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Underwrite Policy for Major Events

Reference: P10-001            
Status: Approved by the Council on 2 March 2010

This policy and the process supporting it applies to major events as defined in the adopted Major Events Strategy. The policy represents a balancing of the need for public accountability in respect of the basis for and extent to which the Council may underwrite major events, against the need for flexibility and confidentiality (where justified) around the securing of those events that will best promote the goals and objectives of the Strategy.

The general thrust of this policy is that any underwrite granted should be seen as a last resort and after the applicant has exhausted all other possible options that may be available. The underwrite decision should be seen in light not only of the event itself but also the financial position of the organisation seeking it. While some decisions on underwrites may need to be considered before all other alternatives can be pursued to finality (due to timing or other uncertainty), the final decision to actually release any approved underwrite in part of in full is still to be subject to ongoing oversight and then final review of each individual event.

The events supported in this way should be those that have or can be shown to have considerable iconic status relative to other major events. The Underwrite Policy should not be seen as a general policy applying to all major events – rather it is a relatively narrow policy applying to unusual circumstances surrounding existing or new events from time to time.

Policy Parameters:

1. This policy applies to but is not necessarily limited to the following circumstances where underwrites may be an appropriate option for a major event:

• Established non-profit or low profit events subject to potential and temporary economic impact;
• Fully commercial events of a one-off or developing nature where some form of risk sharing may be required to secure them against other localities or where an underwrite might be a better option than front-end grants (one-off concerts, one-off or recurring sports events);
• Locally-organised events that are relatively new and/or unique, that may have some external support but have potential to develop over time;
• Events that are at least intended to break even in the financial sense, with the underwrite securing some temporary uncertainty around cashflows, prudent downside risk or other similar and acceptable reason.

2. While applications can be made at any time during the year for an underwrite, applications will be more favourably received if any application is made before any event is given any approval to proceed or as soon as any financial risk issue is known. Applications made after or near the end of an event will not be considered as this is in reality a form of retrospective grant support and does not allow the Council to consider the application early on while other mitigation options may be available.

3. Any decision to approve an underwrite is to be guided by and conform to the requirements of this policy and process but each decision will in general terms be made based on each application’s own merits (in particular the degree to which the event is likely to meet or has met the objectives of the Major Events Strategy), its relative merit to other events and the size of the request made relative to the total cost/value of the event.

4. Where multiple applications are assessed at the same time the relative merit of each application may be further assessed to determine its priority based on the criteria applying to the Major Events Fund (as administered by Venture Taranaki), including whether it has already qualified for funding support from that source or, if not, has greater relative merit even if no application could be made. This latter circumstance would typically apply to commercial events that don’t necessarily require upfront funding support but would rank highly as an event if subjected to the ranking criteria only.

5. The limit of underwrite for any one event is to be no more than $200,000 for events intended to break even. The individual limit can be exceeded in exceptional circumstances relating to the relative merit of the request and provided the overall limit is not exceeded.

6. The overall total limit for all major event underwrites is to be no more than $400,000 in any one year.

7. Applications for an underwrite can still be considered where other funding sources have been or may be sought from the Council but this fact will be taken into account in determining the actual or relative merits of any application made.

8. For more commercial events, the Council is to consider the potential for upside risk-sharing (as well as the underwrite itself) to provide some ability to provide funding input to the Underwrite Reserve should the event be more successful than expected.

9. Applicants shall follow the process set out below and may be called on to provide further information before an application is considered. Meeting the requirements of this policy does not guarantee any underwrite will be either approved or released if the Council has good cause not to do so.

10. In the event of a call being made on any approved underwrite, the Council is empowered to make appropriate reasonable enquiry to satisfy itself that all possible alternative measures have been taken to mitigate the call made and that no other legitimate sources of funds exist to offset any call made. The decision of the Council on the final amount to be released shall be final in all cases. The granting of an underwrite does not guarantee its release unless the Council is satisfied it meets the basis for the original underwrite decision.

11. An underwrite letter would be prepared including suitable performance measures to track over time, the benefits to be delivered, key event planning milestones, terms of payment of the underwrite if required, reporting requirements and other applicable conditions.

12. An event audit would be carried out along with a formal post event evaluation. Included in this is a report submitted by the event organiser. For specific key events, economic impact assessments may be commissioned at the cost of the applicant. This information is then fed back to the Council to assist it with future decision making.

Process

a) Applications are to be made in writing.

b) Applications are to be received initially by the Chief Executive and a management recommendation on each application is to accompany the report to the Council.

c) The Council will consider applications on an ‘as required’ basis throughout the year.

d) The Council may require applicants to appear before it in support of their application.

e) The Council may approve an application, offer an alternative, or decline the application outright.

f) The Council will set down conditions that apply for any successful application and may include conditions to acknowledge the Council’s support, and on monitoring the performance of the agreement between the Council and the applicant.

g) The Council is not required to give specific reasons for declining applications but may do so.

h) The Council may determine and amend the process for considering and handling applications provided that still meets the policy parameters. This may be done where the request is urgent or other similar extenuating circumstances warrant such modification.

i) The Council may establish specific criteria and conditions within the parameters of the policy.

j) The Council will decide whether an event, for which any application for an underwrite is made, qualifies for consideration under the terms of the policy.

Information Requirements

In considering applications for support the Council will take into account the following:

a) Applicant Information

i) The legal status of the applicant;

ii) The organisational and management skills and experience of the applicant;

iii) The overall financial status of the applicant;

iv) Whether the applicant has applied previously for funding assistance or an underwrite;

v) The need and availability of referees or testimonials in support of the application;

vi) Any other information the Council deems appropriate.

b) Event Information

i) The amount applied for;

ii) The nature of the event;

iii) The purpose for and circumstances under which the underwrite is to be accessed;

iv) The level of risk associated with the event and the likelihood of making a claim;

v) Other funding available or sought elsewhere;

vi) Whether other Council funding has/will be applied for;

vii) Evidence of sound planning (e.g. feasibility study, business plan, budget, marketing plan etc);

viii) The potential positive and negative impacts on existing community facilities (e.g. local events venues), on associated infrastructure and on other existing events and activities;

ix) Financial viability of the event;

x) Whether the event has the potential to become a recurring event;

xi) Whether future repeats of the event can be achieved without ongoing Council funding.

xii) The necessary consents, licences or other approvals have been or are being obtained.

xiii) Any other information the Council deems appropriate.

c) Benefits to be assessed

 The Major Events Strategy sets out the strategic criteria for supporting major events based around:

i) Economic gains (attracting national and international visitor spend);

ii) Social and cultural benefits (positively profiling New Plymouth and upholding the attributes of the Taranaki brand);

iii) Marketing exposure at a national and international level; and

iv) Developing potential return on investment.

 In addition to this the key goals of the Major Events Fund are:

i) To retain existing sustainable events

ii) To grow new and existing events

iii) To attract new major events to Taranaki

 The application will be assessed based on its degree and level of fit to these benefits and if considered necessary, in terms of the criteria attaching to the Major Events Fund.

d) Council Considerations

i) Amount of money available in the fund and anticipation of other applications;

ii) Cost to the Council of administering an application for funding support.

Applications should address each of the points referred to above and in the same order. They should have any relevant support material attached, including detailed budgets.

Applications are to be posted or delivered to the Council, addressed as follows:

New Plymouth District Council, Corner Leach and Liardet Streets, Private Bag 2025, New Plymouth ATTENTION: Chief Executive

Reviewed three yearly (next review 2013).