Ownership of ratepayers assets now managed by Bay Venues Ltd is to be re-examined, according to a report on Bay Venues Ltd.
The consultant's report, adopted by the Tauranga City Council in December, recommends the council undertake a full review of options for ownership and management of the city's community halls and centres.
The review is recommended to follow on after the council completes its Social Needs Assessment Framework.
Whether council or BVL is best placed to continue owning and managing community halls and centres in the future largely depends on the council's willingness to consider redeveloping facilities that are no longer fit for purpose, says the report prepared by Catherine Syme Consulting.
BVL has the skills and incentives to promote innovative ideas for redevelopment of facilities, and the council will need to balance this against the strong community interest in existing facilities and other priorities and objectives that it may have, the consultants recommend.
The consultant's report makes no mention of the BVL proposed $30 million rebuild of the Queen Elizabeth Centre in Memorial Park, for which the council is committing $150,000 towards a feasibility study.
Bay Venues Ltd is a Council Controlled Organisation established in July 2013 by amalgamating Tauranga City Venues Limited and Tauranga City Aquatics Limited.
Bay Venues was then amalgamated with its holding company, Tauranga City Investments Limited on 1 July 2014.
The review of the structure and components of the BVL model is timed to inform the 2018-28 Long Term Plan.
The review's scope includes considering whether BVL has the right mix of assets and activities, and reviewing the governance framework and tools to ensure that the council and community is getting the most out of BVL.
BVL has achieved a strong growth in the use of the community owned facilities it manages.
In 2014/2015 there were 1.7 million visitors to the network. This increased to 1.99 million by 2016/17 - a 17 per cent increase in patronage, compared to an estimated population growth of four per cent over the same period.
The number of visitors to every type of facility including indoor sports, aquatic, community centres, and community halls, has increased over this period, with particularly strong growth in use of community halls.
Ratepayer assets include Queen Elizabeth Youth Centre and Memorial Hall, Mt Maunganui Sports Centre, Bethlehem Hall and Greerton Community Hall.
Also included are Matua Hall, Tauriko Hall, Welcome Bay Hall, Arataki Community Centre and the Papamoa Sport and Recreation Centre.
To help clarify strategic intent the council has provided further guidance on some matters, including that in growing external revenue BVL should avoid competing with the private sector outside of its venues. For example, in relation to expanding its catering and AV services.
This places limits on BVL's ability to generate external revenue and to take advantage of economies of scale and has therefore been a matter of discussion between TCC and the BVL board.
The issue has been worked through at a governance level, and although some of BVL board and executive may prefer a different strategy there is now a shared understanding of council's position, says the consultant's report.
BVL has increased its external revenue from $11.6 million in 2013/14 to $17.9 million in 2016/17, an increase of 54 per cent.
Revenue growth is due to strong growth in network use, new offerings, and expansion of commercial services such as catering.
At the same time operating expenditure, excluding finance and depreciation, has only increased by 31 per cent, suggesting that BVL has achieved considerable operating efficiencies.
TCC provides an operational grant to BVL of about $2.5 million each year to help fund non-commercial activities. T
his has remained at a similar level since 2013/14 and has decreased slightly in real terms. Although the dollar value of the grant has been stable, the operational grant per network user has been steadily reducing. This was $1.70 in 2013/14 and $1.36 in 2016/17.
While the grant is not intended as a contribution for every user, the measure is a useful indicator of the growth of BVL's commercial activities.
Another useful indicator of financial performance is the percentage of operating expenditure met by external revenue. In 2013/14, 75 per cent of operational expenditure, excluding finance and depreciation, was met by external revenue. By 2016/17 this increased to 89 per cent.
The board itself has had a focus on Earnings before interest, tax, depreciation and amortization. This has improved from a loss of $1.112 million in 2013/14 to a profit of $463,000 in 2016/17 and BVL is forecasting a surplus of $1.45 million by 2019/20.