AGENDA Commercial and Strategy Committee Meeting Tuesday, 9 June 2020 Date Tuesday, 9 June 2020 Time following the Community Services Committee Location Council Chamber Timaru District Council King George Place Timaru File Reference 1343674 DISTRICT COUN CIL Timaru District Council Notice is hereby given that a meeting of the Commercial and Strategy Committee will be held in the Council Chamber, Timaru District Council, King George Place, Timaru, on Tuesday 9 June 2020, at the conclusion of the Community Development Committee meeting. Commercial and Strategy CommitteeMembers Clrs Peter Burt (Chairperson), Allan Booth (Deputy Chairperson), Richard Lyon, Gavin Oliver, Paddy O'Reilly, Barbara Gilchrist, Sally Parker, Stu Piddington, Steve Wills and Nigel Bowen Quorum – no less than 2 members Local Authorities (Members’ Interests) Act 1968 Committee members are reminded that if you have a pecuniary interest in any item on the agenda, then you must declare this interest and refrain from discussing or voting on this item, and are advised to withdraw from the meeting table. Donna Cross Group Manager Commercial and Strategy DIST R I CT COUNCIL Commercial and Strategy Committee Meeting Agenda 9 June 2020 Order Of Business 1 Apologies .......................................................................................................................... 5 2 Identification of Items of Urgent Business .......................................................................... 5 3 Identification of Matters of a Minor Nature ....................................................................... 5 4 Declaration of Conflicts of Interest .................................................................................... 5 5 Chairperson’s Report ......................................................................................................... 5 6 Confirmation of Minutes ................................................................................................... 6 6.1 Minutes of the Commercial and Strategy Committee Meeting held on 28 April 2020 .............................................................................................................................. 6 7 Reports ........................................................................................................................... 10 7.1 LGFA Trust Deed Amendment .................................................................................... 10 7.2 Aoraki Development - Draft Statement of Intent .................................................... 327 7.3 Aoraki Development and Promotions Limited - Quarterly Report - 1 January 2020 to 31 March 2020 ............................................................................................ 340 7.4 Timaru District Holdings Limited - Quarterly Report - 31 March 2020 .................... 350 8 Consideration of Urgent Business Items ......................................................................... 359 9 Consideration of Minor Nature Matters ......................................................................... 359 Page 3 Commercial and Strategy Committee Meeting Agenda 9 June 2020 1 Apologies 2 Identification of Items of Urgent Business 3 Identification of Matters of a Minor Nature 4 Declaration of Conflicts of Interest 5 Chairperson’s Report Page 5 Commercial and Strategy Committee Meeting Agenda 9 June 2020 6 Confirmation of Minutes 6.1 Minutes of the Commercial and Strategy Committee Meeting held on 28 April 2020 Author: Jo Doyle, Governance Advisor Recommendation That the Minutes of the Commercial and Strategy Committee Meeting held on 28 April 2020 be confirmed as a true and correct record of that meeting. Attachments 1. Minutes of the Commercial and Strategy Committee Meeting held on 28 April 2020 Item 6.1 Page 6 Commercial and Strategy Committee Meeting Minutes 28 April 2020 MINUTES Commercial and Strategy Committee Meeting Tuesday, 28 April 2020 Ref: 1343674 Page 7 Commercial and Strategy Committee Meeting Minutes 28 April 2020 Minutes of Timaru District Council Commercial and Strategy Committee Meeting Held via Zoom Meeting Link on Tuesday, 28 April 2020 following the Community Services Committee Present: Cr Peter Burt (Chairperson), Cr Allan Booth (Deputy Chairperson), Cr Richard Lyon, Cr Gavin Oliver, Cr Paddy O'Reilly, Cr Barbara Gilchrist, Cr Sally Parker, Cr Stu Piddington, Cr Steve Wills, Mayor Nigel Bowen In Attendance: Community Board Representatives Temuka Community Board – Charles Scarsbrook Pleasant Point Community Board – Anne Lemmens Geraldine Community Board – Jan Finlayson Council Officers Group Manager Commercial and Strategy (Donna Cross), Chief Financial Officer (David Codyre), Chief Executive (Bede Carran), Governance Advisor (Jo Doyle), Governance Support Officer (Joanne Brownie) 1 Apologies There were no apologies. 2 Identification of Items of Urgent Business There were no urgent business items identified. 3 Identification of Matters of a Minor Nature There were no minor matters identified. 4 Declaration of Conflicts of Interest There were no conflicts of interest declared. 5 Chairperson’s Report The Chairperson reported on Council meetings he had attended and other meetings relating to the Covid pandemic. 6 Confirmation of Minutes 6.1 Minutes of the Commercial and Strategy Committee Meeting held on 10 March 2020 Resolution 2020/14 Moved: Cr Sally Parker Page 8 Commercial and Strategy Committee Meeting Minutes 28 April 2020 Seconded: Cr Barbara Gilchrist That the Minutes of the Commercial and Strategy Committee Meeting held on 10 March 2020 be confirmed as a true and correct record of that meeting. Carried 7 Reports 7.1 Investments and Borrowing Treasury Report for quarter ending 31 March 2020 The Committee considered an update on the status of Council treasury activities at 31 March 2020, with it being noted that the report predominantly covers the period pre the Covid pandemic. In response to questions on the report, the Chief Financial Officer further explained the position around cash available for everyday operations, the possibility of taking on more loans, the higher weighted average cost of funds and renewing external debt. Resolution 2020/15 Moved: Mayor Nigel Bowen Seconded: Cr Richard Lyon That the Committee receives and notes the report. Carried 8 Consideration of Urgent Business Items There were no urgent business items to consider. 9 Consideration of Minor Nature Matters There were no minor nature matters to consider. The Meeting closed at 10.53am. ................................................... Chairperson Page 9 Commercial and Strategy Committee Meeting Agenda 9 June 2020 7 Reports 7.1 LGFA Trust Deed Amendment Author: David Codyre, Chief Financial Officer Authoriser: Donna Cross, Group Manager Commercial and Strategy Recommendation That Council: 1. Notes and receives the report, and 2. Resolves that it has considered the following three deeds, approves the entry by Timaru District Council into those deeds, and authorises two elected members to execute those deeds on behalf of Timaru District Council: a. Amendment and Restatement Deed (Notes Subscription Agreement) b. Amendment and Restatement Deed (Guarantee and Indemnity) c. Amendment and Restatement Deed (Multi-Issuer Deed) Purpose of Report 1 The purpose of the report is to consider approving the amendment of specific Debenture Trust Deed documents. Assessment of Significance 2 The assessment of significance is low. Background 3 The Council deals primarily with the New Zealand Local Government Funding Authority (LGFA) for external loans. 4 Council has a Debenture Trust Deed with LFGA. This allows Council to issue security stock to fund its debt requirements. 5 LGFA was established to provide a cheaper debt funding alternative for Local Authorities than what is available from banks. LGFA has a AA+ credit rating from Standard and Poors, which is the same rating as held by the New Zealand Government. 6 Timaru District Council is required to be a guarantor to the LGFA scheme as it has in excess of $20 million of total borrowings from LGFA. 7 As a guarantor, Council is guaranteeing the financial obligations of LGFA. Council’s share of the obligation is based on its rates income comparable to the rates income of other shareholders and guarantors. Council’s rates income means it acts as a guarantee in relation to 0.9% of the bills and bonds issued by LGFA. Currently, Council’s share of the total guarantee Item 7.1 Page 10 Commercial and Strategy Committee Meeting Agenda 9 June 2020 is $109 million out of $12.1 billion. The risk of LGFA calling on the full extent of the guarantee or defaulting is seen as unlikely due to covenants imposed on its borrowers and its strong credit rating. For Council to be required to pay the $109 million, every other Council borrower in the scheme would need to default with no prospect of recovery. 8 LGFA intends to amend its borrowing programme. Three documents that form part of the Debenture Trust Deed, namely the Notes Subscription Agreement, the Guarantee and Indemnity, and the Multi-Issuer Deed, are proposed to be amended by LGFA. Discussion 9 The purpose of the amendments proposed by LGFA is to: 9.1 enable approved council-controlled organisations to borrow directly through the LGFA borrowing programme (on the basis of a guarantee from and/or sufficient uncalled capital issued to the parent local authority); 9.2 allow a local authority to apply to LGFA to be tested at the group level rather than at the parent level for compliance with LGFA covenants; 9.3