CFP Client Meeting Note

CFP Client Meeting Note

Demo context: This template was applied to a historical public-sector meeting. It does not represent a real CFP client or advisor relationship and is not current financial or investment advice. Relative dates refer to the period represented by the recording.

1. Meeting Agenda & Objectives

Brief outline of topics to cover:

• Procedural matters: Apologies, attendance, confirmation of minutes from February 18.
• Tourism sector update for Waipā District, including COVID-19 impacts and recovery strategies.
• Industry support, redeployment, airline connectivity, and the status of local/national events.
• Phased recovery plan (mitigate, restart, reimagine) and local campaigns like Mighty Local.
• Hamilton Airport (CE Mark) business update, including operational impacts, financial outlook, and recovery plans.
• Introduction of the new chair of LASS (Local Authority Shared Services) and its post-COVID-19 priorities.
• LGFA (Local Government Funding Agency) update on the financing environment, borrowing costs, covenants, and green financing.
• Review of the monthly financial report through March.
• Health and Safety report and updates.
• Motion to move into a public excluded session.

Meeting objectives:

• Review and confirm prior meeting minutes.
• Receive an update on tourism sector performance, the impacts of COVID-19, and the strategic recovery plan.
• Understand COVID-19 effects on international-reliant operators, sports/events, and Hamilton Airport's response.
• Understand LASS’s strategic direction, regional collaboration benefits, and resource implications.
• Receive an update from LGFA on borrowing conditions and support mechanisms.

2. Stakeholder Updates

Participant context:

• The LASS chair is relocating from Auckland to Cambridge and will become a Waipā District Council ratepayer effective May 1, 2020.

Financial priorities or concerns:

• Tourism operators are facing closures and hibernation, with concerns about the impact after the 12-week wage subsidy ends.
• There is a recognized need for an extended wage subsidy (to 20 weeks) and support for large employers (100+ employees).
• Concern about the reliance on international visitors for specific operators (e.g., Māngere-Tāwharanui) and how international sporting events impact Waipa.
• Interest in infrastructure improvements to aid domestic travel and recovery.
• Anticipated post-COVID-19 pressures on council staffing and resourcing for shared projects.
• Interest in low-cost borrowing amid revenue uncertainties.

3. Financial Overview

Income and expenses:

• As of the end of March, total income is at 74% of the forecast, and operating expenditure is at 72% of the full-year forecast.
• Hamilton Airport experienced a 97–98% immediate loss in aeronautical income from late March. Its hotel revenue was temporarily supported by Ministry of Health isolation facility payments, which were ending in the week represented by the recording.
• The airport implemented significant cost reductions, including up to 20% payroll reduction and board fee reductions, and received the government wage subsidy.
• An arbitrage arrangement was made on March 12, 2020, utilizing $6 million of short-term borrowings, expected to yield approximately $13,000 in net interest by its maturity in June 2020.

Assets and liabilities:

• Hamilton Airport's property portfolio is its current lifeline. The terminal upgrade (~$15M) is suspended. Debt utilization is ~65% of facilities, with a plan to extend total facilities to ~$30M.
• Vested assets recognized to date are $11.8 million (94% of forecast), and discovered assets are $402,000.
• Capital expenditure is $71.3 million (51% of forecast).
• Development contributions received total $4.4 million.
• Subsidies and grants are at 47% of the forecast.
• Outstanding prior-year rates are $62,000, and current year-to-date outstanding rates are $464,000.
• LGFA's lending portfolio is approximately $10B.

Recent financial statements reviewed:

• A tourism sector report covering the six months ending December 31, 2019, was referenced.
• The financial report through March was reviewed. It was noted that the forecast column is outdated due to COVID-19, and a significant reforecasting effort is underway.
• The LASS Statement of Intent and half-yearly report to December 31, 2019, were reviewed.
• The draft Statement of Intent (SOI) for Hamilton Airport and the LGFA were noted as outdated due to recent events.

4. Discussion Points

Short- and long-term goals:

• Tourism Sector:
• Short-term: Mitigate impacts, support businesses via the Mighty Local campaign, secure shovel-ready projects, and redeploy the workforce.
• Long-term: Reimagine tourism with sustainable, community-led models and develop a destination management plan for net-benefit tourism.
• Hamilton Airport:
• Short-term: Stabilize operations, preserve cash and core capabilities, and leverage property and land sales to bridge cash flow.
• Long-term: Achieve a modest, sustainable recovery without shareholder funding and restore aeronautical, hotel, and conference activities.
• LASS:
• To drive transformative regional projects, deliver efficiency gains, increase regional influence, and improve customer experience. Post-COVID-19 priorities include securing a public works pipeline and supporting council staff.

Investment strategy:

• Hamilton Airport's diversification strategy (initiated 5–6 years ago) into its property portfolio is proving critical, with a focus on land sales to strengthen its cash position.
• The LGFA is actively developing a framework for green, social, and sustainable financing options for councils, pending eligible projects. This is seen as a way to improve access to debt markets.

Risk tolerance:

• The tourism sector faces a prolonged recovery (2–5 years for international connectivity) with uncertainties around alert levels and event dependencies.
• Hamilton Airport is using conservative modeling, assuming minimal Air New Zealand activity until October, no hotel activity for the rest of the calendar year, and conservative assumptions on tenants' ability to pay.
• LASS embraces a “fail fast, fail cheap” approach to innovation.
• LGFA is monitoring potential covenant breaches in FY2020/21 for high-debt, revenue-impacted councils.

Additional topics discussed:

• Attendance and Procedural: Apologies were noted for Hazel, and Jim was to leave at 13:30. A correction to the February 18 minutes was required to include Andrew Graham and Bruce.
• COVID-19 Impacts: Pre-COVID, Waipā saw double-digit tourism growth. This has sharply reversed, with a significant drop in visitor expenditure. Impacts are broad, affecting accommodation, retail, hospitality, transport, and major venues. Business responses include hibernation, reduced services, and some permanent closures.
• Airline Connectivity: Air New Zealand is planning an incremental domestic restart at alert level one. International recovery is estimated at 2–5 years. An air traffic control review in Rotorua could redirect traffic to Tauranga/Hamilton.
• Events: Fieldays is moving online from June 30, 2020. The NZ Tourism Awards are postponed to 2021. A decision on the ICC Women’s Cricket World Cup (scheduled for February 8, 2021) is expected by October–November 2020. Delays to major convention centers may create opportunities for regional venues.
• Workforce Redeployment: Tourism staff have been shifted to essential services like catering for food banks, transport, civil defense roles, and supermarkets. 110 staff were placed into the kiwifruit industry.
• Health and Safety: A review of council entrance accidents found no infrastructure issues. H&S processes are monitored through "lead indicators." The impact of COVID-19 on staff well-being will appear in the next report, and protocols are being developed for the move to Level 3.

5. Action Items

Tasks for council and sector teams:

• The finance team will present reforecasted financials in the next report.
• The health and safety team will continue to develop safety protocols for staff during COVID-19.
• Continue national and regional advocacy for an extended wage subsidy and large employer support.
• Advance the destination management plan in partnership with Tourism NZ and DOC.
• Support shovel-ready tourism project submissions.
• Maintain weekly data sharing and contribute to the Te Wāka economic outlook.
• Develop and launch a major business events restart campaign.
• Engage with Well Energy Trust regarding the regional major events fund.
• LASS to continue outreach to council CEOs on skill needs and refine project communications.
• LGFA to continue engagement with councils on borrowing options and covenant monitoring.

Tasks for meeting participants:

• Update minutes to correctly record attendance for Andrew Graham and Bruce (Sam to make changes).
• Note Jim’s departure at 13:30.
• Hamilton Airport to present a revised SOI to all shareholding councils in May.
• Continue engagement with the government on airport support and project applications.
• Participate in surveys on tourism impact in Waikato.
• Utilize the Mighty Local platform and prepare for phased reopening compliance.
• Waipā exec team to consider leveraging LASS energy/carbon management providers for the council’s carbon audit.
• Assess potential participation in LASS transformative projects.
• Evaluate LGFA borrowing opportunities.

Deadlines and follow-up:

• Fieldays online: Starts June 30, 2020, for two weeks.
• ICC Women’s Cricket World Cup decision: By October–November 2020.
• American Airlines planned return: October 2020.
• Revised SOI and 15-month forecast for Hamilton Airport targeted for May presentations.
• Meeting with Jet Park later this week to review hotel restructuring.
• The LGFA will provide another update on its green financing initiative at the annual council day in July 2020.
• Ongoing weekly operator check-ins and insights reporting.

6. Next Steps & Follow-Up

Date/time for next meeting:

• A Hamilton Airport board and management presentation to shareholding councils is scheduled for May (specific date not provided).

Documents or info needed:

• Corrected minutes from the February 18 meeting.
• Continued weekly data on visitor arrivals and expenditure.
• Results of the current tourism impact survey.
• Updates from the WorkSafe investigation (Whakaari/White Island).
• Air New Zealand domestic restart schedules.
• Well Energy Trust decision on the regional major events fund.
• Revised SOI for Hamilton Airport for the next three years.
• Funding details for successful crown infrastructure applications.
• Updated LGFA SOI reflecting the current environment (when available).
• Status of Waipā’s carbon audit.

7. Advisor Notes & Observations

Key insights:

• Waipā’s strong pre-COVID tourism growth has reversed sharply, with sector-wide impacts. Recovery will be constrained by permanent business closures.
• The tourism recovery plan is phased: hyper-local (1–3 months), intraregional (3–6 months), domestic (6–12 months), and full international (2–5 years). The drive market is critical.
• Events are likely to lead economic and social recovery.
• Hamilton Airport’s prior diversification into property provides resilience. Its cash position is expected to turn slightly positive through June of next year, supported by land sales.
• Waipa’s reliance is largely domestic; infrastructure projects like the Waikato Expressway extensions will aid recovery.
• LASS aims to operate “regionally without boundaries,” and its relevance is increased in the post-COVID environment.
• LGFA borrowing costs are currently very favorable (e.g., short-term below ~1%; recent 6-year issuance at 1.46%). Strong government and Reserve Bank support for LGFA is in place.
• The council's health and safety program is maturing well, with strong CEO commitment.

Any concerns or recommendations:

• Monitor evolving alert levels and hospitality reopening opportunities.
• There is a significant gap in support for employers with 100+ staff. The post-12-week wage subsidy cliff is a major risk.
• The Rotorua ATC changes may benefit Hamilton/Tauranga but require network coordination.
• Emphasize community-led, sustainable tourism to deliver net benefits.
• Hotel recovery is uncertain due to reliance on conferencing.
• Balance sheet impacts are anticipated from property revaluations.
• Monitor council resourcing capacity for shared projects amidst COVID-19 demands.
• Prepare for potential net debt-to-revenue covenant pressure in FY2020/21 for higher-debt councils, though Waipā is currently well-positioned.
• Consider strategic use of LGFA facilities to secure low-cost, long-term funding.
• Reassess non-essential spending to prioritize resilience and regional recovery.