I hereby give notice that an ordinary meeting of the Finance and Performance Committee will be held on:

 

Date:                      

Time:

Meeting Room:

Venue:

 

Thursday, 13 March 2014

9.30am

Reception Lounge, Level 2
Auckland Town Hall
301-305 Queen Street
Auckland

 

Finance and Performance Committee

 

OPEN ADDENDUM AGENDA

 

 

 

MEMBERSHIP

 

Chairperson

Cr Penny Webster

 

Deputy Chairperson

Cr Ross Clow

 

Members

Cr Anae Arthur Anae

Cr Calum Penrose

 

Cr Cameron Brewer

Cr Dick Quax

 

Mayor Len Brown, JP

Cr Sharon Stewart, QSM

 

Cr Dr Cathy Casey

Member David Taipari

 

Cr Bill Cashmore

Member John Tamihere

 

Cr Linda Cooper, JP

Cr Sir John Walker, KNZM, CBE

 

Cr Chris Darby

Cr Wayne Walker

 

Cr Alf Filipaina

Cr John Watson

 

Cr Hon Chris Fletcher, QSO

Cr George Wood, CNZM

 

Cr Penny Hulse

 

 

Cr Denise Krum

 

 

Cr Mike Lee

 

(Quorum 11 members)

 

 

Crispian Franklin

Democracy Advisor

 

11 March 2014

 

Contact Telephone: (09) 373 6205

Email: crispian.franklin@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 

 

 


Finance and Performance Committee

13 March 2014

 

 

ITEM   TABLE OF CONTENTS                                                                                        PAGE

    

10        Bruce Pulman Park Trust - Request for $4 million Community loan                      5

11        Monthly budget update                                                                                               55 

PUBLIC EXCLUDED

Procedural motion to exclude the public                                                                              61

C1       Update on proposal to acquire an easement in Newmarket for access purposes 61  

      


Finance and Performance Committee

13 March 2014

 

 

Bruce Pulman Park Trust - Request for $4 million Community loan

 

File No.: CP2013/28265

 

  

 

 Purpose

1.       To obtain the decision of the Committee on whether to approve a community loan of up to $4 million to the Bruce Pulman Park Trust (BPPT) for the purpose of completing the Indoor Courts Centre at Bruce Pulman Park, Walters Road, Papakura.

Executive Summary

2.       The Bruce Pulman Park Trust leases Bruce Pulman Park from Auckland Council.  The park covers an area of 64 hectares, is located on Walters Road, Papakura and consists of facilities catering to football, rugby, netball, tennis, cricket, gymnastics, together with supporting ancillary services.  Over 650,000 people visited the park in 2013, and with further developments planned, this is likely to increase to in excess of 1.3 million visits in future years.

3.       The former Papakura District Council approved a grant of $3.9 million to the Bruce Pulman Park Trust as a contribution towards the $10.5 million cost of constructing the Indoor Courts Centre at the park.  This decision was subsequently endorsed by Auckland Council and recorded in a funding agreement.

4.       As a result of design enhancements, increased scope of works and cost increases, the enlarged facility has a revised construction cost of $17 million.  Construction of the complex is well advanced and the trust is seeking funding to ensure the building is completed in a timely manner.

5.       The BPPT is therefore seeking an Auckland Council community loan of up to $4 million, [preferably interest free], repayable over a 5 year term.

6.       A review of the trading results of the BPPT and the Manukau Counties Community Facilities Community Trust (MCCFCT) indicate strong trading results over the last years, coupled with strong balance sheets.  The BPPT is the single largest recipient of annual grant distributions from the MCCFCT.

7.       Security for the loan will be by way of cross-default provisions in the loan and lease documents.

8.       The lease agreements contain provisions that enable the BPPT to seek assistance from Auckland Council to enable the construction to be completed.

9.       It is recommended that a loan of up to $4 million, for a maximum period of 5 years be approved at an interest rate to be determined by the Finance and Performance Committee.

 

Recommendation/s

That the Finance and Performance Committee:

a)      Acknowledge and record its support for the development of Bruce Pulman Park and acknowledge the contribution that the Indoor Court Centre will make to the sports facilities located both at the park, Auckland and at a national level.

b)      Approve a community loan of up to $4 million to the Bruce Pulman Park Trust for a period of 5 years; at an interest rate equivalent to the cost of borrowing for Auckland Council (circa 5.66%); with interest only payable for the first three years, and interest and principal repaid over the final two years; other terms and conditions are to be in accordance with Auckland Councils normal lending terms and conditions in respect of community loans.

c)      Delegate approval for the final terms and conditions of the loan agreement to the Manager Finance and Manager Regional and Local Planning.

d)      Approve varying the leases between Auckland Council and Bruce Pulman Park Trust in respect of 90 and 138 Walters Road Papakura to provide for cross-default in respect of the loan, noting that these variations must be executed prior to the release of any funds.

 

Discussion

Background on Bruce Pulman Park

 

10.     The Bruce Pulman Park Trust leases Bruce Pulman Park from Auckland Council.  The park covers an area of 64 hectares and is located on Walters Road, Papakura and consists of:

15 sports fields

indoor sport, recreation and administration facilities

• a purpose-built indoor gymnastics and trampoline facility

21 outdoor netball courts

6 outdoor tennis courts

2 cricket ovals

• an all-weather sprint strip

open space

an adjoining training and accommodation facility (the Lodge)

11.     The Trust expects there to have been over 650,000 visits to Bruce Pulman Park in 2013, up from approximately 600,000 in 2010.  Further developments either under way or planned allow for upwards of a further 700,000 visits to the park, giving an annual total visitation in excess of 1.3 million.

12.     There are currently a large number of sports and community groups using the park, including Papakura Netball, Ardmore Marist Rugby Club, Counties Manukau Gymnastics, Counties Manukau Cricket, numerous schools, Netball New Zealand, NZ Academy of Sport and Auckland University of Technology.  A number of individual passive recreation users also frequent the park.  The sports fields comprise a significant part of the Papakura community’s recreation network.  Attachment A lists the 2013 users of the park.

13.     The former Papakura District Council historically supported the park in a number of manners.  In 2006, the Papakura District Council joined the Bruce Pulman Park Trust, Netball Counties Manukau and Papakura Netball Centre on a Working Party to plan for the construction of an indoor court centre on Bruce Pulman Park.  In 2007, Papakura District Council allocated $2 million to the construction of the Indoor Courts Centre and a further $1,900,000 in 2009. 

14.     Resource consent was originally granted for 4 indoor courts, however following completion of a feasibility study for the Indoor Courts Centre in 2009, this was revised to include 6 indoor courts, built to Netball NZ and Auckland Volleyball’s specifications for national championships.  Both the Auckland Regional Netball Facilities Report and the Auckland Regional Physical Activity and Sport Strategy supported the feasibility study.  In particular, the Auckland Regional Netball Facilities Report identified the development of indoor court facilities as its highest priority and states that the most significant gap in the Auckland region is in Counties Manukau. 

15.     Since the completion of the Indoor Courts Centre feasibility study, the Bruce Pulman Park Comprehensive Development Plan has also been completed, and was formally endorsed by the Papakura District Council in 2010.  This Plan outlines proposed capital development at the park, including:

• the Indoor Courts Centre

a golf centre

a sport development centre

sports office and resource centre

cricket pavilion

children’s adventure playground

a multi-purpose sports centre

field floodlights and goalposts

fitness cycle trail and exersites

 

16.     Approximately $30 million has been invested in the development of Bruce Pulman Park (excluding current work in progress).  An estimated further $98 million will be required to complete the planned improvements detailed in the Comprehensive Development Plan.

17.     To date, Council has provided a $439,000 per annum operational subsidy; funded the Comprehensive Development Plan; financially contributed to the construction of a public toilet in July 2010; and has allocated $3.9 million to the development of the Indoor Courts Centre.  The Comprehensive Development Plan confirms that most of the large development projects on the park will require feasibility studies.  Several of these have now been completed, with the balance still to be undertaken.

18.     Bruce Pulman Park Trust has a Memorandum of Understanding with Auckland University of

Technology that provides certainty of use and contributes to the long-term sustainability of the park; in turn, this provides opportunities for coaching and exercise science, improving health outcomes through physical activity. 

19.     A significant amount of development has already occurred at the park and construction of the Indoor Courts Centre is well underway. 

Organisational Structure

20.     There are a number of organisations involved in enabling the Indoor Court Centre to be constructed.  The key organisations include:

·    Bruce Pulman Park Trust

·    Manukau Counties Community Facilities Charitable Trust

·    HEB Construction Ltd

Staff have identified and worked through the nature of the trusts and delivery entities and have a number of concerns that need to be addressed.

Lease

21.     There are two leases in respect of Bruce Pulman Park.  These effectively mirror each other regarding terms and conditions.  The agreements were entered into by the former Papakura District Council and extend a larger than normal number of rights to the lessee (i.e. BPPT).

The basic terms of the agreement are as follows:

a.   Thirty-three year term commencing from 1 August 2001 with a right of renewal for a minimum of a further 33 years, on essentially the same terms and conditions.

b.   $1 per annum rent, with no rent reviews.

c.   The trust will not pay any land rates on the leased area.

d.   The trust would undertake a certain minimum level of improvements at the park.   However in approving this, the council in its capacity as lessor (not regulatory), pre-approved all matters relating to the improvements (including alterations, additions and renewal), giving the trust full and unfettered discretion to decide all matters relating to the improvements.

e.   If, for any reason, the trust is unable to complete the work on the improvements within a reasonable period of time the trust is permitted to advise the council, following which the council (although under no obligation to do so) can either complete the work itself, or provide funding to the trust to complete the works.  Any amount advanced shall be a debt owing to the council, unless agreed otherwise.

22.     The effect of these clauses is that provided the improvements are consistent with the stated “Permitted Use of the Land” the trust has the ability to develop the park as it wishes, produce and amend plans for improvements as it desires, and should there be any funding shortfall, it can request Council to assist to remedy the situation (which by implication means provide funding), although Council is under no obligation to do so.

Nature of Works Being Undertaken – Indoor Court Centre

23.     As noted earlier, work has commenced on the construction of the Indoor Courts Centre, and Council has already approved grants totalling $3.9 million towards the construction costs that (at the time) were estimated to be circa $10 million.  Since construction has started, the scope of works has expanded significantly as a result of enhancements agreed between the BPPT and interested user groups of the facility.  The improvements will greatly enhance the usability and appeal of the facility, creating a high-quality facility with greater user appeal.

24.     Aerial and other photographs of the development are attached as Attachment B.  Plans of the facility are shown at Attachment C.

25.     The extent of the enhancements and additional costs is detailed below in an explanation provided by the BPPT:

“The planned expenditure for the construction of the Indoor Courts Centre on Bruce Pulman Park has increased by $6.161m due to a major redesign, enhancements and soil conditions (see below).  The enhancements are the result of:

·    Further consultation with the community resulting in additional information and needs unaccounted for in the original Feasibility Study.

·    Further consultation with Netball NZ, Auckland Basketball and Manukau Auckland Volleyball.

·    At the request of Netball NZ, consultation and planning with SKYTV to accommodate live television coverage of major events.

·    Following assessment of Auckland Council/NSO’s Sports Strategies, BPP Trust reassessed the usage of the Indoor Courts Centre.  Originally designed as a training centre, there was reconsideration and enhancement of the designs to accommodate major events including National and National Secondary Schools for all three key sports codes and possibility of ANZ Netball events.  BPP is a training centre and this move in our philosophy was taken to cater for the needs of the community, sports organisations and the Auckland South demographics including a large netball following and the non-capability of the Manukau based Vodafone Events Centre to host major court sport events.”

 

26.     Design Enhancements and Variations:

1. Increase in overall size of 2,601m˛

2. Site Works and Overall

a.        An increase of 13 piles (from 70 to 83) was needed due to the increase in loads, and increase in building size, plus pile depth extensions.

b.        Associated additional site works including excavations, foundations, drainage, concrete etc.

c.        Eco-friendly projects for ventilation and collection of grey water storage tank installation.

3. Ground Floor

a.        Increase in the size of the foyer to provide for better access and egress additional for supporters and spectators including a café, with an emphasis to minimise outdoor and wet shoe traffic on the international FIBA Level 1 sprung sports floor.

b.        Addition of a canopy to provide for wet weather shelter for transport vehicles and foot traffic (south westerly wind and rain).  Access shifted to northern side of building.

c.        Building extension on both western and eastern ends of the stadium to provide for storage (outdoor access), increase in size of electrical services room, access to SKY Deck (level 3), pre-school children’s play room with viewing and access onto sports arena floor to provide parent child-care facilities for mid-week daytime sports leagues.

d.        Major extension to northern and southern side of the stadium to accommodate level 2 mezzanine seating.

e.        Under floor and in column services cabling, including provisions for television production, LCD logistics and score display boards.

f.        Courtside fixed team seating.

g.        Provision for indoor/outdoor access between indoor and outdoor netball courts.

h.        Redesign to increase team rooms, ablutions, showers, cold pools from two to four and additional storage.

4. Mezzanine Floor/Level 2

a.        Extensions to accommodate additional access, stairwells and up to 1,000 seats based on National Sports Organisations requirements for both regional and national events. Status quo remains in the design to provide for a single major event court and provide strengthened floor space for organisers to install 4,000 temporary seats.

b.        Addition of balconies; increase in size of Control Room and Plant Room; increase in meeting rooms to replace Ground floor rooms converted into Team Rooms; re- layout for offices etc.

c.        Reinstatement of suspended ceilings.

5. 3rd Level, SKY Deck

a.        Installation of a goods lift to meet SKY TV specifications and control rooms; access from ground level to 3rd level and construction of the television deck.

6. Preliminary & Design

a.        Costs associated with designing, project management, amendments to both Resource and Building Consents, Fire Engineers and sub-contractor advisory consultations.

b.        Future proofing and construction for wireless connectivity scoring and LCD displays.

27.     The additional costs can be attributed not only to the expanded scope of the facility, but also to other unforeseen factors arising during the early part of construction, despite comprehensive investigative work.

28.     The lease contains provisions that enable the BPPT to make alterations to the designs as it wishes, and there is no provision for Auckland Council as lessor to challenge these.

29.     The table below provides an overview of where the additional costs have been attributed to:

(Information supplied by Bruce Pulman Park Trust)

Cost variations

 

 

Original Tendered Costs August 2010

 

10,858,656

Enhancements including variations

 

6,160,849

Current Construction Costs September 2013

 

$17,019,505

 

 

 

Additional Design, Certification, Supervision and Consents

615,764

 

Variations Piling, Excavations

659,850

 

Enhancements Mezzanine Seating

1,231,989

 

Balustrades, Walkways, Glazing

922,700

 

Canopy

550,000

 

Storage at each end, Play Area

490,094

 

Foyer, Mezzanine Offices, TV requirements, Lift

490,987

 

Suspended Ceilings, Outdoor Viewing, Conference Room, Electrical, Graffiti Guard

819,840

 

Miscellaneous, Structural Steel Alternations

379,625

 

Total

$6,160,849

 

 

30.     The BPPT had advised that the value of the additional building costs has been verified by the Trust’s quantity surveyor, however this has not been verified by Council staff at this stage.

Request Received from the BPPT

31.     In order to cover the additional costs, the BPPT is continuing to seek grant funding from a variety of sources, but in the meantime is seeking to complete the construction of the facility in a timely manner. 

32.     BPPT is seeking a concessionary community loan of up to $4 million from Auckland Council for a term of 5 years.  This will enable the Indoor Court Centre to be completed in the near future while fund-raising continues.

33.     The trust is requesting that, if approved, the loan be interest free for the duration of the term.

34.     In addition, and in order to assist cashflow for the project, the trust is seeking drawdown of the loan over a 1 year period, with repayments commencing at the beginning of year 4, and being concluded within the 5 year period (i.e. actually repaid over the last 2 year period of the 5 years).

35.     It is estimated that the cost of interest over the 5-year lifetime of the loan would be in the vicinity of $860,000 (Attachment D).  Currently there is no budget provision to cover these costs.  If the decision is made to charge interest on the loan, whether at a concessionary rate, or at a rate sufficient to cover the cost to Council, the BPPT has indicated this cost could be covered, however, its preference is for the loan to be interest-free. 

36.     If the loan is approved, and should the decision be made for the loan to be interest free, or at a rate less than the cost to Council, the value of this benefit will be recognised by the BPPT.

Trust Sources of Funding

37.     The reason for the 2 year repayment holiday (years 2 and 3 of the loan) relates to the flow of cash from the largest donor to the BPPT, viz: Manukau Counties Community Facilities Charitable Trust (MCCFCT).  Correspondingly, the BPPT is the largest single recipient of funding from the MCCFCT.

38.     The intention is that grants in years 2 and 3 from MCCFCT will be used to finance the project, and then grants in years 4 and 5 would be used to repay the loan.

39.     The following table illustrates the donations received by BPPT from MCCRCT since 2009: (Source: Annual reports of the MCCFCT lodged with the Charities Commission)

Year

Donation

2013

$3,158,995

2012

$3,110,474

2011

$2,717,691

2010

$1,853,353

2009

$1,589,513

 

40.     The financial reports of the BPPT indicate very healthy trading results for the 6 years ended 31 March 2013.  Accumulated surpluses exceed $13 million, with the vast majority of this funding being redirected back into the development of the park and facilities.  A summary of the trading results for each of the BPPT and MCCFCT is included at Attachment E.

41.     Apart from the $3.9 million grant from Auckland Council referred to above, the bulk of the revenue for the BPPT over the last six years has been derived from MCCFCT.

42.     The BPPT shares two trustees in common with MCCFCT, including Bruce Pulman himself.  The significance of this being that there is probably a reasonable expectation that the BPPT will continue to be a significant beneficiary of the MCCFCT into the foreseeable future, ensuring that the BPPT has sufficient funding to undertake and complete the Indoor Courts Centre development at Bruce Pulman Park, and then to repay the loan in the last two years of the proposed term.

43.     A copy of a Grants Distribution Policy dated 31 October 2013 has been provided.  This has been prepared in accordance with the provisions of the Gaming Act 2003.  The authorised purposes of the Trust include the following items:

o Grants for the provision, maintenance and development of facilities and activities at Bruce Pulman Park, including additions to the park by way of land purchase;

o Funds for the charitable purposes of the Bruce Pulman Park Trust for community sporting and other community activities;

The full list is available as Attachment F.

44.     The forecasted budgets for 2014-2015 and the subsequent 4 years show budgeted surpluses totalling $10.640 million.  In the first three years ended 31 March 2017 these surpluses ($6.395 million) will be used to finalise the Indoor Court Centre, and in the next two years (2018 and 2019), the surpluses ($4.425 million) would be directed to repaying the Council loan at the rate of $500,000 per quarter.

45.     Based on the historic financial information together with the forecasted trading results out to 2019, it would appear that the BPPT will be in a strong position to repay the loan, if approved.

Security for the Loan

46.     Traditionally security for loans that are made to organisations leasing land and/or premises from Auckland Council is for the lease to contain provisions that provide that should there be default under the loan agreement, this would be deemed to be a default under the lease, meaning that Council could enforce termination provisions in the lease and effectively take control of the facilities.

47.     The existing leases do not contain provisions of this nature.  It will be necessary to vary the leases to include cross-default provisions under the two agreements.

48.     The Trust has confirmed that it is willing to amend the lease to allow for cross-default provisions with the loan agreement.

49.     A General Security Agreement will also be required as further security.

Risks

50.     There are a number of risks associated with this proposal that should be considered by Council. 

51.     Given the provisions of the lease agreements that give wide reaching powers to the trust to amend the plans without reference to Council (in its capacity as lessor), it is possible that there could be further enhancements included in the project which put further strains on the budgets for the project.

52.     Despite best intentions, costs could increase to a level beyond current levels of available funding.

53.     The BPPT could commence other projects that divert funds away from completing the Indoor Court Centre facility.

54.     If a community loan is approved, approval of the loan could be made conditional on ensuring there are clauses in the loan agreement that place conditions on the release of the funding in place to minimise the possibility of these situations occurring.

Consideration

55.     Bruce Pulman Park is considered a strategic asset on both a local and Auckland-wide scale.  The proposed capital improvements will encourage national events and wider usage of the park.  The Bruce Pulman Park Trust is committed to providing accessible, world-class infrastructure for the community. 

56.     Bruce Pulman Park aligns with the Auckland Regional Physical Activity and Sport Strategy and the Papakura Draft Physical Activity Strategy.  The Papakura Local Board Plan states a commitment to the “… continued development of Bruce Pulman Park and its surrounding facilities”.

57.     If this arrangements was being considered today (i.e. 2014), council may not be willing to provide as many concessions as are contained in the agreements that have been entered into.  The agreements are weighed heavily in favour of the lessee, although this reflects the significant level of investment that the trust is making into the park.

Options for the Community Loan

58.     There are a number of options available to Auckland Council in respect of this request for a loan.  These include:

a)   Not approving the loan request

b)   Approve the request for a community loan in its entirety (i.e. as requested)

c)   Approve the request, but on modified terms and conditions

59.     In all instances the major difference relates to the amount of the loan, the length of the term, interest rate and when draw down can occur and repayments commence.

60.     All other terms and conditions would be based on the format of community loan agreements previously developed by Legal Services.  These include ensuring that the loans are drawn down against certificates issued by the project manager, or quantity surveyors who certify the value and quantum of work completed to date.  i.e. there is no provision for draw down of the loan as a lump sum quantity.

Not Approve the Loan

61.     Not approving the loan is likely to place strain on the project and jeopardise the viability of this particular piece of work at the park.  Completion of the wooden floor is necessary to enable the facility to be enclosed and weather-proofed.

62.     In addition, should the BPPT wish to borrow funds from others sources, it is likely that any lender will require security for the loan.  As the underlying land is owned by Council, it will not be possible for BPPT to offer mortgage security to a third-party lender.  Instead, BPPT may request that Council act as guarantor for the loan arrangement in which case further legal arrangements would need to be implemented and Council would be under contractual arrangements to the bank and have to rely on the Trust fulfilling its obligations under the contracts.

Approve the Loan as Requested

63.     The BPPT has requested an interest free loan of up to $4M, repayable over a 5 year period.  Based on the proposed drawdown and repayment schedule supplied by BPPT, the estimated cost of interest over the 5 year period is $860,000 for which there are currently no budgets held at either a corporate or local board level.

64.     If an interest free loan is approved, it will be necessary to provide an additional budget allowance to cover the annual cost of the interest.

65.     Adequate and suitable security for the loan must be provided by the Trust, although this is likely to be limited to cross-default provisions in the loan and lease agreements.

Approve the Loan – but on modified terms and conditions

66.     A further alternative is for Council to consider and approve a loan arrangement on alternate terms and conditions, for instance, a lesser sum, different period of time, different repayment terms, and whether or not interest is charged, and at what rate.

67.     A number of options are available regards the interest rate payable.  The Council could opt to:

1.       carry the cost of providing the loan as interest free to the BPPT;

2.       on-charge interest at the same rate that Council borrow the funds; or

3.       elect to charge interest on the basis of cost plus a margin (typically a small margin to cover overheads and other costs).                         

68.     Existing community loans are on many varied basis relating to terms (length) and interest rates, and are reflective of the organisation’s ability to repay, legacy council policy prevailing at the time, as well as the perceived value of the community benefits arising from the development.

69.     Adequate and suitable security for the loan must be provided by the Trust.

70.     These options have been discussed with the Mr Pulman who has indicated that the Trust would be willing to consider alternative arrangements if that was the wish of Council.

Local Board Views

71.     The Papakura Local Board Plan states:

“Bruce Pulman Park has high-quality facilities and caters for such a wide range of activities that it has the makings of a complex of sub-regional importance.  The development is ongoing.  The trust undertaking the project needs to be supported both through funding and assistance in land acquisition to ensure that this developing world-class centre fulfils its potential.”

72.     Details of the loan request were reported to the Papakura Local Board.  A copy of the Papakura Local Board resolutions supporting this loan application are attached as Attachment H.

Maori Impact Statement

73.     A loan to the BPPT will have little direct impact on Maori.  However the demographic make up of users of Bruce Pulman Park and its facilities would suggest that a large number of the Maori community would be users of the park and would therefore benefit from the completion of the various facilities at the park.

Implementation Issues

74.     If the request for a loan is approved, there are a number of legal matters arising that will need to be comprehensively documented.  Legal Services are currently providing advice on this matter and will maintain a watching brief in this regards.  The major matters to consider from a legal perspective are the terms and conditions of the loan, and the security to be taken.

75.     In 2011 the BPPT received approval from Council to utilise $2 million of the original $3.9 million grant to assist with cashflow requirements associated with constructing Pulman Lodge.  In accordance with the agreement entered into at the time to record this arrangement, the funding has subsequently been ‘repaid’ and used by the trust in respect of the Indoor Courts Centre. 

 

 

Attachments

No.

Title

Page

aView

BPPT - User Groups  - 2013

19

bView

BPPT - Aerial & Other Photos

21

cView

BPPT - Indoor Court Centre Plans

39

dView

Indicative Interest Costs $4 million

43

eView

BPPT Summary of Trading Results - 6 years to 31 March 2013

45

fView

MCCFCT Summary of Trading Results  - 6 years to 31 March 2013

47

gView

MCCFCT Grants Distribution Policy Oct 2013

49

hView

Papakura Local Board Resolutions 19 Feb 2014

53

      

Signatories

Authors

Leigh Redshaw - Strategic Partnerships Advisor

Authorisers

Penny Pirrit - Regional & Local Planning Manager

Roger Blakeley - Chief Planning Officer

Andrew McKenzie - Chief Finance Officer

 


Finance and Performance Committee

13 March 2014

 

 



Finance and Performance Committee

13 March 2014

 

 



















Finance and Performance Committee

13 March 2014

 

 


Finance and Performance Committee

13 March 2014

 

 


Finance and Performance Committee

13 March 2014

 

 



Finance and Performance Committee

13 March 2014

 

 


Finance and Performance Committee

13 March 2014

 

 


Finance and Performance Committee

13 March 2014

 

 


Finance and Performance Committee

13 March 2014

 

 




Finance and Performance Committee

13 March 2014

 

 



Finance and Performance Committee

13 March 2014

 

 

Monthly budget update

 

File No.: CP2014/02607

 

  

 

Purpose

1.       The Finance and Performance Committee has delegated authority to approve changes to budgets during a financial year. This report will be provided each month as required. It collates decisions required of the committee on changes to the budget for 2013/2014, and provides a financial context within which the decisions can be made.

Executive Summary

2.       The table below shows the financial impacts of all budget changes considered in this committee meeting. The impacts include:

· $1.2 million increase in net borrowing for 2013/2014

· $179,000 negative impact on the council’s operating result for 2013/2014

· $10,000 increase in rates requirement for 2014/2015. The projected average general rates increase would remain at 2.5 per cent.

 

$000

Closing Group Net Borrowing

Operating After Tax Surplus/(Deficit)

General Rates

Cumulative % rates increase

 

2013/2014

2013/2014

2014/2015

% increase

Annual Plan 2013/2014

6,502,315

-13,482

1,403,287

3.5%

Decisions agreed since 1 July 2013

76,510

-9,057

2,628

 

Current position

6,578,825

-22,539

1,388,834

2.5%

February proposals

 

 

 

SkyPath investigation

175

-179

10

0.001%

 

Bruce Pulman Park Trust loan

1,000

0

0

0.000%

 

Cultural Impact Assessment facilitators

0

0

0

0.000%

 

Potential Position

6,580,000

-22,718

1,388,844

 

2.5%

 

3.       The Budget Committee will have the opportunity to address these impacts alongside other budget changes through the 2014/15 Annual Plan budget process.

Auckland Harbour Bridge Pathway (SkyPath)

4.       In December 2013, the council approved a way forward for the investigation of the SkyPath project, a walking and cycle pathway to be attached to the Auckland Harbour Bridge. Auckland Tourism Events and Economic Development (ATEED), whose Chief Executive sponsors the project for the council group, is seeking additional operating funding of $175,000 in the 2013/14 financial year for investigation work that cannot be undertaken with internal resources. Some of the costs to date have been paid for from ATEED’s working capital, with an understanding that the entire cost would be funded by the council.

5.       The additional funding is to cover approximately $50,000 in specialist legal cost, a grant of $85,000 to contribute to preparation of reports and images for the resource consent application of the Auckland Harbour Bridge Pathway Trust, and $40,000 in consultancy cost for undertaking patronage studies. It is recommended that the committee approve additional funding of $175,000 to ATEED for this purpose.

Bruce Pulman Park Trust Loan

6.       A separate report on the agenda recommends the committee approve a community loan of up to $4 million to the Bruce Pulman Park Trust for a period of five years, at an interest rate equivalent to the cost of borrowing for the council. The drawdown in 2013/14 is estimated to be $1 million. It is noted that the recommendation, if adopted, will not have an impact on the operating result of the current year or general rates funding requirements for future years.

7.       Should the committee decide to impose an interest rate that is lower than the council’s cost of borrowing, an adverse impact on rates will result. In any event, the loan will increase the debt level of the council until it is fully repaid.

Unitary Plan - Cultural Impact Assessment

8.       In response to strong feedback from Auckland’s 19 iwi authorities and the Independent Maori Statutory Board, the Proposed Auckland Unitary Plan (PAUP) requires a Cultural Impact Assessment (CIA) to be submitted for a specified list of resource consent applications that may have an effect on Mana Whenua values. The PAUP also includes a provision that enables Mana Whenua to confirm that a CIA is not required. Since the notification of the PAUP on 30 September 2013, it is estimated that between 10 and 30 applications per week have triggered the need for a CIA or confirmation from Mana Whenua that a CIA is not required.

9.       In the current CIA process, the council provides resource consent applicants with the contact details of the relevant Mana Whenua representatives, and leaves the two parties to work with one another in the first instance. If no response regarding the outcome is received within 15 working days, council staff will then intervene and facilitate the process.

10.     To make the CIA process easy for both resource consent applicants and Mana Whenua, the Resource Consent department is looking to appoint two to three CIA facilitators who will make the initial contact with Mana Whenua on behalf of applicants, and follow up on the need for a CIA. The additional cost for this initiative is estimated to be $100,000 for 2013/14, which will be funded from existing budgets.

11.     Any additional funding requirements from 2014/15 onwards associated with the PAUP, including CIA facilitators, will be considered by the Budget Committee in a separate report on 27 March, as part of the annual plan process.

 

Recommendation/s

That the Finance and Performance Committee:

a)      approve additional operational funding of $175,000 in the 2013/14 financial year to Auckland Tourism, Events and Economic Development Limited to undertake further investigation of the Auckland Harbour Bridge Pathway (SkyPath) proposal.

b)      note that a community loan of up to $4 million to the Bruce Pulman Park Trust at an interest rate equivalent to the cost of borrowing for Auckland Council will not affect the operating result of 2013/14 or the general rates funding requirements for future years.

c)      note that additional resources will be deployed to facilitate the Cultural Impact Assessment process required under the Proposed Auckland Unitary Plan, and these will be funded from the existing budgets for the 2013/14 financial year.

d)      note that any additional funding requirements from 2014/15 onwards associated with the Proposed Auckland Unitary Plan will be reported to the Budget Committee on 27 March, as part of the annual plan process. 

e)      agree that the council’s budgets be updated to reflect the financial implications of the above decisions.

 

 

Discussion

Background

12.     Rates for 2013/2014 have been set with no provision made for accommodating new or additional expenditure items. Any new expenditure committed to will either require reprioritisation of existing budgets or increased borrowing.

13.     None of the budget changes proposed in this report will have a material impact on the council’s future rates requirement, current year operating deficit or projected debt levels.

Auckland Harbour Bridge Pathway (SkyPath)

14.     In December 2013, the council approved a way forward for the investigation of the SkyPath project, a walking and cycle pathway to be attached to the Auckland Harbour Bridge. ATEED’s Chief Executive is sponsoring the project for the council group. ATEED is seeking additional operating budget of $175,000 in the 2013/14 financial year for investigation work that cannot be undertaken with internal resources. Some of the costs to date have been covered by ATEED’s working capital, with an understanding that the entire cost would be funded by the council.

15.     In regard to the additional funding sought, approximately $50,000 is allowed for specialist legal input in addition to the in-house legal services, which is required due to the somewhat unconventional nature of the SkyPath proposal.

16.     The project team also intends to provide a grant of $85,000 the Auckland Harbour Bridge Pathway Trust, which is a contribution to the preparation cost associated with the reports and assessments that the trust will submit in its resource consent application to the council. These materials (e.g. traffic effect report and images) will be of interest and use to the public and the Auckland Council group in future investigation and consultation.

17.     Last but not least, approximately $40,000 in consultancy charge is allowed for as ATEED’s share of the total cost of the patronage projection review. The project team engaged Angus & Associates Limited to undertake surveys and develop a model to assess the likely patronage profile for SkyPath over a 20-year period. This essential work has and will continue to help understand the revenue projections to manage the council’s risks in relation to the potential underwrite. The majority of this work was undertaken in the second half of 2013. However, further targeted work is necessary in the next few months to investigate the likely peak or daily usage to assist the council in understanding these effects on the surrounding network and areas.

Bruce Pulman Park Trust Loan

18.     A separate report on the agenda recommends the committee approve a community loan of up to $4 million to the Bruce Pulman Park Trust for a period of five years, at an interest rate equivalent to the cost of borrowing for the council, subject to variation of the current lease agreement providing for adequate security of the loan is executed prior to any drawdown. The drawdown in 2013/14 is estimated to be $1 million.

19.     It is noted that the recommendation, if adopted, will not have an impact on the operating result of the current year or general rates funding requirements for future years. Should the committee decide to impose an interest rate that is lower than the council’s cost of borrowing, an adverse impact on rates will result. In any event, the loan will increase the debt level of the council until it is fully repaid.

Unitary Plan - Cultural Impact Assessment

20.     In response to strong feedback from Auckland’s 19 Iwi Authorities and the Independent Maori Statutory Board, the Proposed Auckland Unitary Plan (PAUP) requires a Cultural Impact Assessment (CIA) to be submitted for a specified list of resource consent applications that may have an effect on Mana Whenua values. The PAUP also includes a provision that enables Mana Whenua to confirm that a CIA is not required. Examples of the types of resource consent that may trigger the need for a CIA are discharges from crematoria, earthworks within 20 metres of the sites of significance to Mana Whenua mapped in the PAUP, and coastal reclamation. While most of the rules in the PAUP do not have legal effect until decisions are released, due to the requirements of the Resource Management Act, many of the rules that may trigger a CIA came into effect on 30 September 2013. Since that time, it is estimated that between 10 and 30 applications per week have triggered the need for a CIA or confirmation from Mana Whenua that a CIA is not required.

21.     In the current CIA process, the council provides resource consent applicants with the contact details of the relevant Mana Whenua representatives, and leaves the two parties to work with one another in the first instance. If no response regarding the outcome is received within 15 working days, council staff will then intervene and facilitate the process.

22.     To make the CIA process easy for both resource consent applicants and Mana Whenua, the Resource Consent department is looking to appoint two to three CIA facilitators who will make the initial contact with Mana Whenua on behalf of applicants, and follow up on the need for a CIA. The additional cost for this initiative is estimated to be $100,000 for 2013/14, which will be funded from existing budgets.

23.     Any additional funding requirements for 2014/15 onwards associated with the PAUP, including CIA facilitators, will be considered by the Budget Committee in a separate report on 27 March, as part of the annual plan process.

Overall budget impact

24.     The table below shows the financial impacts of all budget changes considered in this committee meeting. The impacts include:

· $1.2 million increase in net borrowing for 2013/2014

· $179,000 negative impact on the council’s operating result for 2013/2014

· $10,000 increase in rates requirement for 2014/2015. The projected average general rates increase would remain at 2.5 per cent.

 

$000

Closing Group Net Borrowing

Operating After Tax Surplus/(Deficit)

General Rates

Cumulative % rates increase

 

2013/2014

2013/2014

2014/2015

% increase

Annual Plan 2013/2014

6,502,315

-13,482

1,403,287

3.5%

Decisions agreed since 1 July 2013

76,510

-9,057

2,628

 

Current position

6,578,825

-22,539

1,388,834

2.5%

February proposals

 

 

 

SkyPath investigation

175

-179

10

0.001%

 

Bruce Pulman Park Trust loan

1,000

0

0

0.000%

 

Cultural Impact Assessment facilitators

0

0

0

0.000%

 

Potential Position

6,580,000

-22,718

1,388,844

 

2.5%

 

25.     The Budget Committee will have the opportunity to address these impacts alongside other budget changes through the 2014/15 Annual Plan budget process.

Consideration

Local Board Views

Bruce Pulman Park Trust loan

26.     The Papakura Local Board supports the development of Bruce Pulman Park, and acknowledges the contribution that the Indoor Court Centre will make to the sports facilities located both at the park and southern Auckland. It recommends to this committee that a community loan of up to $4 million to the Bruce Pulman Park Trust be approved for a period of five years, at an interest rate to be determined by this committee.

Māori Impact Statement

27.     It is considered that the Cultural Impact Assessment improvement initiative will provide significant benefits in terms of the service the council provides to resource consent applicants including Māori that are required to provide a CIA. It is also strongly aligned with the commitments made to Mana Whenua engagement and the protection of Mana Whenua values in the Auckland Plan.

28.     Staff do not consider that other decisions or budget adjustments set out in this report have a specific impact on Māori.

General

29.     Staff do not consider that the decisions or budget adjustments set out in this report are significant for the purposes of the Auckland Council Significance Policy.

Implementation Issues

30.     Budgets will be amended in core financial systems and used for internal management reporting, regular reporting to councillors and financial control for the 2013/2014 financial year.

 

Attachments

There are no attachments for this report.     

Signatories

Authors

Neil Huang - Senior Analyst - Evaluation

Authorisers

Ross Tucker - Team Leader Capital Planning

Matthew Walker - Manager Financial Plan Policy and Budgeting

Andrew McKenzie - Chief Finance Officer

    


Finance and Performance Committee

13 March 2014

 

 

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

 

That the Finance and Performance Committee:

a)      exclude the public from the following part(s) of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

 

C1       Update on proposal to acquire an easement in Newmarket for access purposes

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

In particular, the report contains information on property values which could impact on negotiations with landowners..

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.