Tag Archives: Cash on hand

DCC financial position | DCC reply: “$20M cash on hand” #LGOIMA

### dunedintv.co.nz May 5, 2015 – 12:27pm
DCC’s financial position better than expected
The Dunedin City Council is finishing the financial year on a high, with an operating surplus of almost $8m. Its finance committee has just analysed the latest accounts, which show the council’s in a better position than expected. It’s received more money through its invested Waipori Fund, and saved on asset maintenance. The council’s got less debt to pay than what was initially budgeted for, and has deferred some work. But it’s received less than expected from the New Zealand Transport Agency for roading projects, and it’s lost some money on the sale of a Dukes Road property. The financial year ends in June.
Ch39 Link

As tabled at the DCC Finance Committee meeting on 4 May 2015:

Report – FC – 04/05/2015 (PDF, 1.2 MB)
Financial Result – Nine Months to 31 March 2015

Report – FC – 04/05/2015 (PDF, 1.2 MB)
Financial Result – Eight Months to 28 February 2015

****

WHERE DID DCC’S $20M “CASH ON HAND” DEMATERIALISE TO ?????

From: Elizabeth Kerr
Sent: Tuesday, 23 September 2014 11:13 p.m.
To: Sandy Graham [DCC Group Manager Corporate Services]
Subject: LGOIMA request

Dear Sandy

Re: Cull warns debt still hurdle for council (ODT 15.9.14)
http://www.odt.co.nz/news/dunedin/315949/cull-warns-debt-still-hurdle-council

Within the news item it says:

“The forecast had included about $22 million in “cash on hand”, but, since Mr McKenzie’s arrival, the decision had been made to slash the amount to about $2 million, he said.

“The cash was instead used to pay for capital projects, avoiding the expected need to borrow for the work, which reduced the council’s need to borrow by $20 million, he said.”

6.5.15 This paragraph goes unexplained in Ms Graham’s reply below;
a further clarification has been sought on WHICH CAPITAL PROJECTS

I would like the DCC to precisely itemise the way(s) in which the city council has spent this $20 million of “cash on hand”, to include the capital projects by name or other reference; the name(s) of the relevant council department(s) and or committee(s) that incurred this expenditure; the dates of expenditure; the spending delegations attributable to which, by name, formal signatories on account; and any other information in legible form that would assist the city council to meet my request in a forthright, full and transparent manner.

I look forward to reply.

Thanks, kind regards

Elizabeth Kerr

* My LGOIMA request was made on 23 September 2014.
** Dunedin City Council was legally required to reply within 20 working days.
*** Dunedin City Council finally replied on 29 April 2015.

—————————————

From: Sandy Graham
Sent: ‎Wednesday‎, ‎29‎ ‎April‎ ‎2015 ‎1‎:‎36‎ ‎p.m.
To: Elizabeth Kerr
Subject: RE: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear EJK

I do appear to have sent this on Friday. I’m resending. Can you confirm receipt?

Regards
Sandy

From: Sandy Graham
Sent: Friday, 24 April 2015 1:40 p.m.
To: Elizabeth Kerr
Cc: Carolyn Allan; Grant McKenzie
Subject: RE: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Elizabeth

We have considered your questions and now provide the following response which we hope finally answers your enquiry. Apologies for the delay in providing this clarification.

First I want to background a couple of things to give context to both the question and our response. In our budget (the Annual Plan), the Council ensures that there is enough money to meet its financial obligations. This means that the Council has budgeted money in order to pay for a liability if and when it falls due over the course of the financial year.

While the budget provides for the necessary money to meet the various financial obligations that fall due over the course of the financial year, it is not financial best practice to have large sums of money sitting in the bank at the same time as the Council has debt. This is because the cost of borrowing is generally at a higher rate than the return on money invested in the bank.

With that background I want to deal with the specific situation referenced in the ODT on 15 September 2014 which forms the basis of your enquiry. For clarification, the article in the ODT on 15 September 2014 referred to a decision to “slash” the amount of cash on hand from $22 million to $2 million. To clarify, the $22 million was a budgeted amount of cash based on the Annual Plan for 2014/15. It was never physically in the bank – it was simply a budgeted figure.

The reference to “slash the amount” to about $2 million simply means that the Council (which had intended to borrow this money following the completion of certain capital expenditure projects) did not borrow it. It wasn’t spent on anything – the debt wasn’t raised. If it did borrow the money, then the Council would’ve had the money sitting in the bank. As outlined above, the current practice is to have a minimal amount of money in the bank but access to money if and when required.

The Council is currently consulting on a draft Financial Strategy which formalises this approach and incorporates it into the budget from 1 July 2015 onwards. I have attached a copy of the draft Financial Strategy for your information.

Regards
Sandy

Attachment: Finance-Strategy

—————————————

From: Elizabeth Kerr
Sent: Friday, 24 April 2015 1:56 a.m.
To: Sandy Graham
Cc: Carolyn Allan
Subject: Re: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy

Please can you have the information requested since 23 September 2014 to me within 5 working days. Appreciated.

Regards, Elizabeth

Sent from Windows Mail

—————————————

From: Elizabeth Kerr
Sent: Thursday, 9 April 2015 11:49 a.m.
To: Sandy Graham
Cc: Carolyn Allan; Elizabeth Kerr
Subject: Re:RE: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy and Carolyn

The draft LTP has recently been signed off by the Council and is now available for public consultation.

Further to your last email, Sandy, if you can, please provide timeline for delivery of the information promised to me regarding DCC’s use of the $20M cash on hand, as referred to in the Otago Daily Times on 15 September 2014 (refer correspondence below).

I look forward to your update and following, prompt receipt of the information kindly requested last year.

Best regards, Elizabeth

█ The rest of the oh so tiresome email trail can be found at this thread:
3.11.14 DCC: What happened to $20 million cash on hand? #LGOIMA

Posted by Elizabeth Kerr

15 Comments

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DCC: What happened to $20 million cash on hand? #LGOIMA

1. Council had $22 million cash on hand.
2. Council spent $20 million (cash) on “capital projects”.
3. Council won’t account for the $20 million.
4. Council seeks open cheque to make discovery.

Report – FIN – 08/09/2014 (PDF, 2.3 MB)
Interim Financial Result – 12 Months to 30 June 2014

On 8 September 2014, the Council’s interim financial result for 12 months to 30 June 2014 was tabled at a meeting of the Finance Committee. A week later, ODT (15.9.14) reported Mayor Cull as saying there was a “significant improvement” to the Council’s core debt position.

In the same item, “Council group chief financial officer Grant McKenzie said the turnaround was partly due to a significant change in the amount of cash held by the council. The forecast had included about $22 million in “cash on hand”, but, since Mr McKenzie’s arrival, the decision had been made to slash the amount to about $2 million, he said. The cash was instead used to pay for capital projects, avoiding the expected need to borrow for the work, which reduced the council’s need to borrow by $20 million, he said.” ODT Link

What if? flagged the ‘cash-no-longer-on-hand’ illumination with a post:
● 15.9.14 Cull’s council spent the cash

Capital projects?
How was the money spent, and who by?
Then, we completely lost sight of it.
As the following correspondence shows, Council spent $20 million of ratepayer funds but refuses to declare where the cash went. Mr McKenzie plays the convenient game of obfuscation —like so many before him, and alongside him now at DCC.

█ Apparently, I’m to be personally charged for demanding relevant paperwork to track down the Public Money.

Accountability? Transparency? What the HELL is that?
NOT something DCC values, that’s a dead cert.

[begins]

From: Elizabeth Kerr
Sent: Tuesday, 23 September 2014 11:13 p.m.
To: Sandy Graham [DCC Group Manager Corporate Services]
Subject: LGOIMA request

Dear Sandy

Re: Cull warns debt still hurdle for council (ODT 15.9.14)http://www.odt.co.nz/news/dunedin/315949/cull-warns-debt-still-hurdle-council

Within the news item it says:

“The forecast had included about $22 million in “cash on hand”, but, since Mr McKenzie’s arrival, the decision had been made to slash the amount to about $2 million, he said.

“The cash was instead used to pay for capital projects, avoiding the expected need to borrow for the work, which reduced the council’s need to borrow by $20 million, he said.”

I would like the DCC to precisely itemise the way(s) in which the city council has spent this $20 million of “cash on hand”, to include the capital projects by name or other reference; the name(s) of the relevant council department(s) and or committee(s) that incurred this expenditure; the dates of expenditure; the spending delegations attributable to which, by name, formal signatories on account; and any other information in legible form that would assist the city council to meet my request in a forthright, full and transparent manner.

I look forward to reply.

Thanks, kind regards

Elizabeth Kerr

__________________________

From: Sandy Graham [DCC]
Sent: ‎Wednesday‎, ‎24‎ ‎September‎ ‎2014 ‎9‎:‎01‎ ‎a.m.
To: Elizabeth Kerr
Cc: Grace Ockwell [DCC]

Thanks Elizabeth

I have forwarded to staff to consider and a response will be provided as soon as possible but in any event within twenty working days. It may be that I need to come back to you with questions of clarification or refinement depending on how this information is stored/held but I will be in touch as required.

Warm regards
Sandy

__________________________

From: Elizabeth Kerr
Sent: Friday, 31 October 2014 1:42 p.m.
To: Sandy Graham [DCC]
Cc: Grace Ockwell [DCC]
Subject: Re: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy

The official information request I made on 23 September 2014 (see emails [above]) is yet to have a response, we are now well outside the twenty working day limit.

Please provide update on how soon the information will be released.

Many thanks, and kind regards

Elizabeth

__________________________

From: Sandy Graham [DCC]
Sent: ‎Friday‎, ‎31‎ ‎October‎ ‎2014 ‎2‎:‎03‎ ‎p.m.
To: Elizabeth Kerr
Cc: Grace Ockwell [DCC]

Sorry Elizabeth.

My fault. I had been supplied with a response and had not forwarded it.

The Group Chief Financial Officer advises:

“This request cannot be completed for what they are requesting as I do not know what capital and operating activity we would assign to the $20 million. In addition the work involved in getting the invoices etc would be significant. What has happened is that we have used our cash on hand to fund council activity (operating and capital) instead of borrowing to do this.”

If you would like me to pursue the possibility of tracking down invoices, I would need to consider charging for this work because there would be significant collation and research required, and even then, we may not be able to fully answer your question. Let me know if you would like me to investigate this further.

The GCFO has indicated he is happy to meet and talk through the issues but is unable to provide any further information at this stage.

Again, apologies for my tardiness.

Sandy

__________________________

From: Elizabeth Kerr [mailto:ejkerr@ihug.co.nz]
Sent: Friday, 31 October 2014 2:05 p.m.
To: Sandy Graham [DCC]
Cc: Grace Ockwell [DCC]; Grant McKenzie [DCC GCFO]
Subject: Re: LGOIMA request [DCC expenditure of $20M cash on hand]

Dear Sandy

Thanks for getting back to me promptly today. I acknowledge receipt.

I’m considering your response fully and as a consequence looking into all my options.

Kind regards, Elizabeth

[ends]

Serendipitously, the same day (31.10.14), I heard from Cr Lee Vandervis —unbeknownst to me, a couple of days earlier he had voiced a similar query about the [MISSING PRESUMED DROWNED] $20 million “cash on hand”, and more, following his study of the Council’s Annual Report 2013-14.

Report – Council – 30/10/14 (PDF, 2.5 MB)
Approval and Adoption of Annual Report

[begins]

—— Forwarded Message
From: Lee Vandervis
Date: Tue, 28 Oct 2014 22:38:15 +1300
To: Sue Bidrose [DCC], Sandy Graham [DCC]
Conversation: Annual Report
Subject: Annual Report

Hi Sue,

The beginning of the Annual Report seems very reassuring with your highlighting our billion dollars worth of saleable assets, and our debt levels in pretty good shape and improving.

Looking further into the body of the report there is a lot of tabulation of various kinds of assets, but I seem not to be able to find the same depth of discussion on debt or the historical debt graph that I fought for years to finally get included. [A Consolidated term liabilities figure of $622,843,000 does appear on p199. I had been led to expect a historical graph of DCC debt and of total consolidated debt]
Is it possible to also have a graph of all inclusive historical staff costs included? There was one a while ago but it seems to have been dropped again.

At the end of the document I find a number of graphs that feature a fetching orange colour bar that seems to indicate that our “thriving and diverse economy” under Affordability has exceeded our LTP quantified limit on rates income in 2013 and 2014, exceeded the quantified limit on rates increase this year, slipped below the balanced budget benchmark, and also slipped below the essential services benchmark for this year.
It is no surprise to me that Citipark has not achieved targets, but I am surprised that your opening comments are so upbeat when the closing benchmarks are not met and the quantified limits seem to be exceeded.
These benchmark and limit graphs may have been misinterpreted by me because despite reading them several times I remain unsure of their real import.
Is it possible for someone to explain to me how the ‘pretty good shape and improving’ overview is supported, especially in light of the $20 million cut [from $22 million] in cash on hand and various sales that we have apparently recently instituted, combined with further expected constraints on DCHL subvention payments?

Looking forward,
Lee
__________________________

—— Forwarded Message
From: Lee Vandervis
Date: Fri, 31 Oct 2014 15:34:29 +1300
To: Debbie Porteous [ODT], Nicholas GS Smith [ODT]
Conversation: Annual Report
Subject: FW: Annual Report

Hi Debbie,
The Tuesday 28th email [above], which still remains unanswered, may help explain some of what deeply concerns me regarding yet another DCC Annual Report presented as up-beat.

Kind regards,
Cr. Vandervis
—— End of Forwarded Message
—— End of Forwarded Message

[ends]

If there was a plot to hide the way $20 million slid from sight, it thickens.
Not done yet, because I’m not a turkey dinner.

Posted by Elizabeth Kerr

20 Comments

Filed under Business, Citifleet, Construction, Cycle network, DCC, Democracy, Design, Economics, Enterprise Dunedin, Heritage, Hot air, Media, Name, New Zealand, NZTA, Otago Polytechnic, People, Politics, Project management, Property, Site, Stadiums, Tourism, Town planning, University of Otago, Urban design, What stadium