenue will be at least fourtimes the amount of the Council’s operating grant.At least 160 live nights for the year in respect of thetheatre’s main auditorium.At least 40 live nights for the year in respect ofthe theatre’s main auditorium at the theatre’s fullcommercial hireage rate.Total attendance numbers for events are at least100,000 for the year.At least 10 days use of the theatre’s auditorium peryear for tertiary graduation ceremonies.The Theatre will assist the City’s economic growth byacting as a cultural magnet for out-of-town visitors.To maintain the City’s cultural heritage the Theatre willmaintain and preserve the physical infrastructure of thebuilding and its fixtures and fittings.ActionsTo promote and operate the Regent the Board will:• Liaise with marketing personnel to identify andsource product for the Regent.• Produce an e-news bulletin for the Regent topromote public awareness of upcoming events.• Develop a database of prospective patrons forRegent events.• Maintain and operate an entrepreneurial fund toenable financial assistance to be provided whereconsidered appropriate to secure shows andperformances for the Regent.• Operate a street-front event ticketing facility forevents at the Regent and elsewhere.• Encourage continuing appreciation of theheritage aspects of the Regent and oversee themaintenance and preservation of such aspects toprevent degradation.ResultsTarget met - 56.5%.Survey done in November 2011 - household visitorsatisfaction rating of 98%; resident satisfaction of85% with 14% neutral or don’t know.Target not met – 3.59 times.Target met - 213.Target met - 40.Target met - 102,351.Target met - 12.At least eight days of use of the theatre’s auditoriumper year for school prize-givings.At least 35 functions per year held in the RegencyRoom and/or Mezzanine area.At least 100 days of use for the year in respect of theRehearsal room.Target met - 14.Target not met - 28.Target met - over 100.192Palmerston North City Council Annual Report 2011/12

Te Manawa Museums Trust BoardObjectivesTe Manawa is one of the Council’s major arts and culturalfacilities. It consists of the museum, science centre andart gallery and is run for the Council by the Te ManawaMuseums Trust Board. It has key roles in promoting thearts, culture and science, while educating visitors byproviding challenging experiences.What does the Board do?The Board governs and manages Te Manawa as itdevelops as a significant regional cultural institutionencompassing a museum, gallery and science centre.What does Te Manawa do?Te Manawa provides a regional cultural centre where art,heritage and science themes dominate. In doing this TeManawa is also a storehouse of regionally and nationallyimportant collections of Taonga Māori, New Zealandcontemporary art, social and natural history.To promote educational and challenging experiences TeManawa will host international touring shows and homegrown exhibits that celebrate the joys and challenges ofprovincial life and stimulate the mind.These are supported by education programmes, specialevents, and public programmes. In undertaking theseactivities Te Manawa contributes to the City’s goals:• Palmerston North is a socially sustainable citywhere people want to live because of its safe andeasy lifestyle and its many social, cultural andrecreational opportunities• Palmerston North is an economically sustainablecity which attracts, fosters and retains businessesand jobs to create a prosperous community.ActionsTo enable and improve the ongoing visitor experiencethe Board will:• Enhance Te Manawa’s engagement andparticipation with the community and visitors.• Ensure collections in the care of Te Manawa areprofessionally managed and contribute to thecommunity’s understanding of Manawatū history,art, creativity and scientific endeavour.• Strengthen the funding base.• Develop a high performing organisation.Council Controlled Organisations Te Manawa Museums Trust BoardPalmerston North City Council Annual Report 2011/12193

Key Performance MeasuresTargetResultsTe Manawa visitor surveys target 90% satisfaction. 94% satisfaction comprising 63% excellent, 23%very good, 8% good from Te Manawa visitor survey.Maintain and grow visitation, target visits to TeManawa 164,729, exhibitions at other venues 80,000and to website 125,000.Collections are housed to best practice museumstandards.NZ Rugby Museum is co-located into the Te Manawacomplex.Target not met – visits to Te Manawa 152,148,exhibitions at other venues 21,793.Target met – visits to website 137,033.Target met.Target met.Council Controlled Organisations Te Manawa Museums Trust BoardA minimum of 40 public programmes are run duringthe year with total visitation 11,000 and participationin two events attracting at least 1,000 visitors.A minimum of two temporary exhibitions from the TeManawa collection are held to reflect the distinctivecharacteristics of our community and its collections.A minimum of three outreach activities occur.Two temporary exhibitions feature material fromregional collections.Two events developed to include focus on regionalcollections.Revenue targets for semi-permanent developmentsare increased. Target for third party revenue toexceed $516,000.Target Met - more than 40 programmes and eventsrun, attracting 15,159 participants; two events -Grand Opening Weekend and The Queen’s BirthdayParty - attracted 1,900 visitors (less than the 2,000target).Target met - Eye on Art: Movers and Shakers; andNow & Then: Space Invaders.Target met - presentations at Lower North IslandYouth Justice Centre, Te Wananga o Raukawaand two local alternative education groups, andparticipation at various community events.Target met - Ralph Hotere: Small Holes in theScience; Te Huringa/Turning Points; An EmbroidedCelebration; Now & Then - all feature material fromregional collections.Target met - public talk by Massey lecturers,focusing on objects from the Massey Collection inrelation to the exhibition: The Labours of Herakles;Series of back of house public tours by Social HistoryRegistrar, focusing on objects from the textilescollection at Te Manawa.Target not met - $438,000.194Palmerston North City Council Annual Report 2011/12

Palmerston North Airport LtdObjectivesPalmerston North Airport Ltd is a public limited liabilitycompany incorporated and registered under theCompanies Act 1993 and is 100% owned by the Council.The principal activities of the company are to provideairport facilities and services to airlines and airportusers (both commercial and non-commercial) throughthe ownership and operation of Palmerston NorthInternational Airport.What does the Board do?The Board will protect shareholder value and provide areturn to the Council in the form of growth in companyvalue and annual dividends.What does the Palmerston NorthAirport do?The Airport will continue to provide the City and theregion with a key transport gateway that contributes tothe City’s and the region’s economic development.The Airport will also develop as the principal CentralNew Zealand passenger and freight hub; to serviceinternational flights with a focus on trans-Tasman andthe Pacific (for which re-establishment of the serviceis sought); and to lead Manawatū regional economicdevelopment.In doing this the Airport contributes particularly tothe City’s and region’s economic growth by providingtransportation services that link businesses to domesticand international suppliers and markets. It also bringsvisitors to the City.It also contributes to the positive image of the City as agood place to do business.Key Performance MeasuresTargetA ratio of net surplus before interest/tax/revaluations tototal assets inclusive of revaluations of 3.0% per year.A ratio of net surplus after interest/tax toconsolidated shareholders’ funds inclusive ofrevaluation reserve of 1.7%.To maintain an interest coverage ratio of net surplusbefore interest and tax to interest at or above 2.0.To maintain a tangible net worth (total tangibleassets after revaluations less total liabilities) of orabove $35 million.ActionsThe Airport Company will operate the Airport for bothcommercial and non-commercial aviation users. It isresponsible for all operational and commercial aspectsof the Airport. It provides international and domesticterminal facilities.The company will meet expected new runway end safetyarea requirements by providing physical extensionsthat preserve or increase the current declared runwayoperating lengths, dependent upon progress in reestablishinginternational services.A programme of roading construction will be continuedas previously planned, with provision made to respondto demand for increased aircraft apron space andinternational border processing areas.The Company will also consider further growthconsistent with the Company objectives such as:• Upgrading services for the travelling public• Having an appropriate number of concessionswithin the terminal to maximise financial return• Encouraging the provision of aviation-relatedcommercial facilities such as freight handling• Providing adequate cargo and other storagebuildings at commercial rentals for end users• Encouraging airlines to provide new modernfacilities at the airport• Providing covered light aircraft parking on acommercial basis• Promoting the establishment of an industrial parkon the airport.ResultsTarget not met - 2.6%.Target not met - 1.4%.Target met - 2.55.Target not met - $34.85m.Council Controlled Organisations Palmerston North Airport LtdTo maintain a level of satisfaction of 90% and willperiodically measure this by customer survey.Total passenger throughput of 465,000 during the2011/12 year.Target met - 96% of customers were either quitesatisfied or very satisfied (Customer Satisfaction SurveyNovember 2011).Target not met - 449,318.Palmerston North City Council Annual Report 2011/12195

Council Controlled Organisations Palmerston North Airport Ltd196Palmerston North City Council Annual Report 2011/12

AppendicesAppendicesPalmerston North City Council Annual Report 2011/12

AppendicesPalmerston North City Council Annual Report 2011/12Central Library.Laura Ridley Photography 2010.

How to Find usPostal AddressPrivate Bag 11034Manawatū Mail CentrePalmerston North 4442Customer ServicesCentre32 The SquarePalmerston NorthOpen Hours:Monday, Tuesday, Thursday andFriday, 8am-5pmWednesday, 9am-5pmThe Customer Services Centreis the first point of contactwithin the Council for all of ourbusiness and is user friendly forpeople with disabilities.Our friendly customer-focusedteam will assist you in personat the Customer Services Centreon The Square side of the roadlinking the Council’s CustomerServices to the heart of the City.The Palmerston North CityCouncil also operates a 24 hour,seven day a week, 365 days ayear Customer Services CallCentre which acts as a first pointof contact with the Council.The Customer Services Centrestaff are always there to talk toyou about any issues you maybe having within the City. It alsoprovides a translation servicefor those who have English as asecond language.For all enquiries, servicerequests, or to contact anyonewho works for the PalmerstonNorth City Council, pleaseuse the following contactinformation:Telephone: 06 356 8199Fax: 06 351 4471Email: info@pncc.govt.nzWeb: www.pncc.govt.nzService CentreAshhurst ServicesDelivery CentreC/o AshhurstFour Square Discounter122 Cambridge AvenueAshhurstCity LibraryCentral Library4 The SquarePO Box 1948Phone: 06 351 4100Renewals: 06 351 4101Fax: 06 351 4102Email: webmanager@library.pncc.govt.nzHours: Mon, Tues,Thurs - 10am-6pmWed, Fri - 10am-8pmSat - 10am-4pmSun - 1pm-4pmClosed on public holidays.Ashhurst CommunityLibraryCnr Cambridge Street andBamfield StreetAshhurstPhone/Fax: 06 326 8646Awapuni BranchLibraryCnr College Street andPitama RoadPalmerston NorthPhone/Fax: 06 356 7634Roslyn BranchLibrary8 Kipling StreetPalmerston NorthPhone/Fax: 06 357 9287Te Patikitiki(Highbury)Branch Library157 Highbury AvenuePalmerston NorthPhone: 06 357 2108Mobile Library– has regular stops throughoutthe City.Council MeetingsThe Council encourages publicparticipation in its activities.Meetings of the Council andits Committees are open to thepublic and are held in the CouncilChamber. For information ofmeeting agendas and dates,contact the Customer ServiceCentre (06 356 8199) or look inthe public notices section of theManawatu Standard, The Tribuneor The Guardian newspapers;or look at our website -www.pncc.govt.nzAuditorsAudit New Zealand49 Victoria AvenuePalmerston North(on behalf of the AuditorGeneral)BankersWestpac BankingCorporationSolicitorsCooper Rapley240 Broadway AvenuePalmerston NorthSimpson GriersonHSBC House195 Lambton QuayWellingtonAppendices How to Find usPalmerston North City Council Annual Report 2011/12197

GlossaryAppendices GlossaryActivityThe goods or services that the Council provides to thecommunity. The Council has 19 Activities, e.g. EconomicDevelopment, Water, City Library. They have been groupedtogether according to the community outcomes they mostcontribute to. However, all Activities contribute to more thanone community outcome.Annual PlanThis is a budget document that shows how the Council willfund a particular year of the 10 Year Plan (LTP). This is to givemore consistency of direction to what the Council does for thecommunity. It is produced in years two and three of the 10 YearPlan.Asset Management Plans (AMPs)These ensure that the Council’s major infrastructural assetsare maintained to ensure high environmental standards andcan meet the future needs of the City, at the lowest possiblecost over the long term. The Council has AMPs for roading andparking, stormwater, waste management, wastewater, water,and property and recreation facilities.Capital NewThat expenditure which will increase the value of or createnew Council assets (land, infrastructure, plant and equipment).A household analogy would be expenditure to build a newbedroom.Capital RenewalAsset renewals or replacements e.g. renewing a footpath, orreplacing library books.Group of ActivitiesActivities that provide similar services have been groupedtogether. Groups of Activities show how the Council will worktowards the community outcomes.Level of serviceA measurable description of what the Council does (or isplanning to do) for residents.LTP (Long Term Plan)A 10 Year Plan, with particular emphasis on the first three years,developed by the Council and describing what the Council plansto do to contribute to the community outcomes. It shows whythe Council does these things, how much they are expected tocost and how success will be judged. A LTP is prepared everythree years.Maintenance CostsExpenditure in relation to repairs and maintenance of Council’sassets.Operating ExpenditureExpenditure that is necessary for the normal activities ofCouncil. Using a household analogy, this would be paying forthe electricity or food.Performance MeasuresPerformance measures show how people can judge the successof the Council. The measures in the current 10 Year Plan are partof the Council’s performance framework. The Council has othermore technical performance measures in documents like AssetManagement Plans.Community OutcomesWhat local communities think are important for their current andfuture social, economic, environmental and cultural well-being.Council Controlled Organisation (CCO)An organisation which the Council owns or controls at least 50%of the voting rights or has the right to appoint at least 50% of thedirectors or trustees. CCOs are mostly set up to independentlymanage Council facilities or deliver specific services on behalfof residents.Council Controlled Trading Organisation(CCTO)As above for CCO but trading with the main purpose/intentionbeing to make a profit.DepreciationSpreading the costs of assets over their useful life.Development ContributionsDevelopment Contributions provide Council with a method toobtain contributions to fund infrastructure requirements dueto growth. A Development Contributions Policy is required as acomponent of the Funding & Financial Policies in the LTP undersection 102(4)(d) of the Local Government Act (LGA) 2002.Financial YearThe Council’s financial year runs from 1 July to 30 June. The2012 financial year therefore covers the period 1 July 2011 to30 June 2012.ProgrammesProgrammes are the detailed financial actions which includecapital and non-capital works within a particular financial yearto achieve particular outcomes of the Council.Treasury PolicyThis policy sets out:• when and how Council will invest, and for what purposes• when and how Council will borrow, and for what purposes.Uniform Annual General Charge (UAGC)A component of the general rate that is levied as a uniformamount on every property.198Palmerston North City Council Annual Report 2011/12

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