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Thursday
Apr282011

TUGPRA (3) & Endowment Farms

The long awaited report on the above has finally reached the light of day through the CB Agenda for next Monday. Why it has taken this long for a rather simple explanation to be provided completely escapes me, and everyone else who has been calling for it over the last three years, or longer.

There is now a level of transparency that has been absent in the past, but a number of questions remain concerning the uses to which funds have been applied, and the reasons why past TCB decisions have not been implemented. What remains now is that rational long term criteria be established for the future use of the funds.

The report, prepared by the Area Co-ordinator clearly sets out the history and current situation with the accounts - separating the capital account (Thames Urban General Purposes Reserve Account, or  TUGPRA) from the cash-flow account (Endowment Farms Lease Revenue, or EFLR) together with suggestions as to the delegations, the criteria that may be adopted, and appropriate warnings as to the dangers of allowing the accounts to be dissipated through ad hoc decisions taken to satisfy pet projects.

farm lease history prepared by the Property Officer then follows that includes a list of the actual farm leases together with the lease arrangements. All are perpetual 21 year, but some have half term rent reviews). Total current income is $270,000 with all leases having recently rolled over, or subject to review.  

The Finance Controllers Report, and accounts follow. The first outlines the various actions that have taken place, together with the overall effect on rates both in the past, and in the future depending on the criteria options that are adopted. Again, he emphasises the need to avoid ad hoc decisions, and ensure that clear guidelines are followed. The accounts indicating the progress of the TUGPRA since 2000, appear satisfactory - they will of course had been subject to the usual audit requirements. 

Then follows the 2009 TCB Resolutions instructing staff to take the steps necessary to increase the area of benefit from the TUGPRA from the area of the old town boundary to the entire ward, and to cease the subsidising of Thames rates through the transfer of the then $150,000 EFLR income through the setting up of a separate reserve, commencing at $50,000 and increasing at the same rate over  three years, in order to remove the subsidy.To the contrary, the entire income ($270,000) appears to be in the process of being absorbed into Parks and Reserves, thus increasing the pain of its eventual removal.

The 2009 motion was passed in the certain knowledge that Thames rates would need to increase by an equivalent amount, but no action was ever taken to effect these changes for reasons that are unclear. All were aware that they needed to go to the full Council for approval, but that should have been a formality. The new Board will now need to once again grapple with this difficult decision.

Finally, I attach the workshop meeting notes from the workshop held on 28 March to discuss the report, and to familiarise members with what is admittedly a convoluted and confusing matter.

It is clear form these notes that certain members  - Strat Peters, Peter French and Lester Yates are hellbent on securing the maximum amount possible within the confines of whatever criteria are established for the purpose of satisfying the Zoom Zone dry court, and the swimming pool renewal.

The CEO reminded members that the removal of the EFLR $150,000 from Parks and reserves could increase rates by around 7 or 8% contrary to the overall rates instructions he had been given.  The previous Board's ignored decision in 2009 to go 'cold turkey' on this will now need to be re-litigated, and I suspect that there will real concern felt by some members in this regard. The pressure to increase borrowing to cover these projects is building - by the September LTCCP deliberations, the temptation to borrow will clearly be irresistible. 

The notes make quite clear that the board "has two big projects coming up that need providing for, and that clawing back at least the additional $120,000 going to the TUGPRA account as a reserve carrying interest makes sense".

Our Board will need a great deal more than this to meet its Zoom Zone electoral promises, and its clear obligations in regard to the pool. Putting it on the credit card is so easy!

 

 


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