Audit New Zealand representatives are set to give city councillors feedback today on the council's imminent annual report.

Highlights of the report include a $5m underlying operating surplus, including a rates breakeven position. Debt is at $304 million, with a 170 per cent debt-to-revenue ratio and $75 million worth capital infrastructure projects delivered.

The city council buildings are now worth zero following problems with leaks and mould. Photo: File.

However, the Civic Building and Administration Building have been revalued to zero in the wake of their mould issues, and the $7.6m downward revaluation has been recorded as a reduction in the revaluation reserve.

The Finance and Risk Committee received the draft financial information and activity performance for the Annual Report at the beginning of September.

Prior to an audit review, the draft report placed total operating revenue, less operating costs, at $8.2 million, compared to a budgeted surplus of $0.6 million.

The main causes of the drop is an accounting measure - recognising the reduction in the value of software as increased amortisation rather than an asset write down and a correction to the outstanding NZTA grant at year end.

The surplus comes from above-budget revenue, mainly $1 milllion is user fees, and lower operating costs, primarily a depreciation $3.2 million. Accounting entries related to Bay Venues Limited's treatment of depreciation account for $4.2 million of the underlying surplus.

The rates fully covers the rates requirement because the surprise $1.5 million of unbudgeted costs associated with relocating staff from the civic buildings and other work associated with the civic campus, is covered by available rates funding of $1.25 million.

The balance of $0.25 million of operating costs has been funded from the risk management reserve.

The Surplus after tax is $29.6 million more than the budget $34.9 million, at $64.5million.

Asset development revenue, including development contributions to fund new infrastructure and vested assets is $8.5 million above budget.

The remainder of the extra comprises gains on sale of assets, including Route K, and some $16 million in land sales, $6.3 million in unrealised gains and losses, the impairment of various assets and an unbudgeted provision expense for weathertight homes.

The revaluations, impairments and provisions have no immediate impact on rates or debt

The city's net debt at June 30, 2015 is $295 million, compared with $365 million 12 months earlier. The drop in debt is mainly because of the sale of Route K $70.8 million.