Agenda of Governing Body - 27 November 2014

Governing Body

27 November 2014

Contributions Policy Cost Allocation Amendments

File No.: CP2014/25336

Purpose

1. This report recommends amendments to the contributions policy for the Long-term Plan 2015-2025.

Executive summary

2. This report has been deferred to this Governing Body meeting by the Budget Committee on its 5 November 2014 meeting.

3. This report considers amendments to the cost allocation elements of the contributions policy. Staff will report to the Governing Body on 27 November recommending the adoption of a draft policy for consultation which includes the projects to be funded by development contributions. This will be based on the capital program the council agrees to consult on for inclusion in the Long-term Plan 2015-2025.

4. The Council adopted an integrated contributions policy in 2012 to allow development contributions to fund the infrastructure investment the council plans to meet the demand arising from growth. The costs of growth are allocated to developers based on the demand the type of development places on infrastructure by activity, e.g. transport, in the area in which they are developing, e.g. stormwater - Mahurangi (RUB).

5. The current development contribution charge is determined from a baseline for a single detached house, a household unit equivalent (HUE). The current average charge per HUE is $18.500. Where development of different type or area places a different demand on investment it is charged a higher or lower proportion of the HUE e.g. a high-rise apartment is charged 0.6 of HUE.

6. The amendments proposed are a refinement of the current policy to improve the link between the demand development places on infrastructure and the calculation of contributions. These changes are consistent with the objectives of the changes to development contributions legislation in the Local Government Amendment Act 2014. The key changes are:

· increasing the number of funding areas for stormwater and transport to better reflect the different infrastructure investment required in different parts of the region

· setting residential development charges based on house size as well as type

· defining commercial accommodation units as residential “accommodation units”

· including Kaumatua housing in the retirement unit development type

· re-defining minor dwellings units as small ancillary dwellings and increasing the demand factor from 0.5 to 0.6.

6. Staff have undertaken some preliminary engagement with developers in the development of this advice. Developers initial feedback is reflected in this report.

Setting funding areas

7. Staff have reviewed the funding areas used to determine the allocation of growth investment costs across the region. Staff recommend increasing the number of funding areas for stormwater and transport to more accurately allocate the costs of additional infrastructure to development in the areas where that investment is required.

8. It is recommended that funding areas for stormwater are increased from 4 to 17 to reflect the differing type and intensity of investment required to serve additional development in different parts of the region. The investment in stormwater required to support development depends on the capacity of existing infrastructure and the hydrology and topography of each area.

9. Funding areas for transport should also be increased from 2 to 5. Transport services are provided as part of a network so the funding areas are larger in terms of geographical area than those for stormwater. For example a major intersection upgrade may benefit improved travel times for road users over a very wide area. Some investments are also required at a regional level to meet the needs of a growing population wherever development takes place.

10. The policy will retain the flexibility to create area-specific funding areas on a case by case basis to manage timing issues and the unique characteristics of areas targeted for growth in the Auckland Plan and Special Housing Areas.

11. Staff also considered retaining wider regional funding areas or developing a larger number of smaller funding areas for each activity group. Retaining wider regional funding areas for stormwater and transport would not reflect some of the broad differences in the cost of providing for development across the region. However, the use of wider funding areas reduces the council’s flexibility in responding to growth should the need arise to move projects around to meet those demands.

Charging for residential developments based on house size

12. Staff propose to set the residential demand factor based on both the type of development and also the size. New demand factors related to size will have three categories; ≤ 99m², between 100m² - 249m² and 250m² ≤. For detached and attached low rise^{^[2]} dwellings demand factors will be respectively 0.8, 1.0 and 1.2 HUE when considering size. Reduced demand factors for medium/high rise dwellings will be 0.6, 0.75 and 0.9 HUE.

13. Current residential demand factors are based on the type of the building (detached 1 HUE, low rise 0.8 HUE, e.g. town house, and medium/high rise 0.6 HUE, e.g. apartment). This means a 70m2 detached dwelling pays the same contribution (1 HUE) as a 300m2 detached dwelling. However, the demand for infrastructure from residential development is driven by the number of additional residents a property can house. A larger property can provide for more new residents and hence places more demand on infrastructure.

14. As a result smaller dwellings will pay less than larger dwellings, providing a more equitable link between construction of new dwellings and the underlying demand for infrastructure.

Other changes to development types

15. Staff also recommend the following amendments to development types:

· create a new “accommodation units” category for commercial accommodation (hotels and motels) and allocate an appropriate level of transport and open space cost, but at a lower level than residential development. The current policy does not require contributions from accommodation units unless there was also a subdivision of the accommodation units undertaken because legislation precluded it. However, the amended legislation allows for these changes

· include Kaumatua housing in the retirement unit development type as the demand they place on services is similar

· rename minor dwelling units “small ancillary dwellings” to match the change nomenclature in the unitary plan and increase the demand factor from 0.5 to 0.6. This will to better reflect the demand impact these properties place on infrastructure.

Recommendation/s

That, for the purposes of developing the draft LTP 2015-2025 for consultation, the Governing Body adopt changes to the contributions policy as set out below:

a) agree to use development contributions as the primary funding source for growth, retaining the option to use financial contributions in those limited circumstances where development contributions cannot be applied

b) agree to amend the contributions policy to replace the current funding areas with those set out below:

Reserve - Acquisition	Reserve- Development	Stormwater	Stormwater	Transport	Community Infrastructure
Auckland Wide	Auckland Wide	Auckland Wide	Manukau Harbour (RUB)	Auckland Wide	Auckland Wide
	North	HGI	Manukau Harbour (Rural)	North	North
	Central	Hibiscus Coast (RUB)	North East	Central	Central
	South	Hibiscus Coast (Rural)	Tamaki (RUB)	South	South
	West	Kaipara (RUB)	Tamaki (Rural)	West	West
	HGI	Kaipara (Rural)	Wairoa	HGI	HGI
	Rural	Mahurangi (RUB)	Waitemata (RUB)		Rural
		Mahurangi (Rural)	Waitemata (Rural)
			West Coast

c) agree to amend the contributions policy to adjust the charge for residential development to reflect development size as follows:

Detached and attached low rise dwellings^{^[3]}:

i) 0.8 per household equivalent unit (HUE) for developments at or below 99m²

ii) 1.0 per HUE for developments between 100 m²and 249 m²

iii) 1.2 per HUE for developments at or over 250 m².

Attached medium/high rise dwellings:

iv) 0.6 per household equivalent unit (HUE) for developments at or below 99m²

v) 0.75 per HUE for developments between 100 m² and 249 m²

vi) 0.9 per HUE for developments at or over 250 m².

d) Agree to amend the contributions policy to:

i) establish a new development category, “accommodation units” which will include hotels and motels.

ii) include Kaumatua housing in the retirement unit development type category.

iii) rename minor dwelling units as small ancillary dwellings and set the demand factor at 0.6.

Background

16. The council adopted a regionally consistent contributions policy as part of the Long-Term Plan 2012-2022. This replaced the approaches taken by the eight former councils to the funding of growth and the use of development and financial contributions^{^[4]}.

17. The current policy provides that development contributions will be the primary tool for funding growth but retains the ability to use other funding sources, and in particular financial contributions, in those limited circumstances where development contributions cannot be applied.

18. The current policy provides for the funding of council activities in the areas set out in the table below.

Open Space Land Acquisition	Stormwater	Transport	Public Transport	Community service facilities	Local recreation facilities	Regional recreation facilities
Auckland Wide	Urban Auckland	Mainland	Auckland Wide	North	North	Auckland Wide
	Rural development area	Hauraki Gulf Islands		Central	Central
	Rural			South	South
	Hauraki Gulf Islands			West	West
				HGI	HGI
				Rural	Rural

19. The council undertook extensive consultation with developers in establishing its 2012 policy.

20. The policy was amended in September 2014 to reflect changes required by the Local Government Amendment Act 2014. That Act also provides that the council must consult on a new contributions policy by 1 December 2014.

21. Legislation provides that the council must formally state how it proposes to fund growth. If the council decides to use contributions to fund growth it must state whether and in what circumstances it will use either development contributions or financial contributions.

22. This report recommends some amendments to the process the contributions policy uses to apportion the costs of growth between developers. Staff will report to the Governing Body on 27 November recommending the adoption of a draft policy for consultation including a schedule of the capital projects that are to be funded from development contributions. This allows time for the policy to be updated to include the council’s decisions on the capital expenditure program to be consulted on for the Long-term Plan 2015-2025 and a for full legal review of the draft policy.

Comments

23. Staff have balanced the principles set out below in reviewing the contributions policy:

· purpose and principles of development contributions

· equitable sharing of costs of growth between ratepayers, developers and other members of the community having regard to such matters as who causes the costs and who receives the benefits

· equitable sharing of costs of growth between different types of development and different funding areas

· revenue certainty for the council and cost certainty for developers

· alignment with outcomes sought in the Auckland Plan

· administrative simplicity

· ensuring legislative compliance

· accommodation of new development provided for in the Housing Accord and Special Housing Areas.

24. The review has focused on refining the policy as no need has been identified for any fundamental changes. However, particular attention has been placed on the first two principles identified above as these are the key drivers behind the objectives of the changes to development contributions in the Local Government Amendment Act 2014.

25. Staff have held two meetings with developers between March and October 2014 to discuss amendments to the Contributions policy. These were attended by over 60 developers in total. Key comments from these sessions are noted in each section below.

Funding sources for growth

26. Staff recommend that the primary source of funding for investment in infrastructure to support growth should be development contributions. The council will retain the ability to use funding from other sources where development contributions cannot be used. For example the council will have to use rates^{^[5]} funding to pay for some community infrastructure, such as swimming pools and libraries that cannot be funded from development contributions.

27. The beneficiaries of investment in infrastructure to provide for growth will be the new residents of Auckland and the developers who as a result of that investment can construct new buildings. By funding growth from development contributions the beneficiaries of the investment pay for the costs incurred on their behalf. It also means that decisions on development are made by developers taking into account not only the costs of the land and buildings but the costs they impose on the city. Funding growth from development contributions also helps to ensure rates remain affordable.

28. Staff considered the case for funding growth from rates but noted that whilst this would encourage growth it would also place a greater burden on ratepayers and impact on the affordability of rates.

Developer early engagement comments

29. In previous engagement with developers they have acknowledged that it is reasonable that development funds the reasonable costs of growth. They also accept that the contributions provide the council with a greater capacity to invest in new infrastructure and hence allow for more development than if this had to be funded from a constrained rates envelope.

Development contributions or financial contributions

30. Staff recommend that the primary source of funding for investment in infrastructure to support growth should be development contributions.

31. Development contributions provide funding for the investments the council plans to make to fund the impacts of growth on the city as a whole. They allow for integrated financial and infrastructure planning. This ensures that those who use the developments, and existing residents, will have available to them the level of services the council has committed to providing the community. They are a strategic funding tool designed to support the council’s strategic response to growth because they can provide for the cumulative effect of multiple developments and infrastructure investment on a regional as well as local scale.

32. Development contributions provide a certain revenue stream for the council against which it can plan a wide range of investments. They also give developers certainty about the costs they will incur.

33. Financial contributions are designed to provide a means to avoid, remedy or mitigate the adverse effects of developments on the environment by funding the council to provide projects. They require a more direct casual nexus to be established between the proposed development and the projects than do development contributions. Further financial contributions are subject to Environment Court appeals both at the plan change stage and when the council seeks to require financial contributions on development. Given that the Environment Court might reduce the financial contributions payable on a case-by-case basis, a reliance on financial contributions could make it very difficult for the council to provide for the large scale investment required to meet the very significant growth it is expecting. This in turn would slow the rate of investment the city requires and therefore slow the rate at which developers could invest.

Developer early engagement comments

34. Developers are happy with development contributions overall, however, they would be open to further investigations in using financial contributions for stormwater projects.

Setting funding areas

35. Staff recommend increasing the number of funding areas for stormwater and transport to more accurately allocate the costs of additional infrastructure to development in the areas where that investment is required. The current funding areas will be retained for the other activities. The proposed funding areas are set out in the table below. Maps showing the funding areas are included in Attachment 1.

–Reserve - Acquisition	Reserve- Development	Stormwater	Stormwater	Transport	Community Infrastructure
Auckland Wide	Auckland Wide	Auckland Wide	Manukau Harbour (RUB)	Auckland Wide	Auckland Wide
	North	HGI	Manukau Harbour (Rural)	North	North
	Central	Hibiscus Coast (RUB)	North East	Central	Central
	South	Hibiscus Coast (Rural)	Tamaki (RUB)	South	South
	West	Kaipara (RUB)	Tamaki (Rural)	West	West
	HGI	Kaipara (Rural)	Wairoa	HGI	HGI
	Rural	Mahurangi (RUB)	Waitemata (RUB)		Rural
		Mahurangi (Rural)	Waitemata (Rural)
			West Coast

36. Funding arrangements must align with the way the council plans its infrastructure. The nature and spread of the benefits of investment differs across the council’s activities. Funding areas are activity-based and distribute the costs of growth across development in different parts of the region. The council’s planned investment to meet the demands of growth varies from major regional projects that will serve all of Auckland to smaller scale infrastructure to allow development in particular parts of the city. Many of these investments are part of a network where enhancements in one location provide benefits to a wider area or across the entire region. Although individual parts of these programmes may only serve local areas, the programme as a whole is usually distributed relatively evenly across the region.

37. Regional funding areas are proposed to be retained for regional transport projects and reserve acquisition. Reserve acquisition provides for access to reserves at a regional level as residents will travel outside their own catchment to access reserves, and some areas such as reserves on the coastline, serve the whole city. Each locality has its own characteristics of open space provision and the spread of reserve land can never be equal given practical considerations. It is administratively difficult to exactly refine how residents of particular developments will use reserves and hence impractical to create smaller catchments. However, a little more refinement is practical for expenditure required to develop reserves given that this will differ at a regional level even if still on a sub-regional rather than local scale. This also allows the council more flexibility to alter the location and type of projects within a broad funding area to reflect changes in development type and speed and community preferences.

38. Investment in transport projects is regional by design and benefits the entire network through its impact on congestion and connectivity between different parts of city for both public and private transport users. However, the remainder of the transport portfolio can be refined into sub-regional catchments based on the nature of the investments and a broad determination of their benefits.

39. The benefits of investment in stormwater can be more easily identified by location. The proposed funding areas for stormwater are based on the water catchments and how the council is planning to meet the investment needs of growth. While further refinement of stormwater catchments if possible this would lead to too many funding areas making it very difficult to respond if growth occurs differently from that predicted and would create a large number of uneconomical funding areas. The proposed funding areas provide the appropriate balance between providing certainty for developers, averaging out the costs of growth as appropriate, and administrative efficiency.

Developer early engagement comments

40. The development community indicated some support for using:

· single regional catchments for some major regional capital works because of the very wide community benefits they offer

· sub-regional funding areas for some activities because of the size of the region and the particular characteristics and costs associated with different parts of it

· suggest smaller catchments for stormwater

· large development contribution funding areas because they provide a realistic approach to growth funding for Auckland region, avoiding complexity and providing certainty.

41. Developers noted that:

· areas with unique characteristics and costs (such as rural, greenfield and major transformational areas) may warrant separate contribution catchments

· there is a desire to see an alignment between this policy and the main planning directions and documents (particularly the Auckland Plan).

Residential units of demand

42. Staff propose to set the residential demand factor based on both the type of development (detached, low rise and medium/high rise) and also the size of the proposed household (with price points: at or below 99m², households between 100m² and 249m², and households at or greater than 250 m²). As a result smaller dwellings will pay less than larger dwellings, providing a more equitable link between construction of new dwellings and the underlying demand for infrastructure.

43. The demand for infrastructure arising from residential development is mainly determined by the additional residents it will be required to serve. Analysis shows that the occupancy of residential properties is directly linked to size. Larger properties are likely to have more bedrooms and have more occupants. However, beyond a certain size larger properties do not have additional occupants although they presumably provide more amenities for their occupancy.

44. Differences in demand factors by type of development reflects the lower marginal cost of infrastructure provision through a more compact high density future Auckland.

Current HUE		Proposed HUE
No size consideration		0-99m²	100m²-249m²	250m²≤
Detached dwellings	1 HUE	0.8 HUE	1 HUE	1.2 HUE
Attached low rise^{^[6]}	0.8 HUE	0.8 HUE	1 HUE	1.2 HUE
Attached med/high rise	0.6 HUE	0.6 HUE	0.75 HUE	0.9 HUE

45. At present small properties which may have on average 1.6 occupants pay the same contribution as for larger properties which have a higher average occupancy and, therefore, generate more demand on infrastructure.

46. Staff also considered charging per bedroom but determined this was impractical as it would be difficult to enforce given that space can labelled one way on a plan and subsequently used for other purposes. Charging per square metre was also considered but was considered to be administratively too inefficient.

47. In some overseas cities much development of residential properties to serve growth has come from the extension of existing properties. Staff will review the applicability of development contributions to extensions over the next year. It is not possible at this time to charge development contributions for extensions as the council does not collect information in the form to support this administratively in a robust and fair manner.

Developer early engagement comments

48. The development community in general indicated support for using both type and size of development when setting demand factors, positive comments include:

· It is positive to have some way to address equality issues

· Size of dwelling approach is more manageable than bedroom approach.

49. Some concerns have been raised:

· Jump in price between categories should be limited

· Attached low rise dwellings should remain lower than detached dwellings.

Demand factor for commercial accommodation units

50. Staff recommend the establishment of a new category of residential dwelling type “accommodation unit” to cover motels, hotels and similar developments. New proposed per unit demand factors are: Reserves 0.45, transport 0.45 HUE, community infrastructure 0 HUE, stormwater 292m² ISA = 1 HUE.

51. Under current policy, applications for commercial accommodation units are charged as non-residential development units and are not assessed for reserves. The Local Government Amendment Act 2014 introduced a new definition ‘accommodation units’ that covers all types of developments related to commercial accommodation units. The amended Local Government Act states that: “accommodation units” means units, apartments, rooms in 1 or more buildings, or cabins or sites in camping grounds and holiday parks, for the purpose of providing overnight, temporary, or rental accommodation”. This change allows the council the power to require contributions for reserves from this development type.

52. Transport trip generation research suggests that the typical accommodation unit will have just below half the number of trips compared to average detached dwelling units. Staff recommend that the transport demand factor for accommodation units is set at 45% of the average residential factor.

53. The LGA change also provides for the council to charge all accommodation units for reserves on the same basis as residential dwellings. This is important because evidence shows that the users of accommodation units consume demand for public open spaces. (although may generate less demand for sportsfields etc.) The demand factor of 0.45 HUE reflect a 75% reduction from small attached medium/high rise dwelling charges given its lower annual occupancy rate at 75%.

Developer early engagement comments

54. The development community indicated support for this category of development to share the cost of growth with residential development.

Demand factor for Kaumatua housing

55. Staff recommend that Kaumatua housing be included in the retirement village development category.

56. Kaumatua housing generally places the same lower demands on council services as retirement villages. Research shows the typical characteristics of Kaumatua housing are good access to on-site social and cultural connections, close proximity to direct family (papakainga) and the wider Maori community, an onsite health clinic and transport often coordinated through communal people movers rather than individual car ownership and use.

57. Existing lower retirement unit charges are only offered to units in a retirement village as retirement villages are governed by the Retirement Village Act (RVA) 2003. The strict rules in the Act don’t match well with the nature of Kaumatua housing. Without a strict set of rules to work from there may be some additional administrative complexity in determining whether proposed developments meet the requirements. However, this will allow for housing to be developed for Kaumatua with easy access to Marae and places of cultural significance (placed on land administered under the Te Ture Whenua Māori Act 1993 [Māori Land Act] or identified in relevant Treaty settlement legislation as cultural redress land).

Developer early engagement comments

58. The development community have been supportive of the inclusion of Kaumatua housing in retirement unit category.

Demand factor for small ancillary dwelling unit (previously minor dwellings)

59. Staff recommend that the demand factor for minor dwelling units be increased to 0.6 HUE and the name of the category changed to small ancillary dwelling unit.

60. The current policy defines minor dwelling units as: “The first dwelling unit ancillary to the primary dwelling unit on an allotment with a floor area of 60m² or less and not able to be increased in size”. This definition aligns with some current District Plan rules. The demand factor for minor dwellings is 0.5.

61. Minor dwelling units have a similar occupancy to small apartments, 1.6 residents. As a result they should have the same demand factor which is 0.6. In addition draft Auckland Unitary Plan does not identify this built form separately. To provide clarity during the transition period between existing and future plan rules the name for this category should be changed to a more generalised definition “small ancillary dwelling unit”.

Developer early engagement comments

62. The development community have in general been supportive of changes proposed to minor dwellings. Some concern was raised that the 60m² limit does not accurately reflect all district plan rules that still exist across the city.

Projects to be included in reserves category

63. A comprehensive list of project to be funded from development contributions will be part of the policy report to the Governing Body on 27 November. Staff will adjust the reserves category to add the following project types:

· development of reserves

· sportsfields capacity increases (eg. sand carpeting)

· carparking associated with reserves.

64. The council previously funded project types as specified above (other than acquisition) from the community infrastructure category. The change to the definition of community infrastructure in the Local Government Act 2014 now excludes those projects. The council amended its contributions policy on 8 September accordingly. These projects can be funded from development contributions in the reserves category. The projects are closely linked to the reserves category as they are required to develop parks and reserves to provide for the effective use of those services by the public. The value of these projects under the Mayor’s proposal is around $40 million. Under other options for capital investment in Parks, community and lifestyle the value of the projects in this category increases accordingly.

Significance of Decision

65. Adoption of a contributions policy is a significant decision and will be consulted on alongside the Long-term Plan 2015-2025.

Consultation

66. Consultation with the public will occur alongside the LTP.

Consideration

Local board views and implications

67. Two representatives of each local board were invited to a briefing on the financial policies, including the contributions policy, for the Long-term Plan 2015-2025 on 18 August 2014. A further briefing was provided on 20 October, to which all local board members were invited. The 20 October briefing included analysis of options for the contributions policy. Local board chairs and another board member were invited to participate in a workshop on financial policy issues with the Budget Committee on 24 October.

68. Local boards considered their views on financial policy issues at workshops in September and October and during their formal October meetings.

69. Many local boards support a contributions policy that leads to efficient land use and an approach that sufficiently provides infrastructure for growth in the existing urban area. Some local boards support expenditure of development contributions in the areas in which they are collected.

70. A more detailed report of local board views is attached along with the full text of their resolutions on these issues.

Māori impact statement

71. Council does not hold information on the ethnicity of developers. The impact on Maori will be similar to the impact on other residents and ratepayers.

72. The council is developing a grants scheme which will offer funding equivalent to the cost of development contributions for qualifying Papakainga housing. Maori will also benefit from the lower demand factor proposed for Kaumatua housing from its inclusion in the retirement unit category rather than the standard dwelling type.

73. The Independent Māori Statutory Board has two members on the Budget Committee who will consider the Mayor’s Proposal on financial/rating policies including options for setting the social housing rents.

Financial and Resourcing Implications

74. There are no financial or resourcing implications.

Legal and Legislative Implications

75. The options presented in this report comply with the requirements of the Local Government Act 2002 and the Local Government (Auckland Transitional Provisions) Act 2010.

Implementation

76. Issues associated with implementing the options presented in this report have been included for consideration.

Attachments

No.	Title	Page
a View	Contributions Policy maps	45

Signatories

Authors

Andrew Duncan - Manager Financial Policy

Claes Sandstrom, Senior Advisor

Bobbi Parkinson, Principal Advisor

Authorisers

Matthew Walker - Manager Financial Plan Policy and Budgeting

Kevin Ramsay - Chief Financial Officer

Stephen Town - Chief Executive

Governing Body

27 November 2014

Referendum on transport investment and funding options

File No.: CP2014/26484

Purpose

1. To receive information about the costs of a referendum and other issues relating to engagement with the public on LTP provisions for transport investment and funding options.

Executive summary

2. At its meeting on 5 November 2014, the Budget Committee considered a report on “Transport programmes and funding options”. The Committee resolved:

“That staff report to the next Budget Committee meeting on the costs of a referendum and general issues relating to engagement on this matter.”

3. A formal referendum would have to be conducted under the Local Electoral Act 2001 which makes specific provision for referendums. Many of the provisions that exist for the running of elections also apply to the running of a referendum. Those eligible to vote are all resident and non-resident ratepayer electors on the electoral roll.

4. The process would involve compiling an electoral roll and making that available for public inspection. The roll would then be closed and voting packs posted to electors to return over a three week period.

5. Regardless of whether a referendum is held, a consultation document for the Long-term Plan (LTP) will be delivered to each household for feedback. Aucklanders will be able to provide feedback using a structured feedback form, through online channels or in person at a range of events. The referendum would not replace the Council’s separate obligations to consult on the LTP and costs would be in addition to those incurred to support the LTP consultation process.

6. The total estimated cost of an Auckland-wide referendum is $1.5 million. This includes the cost of conducting the referendum, approximately $1.10 (plus GST) per elector or in the vicinity of $1.156 million (plus GST), as well as costs relating to advertising and communication of explanatory information other than what is provided in the voting pack. This cost is estimated to be around $0.3 million based on a similar level of promotion undertaken to support the Unitary Plan process. This assumes only one referendum is required.

7. If the council wished to conduct a referendum, a further report would be necessary setting out the resolutions required by the Local Electoral Act 2001.

8. In order for results to be known in time for the Budget Committee meeting on 7 May 2015, the process would need to commence in late January 2015.

9. Related engagement issues include the need to consult on the LTP at the same time as hold a referendum and the potential for confusion as to whether Aucklanders should take part in one or the other or both. The LTP process is likely to lead to more informed feedback.

10. A non-binding referendum has the benefit of informing councillors of the wish of the electorate (or at least those who participate) and councillors can take this into account when making decisions. However, based on an assessment of the costs and related issues, and given the concurrent LTP process, staff do not recommend that a referendum is used to seek feedback from Auckland electors on transport investment and funding options.

11. As an alternative, if members are seeking greater clarity about public opinion, in addition to the LTP engagement, we recommend a survey is commissioned. The survey would be statistically reliable and independent and less costly than a referendum.

Recommendations

That the Governing Body:

a) agree to not undertake a referendum to seek feedback from Auckland electors on transport investment and funding options.

b) direct the Chief Executive to commission an independent statistically reliable survey to help inform choices about transport funding.

Comments

Costs

12. Independent Elections Services advise that the cost of a referendum would equate to $1.10 (plus GST) per elector or in the vicinity of $1.156 million (plus GST). This includes one A4 double-sided explanatory insert. As at 23 September 2014 there were 1,043,153 residential electors for Auckland Council and there are currently 403 non-resident ratepayer electors outside the Auckland Council area who would be entitled to vote.

13. Costs would also arise from additional advertising and communication of explanatory information. This cost is estimated to be around $0.3 million based on a similar level of promotion undertaken to support the Unitary Plan process.

Example timetable

14. In terms of timing, if polling day was Friday 24 April 2015:

(a) Roll would open (28 days before roll closes): 29 January 2015

(b) Roll would close (57 days before polling day): 26 February 2015

(d) Polling day: 24 April 2015 (results available same day)

(e) Budget Committee meets to make final decisions for the LTP: 7 May 2015.

Requirements for neutrality

15. The referendum proposal should be accompanied by appropriate explanatory information and both the proposal and the accompanying explanatory information should be as clear, accurate, and neutral as possible, so that the persons being polled can make a free and reasonably informed decision. The Council must not attempt to influence the outcome of the referendum by making public statements, or utilizing Council funds/facilities, either in support of or against any particular position. The Electoral Officer determines what information is appropriate, in consultation with others.

16. Clause 46 of the Local Electoral Regulations states:

“(1) The electoral officer may, if he or she considers it appropriate to provide neutral information on the matter or matters that are the subject of a poll, decide that every voting document for that poll that is issued to a voter in person or posted or otherwise delivered to an elector must be accompanied by neutral information on the matter or matters.

(2) For the purposes of deciding whether to provide neutral information under subclause (1), or ensuring that any information provided is neutral, the electoral officer may seek advice from any person he or she considers appropriate.”

17. However, individual elected members are free to express their own views, so long as:

(a) They make it clear that the views are theirs, not the Council’s

(b) They consider the results of the referendum with an open mind when making subsequent decisions and

Background to previous community engagement

18. There has been relatively high engagement with Auckland stakeholders on the policy development for alternative funding for transport. The process to investigate alternative funding for transport infrastructure started in late 2011.

19. In February 2012 the “Getting Auckland Moving – Alternative Funding Discussion Document” was released and consulted on alongside the 2012-22 Long Term Plan Process.

20. As a result of that work, in July 2012 Council agreed to bring together an independent group of stakeholders (the Consensus Building Group – CBG) to work on a broad consensus on the funding sources needed to improve Auckland’s transport network.

21. In April 2013 the CBG released a discussion document “Funding Auckland’s Transport Future”. This second discussion document was the subject of extensive public and targeted stakeholder consultation. This resulted in recommendations to Council in July 2013 on funding pathways that warranted further consideration.

22. In December 2013, councillors considered a report on the next steps which led to the development of detailed policy and business cases for two potential funding options.

23. The Independent Advisory Body (IAB) reported to council in October 2014. On the basis of the IAB report the Budget Committee determined to consult on the two funding programmes as a formal part of the 2015-25 LTP process.

Analysis of benefits and cost of a referendum

24. A referendum has the benefit of informing councillors of the wish of the electorate (or at least of those who vote) and councillors can take this into account when making decisions.

25. However, after considering the various costs and related issues associated with a referendum, staff do not recommend a referendum is used to seek feedback on the views of Auckland electors on transport investment options and funding options.

26. This advice is based on the following considerations:

(a) A referendum would not replace council’s obligation to consult on transport investment and funding options through the LTP process.

(b) The total cost of the referendum is estimated to be around $1.5 million. This cost would be in addition to the costs associated with the LTP consultation process.

(c) The LTP consultation process is likely to be a more effective means of engaging with Aucklanders than a referendum because there is greater flexibility in the provision of information to support the consultation process (delivering more informed feedback) and the LTP process will also engage Aucklanders on the total council budget and the concept of trade-offs across different types of services and investments. The LTP process also supports better analysis of the feedback received, for example, the ability to understand the differing views of specific segments of the population.

(d) A referendum is available to electors only; community groups, business associations and other organisations will need to use the LTP consultation process.

(e) Running two processes to ask about the same issue is likely to be confusing for Aucklanders.

(f) To ensure the results of the referendum are available to support decision-making, the process of setting up the referendum would need to begin in late January 2015. The timetable would be very tight.

(g) Undertaking a referendum process in addition to the LTP consultation process would place considerable pressure on staff required to support both processes.

(h) At the time of writing this report, it is not clear whether one or two referundums would be required. This would be dependent on the information being sought.

Procedural requirements under the Local Electoral Act 2001

27. The following sets out the requirements of the legislation.

Referendum to be on a proposal

28. The key provision for conducting referenda is section 9 of the Local Electoral Act 2001. Subsection 9 (1) provides for a local authority to direct its electoral officer to conduct a referendum on

“(a) any matter relating to—

(i) the services that are provided or that may be provided by the local authority; or

(ii) any policy or intended policy of the local authority; or

(b) any proposal relating to—

(i) the current or future activities or objectives of the local authority; or

(ii) the current or future well-being of its local government area.”

29. In this case, a referendum would relate to a proposal in terms of the Council’s future activities and objectives.

Affected area

30. Subsection 9 (2) states:

“The local authority—

(a) must determine whether the matter that is the subject of the referendum affects all or part of its local government area; and

(b) must direct the electoral officer to conduct the referendum for all or the appropriate electors of the local government area accordingly.”

31. The Council would direct the electoral officer to conduct the referendum over the whole of the Auckland Council area.

A referendum is a poll

32. Subsection 9 (5) states:

“A referendum conducted as a consequence of a direction under this section is a poll to which this Act applies.”

33. Thus, the requirements in the Local Electoral Act 2001 that apply to polls also apply to referenda.

Whether binding

34. Subsection 9 (7) states:

“The result of any referendum conducted as a consequence of a direction under this section is not binding on the local authority unless it resolves otherwise or any enactment provides otherwise.”

35. The referendum would be intended to elicit the views of electors on matters which will form part of the LTP. The results of the referendum would be taken into account by the Council when making decisions on the LTP but should not be binding, if the effect of the referendum would make redundant the Council’s separate LTP consultation process.

Voting method

36. The Council must determine the voting method. If there is no determination, the default method is postal voting (s 36). The Local Electoral Regulations only provides for postal voting or ballot box voting or a combination of the two.

Notice of poll

37. The same requirements under section 52 that apply to giving notice of elections also apply to polls. In addition, section 54 further requires:

“In the case of a poll, a notice under section 52 must also—

(a) state the proposal or subject matter of the poll; and

(b) in the case of a binding poll, state the consequences of each possible result of the poll; and

(c) in the case of a non-binding poll, state the intentions (if any) of the local authority or other body on whose behalf the poll is conducted in respect of each possible result of the poll.”

38. It is necessary to state any intention of the Council as regards to the result of the poll. The Council would take the results of the referendum into account when making decisions on the LTP.

What voting documents for polls must contain (s 76)

39. Section 76 sets out what the voting document must contain in terms of giving directions to the voter.

40. Section 77 states:

“A voting document may not be used at an election or poll unless it is consistent with at least one of the general formats that have been approved for use by the Secretary for Local Government or a person appointed by the Secretary for the purpose of approving formats for voting documents under this section.”

41. Thus, a voting document must be set out in the prescribed way.

Electoral systems for polls (s35)

“(1) Every poll conducted for a local authority must be conducted using an electoral system adopted by resolution of the local authority—

(a) for the purposes of the particular poll; or

(b) for the purposes of 2 or more polls that are to be conducted at the same time.

(2) If a poll is to be conducted for a local authority and there is no applicable resolution, that poll must be conducted using the electoral system commonly known as First Past the Post.”

An alternative to a referendum

42. As an alternative, if committee members are seeking greater clarity about public opinion, in addition to the LTP engagement, we recommend a survey is commissioned. The survey would be statistically reliable and independent and less costly than a referendum.

43. A survey has the benefits of providing more information to respondents to help inform a more comprehensive response.

Consideration

Local board views and implications

44. This report provides the Committee with information it has requested on the implications of conducting a referendum. The views of Local Boards have not been sought.

Māori impact statement

45. This report provides the Committee with information it has requested on the implications of conducting a referendum. If a referendum is conducted, there will not be a specific impact on Māori as distinct from the rest of the community.

Implementation

46. If the Council decides to hold a referendum, the Electoral Officer would need to be instructed to conduct a poll. This would be administered and run through the Council’s election services provider, Independent Election Services.

Attachments

There are no attachments for this report.

Signatories

Authors

Warwick McNaughton - Principal Advisor - Democracy Services

Tanya Stocks – Programme Director, Financial Plan Policy and Budgeting

Authorisers

Marguerite Delbet - Manager Democracy Services

Grant Taylor - Governance Director

Stephen Town - Chief Executive

Governing Body

27 November 2014

Council Controlled Organisation Review - Process Overview, CCO Configuration Options and Delivery of Services Review

File No.: CP2014/19676

Purpose

1. To provide an overview of the council controlled organisation (CCO) review process and key options considered but not recommended for further investigation.

2. This report also covers the new legislative requirement under the Local Government Act 2002 to undertake, at least once every six years, a review of the most cost effective way of delivering services. The report covers this requirement only for services currently being delivered by CCOs.

3. This report in one of three reports on this agenda relating to the CCO review. The other two reports are:

· Council Controlled Organisation Review – Summary of Feedback. This report summarises feedback on the review from CCOs, local boards, the Independent Maori Statutory Board (IMSB) and the Public Services Association (PSA)

· Council Controlled Organisation Review – Proposal for New Urban Development Entity and Proposal to Transfer Management of the Diversified Assets Portfolio from ACIL to Auckland Council. This report recommends that the council forms a new CCO to facilitate urban development outcomes, and transfers responsibility for managing the council’s diversified financial assets portfolio (DFAP) from Auckland Council Investments Limited (ACIL) to Auckland Council’s treasury team.

Executive summary

4. The Governing Body adopted a terms of reference for the CCO review on 27 February 2014. The following table summarises the key steps, findings and decisions to date.

Aspect of CCO Review	Reporting	Key Findings and Decisions
Terms of reference	Governing Body 27 February 2014	Terms of reference defined review objective to ensure that CCO governance structures are aligned with Council’s strategies and provide an efficient and effective model of service delivery.
Current state assessment	Governing Body 27 February 2014 Governing Body local board input 26 June 2014	Council report and CCO report mainly found CCO model not “broken” and many issues were transitional, reflecting the scale of change. Local board feedback acknowledged improvements, with many wanting further improvements.
Why deliver through CCOs?	Governing Body 1 May 2014 Governing Body 26 June 2014	Criteria adopted to test whether services being delivered through CCOs are suited to this mode of delivery. Analysis found that services currently being delivered through CCOs are suited to this mode of delivery and any challenges can be adequately managed within a CCO structure.
Does the council have the right CCOs delivering the right activities?	Governing Body 27 November 2014 (this agenda)	Structural change options not being progressed. Proposals to establish a new urban development entity and transfer responsibility for DFAP to council (separate report on this agenda).
Getting the most out of the CCO model	Audit and Risk Committee 22 July 2014 CCO Governance and Monitoring Committee 2 September 2014 CPO review September 2014	Decision to require CCOs to report to Audit and Risk Committee prior to the council adopting its annual report. This took place at the September meeting. Further work on risk reporting is underway and will be reported in December. Agreement to align statement of intent and with Long Term Plan (LTP) and Annual Plan process to ensure that statement of intent process is strongly linked to funding decisions. Decision to transfer council economic development implementation activities to Auckland Tourism, Events and Economic Development (ATEED) (except local economic development).

5. This report provides an overview of the options for structural change considered at workshops from August to October, and recommends that four options are not progressed because analysis suggests that any advantages would be outweighed by disadvantages.

6. Option – transfer responsibility for water supply, and wastewater from Watercare to Auckland Council. The integrated delivery of water supply, wastewater and stormwater services may generate some benefits but the option has significant drawbacks. It would involve the transfer of a major business with significant cost of change.

7. Option – transfer responsibility for stormwater from Auckland Council to Watercare. This is an alternative method for achieving the benefits from integrated delivery. The option also has some major disadvantages including that it would be very difficult to transfer ‘soft’ assets such as overland flow paths from the council to Watercare.

8. Neither option is recommended. Notably, many of the benefits of integrated management of three waters can be achieved by closer collaboration between Watercare and Auckland Council, building on work already underway.

9. Option – expand the role of ACIL by transferring other investments or business interests. This option was considered because the range of investments managed by ACIL is relatively small compared to some other local government holding companies. However, analysis did not identify any other major investments that could be transferred to ACIL. The option is not recommended.

10. Option – Regional facilities, tourism and major events CCO. Combining some functions of Regional Facilities Auckland (RFA) and ATEED was considered as both entities have a focus on tourism and major events. However, while the option could improve utilisation of council facilities, this may be at the expense of what is best for Auckland. Due to the potential for conflicting objectives, the option is not recommended.

11. The remaining options considered are:

· enhanced status quo

· new redevelopment entity

· transfer responsibility for the DFAP from ACIL to Auckland Council.

12. Options for a new redevelopment entity, and to transfer responsibility for the DFAP are covered by a separate item on this agenda.

13. Enhanced status quo will involve reviewing the purpose and role of each CCO where no significant structural change is proposed. It will also address some specific issues such as whether ATEED takes on additional responsibility for local economic development. This work will take place in the first half of 2015, and will form part of a wider body of work focused on how the council can get the most out of the CCO model.

14. This report also covers the new legislative requirement under the Local Government Act 2002, to undertake at least once every six years, a review of the most cost effective way of delivering services. The report covers this requirement only for services currently being delivered by CCOs.

15. The report concludes that the current arrangements of governance and council funding being council responsibility, and delivery being an Auckland Council CCO responsibility, is cost effective when compared with other options.

Recommendation/s

That the Governing Body:

a) agree that the following options for structural change to council controlled organisations have been considered and will not be progressed because analysis of the options suggests that any advantages would be outweighed by the disadvantages:

i) transferring responsibility for water supply and wastewater services from Watercare Services Limited to Auckland Council

ii) transferring responsibility for stormwater services from Auckland Council to Watercare Services Limited

iii) transferring new major investments or business activities to Auckland Council Investments Limited

iv) transferring responsibility for major events and tourism from Auckland Tourism, Events and Economic Development Limited to Regional Facilities Auckland.

b) agree that after consideration of options, the council is satisfied that for services currently being delivered by council controlled organisations, the current model of

· Auckland Council retaining responsibility for governance

· Auckland Council council controlled organisations being responsible for delivery

· Auckland Council retaining responsibility for funding (where not covered by external sources of funding)

is a cost-effective arrangement for meeting the needs of communities within the Auckland region for good quality local infrastructure, local public services and performance of regulatory functions.

Comments

Review background and scope

16. The governing body adopted a terms of reference for the CCO review on 27 February 2014. The terms of reference sought to ensure that CCO governance structures were aligned with Council’s strategies and provided an efficient and effective model of service delivery. Other objectives included:

· the rationale for delivery of an activity/function by council, a CCO, or another mechanism

· ensuring sufficient political oversight and public accountability of CCOs

· providing clarity about roles and responsibilities

· eliminating duplication

· better integrating services and functions and providing a positive interface between the Auckland Council Group organisations and Aucklanders.

17. The terms of reference reflect three distinct areas of focus:

i. Why should the council deliver services through arms’ length entities such as CCOs?

ii. Does the council have the right CCOs delivering the right services?

iii. Getting the most out of the CCO model.

18. Major structural change for Auckland Transport was identified as out of scope. This was because Auckland Transport is a statutory entity governed by specific legislative provisions.

19. Any major proposals for structural change will be consulted on as part of the Long Term Plan 2015-2025 (LTP). The review is due to be completed by June 2015.

Current state assessment

20. The terms of reference were informed by two current state assessment reports, one prepared from a council perspective and one from a CCO perspective.

21. The council report found that there was a reasonable degree of comfort with the CCO model. It acknowledged that early issues were mainly transitional and reflected the scale of change following the establishment of Auckland Council. However, there was also an expectation that the review would improve strategic alignment, address duplication, streamline accountability processes and consider governance policies.

22. Subsequent input to the current state assessment from local boards acknowledged significant improvements in their interactions with CCOs over the three year period. The feedback indicated most were looking for further improvement.

23. The CCO report was prepared by PwC. It also acknowledged the progress made over the last three years. CCOs raised a range of issues including a common theme that there was a lack of understanding within Auckland Council of the respective roles of management, governance and ownership.

Why deliver through CCOs?

24. The first step in the review was to test the rationale for delivering services through an arms’ length entity such as a CCO. The work identified that there are benefits and challenges from delivering services through CCOs. CCO delivery is likely to be optimal when the benefits of delivering through CCOs outweigh the challenges, and/or where the challenges can be effectively managed.

25. Benefits include commercial focus, efficiency and cost effectiveness, flexibility in decision-making, and ability to attract specialist skills. Challenges include retaining accountability for ratepayer funding, ensuring that CCO decision-making is cognisant of political factors, and achieving integration of CCO activities with other council services and priorities.

26. At its meeting of 1 May 2014, the governing body adopted a set of criteria to help test whether the services being delivered through CCOs were well suited to this mode of delivery. The criteria reflected these benefits and challenges.

27. Overall, the analysis of CCO services suggested that there were likely to be more benefits than disadvantages from continuing to deliver the services through a CCO. Where challenges were identified, the view was that these can be adequately managed within a CCO structure.

28. The governing body received the final analysis at its meeting of 26 June 2014.

Does the council have the right CCOs delivering the right services?

29. The second step was to identify whether any changes to the grouping of activities was likely to deliver better outcomes than the current CCO configuration.

30. To inform this stage of the review, staff undertook or commissioned a number of pieces of desktop research summarised in the following table. These reports have been previously provided to councillors and are available on request.

Report	Purpose
Desktop research report: Regional economic development, tourism and events delivery model	To identify international models for delivering similar activities and assess whether there is a ‘best practice model’.
Desktop research report: Urban development agencies
Desktop research report: Regional sports/arts/culture facility management and operation delivery models
Water supply, wastewater and stormwater linkages, Syngerine Group Limited	To identify the linkages between the three waters and between stormwater and other activities of the council.
Desktop research report: Holding companies	To provide an overview of the activities and structures of other New Zealand local government holding companies.
Critical gaps and overlaps between Auckland Council and its CCOs	To assess whether there are any significant areas of duplication that might justify structural change.

31. Staff identified a number of options for structural change. These were discussed at governing body workshops from August to October. The following drivers for change informed these options:

· opportunities to address issues raised in the current state assessment

· opportunities to increase effectiveness/improve results

· opportunities to improve strategic alignment

· opportunities to increase efficiency/reduce cost

· evidence from international delivery models, or other desktop research.

Options considered but not progressed

32. The council discussed four options in workshops on 6 August, 13 August and 2 September that have not been progressed. There was little or no support expressed at the workshops for further work on these options.

33. Summary of options not progressed:

Option	Description	Drivers for change
Three waters delivered by Auckland Council	Water supply services and stormwater services transferred from Watercare to Auckland Council	Synergine report found that there may be some benefits from the integrated management and delivery of three waters
Three waters delivered by Watercare	Stormwater services transferred from Auckland Council to Watercare	Synergine report found that there may be some benefits from the integrated management and delivery of three waters
Enhanced commercial CCO	Additional commercial investments or business activities transferred to ACIL	Desktop review suggests the range of investments managed by ACIL are narrow compared to some other New Zealand local government holding companies
Regional facilities, tourism, and major events CCO	Combine some functions of RFA and ATEED as both entities have a focus on tourism and major events	Report on critical gaps and overlaps suggested possible overlaps between these two CCOs Potential opportunities to increase efficiency and/or effectiveness

Integrated delivery of three waters

34. The report prepared by Synergine Group Limited found that there could be some benefits from the integrated management of three waters. For example, integrated management could improve catchment management planning.

35. Auckland Council currently delivers stormwater services and Watercare delivers wastewater and water supply services. The options of Auckland Council and Watercare delivering the three waters were both considered.

36. The evaluation of the Auckland Council delivery option suggested that the option could help better align water and wastewater network planning with council strategy. However, these benefits are already being realised through greater collaboration between Watercare and the council. This option would also have some major disadvantages including the significant cost of change and the risk of reduced commercial focus on water and wastewater services.

37. Transferring stormwater to Watercare would also provide the benefits of an integrated approach to management of three waters. It may achieve some operational efficiencies and greater commercial focus.

38. However, as with the in-house option, some of these benefits could be achieved in other ways and there are some major drawbacks. Many stormwater assets are ‘soft infrastructure’ such as overland flow paths in parks, including local parks which are the responsibility of local boards. It would not be practical to transfer these assets to Watercare. This means that the option would require complex agreements between Auckland Council and Watercare. Another disadvantage is that stormwater planning needs to be highly integrated with land use planning which could be more difficult to achieve within Watercare.

39. Neither option has been progressed as both have significant disadvantages that are likely to outweigh any benefits.

Enhanced commercial CCO

40. Consideration was given to other investments or business interests that could be transferred to ACIL. However no other significant opportunities were identified. Two possibilities considered were:

· City Parks Services, which is currently a business unit of council, providing maintenance and related services to Auckland Council. This was not progressed as there would be tax implications from transferring this to a CCO.

· Council’s non service property portfolio, currently managed by ACPL. This was not progressed because the proposal to create a new urban development entity includes the entity making strategic use of the property portfolio.

41. As no significant opportunities were identified, no further evaluation of this option has been undertaken.

Regional facilities, tourism and major events CCO

42. This option was considered because both RFA and ATEED have a focus on tourism and major events including conferences. By removing apparent duplication, there could be opportunities to increase efficiency or effectiveness.

43. Further investigation suggested that the two CCOs have quite different objectives. ATEED’s focus on is maximising benefit for Auckland, while RFA’s main objectives are to maximise utilisation of their assets. While the option could offer benefits in terms of return on council assets, this could be at the expense of benefits to the wider Auckland economy. The option has not been progressed because of concern over conflicting objectives.

Options still under consideration

44. The following options are still being considered:

Option	Description	Drivers for change
Enhanced status quo	Review CCO purpose and address key issues.	Optimise current arrangements for CCOs where no major structural change is proposed.
New urban development entity	Three options are being considered. The recommended option is to create a new entity which combines the activities of ACPL, Waterfront Auckland, and some related activities of Auckland Council.	Strategic alignment, removal of duplication, and efficiency and effectiveness.
Management of the DFAP transferred from ACIL to Auckland Council	Auckland Council’s treasury team takes over management of the portfolio.	Efficiency and cost savings.

Enhanced status quo

45. Workshop discussions indicated support for a review of the purpose and role of each CCO where no significant structural change is proposed^{^[7]}. This work will be undertaken in the first half of 2015.

46. The ‘enhanced status quo’ will address specific issues such as:

· whether ATEED takes on additional responsibility for local economic development

· the relative roles of Auckland Council and Auckland Transport in the provision of strategic advice

· whether ACIL should retain responsibility for Auckland Film Studios Limited

· the role of Auckland Transport in local ‘place-making’ and its interface with local boards. Local boards have decision-making responsibility for local place-making. They have provided feedback that their role in place-making is not well understood or recognised and they seek greater collaboration with CCOs to deliver

· responsibility for management of three facilities located on the Waterfront - the Cloud, Shed 10, and the Viaduct Events Centre (VEC). Waterfront Auckland currently manages the Cloud and Shed 10, while RFA manages the VEC

· ACPL’s role in relation to property acquisitions and disposals for Auckland Transport. ACPL currently undertakes some acquisitions for Auckland Transport but not the acquisitions for the City Rail Link (CRL). Both CCOs have asked for these responsibilities to be clarified.

47. Work on the first two bullet points is underway. Work on the remaining issues will be reported by June 2015. The proposal for a new urban development entity may have implications for the last three issues on the list.

Urban development agency proposal

48. One significant structural change proposal has come out of the review. The proposal is to form a new urban development entity, referred to as Development Auckland, to help radically improve the quality of urban living in Auckland.

49. This proposed change is detailed in a separate report on this agenda. If the council agrees to the proposal to establish a new entity to further the council’s urban development objectives, this will be provided for and consulted on in the LTP. Staff will undertake further work on the detailed evaluation and implementation of this proposal in early 2015.

ACIL and diversified assets portfolio

50. Another proposed change is to transfer responsibility for managing the DFAP from ACIL to Auckland Council. The council’s treasury team would take over the role of managing the fund. This proposed change is detailed in a separate report on this agenda.

Feedback from local boards, IMSB, CCOs and the PSA

51. During September and October the views of local boards, the IMSB and CCOs have been sought in relation to various aspects of the review. The PSA also approached the council requesting an opportunity to make a submission. A separate report on this agenda summarises the feedback and key themes.

52. There was some feedback from local boards relating to the recommendations in this report. For example, a small number of local boards agreed that major events and tourism should not be transferred to ATEED, while others felt that this needed further consideration. Some local boards felt that integrated delivery of three waters also warranted further consideration. A few local boards pointed to activities that they felt should be brought in-house including those currently delivered by ATEED and ACIL.

Local Government Act 2002 requirement to review delivery of service options

53. All local authorities have a new requirement to review, at least every six years^{^[8]}, the cost effectiveness^{^[9]} of arrangements for providing good quality local infrastructure, local public services, and regulatory functions. This requirement arises from an amendment to the Local Government Act 2002 that was one of a number Better Local Government amendments enacted in August 2014. Previous CCO review reports have signalled an intention to ensure the review addresses this requirement for services currently being delivered by CCOs.

54. The changes are designed to facilitate and encourage more efficient service delivery arrangements, including where efficiencies can be achieved by collaborating with other local authorities. Cabinet papers indicate that the changes were primarily targeted at small local authorities who may have opportunities to gain economies of scale from pooling resources. Nevertheless the requirement applies to all councils including the Auckland Council^{^[10]}.

55. In order to meet the requirements the council is required to consider the cost effectiveness of a range of options including, but not limited to:

· responsibility for governance, funding, and delivery is exercised by council (in-house delivery)

· responsibility for governance and funding exercised by council and delivery undertaken by

- a CCO

- a jointly owned CCO

- another local authority

- another person or agency

· governance and funding delegated to a joint committee or other shared governance arrangement and delivery undertaken by any of the options in the previous bullet point.

56. The terms of reference for the review sought to ensure that CCO governance structures were aligned with Council’s strategies and provided an efficient and effective model of service delivery. This explicitly included considering the rationale for delivery of an activity/function by council, a CCO or another mechanism.

57. The analysis of CCO services against review criteria, referred to in paragraphs 24 to 28 and considered by Governing Body in June 2014, focused on the advantages and disadvantages of in-house delivery versus delivery by a CCO.

58. Staff background analysis has considered other options required by legislation. The analysis is provided at Attachment A.

59. The key finding of this analysis is that the current model of

· Auckland Council retaining responsibility for governance

· Auckland Council CCO being responsible for delivery

· Auckland Council retaining responsibility for funding (where not covered by external sources of funding)

is a cost-effective arrangement for meeting the needs of communities within the Auckland Region for good quality local infrastructure, local public services and performance of regulatory functions.

CCO Review Next Steps – getting the most out of the CCO model

60. The CCO review will continue throughout the first half of 2015. The matters raised in paragraphs 45 and 46 will form part of a wider body of work about how the council can get the most out of the CCO model. This work will also include a review of CCO governance and accountability policies.

61. Changes that have been introduced so far, as a result of the review or alongside the review include:

· improved alignment of the LTP, letter of expectation, and statement of intent (SOI) processes, so that the SOI process is strongly linked to decisions about what funding council is providing

· new requirements for CCOs to report on financial and other risk (initial steps implemented and other work in progress)

· transfer of some economic development implementation responsibilities from Auckland Council to ATEED to remove duplication.

62. Further strengthening of the accountability framework will continue and a new Governance Manual will be prepared in 2015. A draft of this manual will be reported to the CCO Governance and Monitoring Committee in April 2015, alongside the draft SOIs.

63. The review of governance policies will include board member remuneration, and director recruitment policies including diversity policies and practices.

Consideration

Local board views and implications

64. Local boards have considered a report on the CCO review at their October/November meetings. The report included an overview of options not being progressed and an overview of the proposal to establish a new urban development entity. It outlined other aspects of the review, including those likely to be of particular interest to local boards, such as responsibility for local economic development. A separate report on this agenda provides an overview of feedback received from local boards as well as from other parties.

65. Local board members were also invited to attend a workshop on the review on 8 October 2014. This was well attended and provided local board members with an overview of the key aspects of the review.

Māori impact statement

66. The recommendations in this report do not have specific implications for Māori wellbeing.

67. The council has statutory obligations to Māori arising from a range of legislation. The Council also has a Māori Responsiveness Framework which makes further commitments to enable Māori outcomes and value Te Ao Māori. The council expects CCOs to act consistently with the council’s statutory obligations, apply the Māori Responsiveness Framework, and contribute to Māori outcomes to the extent that their funding permits.

68. These matters have been highlighted by the IMSB and mostly relate to the “getting the most out of the CCO model”. The IMSB has signalled that it would like to be involved in work on the accountability framework, governance policies and other workstreams. A separate report on this agenda summarising feedback received on the review, includes further comment on the IMSB submission.

Implementation

69. There are no implementation implications associated with the recommendations in this report.

Attachments

No.	Title	Page
a View	Delivery of Service Review - Analysis	69

Signatories

Authors

Catherine Syme - Principal Advisor, CCO Governance and External Partnerships

Authorisers

John Bishop - Treasurer and Manager CCO Governance & External Partnerships

Kevin Ramsay - Chief Financial Officer

Stephen Town - Chief Executive

Governing Body

27 November 2014

Council Controlled Organisation Review - Summary of Feedback

File No.: CP2014/26517

Purpose

1. To provide an overview of feedback on the Council Controlled Organisation (CCO) review received from CCOs, local boards, the Independent Maori Statutory Board (IMSB), and the Public Services Association (PSA). The report highlights key themes and comments on how, and the extent to which, the CCO review can address issues raised in the feedback.

Executive summary

2. CCOs, local boards and the IMSB have had an opportunity to provide input to the CCO review prior to the council making decisions on any structural change. The PSA also requested the opportunity to provide feedback.

3. The proposal to establish Development Auckland was broadly supported by CCOs, by the IMSB and by some local boards, with the majority of feedback highlighting matters for further consideration that reflect the specific interests of those providing the feedback. Some local boards do not support the Development Auckland proposal, and others would like further detail. Further analysis of feedback is provided in the separate report on that proposal in this agenda.

4. Local boards were specifically asked for comment on whether ATEED should take on further responsibility for delivering local economic development, including the functions performed by the council’s Local Economic Development team.

5. Feedback from local boards suggests there is no consensus among local boards for or against this proposal. Some local boards are concerned that the regional focus of ATEED means that local economic development would not be a priority for ATEED even if the function was transferred. Many of the local boards that supported the idea wanted to see more detail on how accountability could be ensured.

6. Feedback was not restricted to providing comments on structural change. Much of the feedback from local boards, the IMSB and the PSA will be of relevance to the final stage of the review, “getting the most out of the CCO model”.

7. Local boards highlighted issues over CCO engagement; whether CCOs adequately took account of local board priorities; and lack of accountability of CCOs to local boards. Most of these issues have been raised previously and require monitoring of existing policies and requirements. The recent elected member survey included a series of questions for local board members about CCOs that will provide baseline data.

8. The IMSB also highlighted issues raised previously including that it expects the review to consider how CCOs will address matters raised in its Issues of Significance to Māori in Tāmaki Makaurau and recommendations of its 2012 Treaty Audit and the 2014 KPMG report on Auckland Council expenditure on Māori outcomes.

9. The IMSB notes that there is a general need to improve current arrangements across CCOs in terms of their approach to engaging Māori, working with the board and their contribution to Māori outcomes and wider Māori wellbeing. The IMSB highlights the importance of monitoring CCO contribution to Māori outcomes and tracking CCO expenditure incurred on delivering on Māori outcomes.

10. The PSA has reservations about the CCO model but is not looking for major structural change at this time. It has suggested some areas of focus for improvement including employment and remuneration issues, removing duplication of functions and strengthening accountability.

11. The next phase of work will include further work on the CCO accountability framework, review of governance policies, and adoption of a CCO governance manual. Many of the issues raised by local boards, the IMSB and PSA will be considered in these workstreams.

Recommendation/s

That the Governing Body:

a) note the feedback on the Council Controlled Organisation review provided by Council Controlled Organisations, Local Boards, the Independent Māori Statutory Board, and the Public Services Association.

Comments

12. The CCO review commenced in February 2014. The terms of reference for the review reflect three distinct areas of focus:

i. Why should the council deliver services through arms’ length entities such as CCOs?

ii. Does the council have the right CCOs delivering the right services?

iii. Getting the most out of the CCO model.

13. A separate report on this agenda provides a full overview of the review process to date. The current focus of the review is on completing the part of the review covered by ii. This review of structure will ensure that the council has the right CCOs delivering the right services to meet council’s objectives and priorities.

14. CCOs, local boards and the IMSB have had an opportunity to provide input to the CCO review prior to the council making decisions on any structural change. The PSA also requested the opportunity to provide feedback.

15. Feedback was not restricted to providing comments on structural change. Much of the feedback will be of relevance to the final stage of the review, “getting the most out of the CCO model”.

16. This report highlights key themes, and comments on how, and the extent to which, the CCO review can address issues raised in the feedback. The report only includes high level feedback on specific proposals relating to Development Auckland and to the diversified financial assets portfolio (DFAP). Further detail is included in the separate report about these proposals on this agenda.

17. A summary of local board feedback and the feedback from each board is attached (Attachment A).

18. Councillors held a joint workshop with local boards on 8 October 2014. Local boards have also considered a report on the CCO review at business meetings and workshops during October and November. Both the councillor/local board workshop and the report discussed the progress to date of the CCO review, options for structural change and other aspects of the review of interest to local boards. Feedback from local boards was particularly sought on:

· the concept of Development Auckland including considerations that the governing body should take into account from a local perspective when developing the concept further

· ATEED taking on additional responsibility for the delivery of local economic development.

Development Auckland

19. Local boards had mixed views about the Development Auckland concept with some in support of it and others not. Local boards want their role and decision-making responsibility for place-shaping to be considered as the concept is further progressed. Some local boards also raised the importance of ensuring that the work of Development Auckland does not come at the expense of other council and community priorities.

Local economic development

20. One of the issues to be addressed in the CCO review is whether ATEED should take on additional responsibility for delivering local economic development.

21. Local boards are responsible, as set out in the allocation of decision-making for non-regulatory activities, for local economic development plans, projects and initiatives within parameters set by regional strategies and policies. Responsibility for delivery is currently met by ATEED and a number of council departments including the Local Economic Development team; Community Development, Arts and Culture; and City Transformation.

22. Following the recent review of council’s Chief Planning Office (CPO), a number of Auckland Council staff involved in implementing economic development, were transferred from Auckland Council to ATEED. This excluded the Local Economic Development team. This team is responsible for preparing local economic development plans and coordinating their implementation.

23. The CPO review signalled agreement in principle to transfer the team and its activities to ATEED subject to the findings of the CCO review. It was referred to the CCO review because currently CCOs are not accountable to local boards for delivery.

24. The report to local boards asked for comment on whether they would support the local economic development team transferring to ATEED subject to finding a suitable mechanism for ATEED to be accountable to local boards.

25. Feedback from local boards suggests there is no consensus among local boards for or against this proposal. Some local boards are concerned that the regional focus of ATEED means that local economic development would not be a priority for ATEED even if the function was transferred. Many local boards wanted to see more detail on how accountability could be ensured.

26. The report to Governing Body of 26 June 2014 noted that the issue was broader than role clarity. There is also insufficient funding to meet local board expectations. Apart from staff costs there is no funding specifically allocated for local economic development activities in the Long Term Plan 2015-2025 (LTP). Previously some local boards have prioritised using some of their discretionary funding for local economic development activities, and it expected that this will happen in the next LTP.

27. Staff will continue to develop and analyse options. The timing for reporting back on this issue has not yet been confirmed.

Other feedback

28. Local board feedback on other matters included:

· support for changes to the accountability framework including a new governance manual for CCOs. Some local boards would like to provide further input to this work

· interest in being further involved in work on Auckland Transport and local place-making, with some local boards looking for improved relationships and/or Auckland Transport delegating responsibilities to local boards

· a desire to see CCOs engage effectively with local boards and take into account local board priorities when developing their work programmes and statements of intent

· a view that CCOs did not always understand and appreciate local boards’ role as governors. Some suggested investigating options for a stronger accountability mechanism between themselves and CCOs

· an interest in seeing the CCO review lead to efficiency gains and cost savings.

29. Staff will consider local board feedback in the next stage of review as work continues on “getting the most out of the CCO model”. Further consultation with local boards over specific issues such as place-making, is likely to be required.

30. The council already has clear policies in relation to many of the general matters raised by local boards including that CCOs must engage with local boards prior to developing their work programmes; keep local boards well informed of projects with a significant local impact; appropriately resource their engagement with local boards; and consult with local boards over matters affecting local communities.

31. A previous report on the CCO review to the 26 June 2014 Governing Body explained that the review would be unlikely to revisit matters relating to local boards where there are already clear requirements. The recent elected member survey included up to three questions for local board members about each CCO, with the exception of ACIL. The questions covered reporting, general engagement, and engagement over work programmes. The baseline data collected in this survey can be used by CCO boards and by council to monitor progress in the future.

CCO feedback

32. CCO feedback is attached (Attachment B). Six CCOs provided formal feedback, with RFA providing informal feedback that it supports the Development Auckland proposal.

33. All CCOs were invited to comment on the Development Auckland proposal and any other aspect of the review. ACIL was also offered the specific opportunity to comment on the proposal to transfer management of the DFAP from ACIL to Auckland Council.

34. Watercare has written in support of the review process and findings as they relate to Watercare. They have provided examples of collaborative working relationships with the council family, including with regard to special housing areas, integrated consenting and the unitary plan. They have also signalled willingness to work with council management on other opportunities for a more integrated approach.

35. Auckland Transport, ACPL, Waterfront Auckland and ATEED have all provided feedback in support of the Development Auckland proposal.

36. ACIL’s feedback relates to the proposal to transfer management of the DFAP from ACIL to Auckland Council which ACIL does not support.

IMSB

37. The IMSB has written to Mayor Len Brown (Attachment C). Advice previously supplied in February 2014 is part of the attachment.

38. The IMSB has commented in support of further exploring a new urban development entity and has stated that it does not have a formal position on the proposal to transfer the DFAP from ACIL to Auckland Council.

39. The IMSB notes that many of its concerns about CCOs can be addressed through the non-structural workstreams of the review.

40. The letter asks that the CCO review addresses Issues of Significance to Māori in Tāmaki Makaurau, specifically issue 7.0, relating to CCOs. The IMSB notes that there is a general need to improve current arrangements across CCOs in terms of their approach to engaging Māori, working with the board and their contribution to Māori outcomes and wider Māori wellbeing.

41. Specific issues that the IMSB has highlighted are

· CCO board and committee reports should include a Māori impact statement

· policies for the governance and operations of CCOs that are accessible to Māori

· CCOs to provide appropriate resourcing for Māori involvement in CCO activities

· assisting the board to have robust and meaningful relationships with CCOs at a decision-making level including creating protocols for ongoing relationship management and engagement.

42. The letter also asks that further work on the CCO accountability framework includes setting out expectations of all CCOs in relation to Māori outcomes and wider Māori wellbeing, with particular consideration of recommendations of the 2012 Treaty Audit and the 2014 KPMG report on council expenditure on Māori outcomes. The IMSB highlights the importance of monitoring CCO contribution to Māori outcomes, and tracking CCO expenditure incurred on delivering on Māori outcomes.

43. Many of the issues highlighted by the IMSB can be addressed through the next phase of the review, “getting the most out of the CCO model”, particularly the accountability framework and governance workstreams. Note that the CCO review will not directly address matters that require additional council funding. However, the recent changes to the accountability framework, to better link the statement of intent and budgeting process, are intended to help highlight where council funding is insufficient to deliver on priority outcomes including Māori outcomes. Previously such matters have been debated through the statement of intent process in April, in isolation from budget decisions.

PSA

44. The PSA has made a submission to the CCO review (Attachment D).

45. The PSA submission expresses some reservations about the CCO model including whether there is sufficient democratic accountability and whether commercial focus threatens public good objectives.

46. However, the PSA acknowledges that substantial change at this point is unlikely and would probably not be supported by members following the disruption of the 2010 changes to Auckland’s governance.

47. The submission highlights some areas of change that the PSA would like to see addressed. Three of these relate to more integrated and consistent employment and remuneration policies and processes across the group. These matters are largely outside the scope of the CCO review and have been referred to the Auckland Council People and Capability Director.

48. The submission also calls for reducing duplication of functions which has been a focus of the review. For example, the proposal to bring ACPL and Waterfront Auckland into a wider urban development entity would help reduce the number of different mechanisms the council has for delivering urban development outcomes.

49. Finally, the PSA has suggested that the review should consider whether there should be improved councillor responsibility for each CCO based on a ministerial model. This could be considered during the next phase of the review. However, there are some significant differences between CCOs and government entities. The biggest difference is that ministers are shareholders of state owned enterprises and crown entities, while the Auckland Council, rather than individual councillors, is the shareholder of CCOs.

Consideration

Local board views and implications

50. This report reflects the feedback from local boards on the CCO review.

Māori impact statement

51. This report reflects the feedback of the IMSB on the CCO review, which highlights how it wishes to see CCOs contribute further to Māori outcomes and Māori wellbeing.

Implementation

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

Attachments

No.	Title	Page
a View	Local board feedback	99
b View	CCO feedback	135
c View	IMSB feedback	165
d View	PSA feedback	183

Signatories

Authors

Catherine Syme - Principal Advisor, CCO Governance and External Partnerships

Authorisers

John Bishop - Treasurer and Manager CCO Governance & External Partnerships

Kevin Ramsay - Chief Financial Officer

Stephen Town - Chief Executive

Governing Body

27 November 2014

Council Controlled Organisation Review - Proposal for New Urban Development Entity and Proposal to Transfer Management of Diversified Financial Assets Portfolio from ACIL to Auckland Council

File No.: CP2014/26519

Purpose

1. To recommend the following decisions to the governing body arising from the review of council controlled organisations (CCOs):

· To publicly consult on, and include in the Long term plan 2015-2025 (LTP), the proposal to establish a new CCO to further the council’s urban development objectives

· to transfer responsibility for the diversified financial assets portfolio (DFAP) from Auckland Council Investments Limited (ACIL) to Auckland Council and reduce the number of directors of ACIL from five to three.

Executive summary

2. The CCO review process, outlined in a separate report on this agenda, has resulted in two proposals for structural change.

3. The most significant recommendation of the review is to include in the LTP consultation, a proposal to establish a new CCO to deliver on council’s urban development outcomes. The proposal includes bringing together Waterfront Auckland and Auckland Council Properties Limited (ACPL) to form a new urban redevelopment agency. For the purposes of this report, the new entity is named Development Auckland.

4. The Development Auckland proposal and options analysis that has taken place to date is outlined in Attachment A. It is envisaged that further evaluation of the proposal will take place concurrently with LTP consultation.

5. This proposal is estimated to save approximately $1.5 million per year primarily through the reduced requirement for board and executive staff remuneration. These savings will offset establishment costs of Development Auckland within approximately 2 years. No additional operational funding will be required.

6. The nature of locations chosen for Development Auckland to operate in would determine whether there was a need for additional capital expenditure for infrastructure^{^[11]}. Infrastructure costs would also be confirmed as part of a masterplan and business case process for a chosen location.

7. The masterplan and business case processes would have also identified the assets in a location that were surplus to council’s service requirements, and therefore appropriate sites for partnership opportunities with private developers for residential and mixed use buildings. Any surplus created by the uplift in value that could be captured from redevelopment would be used for future redevelopment projects.

8. Feedback from CCOs, local boards and the IMSB on this proposal has been provided in the report entitled “Council Controlled Organisation Review – Summary of Feedback”.

9. A second recommendation is to transfer responsibility for the DFAP from ACIL to Auckland Council and to reduce the number of directors of ACIL from five to three.

10. ACIL currently manages the $326 million DFAP on behalf of council. This report recommends that council’s in-house treasury team have responsibility for managing the portfolio from 1 July 2015.

11. The treasury team’s expertise in managing financial investments and liabilities, make this role a natural fit. The team would continue to manage the portfolio by utilising fund managers and advisors. No change in performance is expected. Performance is measured relative to a reference portfolio.

12. The recommendation includes reducing the size of the board from five to three members to reflect the reduced workload. The combination of savings in staff costs and board member fees is expected to be around $250,000 per annum.

13. The council’s Treasury Management Steering Group (TMSG) will provide additional oversight of the portfolio. There are plans to add at least one independent member to the group which currently has one independent member. These plans are unrelated to the proposal to transfer the management of the DFAP to Auckland Council, but will help provide sufficient independent oversight.

Recommendation/s

That the Governing Body:

a) agree to progress evaluation of the establishment of an urban development agency in order to further the council’s urban development objectives.

b) agree that the option to establish an urban development agency by combining Waterfront Auckland and Auckland Council Properties Ltd is the preferred option.

c) note that the proposal for a new council controlled agency will be provided for in the Long Term Plan and subject to public consultation.

d) agree to transfer responsibility for managing the council’s diversified financial assets portfolio from Auckland Council Investments Limited to Auckland Council treasury team, from 1 July 2015, and to reduce the number of Auckland Council Investments Limited Board members from five to three, from November 2015.

Comments

14. The CCO review process, outlined in a separate report on this agenda, has resulted in two proposals for structural change. Other minor changes in responsibilities are possible in the final stage of review, from February to June 2015.

15. The most significant recommendation of the review is to include in the LTP a proposal to establish a new CCO to deliver on council’s urban development outcomes. The proposal includes bringing together Waterfront Auckland and ACPL to form a new urban development agency. It is necessary to consult on this proposal as the establishment of new CCOs triggers the need for consultation. This proposal also signals an increase in activity in brownfield redevelopment.^{^[12]}

16. A second recommendation is to transfer responsibility for the DFAP from ACIL to Auckland Council and to reduce the number of directors of ACIL from five to three.

Proposal to increase the capacity of the council group in urban redevelopment

17. The Auckland Plan determined that that the achievement of a quality compact urban form provided the best way to accommodate future population growth and the best platform for increased productivity and economic growth^{^[13]}. The Auckland Plan assumes a high level of future housing being provided within redeveloped and intensified town centres and outlines some important goals as follows:

· Realise quality, compact urban environments^{^[14]} - The Auckland Plan has signalled the intention to accommodate 60 - 70 % of the future population growth of Auckland within the 2010 urban boundary – much of it within town centres in order to consolidate activity around key infrastructure nodes

· Integrate transport planning and investment with land use development – some of the best opportunities for redevelopment exist in the town centres on the western and southern railway line because it would make the best use of the investment in rail electrification and the service improvements to be brought about by the city rail link

· Cost effective infrastructure provision – best use of existing and committed infrastructure to accommodate population growth. These opportunities primarily exist within the current urban boundary and within town centres. This is particularly true for water and wastewater infrastructure

· Strengthen Auckland’s network of centres so they are well connected and meet community needs for jobs, housing and goods and services, on a variety of scales

· Increase housing supply to meet demand

· Increase housing choice to meet diverse preferences and needs

· Improve housing affordability and the supply of affordable housing

· Create a stunning and economically dynamic city centre full of life and activity that residents can call their home and business will flock to

· Demand good design in all development – a renewed focus on good design that better contributes to our sense of place.

18. Throughout the CCO review, council has been considering options for improving its capability and capacity to achieve urban development outcomes and minimise infrastructure costs. It has, particularly focussed on improving its ability to partner with others to achieve brownfield redevelopment.

19. Council currently has two CCOs involved in property redevelopment, those being:

· Auckland Council Property Limited (ACPL). Established by Order in Council in 2010, its purpose is to manage council property assets, facilitate private sector collaboration in property projects, bring a commercial perspective to the council’s planning initiatives and manage council’s rights and interests in relevant properties, projects and business activities. The Board of ACPL may have up to 7 directors

· Auckland Waterfront Development Agency (known as Waterfront Auckland). Established by Order in Council in 2010 to (consistent with Auckland Council’s vision for the waterfront) lead a strategic approach to developing the Auckland waterfront, develop property that it controls and act in a commercial way in its development projects including investing in projects that achieve high quality urban transformation outcomes. The Board of Waterfront Auckland may have up to 7 directors.

Options considered

20. The following three options have been considered:

· option A1: (recommended proposal) - The establishment of a new urban development entity (Development Auckland) which brings together Waterfront Auckland and ACPL and other functions of Auckland Council

· option A2: The establishment of a new urban development entity (Development Auckland) and the disestablishment of ACPL. Waterfront Auckland would remain structurally unchanged

· option B: Enhanced Status Quo. Leaves both ACPL and Waterfront Auckland structurally unchanged but enlarges the mandate for ACPL to work in conjunction with council to achieve urban redevelopment in agreed locations.

21. Under both options A1 and A2, Development Auckland would also have the ability seek partnership opportunities with private developers to redevelop individual council owned surplus sites that were outside of town centre redevelopment projects. ACPL already has this ability so option B would only require a restatement of this mandate. This more opportunistic type of work would need to be balanced with more comprehensive redevelopment projects.

Initial analysis

22. Each option has been compared to the existing processes, tools and vehicles for the delivery of urban redevelopment projects within council (i.e. the current state).

· Options A1 and A2 could be transformational in their ability to deliver brownfield land supply and intensified housing development.

· Both options would achieve this by using a comprehensive suite of tools to overcome identified barriers to redevelopment. These barriers include fragmented land holdings, and consenting and construction timeframes that can make comprehensive redevelopment unprofitable or too risky for developers.

· Option A1 takes advantage of enhanced resourcing and capability by bringing together the skill sets currently residing in APCL and Waterfront Auckland to focus on existing and new redevelopment locations.

· Option A2 could only achieve the same benefits as option A1 with additional resourcing. For option A2 to deliver the same benefits as option A1, additional and duplicate resourcing would be required, which would have a LTP impact.

· Option B would deliver some benefits compared with the status quo, but is not expected to achieve additional brownfield land supply and intensified housing at the scale envisaged by the Auckland Plan. Change would be incremental rather than transformational.

23. Initial high level analysis supports option A1 because it is a model more likely to achieve successful brownfield redevelopment. It has the advantage of combining the skills of Waterfront Auckland with those of ACPL and of combining other resources more cost effectively. More detail on the initial analysis is provided in the appendix 1 to Attachment A.

Funding this proposal – Establishment costs and operational funding

24. Estimates of the cost savings of the proposed option amount to approximately $1.5 million per year. This is largely made up of a reduced requirement for board and executive staff remuneration. Staff have also estimated that establishment costs (e.g. legal and recruitment costs) are likely to be recouped within the first two years of operation of the new entity.

25. It is not anticipated that option A1 will require additional operational funding initially. In addition to bringing together the existing budgets and resources of Waterfront Auckland and ACPL, the Strategic Development Fund would be used to make surplus council sites ready for redevelopment and the Development Fund would be used for site investigations.

26. Requirements for additional capital expenditure cannot be determined until redevelopment locations are chosen and an assessment of the value and likely yield of surplus assets (e.g. underutilised off-street carparks) is established. A proportion of the capital requirements for redevelopment will be funded through the uplift in value associated with council these council owned sites.

27. Total redevelopment location costs (including infrastructure costs) and benefits will be established via the masterplanning and business case process and would become part of the normal LTP budgeting process. Infrastructure would be funded by development contributions, development agreements or general rates in some cases. The deferral of development contributions might be necessary to attract partners in some locations.

28. The local board and community could propose a targeted rate if they wished to secure significant additional facilities or services as part of the redevelopment process.

An evolutionary approach to building capacity and capability

29. The best examples of urban development agencies overseas also focus on lifting the socio-economic status of the local communities undergoing redevelopment, by building in opportunities for job creation and the provision of social services. It is extremely likely that over time council will also need to work in locations where a high degree of this broader activity is necessary. In the establishment phase of Development Auckland, the focus will be firmly fixed on building capacity and capability to deliver physical redevelopment in brownfield locations.

30. International best practice also shows that having a balanced portfolio of redevelopment locations can be beneficial – those that have the ability to generate a surplus, and those that do not but are still important for other reasons. Staff will consider this and a number of other matters when undertaking location intervention analysis and in recommending the best locations for council approval for Development Auckland to operate in.

31. It is envisaged that location intervention analysis would be led by council staff with input from many parties including Development Auckland staff. Once locations had been approved by council and the Board of Development Auckland, the masterplanning and business case process would be led by Development Auckland staff with council staff input.

32. Over time it is also likely that Development Auckland will build a more sophisticated understanding of property and development dynamics in the Auckland market. Since it will become a key player in this market, it will seek to foster learning within the broader development industry wherever possible.

Proposals in relation to ACIL

33. ACIL was established in 2010 to hold the Auckland Council’s 100% shareholding in Ports of Auckland Limited and 22.4% shareholding in Auckland International Airport Limited. It is also the sole shareholder of the Auckland Film Studios Limited (AFSL) and manages the $326 million DFAP on behalf of council.

34. ACIL was established by the Auckland Transition Agency with the following establishment objectives:

· to bring a strong commercial focus to the ownership and governance of the Auckland Council’s major investment assets

· to provide an efficient structure for the ownership of those assets.

35. Throughout the CCO Review there has been strong support by councillors for retaining separation between the Auckland Council governing body and the Board of Ports of Auckland. The significant improvement in productivity and financial performance of the port company under ACIL’s governance is clearly acknowledged. There are good reasons to retain ACIL to manage the council’s strategic assets.

36. Two options in relation to ACIL have been considered as part of the CCO Review.

· whether there are other investments or business interests that could be transferred to ACIL

· whether ACIL should continue to manage the diversified financial assets portfolio (DFAP) on council’s behalf.

37. A separate report on this agenda explains that other business interests were investigated but no other significant opportunities were identified.

38. Note that ACIL has previously suggested that management of the AFSL should be transferred to another more appropriate part of council, as it is not primarily a commercial investment. ACIL Board’s submission indicates that the board has changed its view and can see value in it retaining ownership of the studios. Although the issue has not yet been considered, the preliminary view of council staff view is in support of ACIL continuing to manage AFSL.

Diversified financial assets portfolio

39. The primary goal of the DFAP is to provide a portfolio of assets held in reserve to meet any unforeseen liquidity or funding events. The portfolio is owned by the council and managed by ACIL, which manages it in accordance with the council’s statement of investment policy and objectives (SIPO) and ACIL’s operational investment policies and objectives (OIPO).

40. ACIL appoints a custodian and advisor; monitors performance of the DFAP; makes decisions about asset allocations within the parameters set by the SIPO and OIPO; and appoints fund managers. Auckland Council pays ACIL a fee of 0.04% of the portfolio per annum to perform these services.

41. ACIL’s statement of intent has a key performance indicator to meet or exceed returns from a reference portfolio. The return since March 2012, when the SIPO was implemented, has been 12.9%, which is exactly the same as the return on the reference portfolio.

42. This report recommends transferring responsibility for management of the DFAP to council. The council has an in-house treasury team which already manages a small trust and reserves fund. ACIL expertise is in managing business investments, while the treasury team has expertise in managing financial investments and liabilities. The treasury team would continue to manage the portfolio by utilising fund managers and advisors. No change in performance is expected. Performance is measured relative to a reference portfolio.

43. The report also recommends reducing the size of the board from five to three members to reflect the reduced workload.

44. The main benefit of the proposal is that it will save an estimated $250,000 per annum. The savings include staff cost and director fees. The council treasury team has capacity to manage the portfolio without increasing staffing. The council would expect the ACIL Board to review its staffing requirements and consider options for reductions. This could include re-sizing of the chief executive’s role.

45. Reducing the size of the board would contribute approximately $70,000 per annum to the savings. Note that councillors have discussed whether senior council staff could be appointed to two board positions to further reduce costs, but there was little support for this.

46. It is also acknowledged that the option has some disadvantages. ACIL has provided comment to council on the proposal which it does not support. ACIL’s feedback is attached to the separate report on this agenda “Council Controlled Organisation Review – Summary of Feedback”. The staff view is that the risks raised by ACIL can be managed.

47. The portfolio was initially transferred to ACIL to give it ‘critical mass’ and transfer of the portfolio to council will mean some disruption for ACIL while it resizes after the loss of this function.

48. ACIL has raised a concern that there would be a loss of independent oversight.

49. As noted, the treasury team would retain the use of independent advisors. The council’s TMSG would also provide oversight. The current members of the TMSG are Chief Finance Officer, Treasurer, Manager Financial Policy and Planning, Manager Finance, Chief Economist, Chief Finance Officer Auckland Transport and an independent member from PwC. The Auckland Council Chief Executive is also invited to attend meetings. There are plans to add at least one more independent member to this group, which would have the benefit of providing additional independent oversight. These plans are not dependant on the DFAP transferring to council.

50. ACIL has also raised a concern that it will be difficult to achieve the required mix of skills, experience and diversity on the board with three members. They cite research that large institutions operate more effectively with a board of six or seven.

51. ACIL is a holding company rather than a large institution. The council staff view is that the board size and mix of skills is more important for Boards of Ports of Auckland Limited and Auckland International Airport Limited, than for ACIL. However, if there was a concern during the recruitment process about the ability to recruit the required skill mix, the decision to reduce the number of directors could be reconsidered. Under the terms of the constitution ACIL can have a maximum of seven directors with no minimum specified.

52. Further detail on the evaluation of the advantages and disadvantages of the proposal is attached (Attachment B).

Consideration

Local board views and implications

53. The views of local boards in relation to Development Auckland are mixed – some being in support of a development agency approach, and others not. Almost all wish to see more detail on the proposal. Many have noted that their role and decision-making responsibility for place-shaping should be considered as the concept is further progressed. Some local boards also raised the importance of ensuring that the work of Development Auckland does not come at the expense of other council and community priorities.

54. The implications of the options for local boards have been outlined in appendix 1 of Attachment A (for all options) and appendix 2 of Attachment A (for options A1 and A2) of this report.

55. In both ‘A’ options, local boards will play a key role in redevelopment projects at the masterplanning stage by assisting with shaping the vision for the location. In addition to the masterplanning stage there is an important role for the local board to continue to champion the vision and be an effective conduit of information with the community as things progress. This role has been well progressed by the Whau local board in the redevelopment of New Lynn.

56. Community resistance to redevelopment would be almost impossible to overcome if a local board was not involved and willing to play a part in the process. Not all communities reject changes to their town centres however, in fact many are very happy to see private and public sector investment where little has occurred for decades.

57. Transferring responsibility for management of the DFAP has no implications for local boards. Local boards were not specifically directed to comment on this issue.

Māori impact statement

58. The Independent Māori Statutory Board (IMSB) is generally supportive of the progression of Development Auckland, recognising that it has the potential to lead to more consistent development outcomes, including providing opportunity for the council group to take a more comprehensive, efficient approach to:

· engaging with the IMSB and addressing Issues of Significance for Auckland’s Māori

· proactively consulting/engaging Māori on development projects

· delivering on lifting Māori social and economic wellbeing

· increasing the visibility of Māori identity (including the application of the Te Aranga Māori Design Principles which are incorporated into the Auckland Design Manual) across Auckland which is its point of difference in the world.

59. The IMSB would like to see more detail on the proposal before taking a final position on the option. In particular they would like to see more detail on how Development Auckland will be funded, its structure, the efficiency of the model and the specific functions it will undertake. The IMSB has asked for further input into the establishment, purpose and scope if the option is progressed.

60. To the extent possible, the request for more information on how Development Auckland will be funded, has been answered in this report. As previously stated, the exact funding arrangements for each location would be determined at a later date once all variables are known and would be subject to a business case.

61. All other points raised by the IMSB will need to be addressed in the later stages of evaluation. As with other CCOs, the extent to which Development Auckland will be able to achieve particular outcomes outlined in the Issues of Significance will need to be balanced with the achievement of its core purpose.

62. In addition to the points raised by the IMSB, staff have considered that many iwi have large property development companies that may be interested in achieving their outcomes in partnership with Development Auckland. Typically these property companies act as long term investors in a region and therefore would make ideal development partners.

63. Transferring responsibility for management of the DFAP is unlikely to have implications for Māori outcomes or wellbeing.

64. The IMSB advice to the CCO review asked for more detail about the council’s capability and capacity to manage the portfolio, and the cost savings. This information is provided in this report.

65. The advice also questioned how the council intends to address Issue of Significance 7.7 (facilitating a direct relationship between Māori, ACPL and ACIL concerning management, acquisition and divesting of land, and other strategic assets) if the remit of ACIL changes. As the DFAP is not a strategic asset and does not involve land holdings, this specific proposal does not impact on this Issue of Significance.

Feedback from CCOs

66. Formal feedback has been given by the Boards of ACPL and Waterfront Auckland which has been provided in the report entitled “Council Controlled Organisation Review – Summary of Feedback” on this agenda.

67. In summary, the Board of ACPL are in support of an urban development agency approach, noting that care must be taken to keep momentum going during any transition to a new agency. Amongst other things, they also note that there are many gains to be made by establishing a property ‘centre of excellence’ within the new entity.

68. The Board of Waterfront Auckland supports the progression of Option A1 – and make many useful observations about the next stages of evaluation, noting the critical success factors for Development Auckland to be able to advance council’s goals.

69. Auckland Transport, ATEED and RFA have also indicated their general support of LTP consultation on option A1. They see many advantages to advancing a more comprehensive approach to urban redevelopment. Watercare has provided feedback on the CCO review more generally and ACIL provided comment on matters directly relevant to their entity.

70. The assistance of ACPL and Waterfront Auckland in the development and analysis of options throughout the CCO Review has been invaluable, insightful and greatly appreciated.

Implementation

Next steps for the urban development proposal

71. Although there are still a number of details to be considered in the Development Auckland proposal, the opportunity for early public engagement is important.

72. The proposal to establish Development Auckland does not require legislative change^{^[15]} but rather seeks to address some of the remaining barriers to brownfield redevelopment by taking advantage of the considerable scale and scope of the Auckland Council group.

73. Subject to council approval to consult on this proposal in the LTP, an evaluation report on any proposed change would need to be carried out. This evaluation report and other investigations on the approved option would encompass:

· More detailed financial analysis

· a high level implementation timetable and plan

· investigation on which redevelopment locations would be the most likely candidates for this type of intervention

· a full risk assessment to understand the long-run risks of operating in the Auckland property market and how these can be mitigated as much as possible

· further work on partnering with social housing providers

· further work on value capture mechanisms and the development contribution regime for redevelopment locations

· further work on other redevelopment tools such as reduction of subdivision costs or development contributions

· consideration of how much flexibility should be given to the new entity

· further investigation of a streamlined consenting process (including examination of what should happen in a Special Housing Area)

· key stakeholder consultation (including Central Government Ministers)

· an investigation of Auckland Transport’s (ATs) current activity in urban design and property and the future synergies with Development Auckland

· any clarification or change to the activities and role of the City Transformation Unit of Auckland Council and the Housing Project Office.

74. It is envisaged that much of this work would take place concurrently with public consultation and prior to a final decision in line with the finalisation of the LTP.

ACIL proposal

75. The proposal to transfer management of the DFAP from ACIL to council does not require public consultation. The transfer would take place on 1 July 2015, at the start of the 2015/2016 financial year. The treasury team would start working with ACIL in early 2015 to facilitate the transfer. Three directors of ACIL are due to retire in November 2015. Planning for the November appointment round will start in May 2015. The CCO Governance and Monitoring committee can decide how to reduce the board from five to three at that time.

Attachments

No.	Title	Page
a View	CCO Review: Urban Development Options	203
b View	Evaluation Options for DFAP	229

Signatories

Authors

Rose Leonard - Principal Advisor

John Bishop - Treasurer and Manager CCO Governance & External Partnerships

Authorisers

Kevin Ramsay - Chief Financial Officer

Stephen Town - Chief Executive

Governing Body

27 November 2014

Off street parking - discussion document and further interim delegation

File No.: CP2014/26522

Purpose

1. To approve a new policy for the management and pricing of council owned off-street carparking across the region and a further delegation to Auckland Transport (AT) to manage council off-street parking assets in line with this policy. The ratification of previous off-street carparking decisions is also sought.

Executive summary

2. The recommendations in this report are necessary interim arrangements in advance of a comprehensive framework for the strategic and effective management of on-street carparking and council owned off-street carparking across the region being completed by the middle of next year.

3. Council (legislatively responsible for council controlled off-street carparking) and AT (legislatively responsible for on-street carparking) have been working in tandem towards this comprehensive framework.

4. Interim arrangements are needed because they will enable changes to off-street parking controls to be made without further delay. This will support council and AT objectives being progressed, and is considered necessary and prudent as occupancy levels are exceeding targeted thresholds in some council owned off-street carparks at present.

5. This report contains recommendations relating to:

· adoption of an Off-street Parking Price Adjustment Policy (the Off-street Policy) which is provided as Attachment 1 and Parking Triggers Table (the Triggers Table) which is provided as Attachment 2

· a further interim delegation from council to AT to manage region-wide off-street carparking assets in line with the Off-street Policy and the Triggers Table

· ratification of historical AT off-street parking management and enforcement decisions.

Recommendation/s

That the Governing Body:

a) note that on 25 November 2014 the Auckland Transport Board was asked to approve certain aspects of a Parking Discussion Document and has approved the Off-street Parking Price Adjustment Policy and Parking Triggers Table

b) note that Auckland Transport has legislative responsibility for on-street parking and that council is legislatively responsible for off-street parking, and council has delegated certain off-street parking powers to Auckland Transport

c) approve the Off-Street Parking Price Adjustment Policy for the management of all council-owned off-street carparking assets across the region except those associated with community facilities

d) approve the off-street and general policy aspects of the Parking Triggers Table for incorporation into the final parking strategy and for use as a guideline for changes to parking restrictions until the parking strategy is completed

e) revoke and replace all existing delegations from Auckland Council to Auckland Transport in relation to the management and control of off-street parking facilities owned by the Auckland Council with this new delegation. Without limitation, this includes the following:

i) delegations from the Regional Development and Operations Committee:

· in relation to Dove-Myer Robinson, Pt Erin and Victoria Parks dated 16 August 2012;

· in relation to Council parks dated 14 March 2013;

· in relation to New Lynn town centre dated 14 March 2013;

· in relation to Anzac Street carpark dated 17 April 2013;

· in relation to Claris Airport dated 24 July 2013;

ii) delegation from the Council's Chief Executive in relation to off-street parking dated 31 January 2014

iii) delegation in relation to libraries and the Central Business District from the Regional Strategy and Policy Committee dated 3 July 2014

f) delegate to Auckland Transport its responsibilities, duties and powers relating to the management and control of off-street parking facilities owned by the Auckland Council, including all regulatory and enforcement powers related to that function, as set out in the November 2014 Off-street Parking Delegation Terms. This delegation takes effect immediately, remains in force until further decision by Auckland Council and may be reviewed or revoked by Auckland Council at any time

g) hereby ratifiy all decisions made and actions undertaken by or on behalf of Auckland Transport in relation to the management and control of off-street parking facilities owned by the Council, in the period from 1 November 2010 to 27 November 2014, including (without limitation) all regulatory and enforcement decisions.

Comments

Responsibility for parking in Auckland

6. The Local Government (Auckland Council) Act 2009 (LGACA 2009) expressly provides that AT are responsible for on-street parking and council are responsible for council owned off-street parking.

7. LGACA 2009 also provides that council may delegate the control and management of council owned off-street parking to AT.

8. Responsibility for off-street parking controls within council sits with Governing Body (or its committees) because parking controls are a part of Auckland’s transport networks and infrastructure and are a regulatory matter.

9. Council and AT have been working in tandem to develop a comprehensive framework for the strategic and effective management of council owned carparking (on-street and off-street) across the region. The comprehensive framework is making progress towards final completion mid next year. This framework will replace legacy council mechanisms for on-street and off-street carparking management and once completed, will consist of:

· a strategy^{^[16]} for on-street and off-street carparking for the region, setting out the objectives for the best use of these publically owned assets under the control of the council group

· two bylaws that enable the setting and enforcement of carparking restrictions (an AT bylaw for the management of on-street carparking, and a council bylaw for the management of off-street carparking)

· the necessary delegations from council to AT in relation to the management, control and operation of off-street parking assets.

Bylaws allow parking restrictions to be made

10. Parking restrictions are able to be put in place by council or AT by adopting bylaws using the special consultative procedure.

11. LGACA 2009 provides that AT has responsibility for transport related bylaws but only in relation to roads (on-street parking). On 8 July 2012, the Board of AT adopted a traffic bylaw pursuant to section 22AB of the Land Transport Act 1998 to set requirements for parking and control of traffic on roads under the care, control or management of AT. This bylaw revoked and replaced the ‘road-related’ (on-street) parts of the legacy transport bylaws.

12. Council retains responsibility for bylaws controlling council owned off-street parking e.g. council owned carparks, library carparks, and carparks associated with community centres or recreation areas. Council has commenced the development and consultation on a traffic bylaw that will work in parallel with the AT Traffic Bylaw 2012. This will replace the off-street carparking provisions in legacy council bylaws when it is complete in mid-2015 (estimated adoption April or May).

Strategy supports bylaws

13. The content of bylaws are normally supported by strategic objectives from strategy or policy documents which have had public input.

Proposed new strategy

14. AT have been consulting with the public on future strategic parking objectives and approaches through the AT Draft Parking Discussion Document 2014 (the discussion document) (Attachment 3). Feedback has been received and incorporated into the Off-street Policy and Triggers Table.

15. The objectives contained in the parking discussion document align with Auckland Plan and are listed in page 7 of the discussion document as follows:

a. “facilitate a transformational shift to public transport

b. support the economic development of the Auckland City Centre, metropolitan and town centres

c. prioritise the safe and efficient movement of people, services and goods on the road network

d. provide an outstanding customer experience at AT operated on and off-street facilities

e. support place-making, amenity and good urban design outcomes

f. ensure the efficient use of land in centres

g. ensure a fiscally responsible approach to providing, managing and pricing parking facilities and that benefits cover costs.”

16. The principles for the achievement of the above objectives that have been carried through into the new Off-street Policy are as follows:

a. “pricing policies should be consistent with the organisation’s strategic objectives by supporting visitation to the CBD, promoting public transport use, discouraging commuter trips at peak times and reducing congestion

b. prioritise short stay parking over long stay parking

c. use a consistent, simple, rules-based, transparent and data-driven approach for setting parking rates

d. use demand responsive pricing and charge the lowest rates possible to achieve occupancy targets

e. ensure the peak demand for short-term parking is met most of the time

f. use discounts to achieve strategic outcomes such as discouraging peak commuting and reducing congestion

g. use specific parking management measures during special events and short seasonal peaks such as school holidays”.

17. The Triggers Table sets out thresholds and interventions for changes to parking controls in off-street at-grade car parks and would form part of a final parking strategy.

18. The Off-street Policy and Triggers Table recognise that transitioning from an approach that focused on the commuter market to one that prioritises short-stay off-street parking is a significant policy change. The Off-street Policy sets out a methodology for setting prices so that short-term off-street parking is prioritised and commuter off-street parking prices are increased as off-street car parks become full. The Off-street Policy also proposes travel demand pricing to further discourage driving during peak traffic times.

19. In order for AT to respond effectively to manage off-street parking it will also be necessary to have the flexibility to change prices and customer products from time to time to ensure that AT and council transport objectives are best met. For example, the early bird and lease parking rates are considerably less than competitor rates and ratepayers are in effect subsidising the cost of commuter car travel into the city centre.

20. On 25 November 2014, after consultation with the public, and in anticipation of the finalisation of a final parking strategy, the board of AT was asked to approve the Off-street Policy and Triggers Table for all council owned off-street carparking buildings, and all council-owned at-grade off-street car parks across Auckland.

21. Council adoption of the Off-street Policy is recommended. It would apply to all council owned off-street parking throughout the region, including libraries but not other community facilities (e.g. community halls and pools). Policy relating to community facilities will be looked at when a final parking strategy is considered.

22. Council adoption of both the off-street parking and general parking policy aspects of the Triggers Table is recommended.

Delegations

23. Prior to amalgamation, the transition Chief Executives of Auckland Council and AT signed a Memorandum of Understanding (MoU) which set out responsibilities for each organisation in relation to road activities. In the MoU, council agreed that AT would be generally responsible for council controlled off-street carparks (other than those specifically associated with other council facilities e.g. libraries and community centres).

24. In 2013 uncertainty arose as to whether the MoU effectively delegated off-street parking responsibilities from council to AT.

25. As a consequence, various delegations have been given by council to AT for off-street parking responsibilities as has been necessary to enable the effective management and operation of council owned off-street parking as part of the region wide parking network.

Delegations currently in place

26. Because of the wording of the residual legacy bylaws, and the provisions of the Land Transport Act 1998, there are currently some off-street parking matters that can be delegated by the Chief Executive, and some matters which cannot be delegated unless by a resolution of council.

27. The Auckland Council Chief Executive has previously delegated to AT powers and duties for the management and control of council owned off-street parking throughout Auckland except:

a. areas specifically dedicated to council facilities – e.g. libraries and community centres

b. the ability to change or set new restrictions or make changes to parking charges

c. the ability to enforce off-street parking in areas that require a council resolution to be delegated.

28. Auckland Council has, by resolution, also delegated certain off-street parking responsibilities to AT, namely:

a. the establishment and enforcement of restrictions in the carparks situated in local and regional parks (subject to a request from the Parks Manager after Local Board consultation). This does not include the ability to set charges

b. the enforcement of parking restrictions and a change to ‘pay and display’ at 40 Anzac Street, Takapuna

c. the enforcement of parking in the short-term and long term parking areas at Claris Airport

d. the establishment of restrictions and the ability to control and manage parking on council owned land and assets within the New Lynn Town Centre

e. a delegation to AT to set and enforce restrictions at community library off-street carparks in accordance with a protocol that requires the manager of the library to initiate the discussion on setting restrictions and also requires local board input

f. a delegation to AT for the management, control and enforcement of all off-street car parking which can only be delegated by a council resolution

g. a delegation to AT to implement the Central Business District (CBD) Price Adjustment Policy by adjusting prices in four inner city off-street car parks owned by council in accordance with the interim policy adopted on 3 July 2014^{^[17]}.

Delegations and ratification sought in this report

29. To consolidate the various existing delegations and to expand them to include wider powers to set charges and restrictions, this report recommends a further interim Auckland wide delegation to AT in relation to off-street parking. This requires resolution of council^{^[18]}.

Options

30. The following options for the further interim delegation have been considered:

· option A: Council could wait until the parking strategy is complete (potentially as early as December 2014) until the new broader delegation is given. This option is not recommended at it is not certain that the strategy will be complete by December, which would leave a number of assets exceeding occupancy targets for a longer time period (e.g. Matiatia and Kingsland town centre)

· option B: Council could wait until the strategy and council Traffic bylaw were complete in mid-2015 (estimated April/May). Whilst this option would mean less duplication (no need for a renewed delegation under the new bylaw) it would also leave a number of assets exceeding occupancy targets for a much longer time period. This option is therefore not recommended

· option C: (recommended) Council could approve the Off-street Policy and Triggers Table via this report (to be incorporated into the final strategy when it is complete); and delegate to AT the powers to implement those policies until both the strategy and council traffic bylaw have been put in place in mid-2015 (estimated April/May). This option is recommended as it allows AT to manage council assets in the most cost effective way and will relieve the pressure on assets that require changes to parking restrictions (e.g. Matiatia and Kingsland town centre).

31. Council and AT agree that the delegation does not include power to adopt parking policy for Council controlled off-street parking (because issues relating to responsibility for policy between council and AT are being resolved in the CCO Review).

32. AT have confirmed that AT will consult with affected parties regarding any changes to parking restrictions and charges, including seeking and having regard to the views and preferences of local boards.

33. In order to consolidate the numerous existing delegations, the recommended delegation will replace all previous delegations from council to AT in relation to off-street parking. This report also recommends revocation of the previous delegations. However, council and AT have agreed that if there were any particular locational conditions or limitations in the previous delegations, that these conditions or limitations would continue to apply in the new delegation. The details of the recommended delegation are in Attachment 4.

34. The recommended delegation would remain in place until the comprehensive framework can be completed. When the parking strategy has been approved (potentially as early as December 2014), and a council Traffic Bylaw is adopted mid-2015, a final delegation will be recommended.

35. The delegations that have previously been given, and the proposed new (interim) delegation have effect prospectively. This means that there is a historical period of time (from amalgamation until the Auckland wide delegations in January 2014 and July 2014) where some AT off-street parking management and enforcement decisions may have been subject to challenge, but are presumptively valid.

36. In order to remove any doubt, and to retrospectively confirm that AT had all requisite authority at any appropriate historical time, this report recommends ratification of all previous AT off-street parking management and enforcement decisions .

Consideration

Local board views and implications

37. Local board views and preferences have been sought on the parking discussion document alongside that of the general public. A summary of this feedback is provided as Attachment 5. This feedback summary provides an overview of submissions received about off-street parking changes within the wider context for changes to on-street and off-street parking proposed in the discussion document.

38. Changes have been made to the Triggers Table as a result of this feedback by specifying additional interventions that should be used before shifting to charging for parking. These changes provide an effective response to the feedback received.

Māori impact statement

39. There are no particular impacts on Māori which are different from general users of the council owned off-street car parks.

Implementation

40. Any surplus revenue generated from changes to off-street parking charges will be used to reduce the annual funding requirement from council. Under this interim delegation, council will continue to meet the costs of the setting the restrictions in local and regional parks, including signage.

Attachments

No.	Title	Page
a View	Off-steet Price Adjustment Policy	239
b View	Parking Triggers Table	243
c View	AT Parking Discussion Document	245
d View	November 2014 Off-street Parking Delegation Terms	305
e View	Parking Discussion Document Feedback	307

Signatories

Authors

Rose Leonard - Principal Advisor

Authorisers

John Bishop - Treasurer and Manager CCO Governance & External Partnerships

Kevin Ramsay - Chief Financial Officer

Stephen Town - Chief Executive

Governing Body

27 November 2014

Meeting Schedule 2015 through to Election 2016

File No.: CP2014/20785

Purpose

1. To adopt a schedule of meetings from January 2015 through to the election in October 2016.

Executive summary

2. The Governing Body needs to adopt a meeting schedule. The schedule has been created for the period from January 2015 through to the election in October 2016. This report outlines the approach used to create it.

3. The Mayor recognises that elected members have an interest in contributing to improved effectiveness and efficiency of governance in 2015. The Mayor has indicated that he wishes to hold a building momentum workshop over two days in late January or early February 2015. Alongside looking at priorities and direction for 2015, he intends that there be some joint reflection on Committee structure and meeting frequency.

Recommendations

That the Governing Body:

a) adopt the meeting schedule for 2015 through to the election in October 2016, as contained in Attachment A of the agenda report

b) authorise the Manager Democracy Services to amend the schedule if required, in consultation with the chair of any affected committee, and subject to the Mayor’s or Deputy Mayor’s approval if a formal meeting has to be held on a Monday or Friday.

c) note that the meeting schedule could be subject to amendment if the Governing Body agrees to committee scheduling changes early in 2015.

Comments

4. In preparing this schedule the following principles have been taken into account, in line with previous schedules:

· Formal business of the Governing Body has been confined to Tuesdays, Wednesdays and Thursdays each week.

· Thursdays are reserved for Governing Body and Committees of the Whole with no other meeting scheduled after these. There are exceptions to this in April and December 2015 and April and July 2016 because of Long Term Plan and Annual Plan consultation processes.

· The Governing Body continues to meet on the final Thursday of the month.

· One-week meeting recesses have been scheduled during the school holiday periods.

· Workshop times have been scheduled on Wednesday afternoons where there is space available.

· As much as possible, Committee membership has been taken into consideration to optimise Councillors’ time.

· Dates for joint quarterly meetings of the Governing Body and the Independent Māori Statutory Board, and the Governing Body and Local Board Chairs have been set.

· The WWI Steering Group, the Election Working Party and the Standing Orders Working Party also form part of the meeting schedule.

5. The following scheduling periods have been used:

Monthly	Auckland Development Committee CCO Governance and Monitoring Committee CEO Review Committee Finance and Performance Committee Tupuna Maunga o Tamaki Makaurau Authority (Maunga Authority) Parks, Recreation and Sport Committee Regional, Strategy and Policy Committee Regulatory and Bylaws Committee WWI Steering Group
Six Weekly	Arts, Culture and Events Committee Community Development and Safety Committee Economic Development Committee Environment, Climate Change and Natural Heritage Committee Infrastructure Committee Auckland City Centre Advisory Board Disability Advisory Panel Ethnic Peoples Advisory Panel Heritage Advisory Panel Pacific Peoples Advisory Panel Rural Advisory Panel Seniors Advisory Panel Treaty of Waitangi Settlement Working Party Youth Advisory Panel
Quarterly	Audit and Risk Committee Civil Defence and Emergency Management Group Committee Governing Body/Independent Māori Statutory Board Governing Body/Local Board Chairs Hauraki Gulf Forum Ngati Whatua Orakei Reserves Board Southern Initiative
Fortnightly	Tenders and Procurement Committee Unitary Plan Committee
Other	Budget Committee (as and when required) Elections Working Party Standing Orders Working Party

6. Other events scheduled include:

· LTP regional consultation events have been scheduled in the second week of the school holiday period in 2015. Budget Committee/Local Board and Budget Committee/CCO engagement meetings have also been scheduled for the end of April 2015 (this will include Friday 1 May). These dates are subject to change depending on future decisions on the consultation process.

· The Annual Plan consultation events have been scheduled for April 2016. These are also subject to change.

7. Past experience has indicated that amendments to the meeting schedule are inevitable. The Governing Body is therefore asked to authorise the Manager Democracy Services to amend the schedule, in consultation with the chair of any affected committee, and subject to the Mayor’s or Deputy Mayor’s approval if any formal meeting has to be held on a Monday or Friday.

8. Consultation with the Independent Māori Statutory Board has taken place and dates for quarterly joint meetings with the Governing Body have been agreed.

9. Some meetings in the schedule are not council committee meetings but are included because they involve councillors or other committee members.

Consideration

Local board views and implications

10. Consultation with Local Board Services has taken place and dates for quarterly joint meetings between the Governing Body and Local Board chairs have been agreed.

Māori impact statement

11. Many of the meetings listed in the schedule will be of relevance to Māori, are co-governance bodies or otherwise involve Māori representatives. Examples include the Independent Māori Statutory Board, the Hauraki Gulf Forum or the Tupuna Maunga o Tamaki Makaurau Authority.

Implementation

12. The Mayor recognises that elected members have an interest in contributing to improved effectiveness and efficiency of governance in 2015. The Mayor has indicated that he wishes to hold a building momentum workshop over two days in late January or early February 2015. Alongside looking at priorities and direction for 2015, he intends that there be some joint reflection on committee structure and meeting frequency.

Attachments

No.	Title	Page
a View	Draft Schedule of Meetings for 2015 and through to Election 2016	349

Signatories

Authors

Sarndra O'Toole - Team Leader Governance Support

Authorisers

Marguerite Delbet - Manager Democracy Services

Grant Taylor - Governance Director

Stephen Town - Chief Executive

[2] Attached low rise will be charged on it actual impervious surface area (ISA), 292m² equating to 1 HUE, rather than 1 HUE per household as for all detached dwellings.

[3] Attached low rise will be charged on it actual impervious surface area (ISA), 292m² equating to 1 HUE, rather than 1 HUE per household as for all detached dwellings.

[4] The previous policies still apply where a consent had been lodged prior to the adoption of Auckland Council’s policy on 1 July 2012.

[5] While these investments will be funded from borrowing the interest costs will be met from rates.

[6] Attached low rise will be charged on it actual impervious surface area (ISA), 292m² equating to 1 HUE, rather than 1 HUE per household as for all detached dwellings.

[7] For Auckland Transport and Watercare this does not include reviewing the statutory provisions which define their purpose and high level responsibilities.

[8] There are some exceptions to this including where an activity is in legislation or covered by an agreement that cannot reasonably be changed within the next two years. For example, the Auckland Council would not be expected to review services delivered by Auckland Transport.

[9] The Auditor-General has defined cost effective to be “the relationship between the level of resources used and progress towards a predetermined outcome”. This can be broader than just value for money. To assess cost effectiveness, the council should consider whether (over time) the costs of services are justified by the impact and outcome results produced.

[10] Notably, guidance from the Department of Internal Affairs states that “the reviews should not be too onerous”.

[11] It is likely that infrastructure readiness and cost would also be two of the many criteria used to determine which locations were prioritised for Development Auckland intervention.

[12] Increases in activity levels also trigger the need to consult under the amended Local Government Act 2002.

[13] It also is the most cost effective way to provide public infrastructure, especially transport infrastructure – enabling the best use of existing networks and minimising the need to build new assets.

[15] It is possible that legislative reform may be necessary at a later date, once more difficult redevelopment locations are being considered.

[16] The final name of the strategy document is not yet decided.

[17] On 3 June 2014, the Regional Strategy and Policy committee of council adopted as an interim measure, the Price Adjustment Policy for Council Owned Off-street Parking in the Central Business District (Downtown, Victoria Street, Fanshawe Street and the Civic carparks) until the discussion document could be finalised into a strategy. The CBD Price Adjustment Policy adopted by committee is almost identical to the Off-Street Price Adjustment Policy recommended for adoption in this report. The differences are not substantive.

[18] Refer to paragraph 27 for an explanation of why some matters require a Council resolution.

Mayor	Len Brown, JP
Deputy Mayor	Penny Hulse
Councillors	Cr Anae Arthur Anae	Cr Dick Quax
	Cr Cameron Brewer	Cr Sharon Stewart, QSM
	Cr Dr Cathy Casey	Cr Sir John Walker, KNZM, CBE
	Cr Bill Cashmore	Cr Wayne Walker
	Cr Ross Clow	Cr John Watson
	Cr Linda Cooper, JP	Cr Penny Webster
	Cr Chris Darby	Cr George Wood, CNZM
	Cr Alf Filipaina
	Cr Hon Christine Fletcher, QSO
	Cr Denise Krum
	Cr Mike Lee
	Cr Calum Penrose

Authors	Mike Giddey - Democracy Advisor
Authorisers	Stephen Town - Chief Executive