Agenda of Extraordinary Finance Advisory Committee Meeting

CONFLICT OF INTERESTS

What is a “Conflict of Interests” - A conflict of interests can be of two types:

Pecuniary - an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to the person or another person with whom the person is associated.

Non-pecuniary – a private or personal interest that a Council official has that does not amount to a pecuniary interest as defined in the Local Government Act (eg. A friendship, membership of an association, society or trade union or involvement or interest in an activity and may include an interest of a financial nature).

Remoteness – a person does not have a pecuniary interest in a matter if the interest is so remote or insignificant that it could not reasonably be regarded as likely to influence any decision the person might make in relation to a matter or if the interest is of a kind specified in Section 448 of the Local Government Act.

Who has a Pecuniary Interest? - a person has a pecuniary interest in a matter if the pecuniary interest is the interest of the person, or another person with whom the person is associated (see below).

Relatives, Partners - a person is taken to have a pecuniary interest in a matter if:

§ The person’s spouse or de facto partner or a relative of the person has a pecuniary interest in the matter, or

§ The person, or a nominee, partners or employer of the person, is a member of a company or other body that has a pecuniary interest in the matter.

N.B. “Relative”, in relation to a person means any of the following:

(a) the parent, grandparent, brother, sister, uncle, aunt, nephew, niece, lineal descends or adopted child of the person or of the person’s spouse;

(b) the spouse or de facto partners of the person or of a person referred to in paragraph (a)

No Interest in the Matter - however, a person is not taken to have a pecuniary interest in a matter:

§ If the person is unaware of the relevant pecuniary interest of the spouse, de facto partner, relative or company or other body, or

§ Just because the person is a member of, or is employed by, the Council.

§ Just because the person is a member of, or a delegate of the Council to, a company or other body that has a pecuniary interest in the matter provided that the person has no beneficial interest in any shares of the company or body.

Disclosure and participation in meetings

§ A Councillor or a member of a Council Committee who has a pecuniary interest in any matter with which the Council is concerned and who is present at a meeting of the Council or Committee at which the matter is being considered must disclose the nature of the interest to the meeting as soon as practicable.

§ The Councillor or member must not be present at, or in sight of, the meeting of the Council or Committee:

(a) at any time during which the matter is being considered or discussed by the Council or Committee, or

(b) at any time during which the Council or Committee is voting on any question in relation to the matter.

No Knowledge - a person does not breach this Clause if the person did not know and could not reasonably be expected to have known that the matter under consideration at the meeting was a matter in which he or she had a pecuniary interest.

Participation in Meetings Despite Pecuniary Interest (S 452 Act)

A Councillor is not prevented from taking part in the consideration or discussion of, or from voting on, any of the matters/questions detailed in Section 452 of the Local Government Act.

Non-pecuniary Interests - Must be disclosed in meetings.

There are a broad range of options available for managing conflicts & the option chosen will depend on an assessment of the circumstances of the matter, the nature of the interest and the significance of the issue being dealt with. Non-pecuniary conflicts of interests must be dealt with in at least one of the following ways:

§ It may be appropriate that no action be taken where the potential for conflict is minimal. However, Councillors should consider providing an explanation of why they consider a conflict does not exist.

§ Limit involvement if practical (eg. Participate in discussion but not in decision making or vice-versa). Care needs to be taken when exercising this option.

§ Remove the source of the conflict (eg. Relinquishing or divesting the personal interest that creates the conflict)

§ Have no involvement by absenting yourself from and not taking part in any debate or voting on the issue as if the provisions in S451 of the Local Government Act apply (particularly if you have a significant non-pecuniary interest)

RECORDING OF VOTING ON PLANNING MATTERS

Clause 375A of the Local Government Act 1993 – Recording of voting on planning matters

(1) In this section, planning decision means a decision made in the exercise of a function of a council under the Environmental Planning and Assessment Act 1979:

(a) including a decision relating to a development application, an environmental planning instrument, a development control plan or a development contribution plan under that Act, but

(b) not including the making of an order under Division 2A of Part 6 of that Act.

(2) The general manager is required to keep a register containing, for each planning decision made at a meeting of the council or a council committee, the names of the councillors who supported the decision and the names of any councillors who opposed (or are taken to have opposed) the decision.

(3) For the purpose of maintaining the register, a division is required to be called whenever a motion for a planning decision is put at a meeting of the council or a council committee.

(4) Each decision recorded in the register is to be described in the register or identified in a manner that enables the description to be obtained from another publicly available document, and is to include the information required by the regulations.

(5) This section extends to a meeting that is closed to the public.

Staff Reports - Corporate and Community Services

Report No. 4.1 Review of Council Investment Policy

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2017/341

Theme: Corporate Management

Financial Services

Summary:

Council at its Ordinary Meeting held on 23 February 2017, considered Report 13.4 regarding Council Investments January 2017. Council resolved 17-043 part 2:

‘That a workshop on the financial investment strategy occurs at the next SPW on 9 March 2017’

A presentation was provided to the Strategic Planning Workshop (SPW) on 9 March 2017. Following from that presentation, this report is provided to the Finance Advisory Committee to consider an updated Draft Policy - Council Investments 2017 and subject to any consideration or amendment, recommend to Council adoption of the Draft Policy - Council Investments 2017 for the purposes of public exhibition.

RECOMMENDATION:

That the Finance Advisory Committee recommend to Council:

1. That the Draft Policy - Council Investments 2017 be placed on public exhibition for a period of 28 days.

2. That in the event:

a) that any submissions are received on the Draft Policy - Council Investments 2017, that those submissions be reported back to Council prior to adoption of the policy; or

b) that no submissions are received on the Draft Policy - Council Investments 2017, that the policy be adopted and incorporated into Council’s Policy Register.

Attachments:

1 Draft Council Investment Policy 2017, E2017/24259 , page 7⇩

Report

Council at its Ordinary Meeting held on 23 February 2017, following consideration of Report 13.4 regarding Council Investments January 2017, resolved (in part) as follows:-

17-043 part 2:

‘That a workshop on the financial investment strategy occurs at the next SPW on 9 March 2017’

The Draft Policy - Council Investments 2017 is included at Attachment 1. The document has been updated to comply with the new template for Council policies and sets out the following guidance in relation to Council’s investments:

· Set the objectives of investing.

· Outline the legislative requirements.

· Ascertain authority for implementation and management of the Policy.

· Establish the capital, liquidity and return expectations.

· Determine the diversity of the investment portfolio.

· Environmentally and Socially Responsible Investing.

· Define the risk profile.

· Establish legal title.

· Set benchmarks.

· Establish monitoring and reporting requirements.

· Define duties and obligations of Delegated Officers.

The new Draft Policy - Council Investments 2017 incorporating the above is provided for the Finance Advisory Committee’s consideration, amendment and recommendation to Council, for public exhibition.

Financial Implications

There are no financial implications directly associated with this report. However, the management of Council’s investments is a significant responsibility. Poor investment decisions have the potential to negatively impact upon the financial position of Council through either revenue from investment interest or possible capital loss of principal invested.

Statutory and Policy Compliance Implications

Section 625 of the Local Government Act 1993 governs how Councils can invest. Specifically Section 625 states:

(1) A council may invest money that is not, for the time being, required by the council for any other purpose.

(2) Money may be invested only in a form of investment notified by order of the Minister published in the Gazette.

(3) An order of the Minister notifying a form of investment for the purposes of this section must not be made without the approval of the Treasurer.

(4) The acquisition, in accordance with section 358, of a controlling interest in a corporation or an entity within the meaning of that section is not an investment for the purposes of this section.

The forms of investment approved by the Minister for Local Government as identified in Section 625(2) of the Local Government Act 1993 refer to the Ministerial Investment Order. The most recent Investment Order was issued on 12 January 2011 and the contents of this Order are provided in Attachment 1 as part of the Draft Council Investments Policy 2017.

Clause 212 of the Local Government (General) Regulation 2005 also outlines requirements regarding Council’s investments as follows:

(1) The responsible accounting officer of a council:

(a) must provide the council with a written report (setting out details of all money that the council has invested under section 625 of the Act) to be presented:

(i) if only one ordinary meeting of the council is held in a month, at that meeting, or

(ii) if more than one such meeting is held in a month, at whichever of those meetings the council by resolution determines, and

(b) must include in the report a certificate as to whether or not the investment has been made in accordance with the Act, the regulations and the council’s investment policies.

(2) The report must be made up to the last day of the month immediately preceding the meeting.

In regard to Council investments, attention also needs to be directed towards Section 14 of the Trustees Amendment (Discretionary Investments) Act 1997 where a trustee must exercise the care, diligence, and skill that a prudent person would exercise in managing the affairs of another person. As Councils are acting as custodians when investing public assets, account of the requirements of Section 14 should also be considered. Specifically contained in Section 14(C)(1) are the following matters which should be considered:

(a) the purposes of the trust and the needs and circumstances of the beneficiaries,

(b) the desirability of diversifying trust investments,

(c) the nature of, and the risk associated with, existing trust investments and other trust property,

(d) the need to maintain the real value of the capital or income of the trust,

(e) the risk of capital or income loss or depreciation,

(f) the potential for capital appreciation,

(g) the likely income return and the timing of income return,

(h) the length of the term of the proposed investment,

(i) the probable duration of the trust,

(j) the liquidity and marketability of the proposed investment during, and on the determination of, the term of the proposed investment,

(k) the aggregate value of the trust estate,

(l) the effect of the proposed investment in relation to the tax liability of the trust,

(m) the likelihood of inflation affecting the value of the proposed investment or other trust property,

(n) the costs (including commissions, fees, charges and duties payable) of making the proposed investment,

(o) the results of a review of existing trust investments in accordance with section 14A (4).

Report No. 4.2 Draft 2017/2018 Budget Estimates

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2017/344

Theme: Corporate Management

Financial Services

Summary:

The Draft 2017/2018 Budget Estimates have been prepared and reviewed by the Executive Team. The purpose of this report is to provide the opportunity to the Finance Advisory Committee to review the Draft 2017/2018 Budget Estimates in their current form and to recommend, subject to any amendments, their adoption by Council for the purposes of public exhibition for a period of 28 days.

RECOMMENDATION:

That the Finance Advisory Committee review the Draft 2017/2018 Budget Estimates and subject to any amendments, recommend to Council the adoption of the Draft 2017/2018 Budget Estimates for the purposes of public exhibition.

Attachments:

1 Detailed Draft 2017-2018 Budget Estimates, E2017/22841 , page 25 ⇩

2 Draft 2017-2018 Budget Summary Statemernts and Reserves, E2017/22852 , page 85⇩

Report

The Draft 2017/2018 Budget Estimates are based on the 2016/2017 budget reviewed at 31 December 2016 with various changes to reflect the updated cost of service delivery across all programs developed from the input received from each Council Directorate.

The Draft 2017/2018 Budget Result on a Consolidated (All Funds) basis forecast a surplus budget result with the details of that result being included below at Table 1.

Table 1 – Forecast Budget Result 2017/2018 Consolidated (All Funds)

Item	Amount $
Operating Result
Operating Revenue	75,503,500
Less: Operating Expenditure	74,873,600
Operating Result – Surplus/(Deficit)	629,900

Funding Result

Operating Result – Surplus/ (Deficit)	629,900
Add: Non cash expenses – Depreciation	13,175,500
Add: Capital Grants and Contributions	24,867,700
Add: Loan Funds Used	2,160,000
Add: Asset Sales	0
Less: Capital Works	(44,685,100)
Less: Loan Principal Repayments	(2,639,800)
Funding Result – Surplus/(Deficit) (Cash Movement)	(6,491,800)
Reserves Movement – Increase/(Decrease)	(6,541,800)
Overall Budget Result – Surplus/(Deficit) (Operating + Funding)	50,000

The above budget result in Table 1 is assuming the Council’s application for a Special Rate Variation(SRV) of 7.50% including rate pegging of 1.50% is approved by the Independent Pricing and Regulatory Tribunal (IPART). If Council’s SRV is not approved, the Draft 2017/2018 Budget Result on a Consolidated (All Funds) basis still forecasts a surplus budget result with the details of that result being included below at Table 2.

Table 2 – Forecast Budget Result 2017/2018 Consolidated (All Funds)

Item	Amount $
Operating Result
Operating Revenue	74,318,500
Less: Operating Expenditure	74,770,100
Operating Result – Surplus/(Deficit)	(451,600)

Funding Result

Operating Result – Surplus/ (Deficit)	(451,600)
Add: Non cash expenses – Depreciation	13,175,500
Add: Capital Grants and Contributions	24,867,700
Add: Loan Funds Used	2,160,000
Add: Asset Sales	0
Less: Capital Works	(43,822,700)
Less: Loan Principal Repayments	(2,639,800)
Funding Result – Surplus/(Deficit) (Cash Movement)	(6,710,900)
Reserves Movement – Increase/(Decrease)	(6,760,900)
Overall Budget Result – Surplus/(Deficit) (Operating + Funding)	50,000

The impact of the SRV in gross terms if not approved alters the Draft 2017/2018 Budget Estimates on a Consolidated (All Funds) basis as outlined in Table 3:

Table 3 – Forecast SRV Impact on Budget Result 2017/2018 Consolidated (All Funds)

Item	Amount $
Operating Result
Operating Revenue	(1,185,000)
Less: Operating Expenditure	(103,500)
Operating Result – Surplus/(Deficit)	(1,081,500)

Funding Result

Operating Result – Surplus/ (Deficit)	(1,081,500)
Add: Non cash expenses – Depreciation	0
Add: Capital Grants and Contributions	0
Add: Loan Funds Used	0
Add: Asset Sales	0
Less: Capital Works	(862,400)
Less: Loan Principal Repayments	0
Funding Result – Surplus/(Deficit) (Cash Movement)	(219,100)
Reserves Movement – Increase/(Decrease)	(219,100)
Overall Budget Result – Surplus/(Deficit) (Operating + Funding)	0

As Table 3 indicates the additional revenue from the SRV if approved is estimated to be $1,185,000 which equates to 6.00% of the 7.50% overall SRV increase. As the 7.50% includes the announced 1.50% rate peg, if the SRV is not approved, it will be the 6.0% component or the estimated $1,185,000 in 2017/2018 that Council will not be able to raise.

The detailed Draft 2017/2018 Budget Estimates prepared on the assumption the SRV is approved are detailed at Attachment 1. The amount of SRV revenue is currently allocated to the following budget items listed in Table 4 below:

Table 4- Proposed SRV Allocation 2017/2018

Item	Total Budget $	SRV Funding $	Other Funding $
Operating Expenditure
Rural Drainage Maintenance	146,500	36,900	109,600
North – Urban Drainage Maintenance	136,400	21,100	115,300
South – Urban Drainage Maintenance	155,200	21,100	134,100
Byron Bay Pool Maintenance	40,900	12,200	28,700
Mullumbimby Pool Maintenance	40,800	12,200	28,600
Total Operating Expenditure	519,800	103,500	416,300

Item	Total Budget $	SRV Funding $	Other Funding $
Capital Expenditure
Broken Head Road	1,191,600	300,000	891,600
Station Street Bangalow	46,600	46,600	0
Pine Avenue Mullumbimby	610,000	75,500	534,500
The Terrace Brunswick Heads	379,400	379,400	0
Byron Bay Town Centre – Landscape/Precinct Plan	88,400	60,900	27,500
Total Capital Expenditure	2,316,000	862,400	1,453,600

Transfer to Reserve
Byron Bay Pool – Renewals to be determined	219,100	219.100	0
Total Transfer to Reserve	219,100	219,100	0

Total SRV	3,054,900	1,185,000	1,869,900

Should the SRV not be approved, then the budget items in Table 4 above will not proceed or will need the extent of works proposed revised to accommodate available funding.

Table 1 (with SRV) and Table 2 (without SRV) indicates a forecasted budget surplus result of $50,000 and this relates to the General Fund. The forecast General Fund Unrestricted Cash Balance position based on the draft budget included at Table 1 and 2 is outlined in Table 5 below:

Table 5 – Forecast General Fund Unrestricted Cash Balance

Item	$
Forecast unrestricted cash balance to 30 June 2017 at 31 December 2016 Budget Review	1,146,500
Add: Estimated initial draft 2017/2018 budget result	50,000
Forecast unrestricted cash balance at 30 June 2018	1,196,500

In addition to Tables 1 and 5 above, budgeted financial statements incorporating a Operating Statement and Cash Flow Statement have been produced. These financial statements replicating the format of Council’s Annual Financial Statements are included in Attachment 2 along with a one page summary of all Council budget program outcomes and the estimated balance of Council reserves as at 30 June 2018.

To arrive at the Draft Budget Results outlined in Table 1 (SRV option) for the 2017/2018 financial year, Council’s revenue and operational expenses are expected to be derived from the following sources and allocated respectively as outlined in the graphs below:

In addition to the operational aspects of the proposed Draft 2017/2018 Budget Estimates, Council is proposing a capital works program of $44.685million (SRV option). By Fund, the projected capital works are:

· General Fund $38.436million

· Water Fund $1.890million

· Sewerage Fund $4.358million

Specific capital works projects have been detailed in Attachment 1, which for 2017/2018 has been presented in a different format for the General Fund, to improve the disclosure of funding sources for specific projects including:

· Section 94 funding to describe the specific part of the Section 94 Plan and catchment that is providing the funding for a project.

· Where reserve funds are funding a project, identification of the reserve being utilised.

· Separation of funding provided by Special Rate Variations (SRVs) including previously granted SRVs prior to 2008/2009 (Council’s last approved SRV) and the proposed SRV for 2017/2018.

Of the $38.436million for capital works related to the General Fund, $34.777million is allocated towards Roads and Drainage projects including $19.812million allocated to the Byron Bay Bypass.

The Draft 2017/2018 Budget Estimates also propose new loan borrowings of $2.160million of a $6.000million borrowing program over the next three financial years to fund a bridge replacement program. These are the first new loan borrowings for Council in at least the last five years as Council has been concentrating of debt reduction. Whilst only $2.160million is required for 2017/2018, should Council approve the loan borrowings, it may be worth testing the market to consider the merits of borrowing the entire $6.000million loan program up front, investing what is not required but considering interest rates on offer at the time borrowings may be sought.

A presentation will be provided to the Council Strategic Planning Workshop to be held on 6 April 2017 concerning the Draft 2017/2018 Budget Estimates subject of this report which will also provide a briefing to members of the Finance Advisory Committee before consideration of this report.

Financial Implications

The proposed Draft 2017/2018 Budget Estimates provided in this report indicate a projected budget surplus of $50,000. This projected surplus is the estimated outcome whether Council’s application for a Special Rate Variation (SRV) is approved by the Independent Pricing and Regulatory Tribunal (IPART) or not approved.

Detailed financial aspects of the Draft 2017/2018 Budget Estimates are outlined for the Finance Advisory Committee to consider earlier in this report.

Statutory and Policy Compliance Implications

In respect of the Draft 2017/2018 Operational Plan, Council must comply with the provisions of Section 405 of the Local Government Act 1993 as described below concerning the adoption of an Operational Plan.

405 Operational plan

“(1) A council must have a plan (its operational plan) that is adopted before the beginning of each year and details the activities to be engaged in by the council during the year as part of the delivery program covering that year.

(2) An operational plan must include a statement of the council’s revenue policy for the year covered by the operational plan. The statement of revenue policy must include the statements and particulars required by the regulations.

(3) A council must prepare a draft operational plan and give public notice of the draft indicating that submissions may be made to the council at any time during the period (not less than 28 days) that the draft is to be on public exhibition. The council must publicly exhibit the draft operational plan in accordance with the notice.

(4) During the period of public exhibition, the council must have for inspection at its office (and at such other places as it may determine) a map that shows those parts of its area to which each category and sub-category of the ordinary rate and each special rate included in the draft operational plan applies.

(5) In deciding on the final operational plan to be adopted, a council must consider any submissions that have been made concerning the draft plan.

(6) The council must post a copy of its operational plan on the council’s website within 28 days after the plan is adopted.”

The specific statements required by Council to be disclosed as part of its Revenue Policy are determined by Clause 201 of the Local Government (General) Regulation 2005 as follows:

201 Annual statement of council’s revenue policy

“(1) The statement of a council’s revenue policy for a year that is required to be included in an operational plan under section 405 of the Act must include the following statements:

(a) a statement containing a detailed estimate of the council’s income and expenditure,

(b) a statement with respect to each ordinary rate and each special rate proposed to be levied,

Note: The annual statement of revenue policy may include a note that the estimated yield from ordinary rates is subject to the specification of a percentage variation by the Minister if that variation has not been published in the Gazette when public notice of the annual statement of revenue policy is given.

(c) a statement with respect to each charge proposed to be levied,

(d) a statement of the types of fees proposed to be charged by the council and, if the fee concerned is a fee to which Division 3 of Part 10 of Chapter 15 of the Act applies, the amount of each such fee,

(e) a statement of the council’s proposed pricing methodology for determining the prices of goods and the approved fees under Division 2 of Part 10 of Chapter 15 of the Act for services provided by it, being an avoidable costs pricing methodology determined by the council in accordance with guidelines issued by the Director-General,

(f) a statement of the amounts of any proposed borrowings (other than internal borrowing), the sources from which they are proposed to be borrowed and the means by which they are proposed to be secured.

(2) The statement with respect to an ordinary or special rate proposed to be levied must include the following particulars:

(a) the ad valorem amount (the amount in the dollar) of the rate,

(b) whether the rate is to have a base amount and, if so:

(i) the amount in dollars of the base amount, and

(ii) the percentage, in conformity with section 500 of the Act, of the total amount payable by the levying of the rate, or, in the case of the rate, the rate for the category or sub-category concerned of the ordinary rate, that the levying of the base amount will produce,

(c) the estimated yield of the rate,

(d) in the case of a special rate-the purpose for which the rate is to be levied,

(e) the categories or sub-categories of land in respect of which the council proposes to levy the rate.

(3) The statement with respect to each charge proposed to be levied must include the following particulars:

(a) the amount or rate per unit of the charge,

(b) the differing amounts for the charge, if relevant,

(c) the minimum amount or amounts of the charge, if relevant,

(d) the estimated yield of the charge,

(e) in relation to an annual charge for the provision by the council of coastal protection services (if any)-a map or list (or both) of the parcels of rateable land that are to be subject to the charge.

(4) The statement of fees and the statement of the pricing methodology need not include information that could confer a commercial advantage on a competitor of the council. “

Report No. 4.3 Draft 2017/2018 Revenue Policy

Directorate: Corporate and Community Services

Report Author: James Brickley, Manager Finance

File No: I2017/345

Theme: Corporate Management

Financial Services

Summary:

The Draft 2017/2018 Revenue Policy has been prepared to support the funding requirements of the Draft 2017/2018 Budget Estimates subject to another report to this Meeting of the Finance Advisory Committee.

The purpose of this report is to provide the opportunity to the Finance Advisory Committee to review the Draft 2017/2018 Revenue Policy in its current form and to recommend, subject to any amendments, its adoption by Council for the purposes of public exhibition for a period of 28 days.

RECOMMENDATION:

That the Finance Advisory Committee review the Draft 2017/2018 Revenue Policy and subject to any amendments, recommend to Council the adoption of the Draft 2017/2018 Revenue Policy for the purposes of public exhibition.

Attachments:

1 Draft 2017/2018 Revenue Policy, E2017/23434 , page 102 ⇩

2 Draft 2017/2018 Fees and Charges, E2017/24210 , page 122 ⇩

Report

Draft General Land Rates and Charges

The Draft 2017/2018 Revenue Policy includes two rating structure tables with the only difference being the rating yields derived. As Council has applied for a Special Rates Variation (SRV), it must show a rating structure table with the SRV included and one without the SRV, on the basis that the SRV is not approved and only normal rate pegging is applied.

The Draft 2017/2018 Revenue Policy in regards to the Ordinary Rates section as been re-written to outline a proposed new rating structure for Council to consider. The rating structure outlined in Attachment 1 is based on outcomes from the following events:

· Council resolution 17-023 from the Ordinary Council Meeting held 2 February 2017.

· Presentation to the Finance Advisory Committee 16 February 2017

· Review by the Executive Team 1 March 2017

· Presentation to the Council Strategic Planning Workshop 9 March 2017

· Presentation to the Council Strategic Planning Workshop 6 April 2017 in conjunction with the Draft 2017/2018 Budget Estimates.

There were a number of alternate options provided but the option currently presented in the Draft 2017/2018 Revenue Policy is based on the following:

· Retention of the ad valorem rate subject to a minimum rate.

· Retention of existing rating categories.

· Abolition of the historical differentials where the ad valorem rate was established for Residential, then the ad valorem rate for Business was set at 150% of Residential, then the ad valorem rate for Business Byron Bay CBD set at 200% of Residential and the Farmland ad valorem rate was set at 73.73% of Residential.

· Application of new land values provided by the Valuer General for the 2017/2018 financial year to coincide with the introduction of the Fire and Emergency Services Levy (FESL) by the NSW Government.

· Application of the Special Rate Variation (SRV) of 7.50% if approved. On this basis the minimum rate will increase for 2017/2018 from $695.00 to $747.00 or $52.00.

· Redistribution of the rating yields between rating categories as outlined in Table 1 below compared to the rating yields from 2016/2017 which has reduced the rate yield from the Residential category but increased the rate yield to the Business and Farmland categories.

Table 1 – Proposed Rating Yield % by Rating Category

Rating Category	% Proposed Yield 2017/2018	Actual % Yield 2016/2017
Residential	74.00%	76.20%
Business – Other	12.50%	11.50%
Business – Byron Bay CBD	8.50%	7.90%
Farmland	5.00%	4.40%
Total	100.00%	100.00%

The current ratepayer population in Byron Shire Council is distributed amongst the following rating categories outlined in Table 2:

Table 2 – Ratepayer Population Distribution 2017/2018

Rating Category	Number of Ratepayer Assessments	Proportion of Ratepayer Population %
Residential	13,339	87.00%
Business – Other	1,098	7.20%
Business – Byron Bay CBD	349	2.30%
Farmland	542	3.50%
Total	15,328	100.00%

Given the distribution of the Ratepayer population, if Council alters the redistribution of the rating yield amongst the rating categories, a small decrease in the Residential rating category creates significant increases in the Business and Farmland rating categories.

A comparison of the proportion of the ratepayer population and proportion of rate yields contributed by each rating category is provided in the graph below:

If Council proceeds with the suggested rating option contained in the Draft 2017/2018 Revenue Policy, and assuming the SRV is approved, a series of tables has been prepared to compare current 2016/2017 ordinary rates payable and to show the ordinary rate price path over the four years of the proposed SRV by land value range and rating category as follows:

Table 3 – Residential Rating

Table 4 – Business – Other Rating

Table 5 – Business - Byron Bay CBD Rating

Table 6 – Farmland Rating

Please Note: *** The land values in tables 3 to 6 above are the new 2016 base date land value ranges to apply in the 2017/2018 financial year. To calculate the comparable 2016/2017 rates payable, these land values have been discounted by the increase in the actual 2016 base date land values by rating category to provide a more realistic and accurate comparison. The discount applied is Residential 9.7%, Business – Other 11.00%, Business – Byron Bay CBD 13.40% and Farmland 8.40%.

The outcome of the four tables immediately above (Tables 3 to 6) naturally will be different if the Special Rate Variation is not approved and Rate Pegging only is to apply but represent an indicative outcome if it is approved.

As the recommended rating structure for 2017/2018 will create a redistribution of the rating yield, especially to the Business category as a whole, which is now proposed to contribute 21.00% of Council’s rate yield overall compared to the 19.40% previously contributed. Council during the normal public exhibition period of the Draft 2017/2018 Operational Plan (including the Revenue Policy), will need to conduct additional consultation with the Byron Shire Business community to ensure they are informed of the proposed changes.

Given the proposed SRV, a review of waste, water and sewerage charges has been conducted and it is proposed for 2017/2018 not to increase these unit charges from those charged in 2016/2017. In respect of waste charges, these have been reviewed to the extent of proposed service types with the three bin service offered by Council. In addition, the stormwater charge has not increased given it is a regulated charge that has not changed over the last ten years.

Draft Fees and Charges

The Draft 2017/2018 Fees and Charges have been reviewed by respective program managers and included at Attachment 2. Where possible, fees have been altered/increased to reflect the following specific changes:

· Increases in the Consumer Price Index (CPI)/Indexation assumed at 1.50%.

· Review of fees and charges including benchmarking/cost of service provision and where possible introduction of new fees to assist Council generate additional/enhanced revenue as themed by its Financial Sustainability Plan(FSP).

· The Office of Local Government is yet to determine the fee to apply for Section 603 Certificates or the Statutory Interest Rate to apply to overdue rates and charges. Once determination has been advised, it is proposed Council apply the maximum amounts advised in respect of both items.

· Fees currently disclosed for Richmond Tweed Regional Library are the current fees for 2016/2017. Council is yet to receive advice from Lismore City Council as to the fees to apply for 2017/2018.

For the 2017/2018 financial year, the Draft Fees and Charges have continued to be developed utilising fees and charges software to manage fees and charges that was implemented on 2016/2017 for the first time.

Fire and Emergency Services Levy (FESL)

All Council’s in NSW for the first time will be required to levy the Fire and Emergency Services Levy (FESL) on all rateable property from 1 July 2017. The levy will be calculated on the basis of a rate applied to land value depending upon the FESL classification applied to each property.

It clearly needs to be understood, whilst the FESL will appear on the Rate Notice, it is not Council revenue but is revenue for NSW Treasury to assist in the funding of Emergency Services. This levy will replace the previous levy included in insurance premiums for those in the community who hold property insurance.

With respect to the FESL, Councils do not determine the fixed charges/ad valorem rates to apply and will remit all FESL revenue collected to the NSW Treasury. Councils are simply the collection agent on behalf of NSW Treasury. It is for this reason, whilst there is some disclosure in the Revenue Policy on the FESL, Council has not and will not provide the fixed charges/ad valorem rates to be charged. Council is also not required to approve the FESL charges.

Financial Implications

The Draft 2017/2018 Revenue Policy is an integral part to Council’s Operational Plan and provides the basis for Council to raise the required revenue to fund the estimated operating and capital expenditures contained in the proposed Draft 2017/2018 Budget Estimates.

There are direct financial implications to ratepayers of Council in regards to the proposed rates and charges contained in the Draft 2017/2018 Revenue Policy as it will determine, subject to final adoption after public exhibition and consideration of submissions, what ratepayers will be requested to pay when rate notices are issued in July 2017.

Statutory and Policy Compliance Implications

405 Operational plan

(5) In deciding on the final operational plan to be adopted, a council must consider any submissions that have been made concerning the draft plan.

(6) The council must post a copy of its operational plan on the council’s website within 28 days after the plan is adopted.”

The specific statements required by Council to be disclosed as part of its Revenue Policy are determined by Clause 201 of the Local Government (General) Regulation 2005 as follows:

201 Annual statement of council’s revenue policy

“(1) The statement of a council’s revenue policy for a year that is required to be included in an operational plan under section 405 of the Act must include the following statements:

(a) a statement containing a detailed estimate of the council’s income and expenditure,

(b) a statement with respect to each ordinary rate and each special rate proposed to be levied,

(c) a statement with respect to each charge proposed to be levied,

(2) The statement with respect to an ordinary or special rate proposed to be levied must include the following particulars:

(a) the ad valorem amount (the amount in the dollar) of the rate,

(b) whether the rate is to have a base amount and, if so:

(i) the amount in dollars of the base amount, and

(c) the estimated yield of the rate,

(d) in the case of a special rate-the purpose for which the rate is to be levied,

(e) the categories or sub-categories of land in respect of which the council proposes to levy the rate.

(3) The statement with respect to each charge proposed to be levied must include the following particulars:

(a) the amount or rate per unit of the charge,

(b) the differing amounts for the charge, if relevant,

(c) the minimum amount or amounts of the charge, if relevant,

(d) the estimated yield of the charge,

(4) The statement of fees and the statement of the pricing methodology need not include information that could confer a commercial advantage on a competitor of the council. “

Venue	Conference Room, Station Street, Mullumbimby
Date	Thursday, 13 April 2017
Time	9.00am