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Finance and
Performance Committee
13 March 2014
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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.
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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.
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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 2,601m²
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)
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Cost variations
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Original Tendered Costs August 2010
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10,858,656
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Enhancements including variations
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6,160,849
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Current Construction Costs September 2013
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$17,019,505
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Additional Design, Certification, Supervision and Consents
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615,764
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Variations Piling, Excavations
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659,850
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Enhancements Mezzanine Seating
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1,231,989
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Balustrades, Walkways, Glazing
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922,700
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Canopy
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550,000
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Storage at each end, Play Area
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490,094
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Foyer, Mezzanine Offices, TV requirements, Lift
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490,987
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Suspended Ceilings, Outdoor Viewing, Conference Room,
Electrical, Graffiti Guard
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819,840
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Miscellaneous, Structural Steel Alternations
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379,625
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Total
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$6,160,849
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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)
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Year
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Donation
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2013
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$3,158,995
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2012
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$3,110,474
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2011
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$2,717,691
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2010
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$1,853,353
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2009
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$1,589,513
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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.
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Title
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Page
|
|
aView
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BPPT - User Groups - 2013
|
19
|
|
bView
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BPPT - Aerial & Other Photos
|
21
|
|
cView
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BPPT - Indoor Court Centre Plans
|
39
|
|
dView
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Indicative Interest Costs $4 million
|
43
|
|
eView
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BPPT Summary of Trading Results - 6
years to 31 March 2013
|
45
|
|
fView
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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
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Authors
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Leigh Redshaw - Strategic Partnerships Advisor
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|
Authorisers
|
Penny Pirrit - Regional & Local Planning Manager
Roger Blakeley - Chief Planning Officer
Andrew McKenzie - Chief Finance Officer
|
|
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
|
