Community Information Evening Draft MOSPLAN 2013 2023 Draft Budget - - PowerPoint PPT Presentation

Community Information Evening Draft MOSPLAN 2013 – 2023 Draft Budget 2013 – 2014

Welcome & Introduction Councillor Peter Abelson, Mayor

Integrated Planning & Reporting Di Lawrence, Director Community Development

Integrated Planning & Reporting

• MOSPLAN History & Purpose
• MOSPLAN Elements
• Community Strategic Plan
• Resourcing Strategy – incl. 10 yr financial forecasts
• Resourcing Strategy – incl. 10 yr financial forecasts

and budget commentary

• Delivery Program & Operational Plan – incl. 4 year and

1 yr budgets

• Planning AND Reporting

Integrated Planning & Reporting

Integrated Planning & Reporting

Key MOSPLAN Priorities

• Maintaining High Quality Services
• Customer Service focus
• Preserving Residential Amenity & Local Character
• Preserving Residential Amenity & Local Character
• High Quality Community Spaces
• Conserving our Natural Environment
• Tackling Infrastructure Challenges
• Traffic & Parking
• Financial Sustainability

Mosman’s Long Term Financial Sustainability Mark McDonald, Chief Financial Officer

Mosman’s Long Term Financial Sustainability

• 10 Year financial model underpins the Community Strategic Plan
• Developed by using current base year data and applying projected

movements in a number of key drivers over its life

• Key Revenue Assumptions:
• 2013/14 Rates (IPART) 3.4% (Av Rate up by $37pa)
• Model uses 3% over its life
• Storm water Levy $25 per dwelling/$12.50 strata (first time)
• Storm water Levy $25 per dwelling/$12.50 strata (first time)
• User Charges & Fees 3%
• Interest & Investment Revenue (4.50% to 5.50% in 2020/21)
• Other Revenues-includes Investment Properties 3%, regulatory

income 1%

• Grants & Contributions/Operating – Community Services 3%
• Grants & Contributions/Capital – S94A

Mosman’s Long Term Financial Sustainability

Key Expenses Assumptions:

• Employee Benefits & On Costs-Local Gov’t Award-next 2

years 3.25% increase (this being used over the model’s life) Superannuation Guarantee Levy 9.25% in 13/14 to 12% in 18/19

• Borrowing Costs-All existing & projected loans
• Borrowing Costs-All existing & projected loans
• Materials & Contracts-Major contracts such as Waste, S&G

Cleaning, Beach & Reserve, Amenity & Building Cleaning, Engineering/Open Space contracts all impacted by Sydney Allgroups CPI

• Depreciation & Amortisation-significant impact/work being

done

• Other Expenses-Advertising, Insurance, Postage,

Telecommunications-CPI

Mosman’s Long Term Financial Sustainability

General Assumptions (include):

• Continuation of existing 5% Environmental Levy from 17/18 –

Submission to IPART

• Local Government Infrastructure Renewal Scheme – Round

2 ($2M)

• Loan repayments for LIRS (within model) funded by
• Loan repayments for LIRS (within model) funded by

increased parking income

• Large capital allocations from S94 Reserve & Domestic

Waste Reserve between 2014/2015 & 2022/2023 (if required)

• No allocation of funds for the Raglan St car park

development

Mosman’s Long Term Financial Sustainability

Income Statement Positive net operating results post 12/13 largely resultant from:

• Parking Income
• Storm water Levy
• Income from advertising on Bridgepoint Bridge
• Continuation of CEC Levy post its expiration (to

Infrastructure) Infrastructure)

• The majority of the expenditure associated with these

revenue streams is via the Balance Sheet

Mosman’s Long Term Financial Sustainability

Balance Sheet

• Projections provide for a strong Balance Sheet (Equity in

excess of $462M in 13/14-largely based on Non Current Assets

• All Assets –Fair Value
• Loan Liability – $11M at 30/6/13 reduces over life of model,

with Council debt free 21/22 with Council debt free 21/22

• All Employee Provision liabilities accounted for with adequate

cash funding-look to target around 20% coverage (17.25% currently)

Mosman’s Long Term Financial Sustainability

• Cash Flow Statement-provide for positive movement

throughout its life with only 2 occasions (based on significant capital spend from Reserve) negative result 16/17 & 19/20 Key Performance Indicators for discussion:

• Unrestricted Current Ratio (UCR)
• Debt Service Ratio (DSR)
• Debt Service Ratio (DSR)
• Rates Coverage
• Rates Collection
• Building & Infrastructure Coverage

Proposed Storm water Spend via Location

Existing and Required Funding with Levys

$8,000 $10,000 $12,000 $14,000 $000's Planned/Current Renewal and Maintenance Expenditure Required Renewals and Maintenance Expenditure 2012/13 $2mil Government Loan 2013/14 $2mil Government Loan 2015/16 Signage Levy 2016/17 Infrastructure Levy Loan $2,000 $4,000 $6,000 2 1 2 / 1 3 2 1 3 / 1 4 2 1 4 / 1 5 2 1 5 / 1 6 2 1 6 / 1 7 2 1 7 / 1 8 2 1 8 / 1 9 2 1 9 / 2 2 2 / 2 1 2 2 1 / 2 2 2016/17 Infrastructure Levy Loan Repayment for 2008 Balmoral Baths restoration works complete 2017/18 Expansion of CEC Levy 2019/20 $2mil Government Loan Repayment Complete

Council’s Objectives: MOSPLAN & Budget Overview Councillor Peter Abelson, Mayor

Objectives of session

• Provide general overview of finances
• Describe 2013-14 budget strategy
• Discuss Treasury Corporation findings
• Invite questions / discussion on major

issues

• Take note of more detailed comments for

Council / staff consideration

Income Statement-2011/2012 to 2013/2014

11/12 12/13 13/14 REVENUE $’000 $’000 $’000 Rates & Annual Charges 21,041 21,734 22,723 User Charges & Fees 7,986 8,764 9,057 Interest 434 396 470 Other Revenues 3,569 3,550 3,668 Operating Grants & Contributions 2,842 2,266 2,065 Capital Grants & Contributions 3,167 2,643 1,914 Share of Joint Ventures 114 Nil Nil Gain on Asset Sales Nil Nil Nil TOTAL 39,153 39,353 39,897 TOTAL 39,153 39,353 39,897 EXPENDITURE Employee Benefits 14,181 14,809 15,269 Borrowing Costs 672 662 627 Materials & Contracts 10,875 11,485 11,839 Depreciation & Amortisation 6,890 6,797 6,797 Other Expenses 6,289 5,617 5,306 Net Losses from Asset Sales 57 Nil Nil TOTAL 38,964 39,370 39,838 Net Operating Result for Year 189 (17) 59 Net Operating Result Before Capital (2,978) (2,660) (1,855)

Balance Sheet-2011/2012 to 2013/2014

11/12 12/13 13/14 ASSETS Current Assets Cash & Cash Equivalents 3,609 4,869 5,488 Investments 2,750 2,750 2,750 Receivables 3,016 2,574 2,539 Inventories 162 175 180 Other 102 149 149 Total 9,639 10,517 11,106 Total 9,639 10,517 11,106 Non Current Assets Receivables 49 84 88 Infrastructure, Property/Plant 432,073,000 432,563,861 431,907,246 Investments using Equity Method 635 599 563 Investment Property 41,078 41,078 41,078 Intangible Assets 344 344 344 Total 474,179,000 474,669,155 473,980,377 Total Assets 483,818,000 485,185,978 485,086,745

Balance Sheet-2011/2012 to 2013/2014

11/12 12/13 13/14 LIABILITIES Current Liabilities Payables 7,288 7,392 7,216 Borrowings 1,669 2,057 2,063 Provisions 3,944 4,170 4,242 Total 12,901 13,619 13,521 Non Current Liabilities Non Current Liabilities Borrowings 8,406 9,138 9,075 Provisions 115 139 142 Total 8,611 9,278 9,217 Total Liabilities 21,512 22,897 22,738 EQUITY 462,306,000 462,289,204 462,348,379

Major Revenue Components (13/14)

• Rates & Annual Charges

$22,723,213

• General*

$16,865,661

• Residential

$15,276,765 (91%)

• Business

$ 1,588,896 (9%)

• Stormwater Levy (capex)

$ 240,625

• Waste

$ 5,616,927 *(Includes CEC & Infrastructure Levy & is net of pension rebates & council properties)

• Note we are primarily a residential area not a business centre

Major Revenue Components (13/14)

User Charges & fees $9,057,591 Includes:

• Car Parking (On Street)

$1,930,000

• Property Rents

$1,747,130

• Car Parking (Foreshore)

$1,153,000

• Children’s Services Programs

$ 768,000

• Children’s Services Programs

$ 768,000

• Development Assessment

$ 765,000

• Road & Footpath Restorations

$ 375,000

• Ovals & Reserves Rents

$ 310,000

• Car Parking Sticker

$ 220,000

• Work/Construction Zone

$ 200,000

• Hoarding

$ 175,000

• Other

$1,414,461

Major Revenue Components (13/14)

Grants & Contributions (Operating) $2,064,945 Includes:

• Financial Assistance - General

$ 605,000

• Aged Services Programs

$ 545,818

• Financial Assistance - Local Roads

$ 225,000

• Waste & Sustainability

$ 165,000

• Waste & Sustainability

$ 165,000

• Roads Maintenance & Education

$ 150,500

• Pension Rebate

$ 90,750

• Art Gallery

$ 80,000

• Children’s Services Programs

$ 56,627

• Per Capita-Library

$ 54,000

• Other

$ 92,250

Major Revenue Components (13/14)

Grants & Contributions (Capital) $1,914,150 Includes:

• Section 94 Contributions

$1,000,000

• Roads Programs

$ 476,000

• Balmoral Baths Disabled Access

$ 175,000

• Flood Study/Coastal Zone

$ 120,000

• Flood Study/Coastal Zone

$ 120,000

• Cycleways

$ 83,150

• Library Foyer

$ 60,000

Major Expenditure Components (13/14)

Employee Benefits & On costs $15,269,689 Spend/FTE via Department:

• General Manager’s Unit

$ 419,916 (2 FTE)

• Corporate Services

$4,580,906 (50 FTE)

• Community Development

$5,153,522 (59 FTE)

• Environment & Planning

$5,115,345 (51 FTE)

• Environment & Planning

$5,115,345 (51 FTE)

Departmental-Functions

Corporate Services:

• HR & Risk, Finance, Governance, Ranger Services,

Information Technology Community Development:

• Library, Culture (includes Gallery), Youth, Children’s

Services, Aged & Disability Services, Mosman Festival, Events & Marketing Services, Aged & Disability Services, Mosman Festival, Events & Marketing Environment & Planning:

• Urban Planning, Assets & Services, Development Services,

Environmental Services, Open Space (ie parks/ovals)

• Further information can be provided on inquiry

Major Expenditure Components (13/14)

Materials & Contracts $11,838,730 (including Rider) Includes the following:

• Waste

$3,636,218

• Infrastructure

$1,309,400

• Street & Gutter

$1,144,261

• Beach & Reserves

$ 687,425

• Sporting Fields

$ 458,800

• Bushcare/Bushland

$ 445,200

• Sporting Fields

$ 458,800

• Bushcare/Bushland

$ 445,200

• Public Amenity/Buildings

$ 383,217

• Mosman Rider

$ 285,000

• Tree Preservation

$ 224,280

• Gardens

$ 175,700

• Turf Maintenance

$ 157,100

• Graffiti Removal

$ 115,577

• Other

$2,816,552

Major Expenditure Components (13/14)

Depreciation $6,797,000

• Significant impact on Operating Statement-vital that we get

this right

• Heavily impacted by Fair valuation principles on

Infrastructure Assets ie Greenfield v Brownfield (used to Infrastructure Assets ie Greenfield v Brownfield (used to determine unit rates of infrastructure assets) ie Mosman Brownfield with road assets v Nth Sydney Greenfield (up to 60% variance between methods)

• Staff analysis shows significant variations in useful life

(depreciation rates) calculations across the industry

Major Expenditure Components (13/14)

Other Expenses $5,305,966 Includes line items such as:

• Emergency Services Contribution

$1,014,000

• Insurance

$ 740,000

• Computer Software Licences

$ 623,000

• Street Lighting

$ 550,000

• Electricity

$ 330,000

• Other

$ 2,048,966

Capital Expenditures (13/14)

Overall Picture $6,140,386

• Infrastructure Works Program

$2,587,378

• Local Infrastructure Renewal (Rnd 2)

$2,000,000

• Infrastructure Levy

$ 732,808

• Library Stock

$ 267,700

• Parks/Reserves/Open Space

$ 224,000

• Parks/Reserves/Open Space

$ 224,000

• Waste Service

$ 155,000

• IT Hardware

$ 100,000

• Art Acquisitions

$ 57,500

• RFID Technology

$ 16,000

• Funding sources include capital grants and contributions, some

recurrent income (e.g. library stock) borrowings and reserves.

Capital Expenditures (13/14)

Infrastructure Works Components $2,587,378 Includes:

• Military Road Upgrade

$ 440,000

• Balmoral Baths Disabled Access

$ 350,000

• Balmoral Sewall Works

$ 300,000

• Stormwater Levy

$ 240,625

• Cycleways

$ 177,100

• Cycleways

$ 177,100

• Flood Study Project

$ 160,000

• Library Foyer Upgrade

$ 120,000

• Parriwi Road Project

$ 116,000

• Coastal Zone Management Stage 2

$ 100,000

• Military Road/Mandolong/Almora-Ped

$ 70,000

• Cabramatta & Cowles Ped Refuge

$ 70,000

• Other

$ 443,653

Capital Expenditures (13/14)

Infrastructure Levy Components $732,808 Includes:

• Roads & Footpaths

$367,808

• Stormwater

$185,000

• Retaining Walls

$110,000

• Buildings & Open Space

$ 70,000

Key Financial Ratios (11/12 to 13/14)

• Unrestricted Current Ratio
• This is an indicator unique to Local Government whose

formula is :

Current Assets less All External Restrictions Current Liabilities less Specific Purpose Liabilities

• External Restrictions are Unspent Grants/Domestic
• External Restrictions are Unspent Grants/Domestic

Waste/Section 94

• Allows Local Authorities to reduce Liabilities such as

Payables & Provisions to reflect actuality (ie based on history, most P & P will not be paid out in next 12 months).

• 1.5% is DLG benchmark

UCR-Unrestricted Current Ratio

Key Financial Ratios

• Debt Service Ratio formula:

Debt Service Cost (Principal & Interest) Income from continuing operations excluding Capital Items & Specific Purpose Grants/Contributions

• Measure of % of normal operational income being used to
• Measure of % of normal operational income being used to

pay debt, 10% DLG benchmark

DSR-Debt Service Ratio

Financial Sustainability & Strength –Our View

Mosman’s Strengths:

• TCORP Report-Mosman 1 of only 5 councils with positive

financial future outlook

• Strategic Financial Planning of the Council deemed to be

Best Practice by DLG

• Investment Properties-Fair Value of $41M returning $1.817 in

annual revenue annual revenue

• Strong Debt Service & Own Source Revenue Performance

indicators

• Effective ability to meet short term liabilities.

Financial Sustainability & Strengths – Our View

Weaknesses:

• Recurrent Operating Deficit before Capital Grants &

Contributions

• Infrastructure Backlog (currently being reviewed)
• *Staff are developing Capitalisation & Disposal policies for

Infrastructure Assets which should impact positively on both weaknesses shown above

Financial Sustainability Rating -TCORP

• Basic TCORP Formula
• 4 classes of financial indicators
• Financial Flexibility (35%)
• Liquidity (10%)
• Debt Service (20%)
• Asset Renewal & Capital Works (35%)
• Mosman FSR = Weak (3 out of 7 ranks)
• Expense adjustments would result in

significant changes to the range/quality of services

• May have difficulty in managing core

business risks

• Positive Financial Outlook-1 of only 5

Councils to have this rating

• Acceptable capacity to meet its financial
• bligations in short to medium term
• Record of reporting moderate to

significant operating deficits with a recent significant deficit

• Unlikely to be able to address operating

deficits, manage financial shocks & any adverse changes in its business without significant revenue or expense adjustments

• Analysis – problems with TCORP formula
• No information about how a council is

scored within each category

• The % given to each class is arbitrary
• Eg Cash Expense Ratio 3 month

benchmark

• Asset Renewal Class has a combined

weighting of 35%, with information collected largely from non audited data.

Summary

• Strong Balance Sheet
• Looks to provide a range of quality services across a variety
• f programs
• Strong revenue raising capacity
• Increase in funding to Infrastructure
• We are moving towards a balanced operating budget
• (e.g. reviewed cost of green power).
• (e.g. reviewed cost of green power).

Possible issues for discussion

• Should we move faster towards a balanced
• perating budget (and more emphasis on

capital works)?

• Should we be looking at either (a) efficiencies
• r (b) lower services to reduce operating

costs? costs?

• Should Council look at increasing specific

revenue sources or general rates?

• Is Council spending capital on priority areas?
• --------------------------------------------------------
• Submissions welcome to 17 May

Question & Answer