Overview

The Auditor-General inquired into aspects of how the Thames-Coromandel District Council (the Council) has managed leasing arrangements for a block of land in Moewai Road, Whitianga. The block of land is commonly referred to as the Sherriff Block, and the Council has owned it since 2000.

Our inquiry included considering the nature of the Council’s leasing arrangements with Mr Dirk Sieling before he was elected to the Council in 2007 and the handling of his interest in the Sherriff Block after he became a Councillor. In this report, we use Mr or Cr to make it clear what his status was at the time.

We acknowledge the high level of local community and media interest in this matter. This did not affect our ability to carry out a thorough inquiry and we received full co-operation from all parties involved.

Most local authorities have extensive land holdings. Our findings from this inquiry reinforce the importance for all local authorities to have in place effective systems and processes to manage their land well on behalf of their communities.

Summary of findings

The Council was not effective in its management of the Sherriff Block because it did not formally document a lease agreement or have arrangements in place to manage its interests in the land.

In our view, a formal lease agreement would have provided clarity about the terms and conditions of the lease of the Sherriff Block, including the requirement to pay rates.

Despite the Council’s poor management of leasing arrangements for the Sherriff Block, we note that all financial matters relating to Cr Sieling’s use of the land have been or are being settled. Thames-Coromandel ratepayers are not out of pocket in relation to Cr Sieling’s lease of the Sherriff Block.

We also concluded that the Council’s administration systems did not adequately support the management of conflicts of interest in this matter.

We understand that the Council has now addressed the way that it administers matters where there are conflicts of interest. For example, the staff member responsible for sending out papers for Council or Committee meetings takes steps to ensure that Councillors do not receive information about matters in which they have declared a conflict of interest.

In our view, Cr Sieling handled his interest in the land in a reasonable manner.

Our recommendations

We recommend that the Thames-Coromandel District Council:

• put in place formal agreements for all Council-owned land whether it is leased or not and ensure that the relevant information for each agreement, such as terms and conditions, is formally documented and held in its central register of leases;
• update and maintain information about all Council-owned land in the central register of leases, and regularly monitor the register to provide assurance that terms and conditions are being adhered to and the land is being managed in keeping with the Council's original intentions;
• prioritise the completion of its property strategy;
• clarify roles and responsibilities for managing Council land, including staff roles and responsibilities, and make sure they are understood by Council staff; and
• review its recently implemented procedures for managing potential conflicts of interest to consider whether the procedures are operating as expected, and add additional controls if necessary.

We wish to thank all those who assisted us during our inquiry. We received full co-operation throughout from all parties.

Phillippa Smith
Deputy Controller and Auditor-General

23 November 2009