Agenda of Finance and Performance Committee

1 Apologies

At the close of the agenda no apologies had been received.

2 Declaration of Interest

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

3 Confirmation of Minutes

That the Finance and Performance Committee:

a) confirm the ordinary minutes of its meeting, held on Thursday, 12 December 2013, including the confidential section, as a true and correct record.

4 Petitions

At the close of the agenda no requests to present petitions had been received.

5 Public Input

Standing Order 3.21 provides for Public Input. Applications to speak must be made to the Committee Secretary, in writing, no later than two (2) working days prior to the meeting and must include the subject matter. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders. A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

At the close of the agenda no requests for public input had been received.

6 Local Board Input

Standing Order 3.22 provides for Local Board Input. The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time. The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give two (2) days notice of their wish to speak. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

This right is in addition to the right under Standing Order 3.9.14 to speak to matters on the agenda.

At the close of the agenda no requests for local board input had been received.

7 Extraordinary Business

Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“An item that is not on the agenda for a meeting may be dealt with at that meeting if-

(a) The local authority by resolution so decides; and

(b) The presiding member explains at the meeting, at a time when it is open to the public,-

(i) The reason why the item is not on the agenda; and

(ii) The reason why the discussion of the item cannot be delayed until a subsequent meeting.”

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a) That item may be discussed at that meeting if-

(i) That item is a minor matter relating to the general business of the local authority; and

(ii) the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b) no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

8 Notices of Motion

At the close of the agenda no requests for notices of motion had been received.

Finance and Performance Committee

20 February 2014

Funding Assistance Rates Review

File No.: CP2014/00199

Purpose

1. The purpose of this report is to inform the Finance and Performance Committee of the New Zealand Transport Agency’s Funding Assistance Rate Framework; and seek feedback on, and approval of a submission on options for setting funding assistance rates.

Executive Summary

2. The New Zealand Transport Agency (NZTA) is carrying out a two-stage review of Funding Assistance Rates (FARs). FARs are the proportion of funding assistance that NZTA provides to transport activities and projects.

3. This is a major funding policy review with potentially significant implications for Auckland Council (in terms of its contribution from rates and development contributions) and Auckland Transport (in terms of the transport programme it is funded to deliver).

4. NZTA considered feedback from the first stage of the review and developed a new provisional funding assistance rates framework on how funding assistance rates could be set.

5. This report proposes a submission on the second stage of the review (Attachment A). The key points in Council’s submission are that:

§ Principles underpinning the framework should include alignment with national and regional strategic priorities, and an approach to FARs which sets higher FARs for activities that advance national and regional/local priorities as set out in the Auckland Plan and the Government Policy Statement on Land Transport Funding.

§ Agree in principle with the use of a single FAR for all land transport activities and support for the use of a 53% co-investment rate.

§ FAR should be based on contribution and benefits road users get not just on affordability. The FAR system needs to provide a “fair share” of funding for Auckland and that FARs need to support a programme for growth, as well as programmes to optimise/maintain existing transport systems.

§ Support for Option 5b if setting FARs is to be based only on ‘ability to pay’ - the appropriate metric for assessing this should be based on both ability to fund and size of the transport task.

§ Support provision for special purpose roads and for targeted enhanced funding assistance rates to provide for ‘exceptional circumstances’.

§ Proposed changes to FARs are only applied to new applications for subsidy and not for already approved projects, and to ensure efficiencies, there needs to be a gradual long-term transition in applying any changes to funding assistance rates.

Recommendation/s

That the Finance and Performance Committee:

a) receives and, subject to any amendments, endorses the proposed submission to New Zealand Transport Agency on the Funding Assistance Rates Review.

b) requests that this report and the final submission be circulated to Auckland Transport and all Local Boards.

Discussion

Scope and Process

6. As reported to the Transport Committee in April 2013 the NZTA is carrying out a two-stage review of FARs. FARs are the proportion of funding assistance that NZTA provides to transport activities and projects of Approved Organisations (For example, Auckland Transport currently receives a FAR of 54% in relation to new local road capital projects and 43% in relation to local road maintenance expenditure). NZTA is considering through this review whether the current approach and FARs are still valid and appropriate, or whether changes are required.

7. This is a major funding policy review with potentially significant implications for the Auckland Council (in terms of its contribution from rates and development contributions) and Auckland Transport (in terms of the transport programme it is funded to deliver). Auckland Transport received subsidies of approximately $383 million in 2012/13 from NZTA in relation to its transport activities. A new funding assistance approach adopted by NZTA could have significant (positive or negative) financial implications for Auckland Council and Auckland Transport.

8. It is expected that the FAR review will guide development of the 2015–2018 National Land Transport Programme.

9. A reference group, largely comprising local government representatives, has been set up to provide operational and engagement advice on the review. Andrew McKenzie (Chief Finance Officer) has participated on behalf of Auckland Council.

First stage

10. The first stage of the review (which finished in May 2013) looked at a wide range of approaches that could be taken to setting and applying funding assistance rates. It involved looking at the role of funding assistance rates and what principles should sit behind them and whether the way funding assistance rates are currently set and applied is consistent with that role and those principles.

11. Council provided high level feedback on the principles and approaches in a submission approved by the Auckland Council’s Transport Committee on the 16 April 2013. A copy of this submission is on the Council website at: http://www.aucklandcouncil.govt.nz/SiteCollectionDocuments/aboutcouncil/committees/transportcommittee/meetings/transportcomagp155-24820130416.pdf

12. The key points made in the Council submission on FARs were:

§ This review should be seeking to address current problems with the FAR and funding system and include streamlining of funding processes. This could enable bulk funding for Auckland’s transport programme or its transport activities.

§ NZTA’s proposed principles are generally supported, with a suggested additional principle of “advancing national and regional/local strategic priorities” and a request that the impacts of changes to FARs are managed.

§ NZTA should also investigate an approach to FARs which sets higher FARs for activities that advance national and regional/local priorities as set out in the Government Policy Statement on Land Transport Funding and the Auckland Plan.

§ There are some bottom line requirements in terms of a “fair share” for Auckland and that FARs need to support a programme for growth (for example, in Auckland) as well as programmes to optimise/maintain existing transport systems.

13. NZTA considered the feedback and found the current system does not wholly fit the principles and as a result developed a new provisional FAR framework on how funding assistance rates could be set and applied. Key elements of this framework are:

· There would be a set overall National Land Transport Fund co-investment rate that determined what proportion of the overall costs of delivering eligible land transport activities across New Zealand would be met from the National Land Transport Fund.

· Some approved organisations would receive a FAR that is above this overall co-investment rate to take into account factors that materially affect their ability to deliver land transport outcomes. (This would mean that, consequently, other approved organisations received a FAR that is below the overall co-investment rate.)

· Targeted enhanced FARs could be used in exceptional circumstances and for time-limited periods.

14. Other significant differences from the current FARs system include:

· An approved organisation would have the same FAR for all of the different land transport activities it undertakes that are eligible for funding from the National Land Transport Fund (other than where targeted enhanced FARs were used and, possibly, for emergency works).

· It would be more explicit that National Land Transport Fund revenue would only be used towards delivering land transport activities to fit for purpose standards.

15. In practice the overall National Land Transport Fund co-investment rate would work in a similar way to the current 'national average Base FAR', except that it would apply to all land transport activities that are eligible for funding (not just local road maintenance, operations and renewals).

16. The factors used to determine whether an individual approved organisation would receive a FAR that was above the overall co-investment rate would be factors that are not within the approved organisation's or their local community's control, that materially affect their ability to deliver land transport outcomes.

17. Under the provisional framework those territorial authorities who have 'special purpose roads' in their districts would receive the same FAR for those special purpose roads as they would for all the other local roads in their network.

Second Stage

18. NZTA is now considering how the provisional FARs framework might work in practice – how the FARs should be set. It is seeking local government’s views on the optimal approach to setting FARs.

19. To provide a basis for providing this feedback, NZTA have developed five options for the specific methods for setting FARs and provided financial implications of each. These are outlined in an options discussion document on the FAR review that can be accessed at: http://www.nzta.govt.nz/consultation/far-review-options/docs/far-options-discussion.pdf Submissions close on 3 March 2014.

20. The options discussion document describes the different factors that could determine specific funding assistance rates for each council. It presents:

· five different metrics and combinations of metrics that could be used as proxies for councils' relative ability to raise local share - in order to help identify those councils that need more assistance than others

· indicative funding assistance rates for each council under each option.

21. The financial impact on Council (i.e. the local share that Council would need to provide to fund the Long Term Plan) will vary depending on the different FARs and there will be different impacts on different activity classes. For example, NZTA funding for road maintenance and renewals is likely to increase as the proposed FARs are above the current FAR, whereas NZTA funding for public transport services is likely to decrease as the proposed FARs are below the current FAR.

22. NZTA is seeking feedback on:

· Whether the provisional funding assistance framework would support the optimal land transport outcomes being achieved within the available financial resources?

· What the appropriate overall split of costs between approved organisations (local communities) and the National Land Transport Fund (direct land transport system users) - the 'overall National Land Transport Fund co-investment rate'- should be?

· Which factors should be used to determine how many, and which, councils need extra assistance and, therefore, receive higher assistance rates?

· How we should determine funding assistance rates for emergency works.

· How to address National Land Transport Fund investment eligibility and FARs for Waitangi National Trust and Department of Conservation carriageways.

· How we could transition in changes to new FARs.

The proposed Council submission (Attachment A) is structured to address each of these questions. It suggests that changes are required to the framework and the approach that underlies the options for setting the FARs. Recognising, however, that NZTA has made decisions on this framework and there is a risk that feedback focused on the proposed framework would be ineffective, feedback is also provided on the proposed method for setting FARs within the proposed provisional framework.

The key points made in this submission are:

§ Principles underpinning the framework should include a principle which aligns national and regional strategic priorities in order to have strategic alignment both at the national and regional levels, and an approach to FARs which sets higher FARs for activities that advance national and regional/local priorities as set out in the Government Policy Statement on Land Transport Funding and the Auckland Plan.

§ Agreement in principle with the use of a single FAR for all land transport activities and support for the use of a 53% co-investment rate.

§ FAR should be based on contribution and benefits road users get, not just on affordability. FAR system needs to provide a “fair share” of funding for Auckland and that FARs need to support a programme for growth, as well as programmes to optimise/maintain existing transport systems.

§ Support provision for special purpose roads and for targeted enhanced funding assistance rates to provide for ‘exceptional circumstances’.

§ That existing activities continue at the existing agreed FAR and that the proposed changes to FARs are only applied to new activities, and to ensure efficiencies, there needs to be a gradual long-term transition in applying any changes to funding assistance rates.

23. A co-investment rate of 53% would result in a FAR of 52% for Auckland and would result in approximately the same overall level of funding for Auckland’s transport programme.

Consideration

Local Board Views

24. No consultation with Local Boards has been undertaken because of time. This report is proposed to be made available to Local Boards.

Maori Impact Statement

25. It is unclear what impact the principles and range of approaches might have on Iwi or Maori. Investment in transport does have a role in contributing to a significant lift in Maori social and economic wellbeing through improved transport access, particularly public transport services. Changes to FARs in relation to public transport services and other activity classes would affect the level of funding that Council would be required to provide.

General

26. Auckland Transport also plans to make a submission on the FARs review. Staff in Auckland Council and Auckland Transport worked together to develop separate but aligned submissions. Auckland Transport’s submission is to be considered at the Auckland Transport Board meeting on 25 February 2014.

Implementation Issues

27. Once the proposed submission is finalised, it will be sent to the NZTA for its consideration. The NZTA will make decisions about how to set the FARs going forward and how to transition in any changes to FARs (starting in the 2015-18 NLTF investment period.

28. The proposed changes will need to be taken into account in the preparation of the LTP. These changes could affect the level of Council funding required for activities within the transport programme, including committed projects such as AMETI.

Attachments

No.	Title	Page
a View	Submission on funding assistance rates review options discussion	13

Signatories

Authors

Jim Fraser - Principal Transport Planner

Authorisers

Grant Barnes - Manager - Auckland Strategy and Research

Andrew McKenzie - Chief Finance Officer

Finance and Performance Committee

20 February 2014

2 March 2014

Funding Assistance Rates Review Options Discussion Document Submissions

NZ Transport Agency

50 Victoria Street

Private Bag 6995

Wellington 6141

Attention: Clare Sinnott

Dear Ms Sinnott

Submission of Auckland Council to the FAR Review Options Discussion Document

Auckland Council (AC) thanks the New Zealand Transport Agency (NZTA) for this opportunity to provide input into the funding assistance rates (FARs) review. Auckland Council appreciates the importance of reviewing the approach to FARs to ensure an efficient and effective application of the National Land Transport Fund to transport programmes.

This submission provides Auckland Council’s feedback on the NZTA’s Funding assistance rates (FAR) review Options Discussion document. This submission was approved by Auckland Council’s Finance and Performance Committee on the 20th February 2014.

This submission provides high level feedback about the principles and approaches proposed by the provisional assistance framework, and on the specific questions relating to the options for setting the financial assistance rates outlined in the Options Discussion document.

The key submission points are:

§ Principles underpinning the framework should be extended to include a principle which aligns national and regional strategic priorities in order to have strategic alignment both at the national and regional levels, and an approach to FARs which sets higher FARs for activities that advance national and regional/local priorities as set out in the Government Policy Statement on Land Transport Funding and the Auckland Plan.

§ Support for the use of a 53% co-investment rate.

§ Support provision for special purpose roads and for targeted enhanced funding assistance rates to provide for ‘exceptional circumstances’.

§ Changes to the FAR should only apply to and that the

The following is the detailed response to the options discussion document:

Provisional funding assistance rates framework

Principles/One Rate for each AO

1. The proposed approach is unlikely to support the optimal land transport outcomes being achieved. As previously submitted (at stage one of the review) this could be achieved if the setting of FARs is linked to the outcomes that are sought at both national and regional levels. Because NZTA is proposing a single FAR to apply across activity classes, there is a greater need for the GPS to provide for funding levels to those activity classes which align with national and regional outcomes.

2. Because FARs represents the relative contributions by NZTA (from road users) and regional councils (largely from ratepayers) to projects and activities, FARs need to reflect strategic priorities at the national and regional levels. The GPS provides a clear direction of strategic priorities at the national level. The Auckland Plan provides a clear direction of strategic priorities at the regional level, which is reflected in a prioritised funded programme in the Regional Land Transport Programme.

3. This programme and the achievement of outcomes are affected by the level and rate of contribution from NZTA. For example, in setting FARs, NZTA should set FARs to advance economic growth and productivity (a priority in the GPS) and a transformational shift in public transport as part of a one network approach (a priority in the Auckland Plan).

4. It is important that FARs support achievement of strategic outcomes at the national and regional levels. NZTA should investigate an approach to FARs which sets higher FARs for activities that advance national and regional/local priorities as set out in the Government Policy Statement on Land Transport Funding and the regional documents (in Auckland this is currently the Auckland Plan and in other regions it is the Regional Land Transport Strategy). Consideration of other factors such as value for money and ability to pay will also be necessary.

5. NZTA is requested to explicitly apply a principle which aligns national and regional strategic priorities in order to have strategic alignment both at the national and regional levels. In relation to Auckland, FARs would need to reflect the outcomes sought in the GPS and the Auckland Plan.

6. NOTE: The following comments relate to the options for setting funding assistance rates based around the currently proposed provisional framework.

Overall National Land Transport Fund co-investment rate

7. The proposal is to set an overall co-investment rate that determines what proportion of the overall costs of delivering eligible land transport activities would be met from the fund.

8. In practice the overall National Land Transport Fund co-investment rate would work in a similar way to the current 'national average Base funding assistance rate', except that it would apply to all land transport activities that are eligible for funding (not just local road maintenance, operations and renewals).

9. We acknowledge the advantages in using a single FAR for all land transport activities. The use of a single FAR will simplify the administration process and provide more clarity. However, this support is only applicable to the use of a 53% co-investment rate, which under all five options used to account for differences in council’s ability to raise local share of costs, translates into a FAR of 52% for Auckland under all options. This is approximately the effective FAR for the overall Auckland programme over the last few years.

10. Lowering the effective FAR will potentially impact on a number of long term projects currently underway, contractually agreed and/or agreed to in principle across Auckland. Projects in this category that could potentially be impacted on from a change in FAR will be AMETI, EWL and other high priority projects.

11. The use of the proposed lower 50% co-investment rate (which translates to a FAR of 49% for Auckland under all options) will cause a net loss in financial assistance to AT of approximately $25 million which is sufficient to fund several essential smaller projects and will effectively add to the expected shortfall in transport funding in Auckland over the next 30 years.

12. Continuing to develop a prosperous community and economy requires significant and timely investment in Auckland’s transport network. This review cannot afford to result in a reduction in Auckland’s transport funding. The FAR review needs to ensure a fair share of funding for Auckland which enables required contributions to national and regional strategic priorities and ensures Auckland’s transport infrastructure and services are delivered on time and maintained to a high standard.

Council’s funding assistance rates

13. This element of the framework enables AOs to plead a special case for a higher FAR. This element is critical as each AO has an incentive to claim special status. The basis for funding assistance rates that are higher than the overall NLTF co-investment rate is that they have to deal with matters that are outside the of their control which make it harder for them to deliver optimal land transport outcomes than it is for most other councils.

14. NZTA has indicated that these matters relate only to differences in local authorities’ ability to raise the local share of the costs of achieving land transport outcomes. No account is proposed for differences in costs between local authorities.

15. We do not agree that this should be based solely on a local authority’s ability to raise the local share of the costs of achieving land transport outcomes. Both the need for investment (growth) and the ability to raise funds (affordability) should be considered.

16. FARs need to support a programme for growth, as well as programmes to optimise/maintain existing transport systems. Regions which are experiencing high growth, such as Auckland (where maintenance and renewals accounts for only 21% of the programme) have pressures to fund transport improvements in existing and new greenfield and brownfield areas, which presents huge funding challenges for transport. The setting of FARs needs to consider both the need for investment and the ability to raise funds.

17. The proposed approach is potentially suboptimal in terms of delivering transport outcomes. It could result in perverse outcomes – promoting transport investment in areas of low population/low growth/low transport need.

18. Consideration should be given to a FAR system that reflects a combination of approaches. FARs should be based on contribution and benefits road users get, not just on affordability. FAR system needs to provide a “fair share” of funding for Auckland and that FARs need to support a programme for growth, as well as programmes to optimise/maintain existing transport systems.

19. We suggest a measure based on contribution to GDP, size of the transport task and ability to pay. We believe that this is more likely to deliver on the Government’s outcomes and the outcomes for Auckland.

20. Of the five options for metrics used to take into account differences in council’s ability to raise the local share of costs, method 5b is preferred as it relates the demand for funding assistance to the amount of infrastructure to be maintained. However, lane-km is not seen as a good proxy for the size of the land transport activities undertaken. It does not reflect the importance or the size of the transport task - it does not provide a guide as to the classes of the roads to be managed and/or their value to be maintained.

21. A conscious movement to invest and progress alternative forms of transport such as public transport, rail, ferry, cycling and walking infrastructure will not necessarily be reflected in lane-km and therefore not seen as part of the transport task. This is not in line with a number of current national and regional strategic directions and therefore does not correctly reflect the size of the transport task, in Auckland specifically. Furthermore increasing lane–km could be interpreted as being the most important criteria to improve funding assistance.

22. It is therefore recommended to use the capital value of transport infrastructure rather than lane-km as capital value provides a better reflection of the size of the transport task not the length of the network.

Targeted enhanced funding assistance rates

23. The proposal is that FARs could be enhanced for exceptional purposes and for a limited time. In principle this is a good element of the framework – anticipating and allowing for exceptional investments.

24. There are drivers of expenditure outside the control of an AO such as natural events or those instituted by central government that impacts directly on funding availability, especially in the case of Auckland Transport. In such cases the relevant applicable FAR should be reviewed to enable the work required to proceed in line with the proposed outcomes.

25. Where the impact of a natural event is greater than the guiding design standard and the AO have constructed or developed infrastructure in accordance with the design standard, increased FAR should apply as this is considered to be outside the planning norm i.e. constructing for a 1 in 100 year occurrence is the set design norm but experiencing a 1 in 500 year occurrence is above the norm hence requires funding assistance above the agreed FAR because the occurrence could not be reasonably planned for.

26. There are also a number of factors that can result in unplanned events impacting on funding requirements. Some of these may be the result of Central Government initiatives such as:

· Transport infrastructure required to serve Housing Accord Areas

· HPMV routes

· Rail funding, especially in Auckland

27. The upgrades resulting from such measures should be an agreement between the parties involved and the relevant FAR must be one of the pertinent issues to be considered.

28. There is also benefits in having the flexibility to introduce a targeted FAR for special cases in order to stimulate investment to achieve required outcomes. Auckland, for example, is likely to have a large investment in PT to catch up on previous under investment, particularly in the next 20 years. A programme of grade separation of level crossings is at risk of not being implemented and may be worth consideration of a special FAR. While the framework provides for a targeted rate for special cases; consideration should be given to this need.

Transitioning in changes to funding assistance rates

29. Changes to FARs in the next NLTP could have a significant impact on funding and programmes that are funded to be delivered. Changes to the FAR should only apply to new applications for subsidy and not for already approved projects.

30. A transition period should be agreed such that the costing impacts flowing from future projects yet to start is minimised and funding assistance kept to the agreed or forecasted limits, especially in the case of major projects such as AMETI.

31. There need to be a slow, long-term transition to ensure efficiencies. Of the three options identified, we favour the option of generally transitioning the changes in over 10 years but taking longer if this would result in a council’s overall effective FAR for any year decreasing by more than 2% from the rate for the previous financial year. There also needs to be recognition of the agreed reduction of the FAR for PT services over a transition period.

Auckland Council thanks the NZTA for the opportunity to make this submission.

Yours sincerely

Chair Financial and Performance Committee

Councillor Penny Webster

Finance and Performance Committee

20 February 2014

Auckland Council performance report for the period 1 July 2013 to 31 December 2013

File No.: CP2014/01646

Purpose

1. This report provides an overview of the Auckland Council parent performance results for the period 1 July 2013 to 31 December 2013.

Executive Summary

2. This report focuses on the highlights and achievements of the Auckland council parent in the key areas to achieve organisational objectives.

3. The financial overview provides an indication of how the organisation is performing against the budget and associated financial risks.

Recommendation/s

That the Finance and Performance Committee:

a) note the performance report for the three months ended 31 December 2013, highlighting:

i) Net favourable operating surplus variance to budget of $53 million.

ii) Capital expenditure of $164 million.

b) note the following highlights and achievements :

i) Te Atatu Peninsula Community Centre and Library: Dawn blessing took place to acknowledge the demolition of the old centre. Representatives included local board members, mana whenua and community leaders. The occasion signifies the establishment of a new centre and library for the people of Te Atatu.

ii) Council purchased Colin Maiden Park from the University of Auckland, representing one of the largest purchases of open space in New Zealand's history. It is also a commitment to a major sports hub, containing major netball and tennis facilities and in the future FIFA Football facilities.

iii) The Tall Ships Festival took place over Labour weekend attracting around 151,000 visitors. The public were given access to six of the ships and many took part in a programme of activities at the Cloud. Spirit of New Zealand was the most popular with 5,600 visitors.

iv) The Auckland Art Gallery-Toi o Tamaki was a multiple winner at the World Architecture Festival held in Singapore in October. The Gallery won the Interior Award, Culture Category and was winner of the "World Building of the Year".

v) Auckland Heritage Festival attendance following 6 weeks promotional campaign was approximately 65,000, a 60% increase on 2012 figures.

vi) Libraries: Dare to Explore Summer Reading Adventure ran for six weeks until mid-January. This offered children a range of fun and discovery activities to keep them reading over summer. Over 7,000 children aged 5 - 13 enrolled in the programme in December.

vii) A giant of the horticultural world ('titan arum") flowered at Auckland Domain Winter garden's tropical glasshouse with its two day blooming in early December attracting over 17,000 visitors.

viii) The Housing Project Office received approval from the Governing Body and the Minister of Housing for all of the 22 Special Housing Areas proposed in Tranches 1 and 2. These are now operative and the first 6 qualifying development resource consents have been received with 92 dwellings being granted consents prior to Christmas. Discussions are also advancing with landowners to masterplan the greenfield special housing areas. The initiative to co-locate staff from central government (MBIE and Housing NZ) and CCO's within the Housing Project Office has also been successfully implemented.

ix) The final sections of the Sale and Supply of Alcohol Act 2012 were implemented and the new District Licensing Committees were up and functioning from Day 1 and have dealt with a large number of applications.

x) The Proposed Auckland Unitary Plan was publicly notified for submissions in September 2013. A specially appointed panel will hear submissions and make recommendations to Council. The panel members have expertise in a wide range of disciplines including law, resource management, planning, local government and Tikanga Maori. The panel will be chaired by David Kirkpatrick, an Environment Court Judge. Other panel members are Des Morrison, Janet Crawford, Paula Hunter, John Kirikiri, Stuart Shepherd, Greg Hill and Peter Fuller.

xi) In October, the Environment Minister Amy Adams launched the TV Takeback scheme at the RCN recycling plant near Albany. This initiative, which is being supported and subsidised by council, will see about 70,000 TVs diverted from Auckland landfill sites, the creation of local jobs and the recycling of over 90% of the materials.

xii) Martyn Wilson Reserve stormwater project won the Excellence in Environmental Practice (projects under $2 million) at the Institute of Professional Engineers NZ awards in Wellington.

Discussion

4. This report provides an overview of the Auckland Council parent performance results for the period 1 July 2013 to 31 December 2013.

5. This report presented here is for the Auckland Council parent, not the group. A separate report of the group financial results is presented to the Finance and Performance Committee.

Consideration

Local Board Views

6. Local Boards receive their own reporting for their respective areas.

Maori Impact Statement

7. The report details activities delivered in the last quarter of 2013, of which there are several initiatives with positive impacts on or for Mãori. In addition, the report details progress with the Treaty Audit Response Programme and delivery of Mãori outcomes across Council (Appendix D and E). These programmes are intended to transform the council's approach when responding to and providing services to Mãori and form part of wider activities intended to lift council's overall responsiveness to Mãori.

8. Specific activities with positive impacts on or for Mãori include:

· The Southern Initiative (TSI) was formally acknowledged by Ngã Mana o Tãmaki Makaurau (the Tãmaki Collective) for facilitating/supporting the first of Auckland's Special Housing Areas at Weymouth.

· The TSI has been successful in its leadership of a bid to support Mãori and Pasifika through Trades Training and into sustainable employment.

· Manatunga, a major exhibition of Mãori taonga from the Sir George Grey Special Collections, closed on 18 October. Over 18,000 customers viewed the exhibition.

· The Kokiri Trust development has been announced as a special housing area. They will develop approximately 144 new homes, over four years. This development is a papakainga - the building of a community of villages beginning with a kaumatua village and progressing to family/whanau homes that will be secure, warm and interconnected with all other villages.

· Maori economic development framework reported to Independent Maori Statutory Board and Economic Development Committee.

· Completion and official opening of La Rosa Reserve daylighting project held on 16 November 2013. This first daylighting project is a collaboration between Auckland Council, Ngati Whatua and the local community.

General

9. There are no financial or resourcing implications arising from receipt of this report.

10. Quarterly reporting on performance is not a legal requirement and there are no legislative implications from the receipt of this request.

Implementation Issues

11. There are no implementation issues.

Attachments

No.	Title	Page
a View	Performance Report December 2013	23

Signatories

Authors

Jenny Livschitz - Manager Corporate Performance and Reporting

Authorisers

Kevin Ramsay - Manager Finance, Auckland CFO

Andrew McKenzie - Chief Finance Officer

Finance and Performance Committee

20 February 2014

Auckland Regional Amenities draft Funding Plan 2014-15 proposed submission

File No.: CP2014/01672

Purpose

1. To approve a submission on behalf of Auckland Council to the Auckland Regional Amenities Funding Board (Funding Board) draft Funding Plan 2014-15.

Executive Summary

2. The Funding Board was established by the Auckland Regional Amenities Funding Act (the Act). The purpose of the Act was to provide a mechanism for adequate, sustainable, and secure funding to the Amenities.

3. Each year, the Amenities may submit a funding application to the Funding Board. The Funding Board must then analyse the funding applications, and prepare an annual draft Funding Plan.

4. The draft Funding Plan details the provisional allocations of funding as determined by the Funding Board. The draft Funding Plan has been circulated publicly, calling for submissions by 21 February 2014. Auckland Council is permitted to provide a submission to the draft funding-plan.

5. The Funding Board will then consider the submissions, and finalise the Funding Plan. The finalised Funding Plan will then be referred to Auckland Council for approval.

6. The main features of the draft Funding Plan are:

· the total levy sought for 2014-15 is $14,711,000. This is an increase of $615,000 (or 4.36%) from the 2013-14 Funding Plan.

· however, $400,000 of this proposed increase relates entirely to the costs associated with the Auckland Regional Rescue Helicopter Trust (ARRHT) judicial review proceedings. It is proposed that the Amenities will receive a 1.5% increase in their total funding.

· the Funding Board has proposed the following:
(i) that eight of the Amenities receive increases to their grants totalling $665,000;
(ii) that New Zealand Opera receives no increase to its grant; and
(iii) that the ARRHT’s grant be reduced by $450,000 from what it received in 2013-14.

· the Funding Board has made a provisional allocation of $450,000 to the ARRHT, compared to $1,350,000 requested by ARRHT. The Funding Board is of the view that the amount provisionally allocated to the ARRHT is an appropriate contribution to support the ARRHT’s activities laid out in it’s 2014-15 funding application.

· the draft Funding Plan includes the Amenities indicative funding application amounts for 2015-16, and 2016-17. The indicative application amount for 2015-16 totals $18,593,529, an increase of approximately 33% on the proposed funding for 2014-15. The Funding Board has already expressed concern at the level of funding the Amenities have indicated they will seek in future years.

7. The key points of the proposed submission are to:

· acknowledge the Funding Board and the Amenities for their contribution towards making Auckland a vibrant, attractive, and safe place to live and visit.

· acknowledge the Funding Board for proposing a modest 1.5% increase in total funding for the Amenities.

· note that the majority of Amenities have received substantial increases in rate payer funding since the Act came into force, and that this may indicate that some of the Amenities are becoming increasing reliant on ratepayer funding. The draft submission asks the Funding Board to continue working with the Amenities to ensure they have a plan for achieving financial sustainability, and ideally a decreased reliance on ratepayer funding.

· express concern at the level of funding the Amenities have indicated they will apply for in future years. The submission asks that the Funding Board discuss with Council any substantial increases in funding that are proposed by an Amenity, particularly those that are the result of proposed increases in levels of service, and/or capital developments.

8. The Funding board is currently incurring costs relating to the ARRHT judicial review proceedings. As these costs are being incurred now, and Council funding is the Funding Boards sole source of income, it may be appropriate for part payment of the Funding Boards administration expenses to be made in this financial year. If this occurs, it would be on the basis that the levy paid to the Funding board in 2014/15 would be reduced by the same amount.

Recommendation/s

That the Finance and Performance Committee:

a) approves the submission to the Auckland Regional Amenities Funding Board draft Funding Plan 2014-15.

b) authorises the Chair of the committee to sign the submission on behalf of Auckland Council.

c) delegates to the Chief Finance Officer the decision as to the timing and accounting treatment of any payment made to the Funding Board in relation to its administration expenses for the judicial review proceedings.

Discussion

9. The Funding Board was established under the Auckland Regional Amenities Funding Act 2008 (the Act). The intent of the Act was to establish a mechanism to provide adequate, sustainable, and secure funding for the specified Amenities that provide arts, educational and rescue services throughout the Auckland region.

10. The Amenities are:

· Auckland Observatory and Planetarium Trust Board

· Auckland Philharmonia

· Auckland Regional Rescue Helicopter Trust

· Auckland Theatre Company Ltd

· Coast Guard Northern Region Incorporated

· New Zealand Maritime Museum Trust Board

· New Zealand Opera Limited

· Surf Life Saving Northern Region Incorporated

· The Auckland Festival Trust

· Watersafe Auckland Incorporated

11. The Funding Board is an independent body, which is responsible for allocation of the annual funding provided by Auckland Council for the Amenities.

12. The role of the Funding Board is to assess the annual funding applications received from the Amenities against funding principles identified within the Act, and any additional funding principles adopted by Auckland Council.

13. The funding principles in the Act require the Funding Board to have regard to the following;

· the primary purpose of the funding to the Amenities is to contribute to the expenses that the Amenities must incur to provide their facilities or services;

· funding is not available for any part of facilities or services that the Amenities provide outside the Auckland region;

· funding is not available for capital expenses; and

· funding is available only if the Amenity has made all reasonable endeavours to maximise their funding from other available funding sources.

14. In November 2012, Auckland Council adopted two additional funding principles. These additional funding principles require the Funding Board to have regard to the Council’s proposed rates increase for the forthcoming year, and require the Amenities to align their activities to the Auckland Plan, by adopting relevant performance measures.

15. Once the Funding Board has conducted the analysis of the Amenities funding applications, it is required under the Act to prepare the draft-funding plan, circulate it for public consultation, and call for public submissions. The Council is also permitted to make a submission on the draft Funding Plan.

16. The following table sets out the timeline for the 2014-15 funding process:

2014-15 Auckland Regional Amenities Funding Process
30 September 2013	Amenities submit funding applications to the Funding Board.
20 January 2014	Funding Board publically notifies draft Funding Plan.
21 February 2014	Deadline for submissions on the draft Funding Plan.
11 March 2014	Funding Board submissions hearing.
18 March 2014	Funding Board considers submissions, and makes any amendments it considers appropriate to the draft Funding Plan. The Funding Board then submits the Funding Plan to Auckland Council together with details of the proposed levy.
27 March	Auckland Council considers the Funding Plan (having regard to the funding principles), and either approves or rejects the proposed levy.
No later than 30 April 2014	If Auckland Council approves the Funding Plan, the Funding Board meets to deliberate on and adopt its Funding Plan and fix the levy.
1 July 2014	Auckland Council pays the levy to the Funding Board.

17. Council staff have engaged with the Funding Board throughout the funding application process to date. It is hoped that open communication with the Funding Board will help identify any issues so that they could be addressed constructively. However, it is acknowledged that the Funding Board and Council have different roles under the Act, and the Funding Board has a statutory obligation to act independently of Council.

Main features of the draft Funding Plan

18. The following table sets out the provisional allocation of funding to each of the Amenities. The table also shows the amount of funding the Amenities applied for, and also how much they received in 2013-14.

2014 - 2015 Provisional Allocation of Grants to Specified Amenities
Amenity	Grant Allocated by Funding Board 2013-2014	Amenity Funding Application 2014-2015	Provisional Allocation of Grant 2014-2015	Year on Year Change 2013-2014 to 2014-2015
Auckland Arts Festival	$2,230,000	$2,375,000	$2,305,000	+$75,000
Auckland Philharmonia Orchestra	$2,817,000	$3,100,000	$2,942,000	+125,000
Auckland Regional Rescue Helicopter	$900,000	$1,350,000	$450,000	-$450,000
Auckland Theatre Company	$1,330,000	$1,545,000	$1,415,000	+85,000
Coastguard Northern Region	$650,000	$670,000	$670,000	+20,000
New Zealand Opera	$800,000	$840,000	$800,000	$0
Stardome - Auckland Observatory and Planetarium	$1,119,000	$1,315,000	$1,269,000	+$150,000
Surf Life Saving Northern Region	$1,140,000	$1,201,421	$1,200,000	+$60,000
Voyager - New Zealand Maritime Museum	$1,875,000	$2,300,000	$1,975,000	+$100,000
Watersafe Auckland	$920,000	$1,012,000	$970,000	+$50,000
Total	$13,781,000	$15,708,421	$13,996,000	+$215,000
Funding Board administration budget	$315,000		$715,000	+$400,000
Total Levy payable by Auckland Council	$14,096,000		$14,711,000	+$615,000

19. The total levy sought for 2014-15 is $14,711,000. This is an increase of $615,000 (or 4.36%) over 2013-14. However, $400,000 of this proposed increase relates entirely to the costs associated with the ARRHT judicial review proceedings. The Funding Board has proposed that the Amenities should receive a 1.5% increase in their total funding.

20. As can be seen from the table above, the Funding Board has proposed that eight of the amenities receive increases to their grants totalling $665,000. This increase is offset to some extent by the proposed reduction in funding to the ARRHT.

ARRHT

21. The Funding Board has made a provisional allocation of $450,000 to the ARRHT’s, compared to $1,350,000 requested by ARRHT. The Funding Board is of the view, having taken into account the information available to the board, that the amount provisionally allocated to the ARRHT is an appropriate contribution to support ARRHTs activities laid out in its 2014-15 funding application.

22. The Funding Board acknowledges the ARRHT for being able to access support and funding from alternative sources, and also ARRHT’s judicious financial management.

23. The Funding Board also acknowledges that the proposed reduction in funding may appear significant, but it believes that this reduction reflects the intention of the Act, as ARRHT has demonstrated the ability to access alternative funding to support its activities. The Funding Board is also of the view that the ARRHT group has managed to establish an exceptionally sound financial position.

Amenities’ Indicative Funding Requests for July 2015 to June 2017

24. The draft Funding Plan includes the Amenities’ indicative funding application amounts for 2015-16, and 2016-17. The indicative application amount for 2015-16 totals $18,593,529, an increase of approximately 33% on the proposed funding for 2014-15. The Funding Board has expressed concern at the level of the funding the Amenities have indicated they will seek in future years.

25. Much of this indicative increase in funding applications relates to the proposed annualisation of the Auckland Arts Festival, and also the proposed redevelopment of the Voyager New Zealand Maritime Museum.

26. These proposed funding increases are due to an increase in the level of service being provided by an Amenity, and/or a capital redevelopment by an Amenity, which has an impact on the Amenity’s operating funding requirements.

27. The draft submission requests that the Funding Board works closely with Auckland Council in regard to any substantial increase in funding that are proposed by an Amenity, as it has done previously (for example, in relation to the annualisation of the Auckland Arts Festival). Auckland Council can then assess whether the proposed increase in level of service is a desirable from a council perspective.

Financial sustainability of the Amenities

28. A majority of the Amenities have enjoyed substantial increases in funding since the Act came into force. Total ratepayer funding provided under the Act has increased from $9,000,000 in 2009/10, to $14,096,000 in 2013/14.

29. Some Amenities, such as the ARRHT, have been very successful at generating funds from other sources. However, for other Amenities, the ratepayer funding they receive via the Funding Board is an increasing percentage of their total revenue. This may reflect an increasing reliance on ratepayer funding for those amenities.

Draft Council submission

30. Council staff have reviewed the draft Funding Plan, with general feedback being that the plan is well considered. Following the review of the draft Funding Plan, and building on the engagement staff have had with the Funding Board during the funding process, it is recommended that Auckland Council’s submission to the Funding Board cover the following areas:

· acknowledge the Funding Board and the Amenities for their contribution towards making Auckland a vibrant, attractive, and safe place to live and visit.

· acknowledge the Funding Board for proposing a modest 1.5% increase in total funding for the Amenities.

· note that the majority of Amenities have received substantial increases in ratepayer funding since the Act came into force, and that some of the Amenities appear to be increasingly reliant on ratepayer funding. The draft submission asks the Funding Board to continue working with the Amenities to ensure they have a plan for achieving financial sustainability, and ideally a decreased reliance on ratepayer funding.

· expressing concern at the level of funding the Amenities have indicated they will apply for in future years, and asking that the Funding Board discuss with Council any substantial increases in funding that are proposed by an Amenity, particularly those that are the result of proposed increases in levels of service, and/or capital developments.

ARRHT Judicial Review

31. The ARRHT has commenced judicial review proceedings against the Funding Board and Auckland Council. The proceedings relate to the 2013-14 Amenities funding process.

32. The ARRHT has challenged the Funding Board’s decision regarding the amount of funding to allocate to ARRHT for 2013-14.

33. ARRHT has also challenged Auckland Council’s decision to adopt two additional funding principles. The Funding Board is required to consider these funding principles during the Amenities funding process.

34. In particular, the ARRHT has challenged the new funding principle that requires the Funding Board to have regard to the Council’s proposed rates increase for the forthcoming year. The ARRHT has alleged that Auckland Council acted illegally and ultra vires the Act when it adopted the new funding principles.

35. Both the Funding Board and Auckland Council are defending the Court proceedings. These proceedings will be a heard at the High Court on the 3^rd and 4^th of March 2014.

36. The draft Funding Plan proposes an additional $400,000 towards the Funding Board’s administration costs. These additional funds are to cover the costs of the current judicial review proceedings. As these costs are being incurred in this financial year, Council Finance staff are considering the appropriate accounting treatment of this expense.

37. As these costs are being incurred now, and Council funding is the Funding Boards sole source of income, it may be appropriate for payment to be made in this financial year. If this occurs, it would be on the basis that the levy paid to the Funding board in 2014/15 would be reduced by the same amount.

Consideration

Local Board Views

38. Decision-making and oversight in respect of regional activities is the responsibility of the Governing Body. This report relates to the funding relationship between the Council, the Funding Board, and the Amenities.

39. Local Board views have not been formally canvassed. However, views have been sought from the Great Barrier, Waiheke, Rodney, and Franklin local boards, given these areas rely heavily on the regional rescue helicopter service. Any responses from these local boards will be tabled at the committee meeting.

Maori Impact Statement

40. The Amenities have the ability to make positive contributions to Maori Wellbeing, and to deliver on Auckland Plan outcomes relating to effective communication and engagement with Maori and contribute to effective Maori capacity. The Act requires that the membership of the Funding Board must include at least one member who represents the interests of Maori in the Auckland region.

General

41. This report does not trigger the significance policy.

Implementation Issues

42. There are no implementation issues associated with this report.

Attachments

No.	Title	Page
a View	Auckland Council proposed submission to draft Funding Plan	73
b View	Auckland Regional Amenities Funding Board draft Funding Plan 2014-15	75

Signatories

Authors

Alastair Cameron - Principal Advisor CCO Governance and External Partnerships

Authorisers

Mark Butcher - Treasurer

Andrew McKenzie - Chief Finance Officer

Finance and Performance Committee

20 February 2014

Delegation for approval of releasing interim and full year group results to New Zealand Stock Exchange

File No.: CP2014/01644

Purpose

1. Auckland Council Group is an issuer of bonds listed on the New Zealand Stock Exchange (NZX). Listing rules require Council to publish interim and full year results within 60 days of the end of the reporting period.

2. This report requests the chair and deputy chair, Finance and Performance Committee, be delegated authority to release the interim and full year results.

Executive Summary

3. Auckland Council has bonds listed on the New Zealand Stock Exchange. The listing rules impose reporting obligations on Council, including the release of interim and full year financial statements within 60 days of the end of the reporting period.

4. Preparation of the consolidated group results is a lengthy complex task, unable to be completed in time to present the financial statements to the regular Finance and Performance committee meeting. To achieve the NZX reporting time, approval to release the information is required to be delegated.

Recommendation/s

That the Finance and Performance Committee:

a) agrees that the chair and deputy chair, Finance and Performance Committee, be delegated the authority to approve the release of Auckland Council financial statements to the New Zealand Stock Exchange for periods through to 30 June 2016.

Discussion

5. Auckland Council Group, as an issuer of bonds listed on the NZX, is required to publish interim and full year financial results. The results are to be released within 60 days of the end of the 31 December and 30 June reporting periods.

6. The reports relate to the performance of the council group, therefore approving them for release falls within the delegation of the Finance and Performance committee.

7. Preparing consolidated group financial statements is a lengthy complex process. The process is unable to be completed in time for the financial statements to be presented to the regular Finance and Performance committee preceding the reporting date. There are two options for officers to obtain approval for the release of information:

1) Call a special meeting of the committee.

2) The committee delegate the approval.

It is not efficient use of Councillors’ time to call a meeting of the full committee to consider one item.

8. The delegation being sought continues a delegation approved by the previous Council’s Accountability and Performance committee.

9. If approved the delegation does not limit or restrict councillors access to group or CCO financial information. The full interim and final accounts and reports will be reported to the subsequent committee meeting. CCOs will report separately to the CCO Governance and Monitoring Committee.

10. For these reasons the delegation is the preferred and recommended option.

11. For efficiency, it is proposed the Committee approve the delegation for the term of this Council, i.e. up to and including the accounts for the 12 months to 30 June 2016.

Consideration

Local Board Views

12. Local Board views have not been sought.

Maori Impact Statement

13. There are no impacts to Maori.

General

14. There are no financial or resourcing implications arising from receipt of this report.

Implementation Issues

15. Not applicable.

Attachments

There are no attachments for this report.

Signatories

Authors

Robert Nelson – Financial Controller

Authorisers

Kevin Ramsay - Manager Finance, Auckland CFO

Andrew McKenzie - Chief Finance Officer

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