Minute Item Attachments of Howick Local Board

Comments

Phase One – Terms of Reference and Current State Assessment

10. The governing body adopted its 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 the council’s strategies and provided an efficient and effective model of service delivery. They also sought to:

· ensure sufficient political oversight and public accountability of CCOs

· provide clarity about roles and responsibilities

· eliminate duplication

· better integrate services and functions and provide a positive interface between the Auckland Council group organisations and Aucklanders.

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

12. The review is due to be completed by June 2015. Any proposals for structural change will be consulted on through the draft Long Term Plan (LTP).

13. The terms of reference and CCO review workstreams were informed by two current state assessment reports, one prepared from a council perspective and one from a CCO perspective. Local board input to the current state assessment acknowledged significant improvements in interactions between CCOs and local boards over the three year period, although most local boards were still looking for further improvement in certain areas.

Phase Two – Assessment of Services

14. The first step in phase two of the review was to test the rationale for delivering services through a CCO. Councillors discussed that there were both benefits and challenges from delivering services through arms’ length entities such as CCOs.

15. Benefits include commercial focus, efficiency, flexibility in decision-making, and ability to attract specialist skills. Challenges include that the council is ultimately accountable for ratepayer funding, and achieving integration of CCO activities with other council services or policies. It was also acknowledged that where there is high political, public, iwi, or stakeholder interest in CCO decision-making, this can be challenging for the council.

16. At its meeting of 26 June 2014, the governing body received analysis of the services currently being provided by CCOs, against a set of criteria that sought to test the suitability of those services for delivery through a CCO. Overall the analysis suggested that the services currently being delivered through CCOs were well suited to this mode of delivery. Where challenges were identified it was clear that councillors believe these can be properly managed through a CCO model.

Phase Two – CCO delivery and configuration

17. The second step in phase two of the review was to identify whether any changes to the grouping of activities was likely to deliver better outcomes than the current CCO configuration.

18. Councillors have discussed configuration options at a series of workshops in August and September. The options were informed by one or more of the following drivers for change:

· Opportunities to address issues raised in the current state assessment, particularly removing duplication in skills and clarifying responsibilities

· Opportunities to increase effectiveness and drive results

· Opportunities to improve strategic alignment to Auckland Plan goals

· Opportunities to increase efficiency/reduce costs

· Evidence from international best practice or other desktop research.

19. In relation to the last bullet point a number of pieces of desktop research were undertaken. These included reviews of national/international delivery models and a report by Synergine Group on the linkages between water, wastewater and stormwater.

20. The Governing Body has not made any decisions on configuration options; however, workshop discussions have indicated that there was insufficient rationale to progress some options.

Options not being progressed

21. Three waters – The Synergine Group report found that there would be some benefits from the integrated management of three waters, such as enhanced catchment management planning. It also found significant linkages between stormwater and other activities of the council group, including land use planning and transport.

22. For this reason, the options of delivering three waters in-house or within a three waters CCO were both considered.

23. In-house delivery of three waters could help better align water and wastewater network planning with council strategy; however, these benefits can be achieved in other ways including through greater collaboration. This option would have some significant disadvantages including very high cost of change and likely reduced commercial focus in relation to water and wastewater delivery.

24. Delivery of three waters within a three waters CCO could have benefits in terms of operational efficiencies and greater commercial focus. However, some of the benefits can be achieved in other ways and there are some major drawbacks. For example, this option could require complex agreements between Auckland Council and Watercare as many stormwater assets are ‘soft infrastructure’ such as overland flow paths. This would have implications for local boards as many of the overland flow paths are in local parks. Another reason that the option was not progressed was that stormwater planning also needs to be highly integrated with land use planning.

25. Regional facilities, tourism and major events. This option would involve transferring ATEED’s responsibility for tourism and major events to RFA. The main drivers for this option were perceived increase in efficiency and effectiveness as both RFA and ATEED have a focus on tourism and major events including conferences. However, RFA’s main objectives are to maximise utilisation of their assets, while ATEED’s focus is on delivering benefit for the Auckland Region. This option has not been progressed as there was a concern that the resulting CCO would have conflicting objectives.

26. Larger Commercial CCO. Consideration was given to other council investments or business interests that could be transferred to ACIL; however, no significant opportunities were identified.

27. Of the options not being progressed, the option involving transferring stormwater to a three waters CCO is likely to be of most interest to local boards for reasons outlined in paragraph 24.

Options still under consideration

28. Enhanced status quo. This option will apply to all CCOs which do not undergo significant structural change. Enhanced status quo will involve reviewing the purpose and high-level objectives of each CCO as set out in the orders of council under which they were established. This does not apply to Watercare or Auckland Transport, which have specific legislative provisions defining their powers and responsibilities. The timeframe for this review will be between February and June 2015.

29. Enhanced status quo will also involve considering a number of one off issues in relation to each CCO. The following are likely to be of most interest to local boards.

· Whether local economic development activities are delivered by Auckland Council or ATEED.

· The roles and interface between local boards and Auckland Transport in relation to place-making functions.

30. A lot of feedback has already been provided by local boards on these matters and will be taken into account as options are developed.

31. A key difficulty with ATEED delivering local economic development activities on behalf of local boards is that local boards have decision-making responsibility for this, yet they do not have a direct governance relationship with ATEED. This report seeks local board views on ATEED being responsible for local economic development, if a mechanism can be established to hold ATEED accountable to local boards for delivery.

32. Note that the CCO review will not address the level of funding for local economic development activities, as this is an LTP decision. Current budget proposals are for the funding for local economic development activities to be provided in the council’s spatial priority areas only.

33. In relation to local boards, Auckland Transport and place-making, the current state assessment from local boards contained a lot of feedback which will be considered. Any specific proposals would need to come back to local boards for further feedback.

34. Under enhanced status quo there are a number of matters to clarify in relation to Waterfront Auckland. These include the role of Waterfront Auckland in its “area of influence”, and whether the Cloud, Shed 10, and the Viaduct Events Centre, are managed by Waterfront Auckland or RFA. These matters may be of interest to some local boards. The timing for addressing these matters has not yet been determined, but further consultation with interested local boards may be required at a later date.

35. Urban Regeneration CCO: Serious consideration is being given to how the council can increase its level of activity to support its transformational shift of radically improving the quality of urban living. This means moving to quality compact urban form that is well connected, appropriately serviced, provides employment opportunities, and provides housing affordability and choice. These are key elements but there are many other considerations including safety, sustainability, and quality urban design.

36. While the proposed Auckland Unitary Plan (PAUP) is an enabler, it will not be sufficient on its own to provide the scale or quality of development required.

37. The council already has a range of vehicles for helping deliver on these objectives. These include:

· Waterfront Auckland, which is responsible for regeneration of Wynyard Quarter

· City Transformations which undertakes master planning and town centre upgrades

· ACPL which has a role in facilitating housing and commercial development in specific locations including Ormiston Town Centre, Yard 37 at Hobsonville, Papatoetoe town centre, Avondale town centre, and Wilsher Village in Henderson

· Tamaki Redevelopment Company, which is jointly owned with central government and council

· Housing Project Office which is charged with implementation of the Housing Action Plan and integrated consenting in Special Housing Areas (SHAs).

38. The council is considering a new vehicle that could act as a single outward facing voice in the development of the Auckland region, with greater economies of scale, enhanced commerciality and the ability to partner with others. This is likely to be a staged process with the first steps undertaken as part of the CCO review. Options are still being refined but could include expanding the role of ACPL, bringing together the skills and expertise from Waterfront Auckland and ACPL, or another option which could emerge out of work still being undertaken.

39. The concept of a new vehicle to assist in the delivery of quality urban living goals is likely to be of interest to local boards. Local boards’ role in community engagement and local place-making is central to shaping on-going change.

40. In the initial stages it is likely that any increase in redevelopment/regeneration activity would simply reflect repriotisation of LTP budgets in areas which have been identified as spatial priorities. However, it is anticipated that the vehicle would generate and/or leverage new sources of funding over time.

41. This report seeks comments from local boards on the concept of an enhanced delivery vehicle for urban regeneration including comment on the considerations that the Governing Body should take into account from a local perspective, when developing the concept further.

42. Holding Company. ACIL currently owns council shares in Ports of Auckland Limited, Auckland Film Studios, and Auckland International Airport. It also manages the diversified financial assets portfolio (DFAP) on behalf of the council. An option still being considered is to transfer responsibility for the DFAP to the council. ACIL would then become a holding company for council’s ownership in commercial investments. This option does not have identifiable implications for local boards.

CCO model –working better together

43. The focus of the review to date has been on the rationale for arms-length delivery and options for structural change. The terms of reference for the review are much wider than this and include consideration of how to make the CCO model work best for the Auckland Council group. The Auckland Council CCO model is fundamentally different to other local authorities in New Zealand as CCOs deliver core services on behalf of council. The preferred approach is a collaborative model where CCOs are delivery partners, rather than autonomous entities that the council procures services from.

44. Two workstreams likely to be of particular interest to local boards are the Accountability Framework workstream; and the Communication, Collaboration and Consultation workstream.

Accountability Framework

45. To date, the Accountability Framework workstream has focussed primarily on processes, with a goal of improving alignment between budgeting, the LTP process and the annual statement of intent (SOI) process.

46. Proposed new processes have been considered at CCO Review workshops and are due to be considered formally by the CCO Governance and Monitoring Committee on 7 October 2014.

47. The proposed new process recognises that the council’s expectations of CCOs expressed through the SOI process, need to be aligned to the LTP/Annual Plan. When the council considers CCO priorities it should do so within the context of the funding it is providing, or the funding assumptions it is making in the LTP/annual plan.

48. Under the proposed new process the Budget Committee will consider CCO key performance indicators and targets at its October/November workshops with CCOs, and will agree an annual letter of expectation (LOE) to CCO chairs, that reflects budget decisions made. The CCO Governance and Monitoring Committee will receive the draft SOIs in April each year as usual and will limit its shareholder comments to checking that deliverables reflect what has already been agreed through the budgeting process.

49. For local boards, the main implication is that the Budget Committee will also have an overview of local board priorities when it sets its funding for CCOs. For the proposed LTP, the Budget Committee workshops with local boards occur shortly before workshops with CCOs. This will enable Budget Committee members to engage with CCOs regarding local board priorities if they have concerns about any priorities that are not reflected in programmes proposed by CCOs.

50. This does not supersede the requirement for CCOs to take local board priorities into account when they develop their proposed programmes, and for CCOs to actively engage with local boards as they do this.

51. The other proposed change is to streamline the SOIs so that they are focused on what the CCO will deliver. Council expectations in relation to how the CCO is expected to act will be included in a new Governance Manual that will replace the current Shareholder Expectation Guide.

52. Under recent changes to the Local Government Act 2002, the council is required to have a binding agreement with its CCOs. It is proposed that the binding agreement will cross-reference the Governance Manual which will formalise the requirement to comply with council expectations.

53. This Governance Manual will include council expectations of CCOs in relation to local board engagement and reporting, and consideration of local board priorities. These have already been articulated in resolutions of the Accountability and Performance committee in December 2012, and the Strategy and Finance Committee in September 2013. The recent elected member survey included questions for local board members to help assess the current level of satisfaction of local board members in relation to these matters. It is intended that this will continue to be monitored annually.

Communication, collaboration and consultation workstream

54. The purpose of this workstream is to:

· Ensure that CCOs, elected members and council staff engage effectively over strategic issues and keep each other well informed of sensitive issues. This includes CCO interaction with the IMSB and local boards.

· Ensure appropriate public engagement on matters of public interest.

55. This work is still being scoped. The working group will include a staff member from Local Board Services.

56. This work could result in new content for inclusion in the new Governance Manual referred to in paragraphs 51-53. This would need to be identified in draft form by March 2015. If there are any proposals that relate to local boards, CCO Review staff will seek guidance from Local Board Services about further engagement with local boards on these matters.

Next steps in CCO review

57. According to the current timetable, the Governing Body will receive a report on 27 November 2014 with recommendations on CCO configuration options. If the council agrees to support any option that would require significant structural change to any CCO or the establishment of a new CCO, this will be consulted on through the LTP. The proposal to establish a new vehicle to deliver on quality urban living objectives would require LTP consultation.

58. Work on the “working better together” workstreams will continue from now until June 2015.

Consideration

Local board views and implications

59. This report asks for local board views on a number of issues that are being considered as part of the CCO review. This report has provided an overview of review and noted the matters which are likely to be of most interest to local boards.

Māori impact statement

60. The CCO review also includes a range of issues that are likely to be of interest to Māori and to the IMSB. Staff will also seek feedback from the IMSB in relation to these matters.

Implementation

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