Agenda of Finance and Performance Committee

Finance and Performance Committee

22 October 2015

Disposal Recommendation Report

File No.: CP2015/18616

Purpose

1. This report seeks approval to sell three non-service council owned properties that Panuku Development Auckland considers suitable for sale. This report also re-presents a council owned property that the Finance and Performance Committee previously resolved be subdivided and partially disposed of.

Executive Summary

2. Panuku Development Auckland is required to identify properties from within council’s portfolio that may be suitable for potential sale to a combined value of $40 million by 30 June 2016. Panuku Development Auckland and Auckland Council Property Department (ACPD) work collaboratively on a comprehensive review process to identify such properties. Capital receipts from the sale of surplus properties will contribute to all Auckland Plan outcomes by providing the council with an efficient use of capital and prioritisation of funds to achieve its activities and projects.

3. Three of the properties presented in this report, being 56 and 57, 7 Rowlands Avenue, Mt Wellington and 5 Rayma Place, Mt Wellington have been through the agreed consultative process including organisation wide internal officer consultation, local board and iwi engagement. The feedback has been supportive of the proposed disposal of these sites. A detailed overview of the rationalisation process undertaken for each property is outlined in the Comments, Local Board Views and Implications, and Maori Impact Statement sections of this report. Site specific detail, including information and feedback gathered through the rationalisation process is contained in Attachments A and B of this report.

4. The fourth property presented in this report is 39 Taka Street, Takanini. This property was presented to the Finance and Performance Committee in February 2015. The Finance and Performance Committee resolved that this site be subdivided and a 20 metre strip retained for pedestrian and cycling links, with the balance of the property to be disposed of. Auckland Transport subsequently advised that it no longer requires the 20 metre strip to be retained. Due to this the entire property is now surplus to council requirements. Further information about this, as well as site specific detail, including information and feedback gathered through the rationalisation process is contained in Attachment C of this report.

Recommendation/s

That the Finance and Performance Committee approve:

a) subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at:

i) 56/7 Rowlands Avenue, Mt Wellington comprising firstly a one seventh share of an estate in fee simple comprising approximately 1581m²more or less being Lot 1 Deposited Plan 55902 contained in certificate of title NA10B/305 and secondly an estate in leasehold more or less being Flat 5 Deposited Plan 57671.

ii) 57/7 Rowlands Avenue, Mt Wellington comprising firstly a one seventh share of an estate in fee simple comprising approximately 1581m²more or less being Lot 1 Deposited Plan 55902 contained in certificate of title NA10B/306 and secondly an estate in leasehold more or less being Flat 6 Deposited Plan 57671.

iii) 5 Rayma Place, Mt Wellington comprised of an estate in fee simple comprising approximately 420m² more or less being Lot 46 Deposited Plan 50284 contained in certificate of title NA133C/651.

iv) 39 Taka Street, Takanini comprised of an estate in fee simple firstly comprising approximately 1,543m² more or less being Lot 6 Deposited Plan 74054 and secondly, an estate in fee simple of one fifth share in 631m² in Lot 1 Deposited Plan 74051 contained in certificate of title NA29D/1166.

b) that final terms and conditions be approved under the appropriate delegations.

Comments

5. Panuku Development Auckland (and previously Auckland Council Property Limited) and ACPD work collaboratively on a comprehensive review process to identify properties in the council portfolio that may be suitable to sell. Once identified as a potential sale candidate Panuku Development Auckland takes the property through a multi stage engagement process.

6. The first phase of the process involves engagement with all council departments and relevant CCOs. The engagement establishes whether a property is needed for a future funded project or whether it must be retained for a clear strategic purpose. This is determined by an Expression of Interest (EOI) process whereby officers can request that all or part of a property is retained. Alternatively officers may request that the property be encumbered or covenanted as part of the disposal process. If the EOI sets out a robust financial analysis and evidence based rationale to retain the properties, then the EOI is endorsed.

7. If however the reasoning is more subjective a thorough business case is required. An inter-disciplinary steering group comprised of senior managers, called the Property Review Steering Group (PRSG) meets to assess the business cases. The PRSG provides an opportunity for properties to be considered in a cohesive and integrated manner by relevant council departments and CCOs.

8. The Heritage Unit is invited prior to the EOI process to flag any sites of particular archaeological merit that need to be assessed further. Panuku Development Auckland also engages with the Closed Landfills and Contaminated Land Response team prior to the EOI process commencing to ensure any possible contamination issues that may be associated with a property are identified. The EOI process also provides the Maori and Strategy Relations team the opportunity to flag any issue that is of particular relevance to Maori in connection with the potential disposal of a site.

9. Once a property has been internally cleared of any service requirements, Panuku Development Auckland then consults with Local Boards, Ward Councillors, Mana Whenua and the Independent Maori Statutory Board.

10. All sale recommendations must be approved by the Panuku Development Auckland Board (and were previously approved by the ACPL Board) before a final recommendation is made to the Finance and Performance Committee.

Consideration

Local Board views and implications

11. Local Boards are informed of the commencement of the rationalisation process for specific properties. Following the close of the EOI period, relevant Local Boards are engaged with. Panuku Development Auckland attended a workshop with the relevant Local Board and provided information about properties being rationalised in their local board area. Local Boards may then request that Panuku Development Auckland prepare a report for their business meeting so that their views can be formalised.

12. If a Local Board wishes to retain a site, its views are considered by Panuku Development Auckland and if necessary referred to relevant council departments for consideration. The local board may be asked to prepare a business case which sets out the clear service need that will be met by retaining the site, along with how the use will be funded.

13. Panuku Development Auckland and relevant council departments or CCOs work with local boards in preparing the business case. The business case is then considered by the PRSG. If the PRSG accepts the business case and funding is identified, the property is transferred back to the service portfolio. If the PRSG does not accept the business case, the business case is included in the report to the Finance and Performance Committee for a political decision.

14. The views of the relevant local board are contained in the respective property attachments.

Māori impact statement

15. The importance of effective communication and engagement with Māori on the subject of land is understood. Panuku Development Auckland has a robust form of engagement with mana whenua groups across the region. Each relevant mana whenua group is contacted independently by email based on a contact list which is regularly updated. Each group is provided general property details, including a property map, and requested to give feedback within 15 working days. Contacts are sent reminder notices a week out from the due date, and alerted of the passing of the due date in the week following if no feedback has been submitted. Confirmation of any interest expressed is sent in writing and recorded for inclusion in the disposal recommendation report. A feedback spreadsheet is provided to facilitate responses. Any requests for extensions of a due date are handled on a case by case basis.

16. Panuku Development Auckland’s engagement directs mana whenua to respond with any issues of particular cultural significance the group would like to formally express in relation to the subject properties. We also request express notes regarding any preferred outcomes that the group would like us to consider as part of any disposal process.

17. From discussions with our Māori and Strategy Relations team we are developing an understanding of what could amount to a ‘matter of significant cultural relevance’ to iwi. We are also developing a range of reasonable outcomes that could be employed when such a matter of cultural significance is raised in relation to a potential disposal property. Possible outcomes could include commemoration or physical acknowledgment in the form of plaques or other mutually agreed means of recognition. In the event of any issues of particular cultural significance being raised, Panuku Development Auckland will work with the relevant council departments to assess the merits of any such requests and keeps the interested parties informed along the way.

18. Mana whenua groups are also invited to express potential commercial interest in any sites and are put in contact with Panuku Development Auckland’s Development team for preliminary discussions if appropriate to the property. This facilitates the groups’ early assessment of the merits of a development opportunity to their iwi. In the event a property is approved for sale all groups are alerted of the decision, and all groups are alerted once a property comes on the market.

19. Lastly a report is presented to the Independent Māori Statutory Board ahead of presenting any recommendations to sell to the Finance and Performance Committee detailing how Māori have been engaged throughout the process.

Implementation

20. As part of the overall review process each property is also legally assessed to see if there are any impediments to sell or if there is a prescribed legal way in which it must be sold. The last stage of the process is triggered once a resolution to sell is obtained. This involves a robust ‘add value’ assessment as part of the development of the final sales strategy. There is specific attention applied to the possible suitability of the site for housing purposes.

Attachments

No.	Title	Page
a View	56 and 57, 7 Rowlands Avenue, Mt Wellington property information	13
b View	5 Rayma Place, Mt Wellington property information	17
c View	39 Taka Street, Takanini property information	21

Signatories

Author

Letitia McColl - Senior Engagement Advisor, Stakeholder and Community Engagement, Panuku Development Auckland

Authorisers

David Rankin – Director, Strategy and Engagement, Panuku Development Auckland

Sue Tindal - Chief Financial Officer

Finance and Performance Committee

22 October 2015

Maraetai Beach Boating Club Inc. - Request for Loan Guarantee

File No.: CP2015/18290

Purpose

1. For the Finance and Performance Committee to determine whether or not to approve a request from the Maraetai Beach Boating Club Inc. for a loan guarantee facility from Auckland Council in respect of a $310,000 loan from the ASB Bank for a period of up to seven years to enable club house developments to proceed.

Executive Summary

2. Maraetai Beach Boating Club Inc. (the Club) is seeking a loan guarantee from Auckland Council in respect of a proposed loan from the ASB Bank Ltd for the sum of $310,000.

3. The Club is proposing an extension, (estimated at $450,000) to the existing clubhouse facilities it owns and operates on land leased from the council at Maraetai Beach.

4. The building works are subject to approval by the council in its landowner/landlord capacity under the terms of the lease. This aspect of this work is being handled separately by council staff and must be completed prior to construction starting and any funds being drawn down from the bank.

5. The intention is for the Club to borrow $310,000 from ASB Bank Ltd for a maximum term of seven years (to coincide with the termination date of the existing lease).

6. The Club has a good track record of repaying previous loans and undertaking similar developments over the 60 year lifetime of the Club.

7. As the Club is unable to provide security to the bank over the land and buildings it occupies, the Club has requested that the council provide a loan guarantee.

8. If approved, the loan guarantee documentation will require that the lease be amended to add a cross-default clause permitting termination of the lease should the Club default on its obligations under the loan and loan guarantee documentation. Other provisions such as a ‘negative covenant’ preventing the Club from borrowing any further funds without prior council approval will also be included.

9. Based on the previous track record of the Club; that a special building levy has been implemented by the Club; and the modest scale of the development, staff recommend that the loan guarantee be approved.

Recommendation/s

That the Finance and Performance Committee:

a) approve the request from the Maraetai Beach Boating Club Inc for Auckland Council to provide a loan guarantee facility in respect of a loan of $310,000 from the ASB Bank Ltd for a term of up to seven years on the standard terms and conditions the council enters into these arrangements with community organisations and banks, including provisions limiting the ability of the Club to undertake any further borrowings while the loan remains payable to Auckland Council.

b) delegate approval of the final terms and conditions of the loan guarantee agreement and related documents to the General Manager Finance.

Comments

The Request:

10. A request has been received from the Maraetai Beach Boating Club Inc. for Auckland Council to provide a loan guarantee facility in respect of a loan the Club wishes to obtain from the ASB Bank Ltd to enable the Club to undertake Stage One of a two-stage extension programme at the Club facilities at Maraetai Beach.

11. The club house is located on leasehold land owned by Auckland Council, and as such the Club is unable to offer the land and buildings as security for the loan from the ASB Bank.

12. The Club wishes to undertake Stage One of a building Alterations Project which has a budgeted total value of $450,000 (plus GST). The Club proposes to fund the work as follows:

Total cost of Stage One $450,000

Club contribution (cash) $140,000

Balance to be funded by bank finance $310,000

13. The proposal is that the loan be for a maximum term of seven years, with provision for balloon payments to be made that would enable the loan to be repaid earlier. (The seven-year term coincides with the expiry date of the existing lease from Auckland Council, although all things being equal the Club expects this to be renewed in the ordinary course of events.)

History of Club:

14. The Club was formed in late 1953, with the first clubhouse being built in 1960. The clubhouse has undergone a number of iterations (i.e. build, demolish, replace), culminating in the new (current) building being erected in 1978. Further extensions were opened in 2005.

15. The Club currently has approx. 1400 members, comprising 1000 boating members, and 400 community members. The adjacent boat ramps are located within the breakwater and provide instant access to the inner Auckland harbour and nearby islands. Membership is expected to continue to grow as residential developments in Maraetai, Beachlands and Whitford continue.

Proposed Works:

16. The Club leases its site from Auckland Council. The site comprises the footprint of the building as well as a larger area used for storage, access to the boat ramp adjacent to the breakwater and other circulation space.

17. The lease requires that the Club obtain all the necessary approvals before construction can commence. This includes approval from the council (Franklin Local Board) in its capacity as landowner/landlord – this is separate from any regulatory approvals that may be required. council staff are liaising with the Club to ensure that the necessary approvals are sought / given prior to any physical work commencing.

18. The Stage One works comprise:

· Enlarged the lower level observation deck

· New upper level observation deck

· New exterior fire escape stairs

· Internal fire cell to bring the building up to the new code of compliance.

19. The Club has advised that Stage Two will only be undertaken if additional fundraising activities raise sufficient funds to enable this to proceed.

Ability to Repay:

20. At the 2015 AGM the Club approved the introduction of a building levy payable by all members annually for the next five years for the express purpose of loan repayment.

21. In 1991 the Manukau City Council acted as guarantor to the ASB Bank ($150,000, or $255,000 in 2015 terms) to enable the Club to build a new breakwater facility. This facility was renewed in 2005 for further building works. The agreed term was for eight years commencing in February 2005, the loan was repaid in full by April 2007.

22. A review of the financial reports of the Club show that the Club continues to trade profitably and has financial systems in place (i.e. weekly/monthly reporting) to monitor results.

23. The future operational budgets indicate that after providing for expenditure based on historic records (with allowances for known changes and inflation); the Club should be in a position to easily meet its interest and loan repayment obligations.

Loan Guarantee:

24. Loan guarantees are provided by Auckland Council in those instances where organisations wish to borrow funds from third parties (typically commercial banks) to fund a project. As is normal in these circumstances, the lender seeks security for its loan – more often than not over the land and buildings of the organisation.

25. As the Club leases the site from Auckland Council it is prohibited from offering the site as security and relies on Auckland Council to provide loan guarantee facilities.

26. Loan guarantees are not common, and Auckland Council has only offered one new facility (since converted to community loan) and renewed another since it was formed in 2010.

27. Organisations are encouraged to undertake extensive fundraising before taking on debt so as to minimise the on-going financial burden on both existing and future club members.

28. In this instance the Club was originally planning to undertake a larger project (approx. $900,000), however it has subsequently decided to stage the works, identifying the urgent and more immediately beneficial works to form Stage One, leaving the balance for Stage 2.

29. This has the immediate impact of reducing the overall cost of the project as well as reducing the amount that needs to be borrowed to a more manageable amount.

30. Taking into account the scale and nature of the project; the decision by the Club to proceed in stages; a proven track record with the early repayment of previous loans; the annual building levy and the ability to generate surpluses to sufficient to cover should make this a lower risk facility.

Loan Security:

31. As the site is leased from the council, the standard security provided for these arrangements is to ensure a cross-default clause is in place between the loan guarantee documentation and the lease. This means that if the Club defaults on the loan and the council is called upon by the bank to remedy the situation, this becomes a termination event under the lease, which may result in the Club forfeiting the lease and all assets reverting to the council.

32. A “Guarantee Side Deed” and “Variation to Lease” will be put in place to protect the council’s interests prior to any funds being drawn-down from the bank. It will also stipulate all the terms and conditions that must be met prior to the project commencing.

33. The Guarantee Side Deed will include provisions which limit the Club’s ability to incur further debt or borrow further funds without the prior consent of the council for as long as the loan guarantee arrangements are in place.

34. Details of a security interest will also be registered on the Personal Property Securities Register (PPSR).

Risks and Mitigation:

35. There are a number of risks that could arise from this development, including, cost increases coupled with insufficient funds to cover the costs, project scope creep, failure to repay the bank loan.

36. The Guarantee Side Deed referred to elsewhere in this report is designed to put in place safeguards to minimize the risks, viz:

i. Requires that Council sign off on the design, costings, fundraising plan, before the construction contract can be let and bank funds accessed.

ii. Places restrictions on the Club with regards variations to the contracts that have the effect of increasing costs, unless sufficient other funds have been raised to cover any additional costs involved.

iii. In this particular instance the Club is not committing all its available funds to the Stage One works, instead retaining funds to cover unexpected events.

iv. The building levy has been put in place to ensure a separate income stream is available to meet the principal and interest repayment obligations.

Consideration

Local Board views and implications

37. The Franklin Local Board considered this request on 29 September 2015, resolving to support the request to the Governing Body. Local Board members had met representatives of the Club and were satisfied with the scale of the proposed development, and that the Club had implemented a building levy to repay the loan.

Māori impact statement

38. The Club has an open membership and all members of the surrounding communities are invited to join the Club, as either boating or community members. This development will benefit all members of the Club generally and not to the exclusion of any group.

Implementation

39. If the loan guarantee facility is approved following consideration by the Committee, it is necessary for Council staff to continue negotiations with both the Club and ASB Bank to put in place the necessary legal documentation to record all the necessary arrangements covering all aspects of the loan, ranging from conditions precedent to be satisfied prior to physical works commencing; behaviour during construction; and reporting and other requirements once construction is complete and the loan is being repaid to the bank.

40. As Council and ASB Bank have entered similar arrangements previously, many templates and precedents (such as loan guarantee documentation, guarantee side deed, lease variations) have been established that enables this process to proceed seamlessly.

Attachments

No.	Title	Page
a View	Maraetai Beach Boating Club Inc - Request for Loan Guarantee	29

Signatories

Author

Leigh Redshaw - Strategic Funding Advisor

Authorisers

Kevin Ramsay - General Manager Finance

Sue Tindal - Chief Financial Officer

Finance and Performance Committee

22 October 2015

Māori Transformational Shift and co-governance activity budget update

File No.: CP2015/21758

Purpose

1. To report on the implementation of Budget Committee resolutions to identify additional Māori Transformational Shift activities and budget for the 2016/2017 year; and specific budget to implement council’s response programme to the priority recommendations in the Independent Māori Statutory Board’s (IMSB) 2014 Treaty Audit report.

Executive Summary

2. The Auckland Plan Māori transformational shift is to ‘significantly lift Māori social and economic wellbeing’. In the 2015-2025 Long-term Plan (LTP), $104.2 million is identified as contributing to Māori transformational shift activities and $81.5 million as contributing to co-governance and co-management arrangements.

3. On 8 May, as part of decisions on the LTP, the Budget Committee agreed that “work on identifying programmes contributing to the Māori transformational shift and outcomes, as part of the Te Toa Takitini scoping work, identifies at least an additional $5 million for 2016/2017” [BUD/2015/49, resolution c].

4. Te Toa Takitini is council’s top-down approach to Māori responsiveness across the whole council family.Te Toa Takitini takes a strategic approach to prioritising activities that increase Māori responsiveness and contribute to Māori outcomes.

5. On 8 July 2015 the council’s chief executive wrote to all department managers and CCO chief executives requesting that they undertake a second budget refresh process to identify further activities meeting the Māori Transformational Shift criteria and associated budget.

6. Activities identified were tested against the Māori Transformational Shift criteria by staff from Te Waka Angamua and Finance. As a result, 19 projects have been identified as contributing to Māori transformational shift activities with associated budget of $4,087 million for the 2016/2017 year. In addition six activities have been identified as contributing to co-governance and co-management arrangements with associated budget of $234k for the 2016/2017 year. These are attached as Attachment A.

7. The new total budgets for Māori Transformational Shift activities in the 2015-2025 LTP are $118.5 million and for co-governance activity $84 million.

8. For the 2015/2016 financial year, the Māori transformational shift and co-governance activity budgets total $15.16 million, a significant increase from $5.9 million in 2014/2015. First quarter activity for the 2015/2016 year will be reported to the November Finance and Performance Committee meeting.

9. In addition to activities identified through the second budget refresh, ongoing Te Toa Takitini scoping work has identified other Māori transformational activity proposals for discussion at the chief executive’s Māori responsiveness executive leadership group on 11 November prior to their potential consideration as part of the 2016/2017 Annual Plan round.

10. On 8 May, the Budget Committee also resolved to “identify $2 million (over three years commencing 2015/2016) to implement council’s response programme to the priority recommendations in the Independent Māori Statutory Board’s 2014 Treaty Audit report, including increasing the roll-out of Māori Responsiveness Plans and senior staff training” [BUD/2015/49, resolution d].

11. To date, $1.97 million has been identified to implement council’s response programme to the priority recommendations from the 2014 Treaty Audit, over the 2015/2018 financial years. $644,000 has been identified for the 2015/2016 year. A separate report on this agenda provides details of council’s Treaty Audit response work programme for the 2015/2016 year.

Recommendation/s

That the Finance and Performance Committee:

a) note that in response to Budget Committee resolution BUD/2015/49, for the 2016/2017 year, the council has identified to date:

· 19 projects assessed as contributing to Māori transformational shift activities with a total budget of $4,087 million; and

· six activities contributing to co-governance and co-management arrangements with a total budget of $234k.

b) note that in response to Budget Committee resolution BUD/2015/49, the council has identified

· $644,000 for the 2015/2016 year

· $1.97 million for the 2015/2018 financial years.

c) note that the new total 2015-2015 LTP budget for Māori Transformational Shift activities is $118.5 million, and for co-governance activity - $84 million.

d) note that for the 2015/2016 financial year, the Māori transformational shift and co-governance activity budgets together total $15.16 million, a significant increase from $5.9 million in 2014/2015.

Comments

2015-2025 LTP Budget Committee Resolutions

12. The Auckland Plan Māori transformational shift is to ‘significantly lift Māori social and economic wellbeing’. In the 2015-2025 Long-term Plan (LTP), $104.2 million is identified as contributing to Māori transformational shift activities and $81.5 million as contributing to co-governance and co-management arrangements. These activities were identified by the council group; the IMSB; and mana whenua chairs, and supported by feedback during the LTP consultation process.

13. As part of the 2015-2025 LTP process, $104.2 million over 10 years was identified as contributing to Māori transformational shift activities and $81.5 million as contributing to co-governance and co-management arrangements.

14. On 8 May 2015, the Budget Committee BUD/2015/49 agreed:

c) that the work on identifying programmes contributing to the Māori transformational shift and outcomes, as part of the Te Toa Takitini scoping work, identifies at least an additional $5 million for 2016/2017 and report this to the Finance and Performance Committee in September 2015.

d) to identify $2 million (over three years, commencing 2015/2016) to implement the council’s response programme to the priority recommendations in the IMSB’s 2014 Treaty Audit report, including increasing the roll-out of Māori Responsiveness Plans and senior staff training.

Additional $5 million for Māori transformational shift activities in 2016/2017

15. On 8 July 2015, the council’s chief executive wrote to all department managers and CCO chief executives requesting that they undertake a second budget refresh process, within agreed budget envelopes, to identify activities meeting the Māori Transformational Shift criteria, and associated budget.

16. As a result, 19 projects identified as contributing to Māori transformational shift activities with associated budget of $4,087 million and six activities identified as contributing to co-governance and co-management arrangements with associated budget of $234k have been identified for the 2016/2017 year. These are attached as appendix A. The new total budgets for Māori Transformational Shift activities in the 2015-2025 LTP are $118.5 million and for co-governance activity $84 million.

17. The Budget Committee also noted that the chief executive, through the Te Toa Takitini executive leadership group, will have oversight over both of these resolutions c) and d) above and will receive quarterly progress reports on them.

18. Te Toa Takitini is the council’s top-down council-family approach to Māori responsiveness. Te Toa Takitini takes a strategic top down approach to prioritising activities that increase Māori responsiveness and contribute to Māori outcomes. The council’s chief executive leads the Māori Responsiveness Executive Leadership Group, which includes the council’s executive leadership and the chief executives of the council’s substantive council-controlled organisations (CCOs) and the IMSB. This group has oversight over the Te Toa Takitini structure and work programme to embed improved Māori responsiveness into the council.

19. Te Toa Takitini encompasses five programmes of action:

· Whai Rawa – Māori Economic Well-being

· Whai Painga – Māori Social Well-being

· Whai Tiaki – Māori Cultural Well-being

· Whai Tika – Effectiveness for Māori

· Whai Tahinga – Treaty of Waitangi Settlements

20. This approach enables the identification and tracking of progress on activities and budget that contribute significantly lifting Māori, economic, social and cultural well-being, strengthen council’s effectiveness for Māori, and optimise post-Treaty settlement opportunities for the benefit of mana whenua and the wider public of Auckland.

21. In addition to activities identified through the second budget refresh, ongoing Te Toa Takitini scoping work has identified further Māori transformational activity proposals which will be discussed at the Māori responsiveness executive leadership group on 11 November prior to their consideration as part of the 2016/2017 Annual Plan round. These include:

· Whare for life – supporting Māori organisations to develop and invest in affordable housing options

· Thriving Tamariki in Tāmaki Makarau – looking at how council could leverage existing programmes targeting early years intervention to improve outcomes for Māori later in life.

· Enabling Rangatahi Jobs and entrepreneurship in Tāmaki Makarau - looking at what role council can play in increasing employment and entrepreneurship opportunities for young Māori.

Identification of $2 million over three years to implement council’s response programme to the priority recommendations in the 2014 Treaty Audit report

22. To date, $1.97 million has been identified to implement council’s response programme to the priority recommendations from the 2014 Treaty Audit, over the 2015/2018 financial years. $644,000 has been identified for the 2015/2016 year. A separate report on this agenda provides details of council’s Treaty Audit response work programme for the 2015/2016 year.

2015/16 Māori transformational shift and co-governance/co-management activity and budget

23. For the 2015/2016 financial year, the Māori transformational shift and co-governance activity budgets total $15.16 million, a significant increase from $5.9 million in 2014/2015. First quarter activity for the 2015/2016 year will be reported to the November Finance and Performance Committee meeting.

Consideration

Local Board views and implications

24. Local boards contributed significantly to the development of the 2015-2025 LTP, a number of local boards advocated strongly for activities that contribute to Māori well-being and achieve better outcomes for Māori.

25. As part of the Te Toa Takitini approach, Te Waka Angamua, Finance and Local Board Services will work together to report directly to local boards on Māori Transformational Shift and co-governance activity and expenditure within their respective local board areas.

Māori impact statement

26. Te Toa Takitini – Achieving Better Outcomes with Māori is a significant undertaking of the Auckland Council family. Its purpose is to drive council’s contribution to significantly lift Māori, economic, social and cultural well-being, strengthen council’s effectiveness for Māori, and optimise post-Treaty settlement opportunities for the benefit of mana whenua and the wider public of Auckland.

27. The identification of targeted activities and budget, specifically dedicated to achieving this purpose is a significant investment for council that is expected to realise benefits not only for Māori but for Auckland as a whole.

28. This approach also enables council to fulfil its commitments and recognises the aspirations of Māori articulated through the Auckland Plan and affirmed through the 2015-2025 LTP.

Implementation

29. The Te Toa Takitini programmes of action for the 2015/2016 period have been signed off by the Executive Leadership Group. Programme conveners and business owners have responsibility for delivery.

30. New proposals for Māori Transformational activity will be considered by the Māori Responsiveness Executive Leadership Group for potential consideration as part of the 2016/2017 Annual Plan process.

31. Commencing in November 2015, the Finance and Performance Committee will receive quarterly activity and expenditure reports. Updates on progress will also be provided at the joint Governing Body – Independent Māori Statutory Board quarterly meetings.

Attachments

No.	Title	Page
a View	Response to Budget Committee resolution BUD/2015/49	39

Signatories

Authors

Shane Cook - Kaihautu Whakatuturu Puni - Senior Maori Effectiveness Advisor

Deborah James - Executive Officer

Authorisers

Johnnie Freeland - Paearahi Matua - Manager

Phil Wilson - Governance Director

Sue Tindal - Chief Financial Officer

Finance and Performance Committee

22 October 2015

Te Tiriti o Waitangi Audit response work programme 2015/2016 progress report

File No.: CP2015/19328

Purpose

1. As part of Auckland Council’s Te Tiriti o Waitangi Audit response work programme 2015/2016 this report:

a. provides a detailed Treaty Audit response work programme for 2015/2016;

b. provides a progress update for the first quarter of 2015/2016;

c. identifies key priorities for the second quarter of 2015/2016;

d. details a ‘closure process’ for specific actions in the Treaty Audit response work programme 2015/2018.

Executive Summary

2. The 20 August 2015 Finance and Performance Committee meeting (FIN/2015/73):

· requested that a report setting out a detailed annual work programme in response to the Treaty Audit response work programme 2015/2018 and how this aligns with the detailed findings of the Te Tiriti o Waitangi Audit 2015 report, be brought to the Finance and Performance Committee in October 2015;

· noted that council staff will work with the Independent Māori Statutory Board (IMSB) secretariat to develop criteria and a robust validation process by which specific actions in the Treaty Audit response work programme 2015/2018 will be constituted as ‘closed’; and

· noted that the Budget Committee agreed to identify $2 million (over three years, commencing 2015/2016) to implement the Treaty Audit response work programme.

3. A detailed annual work programme for 2015/2016 has been developed with business owners from across the council family and is provided in Attachment A.

4. Through the Whai Tika: Effectiveness for Māori workstream, the council has undertaken detailed project level planning for the 2015/2016 financial year, providing a clear line of sight to the 2015 Treaty Audit recommended action and deliverables. These project plans are shared with the IMSB secretariat.

5. Planning has identified $644,000 as contributing to implementing the Treaty Audit response work programme for 2015/2016 and $1.97 million for the 2015/2018 financial years.

6. Progress has also been made in addressing the priority response actions of the first quarter. The Māori Responsiveness Planning Toolkit; Governance Statement; Hearings Policy and Te Reo Māori Framework recommended actions are near completion. Key priorities for the second quarter of 2015/2016 include fourteen departments and council-controlled organisations (CCOs) and two divisions, (Operations and Chief Planning Office) to make significant progress on their Māori Responsiveness Plans.

7. The 2015 Audit process identified that council staff, PricewaterhouseCoopers and IMSB had differing views as to how many of the 2012 Treaty Audit recommendations remain outstanding. To resolve this council and IMSB secretariat staff have agreed a ‘closure process’. The process will involve a Waharoa group (gate) meeting at the beginning and end of significant project(s) to agree upon critical elements and implement the closure process and criteria. A central register of all projects will be used to track progress.

8. Council, in consultation with the IMSB secretariat will consider how the remaining, 2012 Treaty Audit recommendations can be incorporated into the 2015/2018 Treaty Audit response work programme.

Recommendation/s

That the Finance and Performance Committee:

a) approve the detailed Treaty Audit response work programme for 2015/2016 in response to the recommended actions in the 2015 Treaty Audit.

b) note that $644,000 has been identified as contributing to implementing the Treaty Audit response work programme for 2015/2016 and $1.97 million for the 2015/2018 financial years.

c) note the progress on the priority actions for the first quarter of 2015/2016 financial year.

d) approve the closure process agreed with the Independent Māori Statutory Board secretariat for assessing projects at the planning phase and close off phase.

e) note the council staff will work with the Independent Māori Statutory Board secretariat to consider how outstanding 2012 Treaty Audit recommendations can be incorporated into the 2015/2018 Treaty Audit response work programme.

Comments

9. At the 20 August 2015 Finance and Performance Committee meeting the council was asked to provide a detailed annual Treaty Audit response work programme. The council was also instructed to work with the IMSB secretariat to develop an agreed ‘closure process’. It was also noted that the Budget Committee agreed to identify $2 million (over three years, commencing 2015/2016) to implement the Treaty Audit response work programme, the council was also required to report on this budget provision in this progress report (FIN/2015/73).

Detailed Treaty Audit response work programme for 2015/2016

10. Te Toa Takitini takes a strategic top down approach to prioritising activities that increase Māori responsiveness and contribute to Māori outcomes. The council’s chief executive leads the Māori Responsiveness Executive Leadership group, which includes the council’s executive leadership and the chief executives of the council’s substantive council-controlled organisations (CCOs) and the IMSB. This group has oversight over the Te Toa Takitini structure and work programme to embed improved Māori responsiveness into the council.

11. Te Toa Takitini has five programmes of action. One of these, Whai Tika: Effectiveness for Māori, has oversight of the Treaty Audit response work programme and is led by the council’s transformation director. The Whai Tika: Effectiveness for Māori team includes senior staff from Te Waka Angamua, Communications and Engagement, Organisational Development, Legal, Internal Audit, Risk and Governance.

12. Through the Whai Tika: Effectiveness for Māori workstream, the council has undertaken detailed project level planning for the 2015/2016 financial year. These project plans have been developed by the business owners, ensuring that increasing Māori responsiveness is a transformational change owned and supported by the whole of council.

13. Project plans provide a clear line of sight to the 2015 Treaty Audit recommended action, project objectives and deliverables. They also provide details of project team members, constraints, dependencies, and milestones. For transparency these project plans are shared with the IMSB secretariat. For the purpose of this report, a higher level summary of the Treaty Audit response work programme 2015/2016 is provided in Attachment A.

Treaty Audit response work programme 2015/2016 budget provision

14. In response to the Finance and Performance Committee resolution to report on the Treaty Audit response work programme budget provision, $644,000 has been identified as contributing to implementing the Treaty Audit response work programme for 2015/2016. This includes increasing the roll-out of Māori responsiveness plans, and senior staff training. Work continues to be developed and new activity will be added in future reporting.

15. The table below provides a detailed breakdown of this budget:

Division/CCO	Department	Activity	Detail	Y1 ($000)	Y1 ($000)
Governance	Te Waka Angamua	Effectiveness for Māori	Mana whenua participation in resource consents	65	400
			Māori information portal	80
			Māori responsiveness planning Framework and toolkit	5
			Department and CCO MRPs	110
			Performance Framework	50
			Advice, quality assurance and research	90
		Ngā Kete Akoranga	Senior Leadership training	30	100
			Tikanga training	20
			Engagement with Māori training	5
			Te Reo Māori training	10
			Treaty of Waitangi training	10
			Ngā Kete Akoranga evaluation	25
Operations	Libraries	Māori responsiveness planning – membership and participation in various hui, Mātaurangi Māori courses, kaupapa Māori workshops and conferences, Te Ao Māori workshops, Te Kauhanganui in Action workshops, Matariki Living Toolkit workshop, advanced te reo courses, Māori development workshops.			75
Planning	Natural Environment Strategy Unit	Māori responsiveness planning - Te Reo, Tikanga and Treaty training			5
Panuku Development Auckland		Māori responsiveness planning – development of plan, implementation of plan and improving engagement with Māori.			59
Panuku Development Auckland		Developing internal capacity – Effectiveness Training			5
		Total			$644

16. In total $1.97 million has been identified to date, to implement the agreed 2015 Treaty Audit recommendations, over the 2015/2018 financial years. The table provides a high level breakdown of this budget:

Whai Tika - Effectiveness for Māori	2015-16	2016-17	2017-18
Democracy Services		50,000
Auckland Libraries	75,000	75,000	75,000
Auckland Plan, Strategy and Research	5
Panuku Development Auckland	61,000	$65,000	$65,000
Te Waka Angamua	500,000	500,000	500,000
TOTAL	$644,000	$690,000	$642,000

Progress update first quarter 2015/2016

17. There has been significant work undertaken in the first quarter of 2015/2016. The council has made progress addressing the actions due for completion at the end of the first quarter, these actions will be considered by the Waharoa group at the end of October to determine their closure status (see paras 31 to 34 for detail).

Māori Responsiveness Planning Toolkit

18. The council has developed a toolkit that outlines the methodology and framework for developing MRPs. It is intended to be a generic guide to help departments understand the process, resources and potential pitfalls when developing their plans. Templates and process methodology have been developed and are being tested with the Ngā Pōito community (MRP Project Managers community of practise). On completion of user testing and feedback incorporated into the templates and methodology, the toolkit will be assigned to communications for branding in November 2015.

Governance Statement

19. The council’s Governance Statement was reviewed and amended in June 2015. The amendment affirms council’s position on its partnership with Māori. Work continues to ensure the refresh of the Auckland Plan accurately reflects council’s position.

Hearings Policy

20. The Hearings Policy has been reviewed. A redrafted policy and accompanying practice note have been developed. The review incorporated the recommended changes from the 2015 Treaty Audit. This action will be assessed by the Waharoa team before progressing to implementation.

Te Reo Māori Framework

21. After engaging with CCOs and local boards the Te Reo Māori Framework has been drafted. Engagement with mana whenua about the Te Reo Māori Framework will take place in October/November 2015.

22. Additional actions were identified as being a priority for the first quarter in the August report to the Finance and Performance Committee. The following progress with these priority actions has also been achieved:

Kaitiakitanga/Stewardship of Natural Resources Policy

23. This policy takes a strategic approach to council’s and mana whenua’s respective aspirations, responsibilities, and obligations for natural resource management and where and how collaboration can be enabled. It will assess whether there are gaps in decision-making and collaboration on natural resource management and suggest ways forward to provide comprehensive and strategic involvement of mana whenua in the management of natural resources.

24. Work has been completed on the operational aspects of co-management and co-governance arrangements. Further work on developing the overarching framework will begin later this year, with an initial stocktake of all current projects, gaps across the spectrum identified, mapping of council aspirations, responsibilities and obligations for natural resource management.

Taonga Management Policy

25. A Taonga Management Policy will ensure that taonga acquired by the council are properly cared for and disposed of in accordance with custodianship principles in Tāmaki Makaurau. A definition of taonga will be provided for the purpose of policy and this will assist council to identify taonga that have been acquired and accumulated by the council during pre and post amalgamation. The policy will include principles, rules and guidelines to direct the council’s actions with regard to the acceptance, management, and custodianship of taonga. A Taonga Management Policy project plan has been completed, key stakeholders have been identified and work is now in progress.

Compliance Framework

26. Internal Audit will develop and implement a Compliance Framework that significantly enhances the quality and robustness of information used to report progress. The framework will provide understanding, oversight and controls to the implementation of agreed actions in response to the 2015 Treaty Audit recommendations. In October Internal Audit is carrying out a review of 2015 Treaty Audit action project plans and assessing whether they are fit for purpose to achieve recommendations and objectives. Internal Audit will also be reporting on the results of their monitoring to the Audit and Risk Committee on a six monthly basis.

Performance Framework

27. The Performance Framework will enable council to measure, monitor and attribute its increased effectiveness for Māori and contribution to Māori well-being. It aims to identify measures that align to the Māori Responsiveness Framework and the wider objectives of council and provide ‘line of sight’ to Te Toa Takitini outputs. The Performance Framework is at a beginning stage of development, work is being carried out reviewing and collecting existing measures already used across council and aligning these existing measures to the Māori Responsiveness Framework.

Key priorities for the second quarter 2015/2016

28. One of the key mechanisms that will improve Māori responsiveness is a Māori Responsiveness Plan (MRP). The objective of a MRP is to detail how each department will contribute to delivering on the council’s strategic and operational commitments to Māori. The application of the Māori Responsiveness Framework to each department’s operations and services will provide the basis for improved Māori responsiveness through future business planning, training and service redesign.

29. Fourteen departments and CCOs (including Libraries; Parks, Sports and Recreation; Coastal Land, Air, Water team; Research Information Management Unit; Infrastructure and Environmental Services; People and Capability; Communication and Engagement; Community Development, Arts and Culture; Plans and Places; Animal Control; Civil Defence and Emergency Management) that have undertaken or are currently developing a MRP. The council has prioritised two divisions, Operations and Chief Planning Office to start a MRP by the end of the second quarter 2015/2016.

30. The council will continue working with the IMSB to assess the status of the 26 outstanding recommendations from the 2012 Treaty Audit. The council and IMSB are in agreement that many of the outstanding 2012 Treaty Audit recommendations are either substantively completed or are being addressed through the current 2015 Treaty Audit response work programme. The council, in consultation with the IMSB, will consider how the few remaining recommendations can be incorporated into the 2015/18 Treaty Audit response work programme.

31. In addition, the Treaty Audit response work programme 2015/2016 prioritised the following actions for completion by the end of the second quarter of 2015/2016:

a. Communication of the Significance and Engagement Policy

b. Māori Communications Strategy

c. Good Practise Sharing and Organisational Learning

d. Quality Māori Responsiveness Advice

e. Capacity Building

Closure process

32. Council staff, PricewaterhouseCoopers and IMSB had differing views as to how many of the 2012 Treaty Audit recommendations remain outstanding. Some of these differences can be attributed to the council and IMSB not agreeing in advance what constituted closure of the agreed actions. An agreed process and clarity about what constitutes closure will negate future differences and also lead to improved correlation between recommended actions from the 2015 Treaty Audit and the council’s Treaty Audit Response work programme.

33. The council and the IMSB secretariat have worked together to design an agreed ‘closure process’. In summary, a project closure group will be formed - Waharoa (gate), members of the Waharoa group will include project business owners, Internal Audit, Te Waka Angamua and the IMSB secretariat. The Waharoa group will agree what actions and deliverables will constitute closure of each 2015 Treaty Audit recommendation.

34. A project will pass through the Waharoa group at least twice during the life of a project. In the planning phase, ensuring alignment of project objectives with outcomes and 2015 Treaty Audit recommendations, and in the close off phase, verifying acceptance of final deliverables. To manage this process, a central register of all projects will be used to track progress and provide an overview of the entire programme.

35. The Waharoa group will apply the following criteria when assessing projects at the planning phase and close off phase:

Planning phase:

a. intervention logic addresses Treaty Audit recommendations

b. clear alignment of project objectives with desired outcomes

c. if relevant appropriate communications plan developed, and

d. if required appropriate Māori engagement planned

Close off phase:

a. the deliverable met the outcomes, goals and objectives of the project plan

b. the customer is satisfied with the end product(s)

c. measures are in place to monitor effectiveness and future reporting

d. lessons learnt report completed, and

e. the specific Treaty Audit recommendation has been addressed

Local Board views and implications

36. The Whai Tika: Effectiveness for Māori workstream of Te Toa Takitini is largely an internal facing programme of action; however, some limited elements of the workstream connect with local boards. In these instances, local boards are engaged.

Māori impact statement

37. This report provides a progress update on the 2015 Treaty Audit response work programme, this work programme is in direct response to the IMSB’s 2015 Treaty Audit. The Treaty Audit process is an important part of ensuring that the council is meeting its statutory and Treaty based obligations toward Māori. The council is committed to improving its performance across the areas identified in the 2015 Treaty Audit and to improving its responsiveness to Māori.

Implementation

38. The council’s transformation director has oversight of the 2015 Treaty Audit response work programme as part of the Whai Tika: Effectiveness for Māori workstream of Te Toa Takitini. The Whai Tika: Effectiveness for Māori team includes senior staff from Te Waka Angamua, Communications and Engagement, Organisational Development, Legal and Risk, Internal Audit and Governance. Individual projects or response actions are the responsibility of identified project business owners, so that improved effectiveness for Māori is a transformational change owned and supported by the whole of council.

Attachments

No.	Title	Page
a View	Treaty Audit Response Work Programme 2015/2016	49

Signatories

Author

Sarah Howard - Manager Effectiveness for Maori

Authorisers

Johnnie Freeland - Paearahi Matua - Manager

Phil Wilson - Governance Director

Sue Tindal - Chief Financial Officer

Finance and Performance Committee

22 October 2015

Adoption of amendment to Local boards funding policy to allocate capital fund

File No.: CP2015/21267

Purpose

1. This report recommends the adoption of the amendment to the Local Boards Funding Policy (LBFP) to provide for allocation of discretionary capital expenditure funding and rules for expenditure of the fund.

Executive Summary

2. The Governing Body has created a discretionary fund for capital expenditure for local boards, $10 million per annum. This enables local boards to deliver small local asset based projects. The adoption of the policy will ensure that local boards can proceed with the capital projects from the date of adoption.

3. Staff recommend that the proposal for the allocation of the fund to local boards be adopted. This is equivalent to the formula for the allocation of funds for driven initiative operating expenditure (LDI opex). However, it allocates a slightly smaller percentage the Waiheke and Great Barrier Island local boards (2 and 1 per cent rather than 2.7 and 2.3 per cent). The views of Local boards were sought in the preparation of this report and are included. Consultation was carried out on the proposal but only one submission was received and it did not relate to the issue.

4. Staff also recommend a set of rules for the use of the fund. These are based on the premise that local board operating expenditure is funded by the LDI opex fund and capital expenditure by the capital expenditure fund. However, the rules provide that LDI opex may be used to fund capital expenditure in exceptional circumstances.

Recommendation/s

That the Finance and Performance Committee:

a) agree to amend the Local Boards Funding Policy to provide for the allocation of the discretionary Locally Driven Initiatives Capex fund as follows:

i) one per cent of the fund allocated to the Great Barrier Island local board

ii) two per cent of the fund allocated to Waiheke Island local board

iii) remainder of the fund allocated between the remaining local boards based on 90 per cent population, five per cent land area and five per cent deprivation.

b) adopt the amended Local boards funding policy in Attachment A of the agenda report.

c) agree the following rules for the operation of the fund:

i) local boards may bring three years budgets forward within a long-term plan budget cycle

ii) normal deferral conditions will apply to the LDI Capex fund. Projects cannot be planned outside of the three years but funds may be deferred if projects are unable to be completed within this period

iii) local boards may bring forward regionally funded projects using LDI Capex, subject to an assessment against the Council’s programme of work to ensure projects can be delivered within the proposed timeframe

iv) local boards may transfer their currently approved capex projects paid for by LDI opex (as outlined in their LB Agreement 2015/16), to the new discretionary fund

v) from 1 July 2016, local boards may fund capital projects by using their LDI opex to fund the consequential opex in exceptional circumstances and for projects that boards have already committed to funding.

d) note that staff are developing guidelines for capital grants, facilities partnerships (including feasibility studies) and community-led projects.

Comments

Background

Local discretionary LDI Capex fund

5. The Governing Body has created a discretionary fund for capital expenditure for local boards. On May 7 the Budget Committee passed the following resolution:

a) Provide a new Local Board discretionary capex fund of $10 million per annum noting that this will incorporate the existing Facilities Partnership Fund.

b) Approve the following parameters for this fund:

i. the fund may be managed as a three year amount

ii. local boards may use the fund to build council owned assets, add to an existing council funded renewal or new capital project, work in partnership with an external provider or seed fund a community project.

6. The Budget Committee requested that staff and local boards develop a formula for allocation and criteria for qualifying projects to report to the Finance and Performance Committee. Staff sought the views of local boards in developing the proposal for consultation adopted by the Governing Body at its meeting on 24 September. The views of local boards are included in this report. Consultation was undertaken on the proposal but only one submission was received and it did not relate to the issue.

Purpose of the LDI Capex fund

7. The purpose of the fund is to ensure locally important projects are given appropriate priority. It is envisaged that the fund will be used for projects similar to those historically funded by the local improvement projects (LIP’s) or small local improvement projects (SLIP’s).

Local boards funding policy formula for allocation of funding for locally driven initiatives operating expenditure (LDI opex)

8. The Local boards funding policy (LBFP) makes allocations on the following basis:

· 90 per cent based on local board population size

· 5 per cent based on the relative level of deprivation of the board

· 5 per cent based on the land area of the board

· Waiheke and Great Barrier Island are funded for a fixed amount set by the Governing Body.

9. The following table shows the level of local board support for the use of the above factors for allocating LDI opex recorded during the review of the LBFP.

Local Board Attribute	Local Boards support and comments from last review of LBFP		Relationship to need for funding	Staff Comments
Population	21	“population tends to be a key driver of the demand for services”	Strong	Strongly relates to demand for services
Deprivation	17	“areas of deprivation have characteristics that may indicate a greater dependency on local services”	Weak	Little objective evidence for relationship to demand for services
Geography	16	[Rural areas have less access to regionally funded services, so are more dependent on local services]	Weak	Distortionary effect on allocation that does not relate to need for services

Principles for funding allocations

10. In developing a formula to allocate funding for local activities to local boards the council must consider the matters set out in s19(4) of the Local Government (Auckland Council) Act 2009. The key factors are the demographic characteristics. The matters in the Act were considered in developing this advice. The core principles for allocating funding to local boards are an:

· equitable capacity for each local board to enhance well-being

· administrative effectiveness

· transparency.

Funding Allocation Options

11. Six models for the allocation of the LDI Capex fund between all boards based on the population, deprivation and land area attributes of the boards were consulted on:

· The proposal: Great Barriers receives 1% and Waiheke receives 2% of total funds, remaining funds allocated to all other boards based on 90% population, 5% deprivation and 5% land area.

· Model A: All boards funded based on 100% population

· Model B: All boards funded based on 95% population and 5% deprivation

· Model C: All boards funded based on 90% population and 10% deprivation

· Model D: All boards funded based on 90% population, 5% deprivation and 5% land area

· Model E: Great Barriers receives 2.3% and Waiheke receives 2.7% of total funds, remaining funds allocated to all other boards based on 90% population, 5% deprivation and 5% land area.

12. A key decision for the allocation of the LDI Capex fund is to determine the appropriate level of capital funding for Great Barrier Island and Waiheke. Two options were presented for the allocation of funding to these boards:

· LDI allocation: Great Barrier Island and Waiheke receive the same proportion of the LDI Capex fund as they currently receive of the total funding pool for Locally Driven Initiatives. (This is 2.3% of the total pool for Great Barrier Island and 2.7% for Waiheke)

· Transport model: Great Barrier Island receives 1 per cent and Waiheke 2 per cent of the total funding pool.

13. The following page present these six models in table form.

14. Other potential funding attributes that have been considered, but which have not been included in the modelling are:

· rates paid: there is no relationship with need for services, and support was low for this attribute during the last review, with six boards in favour

· current levels of capital expenditure: data on regional activities is unavailable at local level. Levels of expenditure on local assets are not relevant to the purpose of the LDI Capex fund. Gaps in the provision of assets will be met through the relevant network facilities plan

· population growth: growth will be addressed every three years through the proposed allocation formula.

15. The costs of providing small local capital projects doesn’t vary widely across local boards.

16. The following table shows the impact of the six models on each local board. This shows that:

· using land area as an allocation factor significantly increases funding to Rodney and Franklin local boards

· Great Barrier Island receives less than $7,000 under a population based allocation. This rises to $77,000 under the allocation formula that includes deprivation and land area

· providing Great Barrier Island and Waiheke with fixed allocations under the LDI allocation and Transport models only has a small impact on the other 19 boards.

Model	Proposal: GBI: 1%, Waiheke: 2% of fund. Other boards: 90% Population 5% Deprivation 5% Land Area	A: 100% Population	B: 95% Population 5% Deprivation	C 90% Population 10% Deprivation	D: 90% Population 5% Deprivation 5% Land Area	E: GBI: 2.3%, Waiheke: 2.7% of fund. Other boards: 90% Population 5% Deprivation 5% Land Area
Albert-Eden	615,305	668,963	657,222	645,482	626,669	602,363
Devonport-Takapuna	362,782	391,862	386,741	381,619	369,200	355,152
Franklin	555,317	461,460	454,987	448,514	554,035	543,637
Great Barrier	100,000	6,633	44,609	82,585	77,015	229,088
Henderson-Massey	706,402	760,729	751,296	741,862	718,691	691,544
Hibiscus and Bays	585,717	634,608	617,350	600,091	596,626	573,397
Howick	814,197	898,061	868,651	839,241	830,867	797,072
Kaipatiki	538,371	582,770	573,722	564,673	548,057	527,047
Mangere-Otahuhu	488,222	501,282	513,972	526,663	493,923	477,953
Manurewa	550,368	580,990	583,821	586,652	558,564	538,791
Maungakiekie-Tamaki	473,162	494,522	500,654	506,787	479,650	463,210
Orakei	510,438	561,873	545,485	529,096	520,709	499,702
Otara-Papatoetoe	514,583	534,513	544,180	553,846	521,245	503,760
Papakura	320,059	322,369	335,109	347,849	323,104	313,327
Puketapapa	358,652	373,975	380,219	386,462	363,431	351,108
Rodney	606,195	387,687	385,200	382,714	595,331	593,444
Upper Harbour	355,230	379,146	373,043	366,940	361,197	347,758
Waiheke	200,000	58,896	85,065	111,234	97,922	274,940
Waitakere Ranges	353,507	341,910	343,031	344,153	356,306	346,071
Waitemata	506,690	544,919	540,615	536,311	515,339	496,033
Whau	484,802	512,832	515,028	517,223	492,119	474,605
Total	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000	10,000,000

17. In determining the appropriate funding levels for Great Barrier Island and Waiheke consideration should be given both to the total value of the funding over three years, and the typical costs of activities likely to be undertaken by these boards. The following table shows the level of funding these boards would receive over three years in comparison to the next smallest board, Papakura:

Allocation formula model	Three year LDI capex funding allocation for
Allocation formula model	Great Barrier	Waiheke	Papakura
Board Population size	900	8,400	45,000
A: 100% population	$20,000	$180,000	$970,000
B: 95% population + 5% deprivation	$130,000	$260,000	$1,000,000
C: 90% population + 10% deprivation	$250,000	$330,000	$1,040,000
D: 90% population + 5% deprivation + 5% land area	$230,000	$290,000	$970,000
E: GBI: 2.3% Waiheke 2.7% (Current LDI allocation)	$690,000	$820,000	$940,000
Proposal: GBI: 1% Waiheke 2% of total fund	$300,000	$600,000	$960,000

Local board views of capex allocation formula

18. Local boards considered the options for the discretionary capital allocation formula at their August meetings. The following table shows the level of support for each funding allocation formula.

Allocation formula	Local board support	Key local board comments
100% Population	5	“population strongly relates to the demand for services”
95% Population 5% Deprivation	4	“deprivation is a significant factor for the population of Māngere-Ōtāhuhu local board area and is also a major concern for Great Barrier Island and Waiheke.”
90% Population 10% Deprivation	2	“Deprivation needs to be given greater weighting. The land area component is unrealistic, bearing in mind that the LDI Capex fund does not cover roading.”
90% Population 5% Deprivation 5% Land Area	10	“maintains consistency with current policy”

19. The same funding formula as used for Locally Driven Initiatives opex was the most popular option with the boards. However, 11 boards were opposed to the use of land area.

20. The following table shows the local board support for different funding options for Great Barrier and Waiheke local boards:

Option	Local board support	Key local board comments
GBI: 2.3%, Waiheke: 2.7% of fund	3	“[Island boards] have a higher funding role […]than other boards […that ]are more strongly supported by regional funds”
GBI: 1%, Waiheke: 2% of fund	12	“The Local Boards Funding Policy should also include a percentage allocation for Great Barrier Island and Waiheke Local Boards.”
Funded through allocation formula	6	“Supports the same allocation formula [as for other boards.] applied for Great Barrier and Waiheke local boards”

21. Most boards agreed that the Island boards should be funded through a fixed allocation, with a majority preferring the option of one per cent of the fund for Great Barrier and two per cent for Waiheke.

22. The full local board resolutions are included in Attachment B: Local board resolutions.

Staff views of capex allocation formula

23. Staff consider there is a strong case for using the same formula for LDI Opex and the LDI Capex fund to maintain consistency in the allocation. However, staff note there is also a case for excluding land area given it doesn’t have a strong connection to demand for services and shifts significant funding to rural areas.

24. Staff consider that allocating Great Barrier and Waiheke the same proportion of funding as they receive from the LDI opex fund would over fund these boards compared to other board areas. Staff recommend an allocation of one per cent of the total fund to Great Barrier, and two per cent to Waiheke would be appropriate.

Guidelines for discretionary LDI Capex fund and use of locally driven initiative funding on capital projects

25. To facilitate administration of the discretionary LDI Capex fund staff discussed with local boards a set of guidelines to provide direction on the funding of local capital projects. These are set out below.

26. The capital fund is available for projects that are delivered by the community, generally through a grant, or by council. Staff are preparing guidelines for capital grants, facilities partnerships (including feasibility studies) and community-led projects.

Bringing future capex allocation forward

27. The governing body has proposed that the fund be managed over a three year period, aligned with the Long-term Plan planning cycle. Local boards can use their entire three year allocation for one project or spread it over the three years for smaller projects. This provides boards with greater choice in the size and timing of projects they undertake.

28. As a practical consideration, it is unlikely that all 21 local boards would be in a position to bring forward their three years of funding to 2015/16. However, in the event that this happens, the projects would need to be assessed against the council’s programme of work to ensure they are able to be delivered.

29. Budget for the LDI Capex funding is included in the ten year plan. Local boards’ can only bring three years budgets forward so future decision making is unencumbered.

Role of LDI funding

30. Local boards are currently able to fund capital projects from their LDI budget by funding the consequential opex. The LDI Capex fund largely does away with the need for this and the Mayor’s report proposed the removal of the ability to fund major new facilities with opex funded by their LDI. This raises the question of whether local boards still need the ability to use LDI to fund minor capital projects.

31. Local boards were asked for their views on whether they saw a need to use LDI opex to fund minor capital projects. Fourteen boards supported still being able to use LDI opex in this way.

32. Staff recommend that local boards’ are able to fund capital projects with LDI opex from 1 July 2016 in exceptional circumstances as the LDI Capex fund removes most of the need for boards to use LDI opex for this purpose. This change will not impact projects that boards have already committed to funding.

33. Local boards were also asked whether they should be able to use LDI Capex funding to bring regionally funded projects forward. Eighteen boards supported being able to use the LDI Capex fund in this way.

34. Staff recommend that local boards have the ability to bring forward regionally funded projects using their LDI Capex. Any such proposal will be assessed against the council’s programme of work to ensure departments have capacity to deliver within the proposed timeframes.

Transferring LDI to Capex

35. Local boards may transfer their currently approved capex projects paid for by LDI (as outlined in their LB Agreement 2015/16), to the new discretionary fund. This will free up their LDI opex again and remove the need to fund consequential opex.

Deferral of Capex

36. Normal deferral conditions apply to the LDI Capex fund. Projects cannot be planned outside of the three years but funds may be deferred if projects are unable to be completed within this period.

Transition for current Capex allocations

37. There will be no transition mechanism for any existing Capex budgets held by some local boards. The Governing Body has decided that this fund will replace the current Community Facilities Partnership fund.

38. Projects that have already been committed to through various Community Facilities Partnership Fund (CFPF) schemes will still be funded. Historically the CFPF had made commitments greater than the average annual budget allocated, effectively bringing forward funding. The rationale was that many of the partnership agreements relied on third party funding, resulting in uncertainty regarding the timing of when the Council commitment would be crystallised.

39. A provision has been made to account for these commitments. All existing commitments have a sunset clause, which means that if the conditions are not met by a specified date, Council will withdraw its funding commitment.

Consultation feedback

40. The following process for consultation was approved by the Governing Body at its meeting on 24 September:

a) the consultation period will be from Friday 25 September to Friday 9 October.

b) a Proposal to amend the LBFP document will be published on the Shape Auckland website and available from local libraries, council service centres and local board offices

c) a public notice will be published

d) the public will be able to give feedback in writing, by email, or through the Shape Auckland website.

41. This consultation was carried out from Friday 25 September to Friday 9 October, following the process set out above.

42. No submissions were received during the consultation period. One late submission was received that did not address the issue. As the proposal is primarily an internal allocation process between the governing body and local boards and has no impact on rates it did not attract any interest. Consultation on the last amendment to the LBFP which provided for allocation of annual funding of $330 million for local activities only attracted 14 submissions from the public.

43. Immediately after lunch at the 22 October Finance and Performance meeting, representatives of Local Boards will present the views of the Local Boards to the committee and discuss with them. The committee will then consider the item.

Consideration

Local board views

44. Local board views are set out in the report. Full local board resolutions are attached as Attachment two: Local board resolutions.

Allocation of decision making

45. The proposal does not impact the allocation of decision making.

Significance and Engagement

46. This proposed amendment to the LBFP does not require the Council to follow the full LTP amendment procedure.

47. The proposed LDI Capex fund is a minor change in the scale of the Council’s budget and funding for Local Activities. As such it is not a significant change. Creating a new funding allocation for local boards requires an amendment to the Local Boards Funding Policy and was consulted on.

Māori impact statement

48. Māori may benefit from a funding formula that has greater emphasis on deprivation, based on 2013 census data, as this will provide more funding to local boards with higher Māori populations. How Māori are impacted would depend on how the local boards choose to use their budget.

Implementation

49. The proposed amendment to the Local Boards Funding Policy is not significant. As such, the amendment to the Long-term Plan will not need to be audited.

Attachments

No.	Title	Page
a View	Amended Local boards funding policy	67
b View	Local board resolutions on amendment to Local boards policy	71

Signatories

Authors

Beth Sullivan - Principal Advisor Policy

Andrew Duncan - Manager Financial Policy

Authorisers

Matthew Walker - General Manager Financial Plan Policy & Budgeting

Sue Tindal - Chief Financial Officer

Finance and Performance Committee

22 October 2015

Budget Update

File No.: CP2015/20697

Purpose

1. This report is provided as required. It collates decisions required of the Finance and Performance Committee on changes to the budgets, and provides a financial context within which the decisions can be made.

Executive Summary

Public toilet in Titirangi town centre

2. The sale of the public parking space at 490 South Titirangi Road will eventually lead to the loss of the public toilet currently on site. The final decision to sell was made by the former Waitakere City Council in 2010, and a replacement toilet at southern end of the same site was stipulated as far back as 2006. Staff understand legacy decisions instructed the construction cost of the replacement toilet was to be met from the sale proceeds.

3. There have been significant delays in the finalisation of the sale for a number of reasons, such as mitigating parking requirements and finalising the location of the replacement toilet. Staff of the Property Department have been working with the Waitakere Ranges Local Board to identify a more suitable location, which has recently been confirmed.

4. The sale proceeds are in the order of $650,000. The replacement toilet is proposed to be an Exceloo modular unit costing $189,000. Additional fees for consultancy and project management, along with contingency, bring the total cost to $233,000.

5. Funding the cost of replacement toilet from the sale proceeds would reduce net asset sales proceeds. There would be a minor interest cost compared to budget, as $233,000 of the total proceeds would no longer be available for paying down debt. Depreciation expense would be slightly higher, although the ongoing operational cost should be lower due to newer and more efficiency product. Overall, there would be no additional rates funding requirement going forward. It is recommended that $233,000 capital expenditure budget be approved, funded by the sales proceeds from the site, with ongoing operation being managed within existing budget.

Recommendation/s

That the Finance and Performance Committee:

a) approve $233,000 unbudgeted capital expenditure for a public toilet replacing the existing one at 490 Titirangi South Road, funded by the sale proceeds from the site, with ongoing operational expenditure being managed within existing budget.

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

Comments

Public toilet in Titirangi town centre

6. The sale of the public parking space at 490 South Titirangi Road will eventually lead to the loss of the public toilet currently on site. The final decision to sell was made by the former Waitakere City Council in 2010, and a replacement toilet at southern end of the same site was stipulated as far back as 2006. Staff understand legacy decisions directed the construction cost of the replacement toilet was to be met from the sale proceeds.

7. Whilst there have been significant delays in the finalisation of the sale for a number of reasons such as mitigating parking requirements, the Waitakere Ranges Local Board preferred a location other than the previously decided location (i.e. southern end of the site). This is because the board considers the proposed and consented development for the site by the new owner would seem to make the replacement toilet less visible to general public and potentially less safe to use by all.

8. A recent site visit by Property officers and members of the local board identified two locations that require further investigation for reporting back to the board on the feasibility. Both locations are within road reserve and would require displacing public parking. Following investigation, the location which is in close proximity to the existing toilet was preferred, as it would be economical to construct, given the services are close by.

9. The sale proceeds are in the order of $650,000. The purchaser has agreed to allow the public to continue to use the existing toilet until such time a replacement is built by the council. The replacement toilet is proposed to be an Exceloo modular twin unisex toilet with vandal-proof fittings, sliding doors on time lock and an exterior wrap with Tui decal to maintain the theme of the village and its surrounding. The cost totals $233,000, including $189,000 for the modular unit plus consultancy/project management fees and contingency.

10. Funding the cost of replacement toilet from the sale proceeds would result in a reduction in net asset sales revenue, as the expenditure side was unbudgeted for. There would be a minor interest cost compared to budget, as $233,000 of the proceeds would no longer be available for paying down debt. Depreciation expense would be slightly higher, although the ongoing operational cost should be lower due to newer and more efficiency product. Overall, there would be no additional rates funding requirement going forward. It is recommended that $233,000 capital expenditure budget be approved, funded by the sales proceeds from the site, with ongoing operation being managed within existing budget.

Overall budget impact

11. The table below shows the financial impacts of all budget changes considered in this report. The impacts include:

· $233,000 increase in net borrowing for 2015/2016

· $5,000 impact on the group result for 2015/2016

· No additional general rates requirement for 2016/2017. The projected average general rates increase would remain at 3.2 per cent.

Estimated financial impacts on Auckland Council Group

$000	Closing Group Net Borrowing	Group Net Surplus/(Deficit) After Tax	General Rates		Cumulative % rates increase
	2015/2016	2015/2016	2016/2017	% increase	Cumulative % rates increase
Long-term Plan 2015-2025 budget (2015/2016)	7,806,305	226,448	1,488,482		3.203%
Cumulative impact from decisions since 1 July 2015	-13,638	-522	0	0.0000%
Current position	7,792,667	225,926	1,488,482		3.203%
October proposals
Replacing public toilet in Titirangi town centre	233	-5	0	0.0000%
Potential Position	7,792,900	225,921	1,488,482		3.203%

Consideration

Local Board views and implications

12. The Waitakere Ranges Local Board prefers the replacement toilet to be built in a location that is highly visible to the general public so that it is safe to use by all. The board supports the location that staff from Property Department have recommended.

Māori impact statement

13. This request for unbudgeted expenditure relates to replacing and relocating an existing public toilet to council owned road reserve. The new facility will continue to serve all members of the public including Māori.

Implementation

14. Budgets would be amended in core financial systems and used for internal management reporting, regular reporting to councillors and financial control for the 2015/2016 financial year.

Attachments

No.	Title	Page
a View	Waitakere City Council resolution - 490 South Titirangi Road	101

Signatories

Author

Neil Huang - Senior Analyst

Authorisers

Taryn Crewe - Financial Planning Manager - Council Parent

Ross Tucker - Manager Financial Planning and Strategy

Matthew Walker - General Manager Financial Plan Policy & Budgeting

Sue Tindal - Chief Financial Officer

Finance and Performance Committee

22 October 2015

Finance and Performance Committee Forward Work Programme

File No.: CP2015/21496

Purpose

1. To enable the committee to agree to a twelve month forward work programme, to be reviewed on a six-monthly basis.

Executive Summary

2. This report recommends a twelve month forward work programme for the Finance and Performance Committee (F&P). The purpose of the programme is to enable the committee to manage its workflow, deliver on its priorities, and be well informed of the key decisions required over the next twelve months.

3. The work programme is part of a package of governance changes introduced across council committees and follows the adoption of a revised Committee Terms of Reference by the Governing Body in May 2015. The Auckland Development Committee (ADC) adopted a twelve month forward work programme in June 2015 and the Regional Policy and Strategy Committee (RSP) adopted its programme in August 2015.

4. A proposed programme is appended to this report as Attachment A. The programme will be reviewed around April 2016. The intention is to review all work programmes six-monthly, subject to changes in committee structures and delegations following the 2016 local government elections.

Recommendation/s

That the Finance and Performance Committee:

a) approve the Finance and Performance Committee 2015/2016 forward work programme under Attachment A to the agenda report.

b) note that the forward work programme will guide the work of this committee over the next twelve months and be reviewed after six months.

Comments

5. The Finance and Performance (F&P) Committee delegations state that the committee is responsible for monitoring overall financial management and the performance of the council parent organisation and the financial monitoring of the Auckland Council Group.

6. The delegations include a number of key responsibilities and powers which include financial management, monitoring, development of the 2016/2017 Annual Plan and amendments to the LTP and recommending the Annual Report to the Governing Body.

7. This report recommends a twelve month forward work programme for the F&P Committee. The programme would be reviewed again in March or April 2016, but is not expected to change significantly. Unlike ADC and RSP committees, most of the F&P Committee’s programme follows regular annual processes including the Annual Plan/Long Term Plan, and different forms of monitoring.

8. The executive leadership team (ELT) has proposed that all committees should have agreed forward work programmes by the end of 2015. The programme for the Auckland Development Committee (ADC) was approved in June 2015, and the programme for the Regional Policy and Strategy Committee was approved in August 2015.

9. This forward work programme planning is part of a package of governance changes recently introduced to improve the quality of governance and supporting advice. The changes include:

· Ensuring that the majority of reports to committees require governance decisions, rather than being for information. The ADC and RSP agendas now have a standard report which provides an electronic link to non-confidential memos and workshop material distributed since the previous meeting to ensure that it is on public record. This is less relevant for the F&P committee which has a monitoring function and therefore receives monitoring reports which do not require governance decisions.

· Increasing the chief executive’s financial delegations which helps reduce reporting to committees.

· Reducing meeting frequency for reporting committees to provide time for a focus on strategic priorities and more opportunities for workshops. Regularly scheduled workshops are now used for a combination of briefings and to provide political guidance to the policy development process.

10. A draft work programme is attached (Attachment A). The draft programme includes an explanation of why the work is being undertaken, the committee decisions required, the fit with committee delegations, and approximate timing.

11. New work not currently listed on the programme may be generated from time to time. Staff will provide a brief justification for any work being reported that is not part of the agreed work programme.

12. The programme covers four categories of work that fit with the committee’s delegations:

Strategic Reviews: Annual Plan Development

13. This covers funding and rating policy, review of expenditure, and the process of consulting on and adopting the annual plan. The key areas for focus with respect to funding and rating policy, and review of expenditure, were agreed at the start of the Annual Plan process. A strategic review of alternatives sources of financing also forms part of the 2016/2017 Annual Plan development programme.

Monitoring

14. The committee is responsible for monitoring financial performance and other measures of performance. It receives quarterly financial reports for the council group, a bi-monthly business improvement report for the council, and it recommends the Annual Report to the Governing Body. It also monitors Maori Transformational activity and expenditure, and the council’s progress against its Te Tiriti o Waitangi response work programme. The committee monitors the council’s IS transformation programme and NewCore project as this is a significant area of council expenditure. The programme indicates that the committee may monitor the financial and non-financial performance of large or complex projects such as The Southern Initiative and City Centre Integration programme. This will be investigated further to ensure that it is not duplicating reporting to other committees.

Acquisitions and Disposals

15. The majority of reports in this category are recommendations by Panuku Development Auckland for disposal of land that is no longer required for council purposes.

Other financial decisions

16. These include approving annual levies for the Auckland War Memorial Museum, The Museum of Transport and Technology, and the Auckland Regional Amenities. It also includes approving budget variances or unbudgeted expenditure. Small variances are normally included in a regular Budget update report, while more significant variances, particularly unbudgeted expenditure may require a stand-alone report. This category of reporting also includes restructuring or otherwise amending the terms of community loans.

Consideration

Local Board views and implications

17. The intention is that formally adopting committee work programmes will help to inform local board work programmes over time. The Local Board Services team are also working with local boards to develop work programmes aligned to local board plans and agreements and the annual operational work programmes agreed with council departments and CCOs. Engagement with local boards over Annual Plan development is embedded in the Annual Plan process.

Māori impact statement

18. The Finance and Performance work programme includes reporting against Māori Transformational Activity and Expenditure, and against the council’s response to the Te Tiriti o Waitangi audit. In addition, the agreed annual plan programme includes a review of expenditure on projects to achieve Māori outcomes. Engagement with Māori over Annual Plan development is embedded in the Annual Plan process.

19. Other projects and processes will have a range of implications for Māori which will be considered when work is developed and reported.

Implementation

20. Once approved, staff will review the programme in March or April 2016 and report to the committee with proposed changes for their consideration.

Attachments

No.	Title	Page
a View	Finance and Performance Committee - Forward Work Programme (Draft)	107

Signatories

Authors

Catherine Syme - Chief Advisor

Matthew Walker - General Manager Financial Plan Policy & Budgeting

Authoriser

Sue Tindal - Chief Financial Officer

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