Agenda of Governing Body - 17 December 2015

TERMS OF REFERENCE

Those powers which cannot legally be delegated:

(a) the power to make a rate; or

(b) the power to make a bylaw; or

(c) the power to borrow money, or purchase or dispose of assets, other than in accordance with the long term council community plan; or

(d) the power to adopt a long term plan, annual plan, or annual report; or

(e) the power to appoint a Chief Executive; or

(f) the power to adopt policies required to be adopted and consulted on under the Local Government Act 2002 in association with the long term plan or developed for the purpose of the local governance statement; or

(g) the power to adopt a remuneration and employment policy.

Additional responsibilities retained by the Governing Body:

(a) approval of a draft long term plan or draft annual plan prior to community consultation

(b) approval of a draft bylaw prior to community consultation

(c) resolutions required to be made by a local authority under the Local Electoral Act 2001, including the appointment of electoral officer

(d) adoption of, and amendment to, the Committee Terms of Reference, Standing Orders and Code of Conduct

(e) relationships with the Independent Māori Statutory Board, including the funding agreement and appointments to committees.

(f) approval of the Unitary Plan

(g) overview of the implementation of the Auckland Plan through setting direction on key strategic projects (e.g. the City Rail Link and the alternative funding mechanisms for transport) and receiving regular reporting on the overall achievement of Auckland Plan priorities and performance measures.

Exclusion of the public – who needs to leave the meeting

Members of the public

All members of the public must leave the meeting when the public are excluded unless a resolution is passed permitting a person to remain because their knowledge will assist the meeting.

Those who are not members of the public

General principles

· Access to confidential information is managed on a “need to know” basis where access to the information is required in order for a person to perform their role.

· Those who are not members of the meeting (see list below) must leave unless it is necessary for them to remain and hear the debate in order to perform their role.

· Those who need to be present for one confidential item can remain only for that item and must leave the room for any other confidential items.

· In any case of doubt, the ruling of the chairperson is final.

Members of the meeting

· The members of the meeting remain (all Governing Body members if the meeting is a Governing Body meeting; all members of the committee if the meeting is a committee meeting).

· However, standing orders require that a councillor who has a pecuniary conflict of interest leave the room.

· All councillors have the right to attend any meeting of a committee and councillors who are not members of a committee may remain, subject to any limitations in standing orders.

Independent Māori Statutory Board

· Members of the Independent Māori Statutory Board who are appointed members of the committee remain.

· Independent Māori Statutory Board members and staff remain if this is necessary in order for them to perform their role.

Staff

· All staff supporting the meeting (administrative, senior management) remain.

· Other staff who need to because of their role may remain.

Local Board members

· Local Board members who need to hear the matter being discussed in order to perform their role may remain. This will usually be if the matter affects, or is relevant to, a particular Local Board area.

Council Controlled Organisations

· Representatives of a Council Controlled Organisation can remain only if required to for discussion of a matter relevant to the Council Controlled Organisation.

1 Affirmation

His Worship the Mayor will read the affirmation.

2 Apologies

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

3 Declaration of Interest

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

4 Confirmation of Minutes

That the Governing Body:

a) confirm the ordinary minutes of its meeting, held on Thursday, 26 November 2015, including the confidential section, as a true and correct record.

5 Acknowledgements and Achievements

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

6 Petitions

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

7 Public Input

Standing Order 7.7 provides for Public Input. Applications to speak must be made to the Democracy Advisor, in writing, no later than one (1) clear working day prior to the meeting and must include the subject matter. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders. A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

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

8 Local Board Input

Standing Order 6.2 provides for Local Board Input. The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time. The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give one (1) day’s notice of their wish to speak. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

This right is in addition to the right under Standing Order 6.1 to speak to matters on the agenda.

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

9 Extraordinary Business

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

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

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

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

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

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

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

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

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

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

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

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

10 Notices of Motion

No requests for notices of motion have been agreed to for this agenda.

Governing Body

17 December 2015

Annual Plan 2016/2017 - local board feedback on issues for consultation

File No.: CP2015/26806

Purpose

1. To provide local board feedback on regional financial policy issues with a local impact; key advocacy issues; local targeted rates and Business Improvement District targeted rates for the Governing Body’s consideration when agreeing consultation topics for the Annual Plan 2016/2017.

Executive Summary

2. Legislation governing the Annual Plan process has changed, and there is no longer the requirement to produce a draft Annual Plan. Instead, the council will produce a consultation document which will cover any significant or material changes proposed to the Long-term Plan 2015-2025 (LTP) and content relating to local board agreements.

3. Consultation on the Annual Plan 2016/2017 will take place in February and March 2016. Local boards have provided feedback on issues for consultation and consideration as part of the Annual Plan process, in particular on:

· regional issues (the Uniform Annual General Charge (UAGC), Interim Transport Levy (ITL), Māori land rates and rural rates)

· key advocacy issues

· local targeted rates and Business Improvement District (BID) targeted rates.

4. The feedback from local boards is summarised, in Attachment A. A complete set of the local board resolutions on these matters is set out in Attachment B.

Regional issues

5. A number of local boards did not wish to provide feedback on regional issues until they have received feedback from their local communities. Some feedback is focused on whether the right questions are being asked.

6. Other boards have provided a view, based on previous feedback from communities (e.g. on UAGC, rural rates), so their views could be considered for development of the Mayor’s Proposal and decisions on what is consulted on.

7. Key themes arising from those local boards that provided feedback on regional issues include support for retaining the UAGC at current levels; the need for consultation increasing the share of the ITL paid by businesses; and reviewing Māori land rates. Local boards had differing views on the proposal to consult on lowering rates for farm/lifestyle properties over 50 hectares.

Advocacy issues

8. Key themes that the boards raised in discussions with the Finance and Performance Committee on 27 November 2015 for consideration in developing the annual plan include:

· the need for resource to deliver budgeted, agreed projects and priorities; this includes needs assessment and feasibility work for community facilities, and planning support areas not identified as spatial priorities

· better provision of indoor sports and recreation facilities to meet demand

· a review of regional service levels for community centres and community halls to ensure consistency

· increased funding for parks and open spaces

· the need for integrated transport and other infrastructure to support growth.

9. Staff are preparing responses to a number of these and other matters raised by the boards, together with other information requested by the Finance and Performance Committee. Responses to issues raised in the individual discussions between local boards and the Finance and Performance Committee will be provided prior to the end of the year. Responses to other advocacy issues will be provided in February 2016.

Local targeted rates and BID targeted rates

10. Māngere-Ōtāhuhu and Ōtara-Papatoetoe local boards seek that the Governing Body continue the swimming pool targeted rate in their local board areas in 2016/2017.

11. Local boards have endorsed the proposals for new BID areas (Henderson-Lincoln and Warkworth) and to extend the boundaries of the North Harbour BID. Proposals to extend the Glen Eden and Browns Bay BID areas will be reported to the local boards in February.

Recommendation/s

That, when agreeing consultation topics for the Annual Plan 2016/2017, the Governing Body considers the feedback from local boards on:

a) regional financial policy issues - that is, the Uniform Annual General Charge, Interim Transport Levy, Māori land rates and rural rates (summarised in Attachment A and set out in Attachment B to the agenda report)

b) key advocacy issues (summarised in Attachment A and set out in Attachment B to the agenda report).

Comments

12. Input from local boards was sought on a range of Annual Plan related matters, including regional financial policy issues, advocacy issues, and recommendations as to any local targeted rate or BID targeted rate proposals, for consideration by the Governing Body prior to finalising consultation topics and prior to the Mayoral Proposal.

13. Local board views on these matters were also discussed by local boards and the Finance and Performance Committee on 27 and 30 November 2015.

Consideration

Local Board views and implications

14. Local board views and feedback has been provided in this report.

15. Local boards will also have further opportunities to provide information and views as council continues through the annual plan process.

Māori impact statement

16. Many local board decisions are of importance to and impact on Māori. Local board agreements and the annual plan are important tools that enable and can demonstrate council’s responsiveness to Māori. Local board plans, which were developed in 2014 through engagement with the community, including Māori, form the basis of local priorities. There is a need to continue to build relationships between local boards and mana whenua, and with the wider Māori community. Ongoing conversations will assist local boards and Māori to understand each other’s priorities and issues. This, in turn, can influence and encourage Māori participation in council’s decision-making processes.

Implementation

17. The Governing Body will adopt consultation material for the Annual Plan 2016/2017 in early February 2016.

Attachments

No.	Title	Page
a View	Summary of local board feedback	13
b View	Local board resolutions	19

Signatories

Author

Chantal Creese - Senior Policy Advisor

Authorisers

Karen Lyons - Manager Local Board Services

Phil Wilson - Governance Director

Stephen Town - Chief Executive

Governing Body

17 December 2015

On-site Wastewater Systems (septic tank) Upgrades – Proposed Financial Assistance Pilot

File No.: CP2015/26508

Purpose

1. To approve the development and delivery of a financial assistance programme to encourage homeowners to upgrade and/or replace failing on-site wastewater systems (septic tanks) to reduce faecal contamination of waterways.

2. To recommend that this proposal, identified in the mayoral proposal for the Annual Plan 20161/7, be included in the consultation process for the Annual Plan 2016-17.

Executive Summary

3. Auckland has a region-wide problem with faecal contamination of our waterways. In rural areas, sources of faecal contamination include livestock, wildfowl, dogs and failing septic tank systems.

4. There are a number of potential solutions to address failing septic tank systems, including reticulation, the increased use of regulatory tools and offering incentives to encourage household level action, particularly maintenance. The upgrade or replacement of failing on-site wastewater (OSWW) systems is one of several solutions.

5. While it is estimated there are 50,000 on-site wastewater systems across Auckland, the proportion of sites overall that are failing is currently unknown. However, work underway in the west coast lagoons (Piha, Te Henga and Karekare) suggests the problem is widespread and relates to both the system itself (its age and appropriateness) as well as the management of it (including maintenance) by the homeowner.

6. The cost of up to $35,000 per property to replace or upgrade an OSWW system is likely to be a significant barrier for many homeowners and one that a financial incentive could help overcome. A two year pilot is recommended as it will provide an opportunity to assess level of interest and consequential financial impact before consideration of any region-wide proposal.

7. Both the west coast lagoons and Little Oneroa (Waiheke Island) catchments are known to be contaminated by leakage from failing OSWW systems, and both are popular swimming locations. Action plans to reduce faecal contamination in these catchments are currently being implemented, and a Voluntary Targeted Rate (VRT) would supplement these.

8. The mayoral proposal for the Annual Plan 2016/17 describes a two year financial assistance pilot, repaid via a VTR, to encourage homeowners to upgrade their OSWW systems, specifically in the west coast lagoons and Little Oneroa catchments.

9. Given the financial assistance is to be repaid via a rating mechanism, even though it is voluntary and will not be struck until 2017/18, the pilot programme would be launched in 2016/17 and should therefore be included in the current 2016/17 Annual Plan consultation.

10. It is proposed that the pilot programme is managed within the $35 million net debt cap and the $9 million financial assistance annual cap adopted during the Long-term Plan for the Retrofit Your Home programme (RYH) with $600,000 (of the $9 million) per annum ring-fenced for OSWW system retrofits.

11. The impact on the existing RYH programme would be a reduction in the number of clean heat, insulation and water efficiency retrofits supported by an estimated 200 per annum (currently around 3,000 per annum, averaging $3,000 per retrofit). This reduction would make way for an estimated 30 OSWW systems (at an estimated $20,000 per retrofit) per annum to be upgraded or replaced.

12. The pilot will test the level of uptake and indicative outcomes as well as inform how any associated debt should be prudently managed. This includes options to be considered as part of any potential region-wide rollout, such as third party (external) debt funding. However, this pilot does not commit council to any such rollout.

Recommendations

That the Governing Body:

a) approve a two year pilot on-site waste water financial assistance programme focused on the west coast lagoons and Little Oneroa catchments to address issues with waterway contamination in these areas.

b) approve the use of up to $600,000 per annum of the financial assistance debt facility approved in the Long-term Plan 2015-2025 for the existing Retrofit Your Home programme for the pilot on-site wastewater financial assistance programme.

c) approve the inclusion of this pilot on-site wastewater financial assistance programme, repaid via a voluntary targeted rate, in the consultation process for the 2016/2017 Annual Plan.

Comments

Background & Problem Definition

13. Auckland has a region-wide problem with faecal contamination of our waterways. Water quality monitoring results in a number of Auckland’s coastal areas have returned faecal indicator bacteria levels in fresh water indicating contamination that poses a risk to human health. Ten percent of regional Safeswim bathing samples exceeded safe levels for swimming during the 2014/15 bathing season. Health warnings were established at 22 of the 69 Safeswim sites on 54 occasions during this period. On average signs were in place for between 3-4 days before the waterway was cleared for bathing. A further five sites (Little Oneroa Lagoon, Weymouth Beach, Cox’s Bay, Meola Reef and Wairau Outlet) have permanent warning signs in place advising against swimming due to contamination issues.

14. Faecal contamination can originate from a range of point or diffuse sources including from onsite wastewater systems, livestock, wildfowl, dogs and feral animals. This can be exacerbated by environmental conditions such as weather conditions and tide.

15. There are a number of potential solutions to the problem including reticulation, the development of locally-funded wastewater systems the increased use of regulatory tools (such as increased monitoring of septic systems with enforcement of council’s standards) and offering incentives to encourage household level action. The voluntary upgrade or replacement of failing onsite wastewater systems is one part of the solution to this problem.

16. There are an estimated 50,000 OSWW systems across the region. An unknown, but possibly high proportion of these systems are leaking faecal contamination into adjacent waterways. Systems fail due to old age, poor maintenance, changes in household or site requirements. In some cases, baches are now used as family homes and the system is no longer appropriately sized for the permanent household. In other cases high seasonal usage (such as the summer holiday period) can overload a system. While not ‘failing’, other systems may no longer be considered appropriate, for example long drops.

17. While we don’t know the extent of OSWW system failures regionally, we do have more information at a local scale, including in the west coast lagoons and Little Oneroa catchments where localised investigations have been undertaken.

Western Lagoons

18. In September 2013, following a report into the sources of contamination at the west coast lagoons the Environment and Sustainability Forum resolved that an action plan should be created to improve water quality in the lagoons at Karekare, Piha, North Piha and Bethells (Res No. ES/2013/57).

19. These lagoons are often not safe to swim in because of faecal contamination. Investigations have shown that in these areas the contamination comes from a range of sources, including poorly performing septic systems, dogs, birds and livestock.

20. Recent work in the west coast lagoons suggests that the number of the failing systems could be significant. Earlier in 2015 29 OSWW systems were checked as part of a voluntary inspection offered free of charge to the homeowners in the catchment. Forty percent of those systems had significant issues with some newer systems having similar problems as older systems due to a lack of maintenance. Upgrading or replacing OSWW systems will contribute to improving water quality, however how people use and maintain their OSWW systems is also important to their proper functioning.

21. The West Coast Lagoons action plan includes education, incentives and enforcement to improve OSWW system performance and therefore water quality in the lagoon catchments.

Little Oneroa (Lagoon)

22. Little Oneroa stream meets the coast at Little Oneroa beach, a popular beach on Waiheke’s northern coast. For most of the year, the Little Oneroa stream is impounded by sand at its mouth and does not flow to the sea, forming a small lagoon. The lagoon is beside a popular children’s playground where children are naturally drawn to paddle and play in the warm shallow water.

23. The Little Oneroa lagoon has a long history of serious faecal contamination which poses a public health risk. Monitoring of Little Oneroa Lagoon has found E. coli level exceeding the Ministry for the Environment (MfE) and Ministry of Health (MHF) guidelines for safe swimming. There is a permanent warning sign erected to discourage recreational use. Monitoring has identified that the most prevalent source of faecal contamination in the lagoon is from human origin; septic systems. Other sources include dogs and wildfowl.

24. As with the issues in the west coast lagoons, cross-council and community effort is required to improve the water quality. A cross-council co-ordination group has formed and are supporting the Waiheke Resources Trust to develop a community-led approach (action plan). The Waiheke Local Board will consider endorsement a draft action plan at its December 2015 meeting.

What action is needed

25. Sound, functioning OSWW systems requires homeowners to have the right technology (system) and to be using and maintaining it correctly.

26. Council has a monitoring and enforcement role regarding OSWW systems and can recover the reasonable cost of providing its services under a range of legislation. However, council generally prefers to take an incentivising approach, in the first instance, to encourage property owners to proactively manage the maintenance and upgrade of their septic systems to prevent contamination from entering waterways.

27. Operating since 1998, Council’s Waitakere pump-out programme provides triennial pump-outs and cleaning of on-site wastewater treatment systems including septic tanks, long drops, grease traps and grey water systems. This programme covers approximately 4,300 systems across the rural parts of the legacy Waitakere City Council area (being parts of Upper Harbour, Henderson-Massey and Waitakere Ranges local board areas). This pump out programme is funded via a targeted (rural sewage) rate.

28. The potential to expand the pump-out programme as a region-wide service is being investigated and evaluated as part of the region-wide options for improving OSWW management. It is expected that these options will inform decisions required at the end of the current contract period in 2018.

29. The west coast lagoons draft action plan includes a wide range of initiatives that will be implemented progressively depending on the resources available, such as:

· community engagement, information sharing and participatory decision making

· review of regulatory methods

· targeted enforcement of high risk properties;

· evaluation of onsite, decentralised and centralised wastewater collection, disposal and treatment options

· evaluation of lagoon management options

· ensuring compliance of Council’s systems

· providing financial incentives such as reduced building consent fees, a subsidy for resource consents or OSWW subsidy schemes such as that funded by the Waitākere Ranges Local Board.

Financial Incentives to Upgrade Systems

30. The cost of replacing or upgrading OSWW systems ranges from $15,000 to $35,000. There are a range of potential financial incentive tools available to Council to assist homeowners to overcome the financial barrier associated with septic tank upgrade including grants, subsidies, rate rebates and repaid finance assistance.

31. This report recommends that a repayable financial assistance pilot for OSWW is made available to homeowners to replace or upgrade their failing systems. This assistance would be fully repaid, over a period of up to 15 years, via a voluntary targeted rate. Given that the financial assistance would be repaid via a voluntary targeted rate, the proposal needs to be included in the Annual Plan 2016/17 consultation process.

Repayable Financial Assistance Pilot Programme

32. The high cost per unit (and household) of replacing or upgrading OSWW systems makes the level of uptake of any voluntary programme difficult to predict.

33. It is therefore proposed that the repayable financial assistance programme is piloted for a two year period. This will allow parameters, including the type and cost of septic systems; financial assistance required per household; level of uptake; and barriers to upgrading, to be tested and evaluated.

34. Piloting the programme in the west coast lagoons and Little Oneroa catchments will help address issues in those catchment but will also provide lessons for wider application. Both locations have a significant history of community demand and involvement, and are suitable as pilots given:

· the long history of faecal contamination and clear understanding of contamination sources at these sites

· the known contamination impacts on these popular swimming places making them unsafe for contact recreation but where there is ongoing high public usage

· comprehensive action plans to address the issues are under development with local board and community involvement and or leadership.

Pilot Programme Parameters

35. There are less than 1,000 properties within the pilot locations with OSWW systems that could potentially be upgraded or replaced. This would include composting toilets through to tertiary on-site wastewater treatment systems.

36. The amount of assistance provided and repayment period have been considered based on council experience with both the Retrofit Your Home (RYH) programme and Kumeu-Huapai Riverhead (KHR) Wastewater Connection Financial Assistance programme.

37. The pilot programme would provide financial assistance of up to 100% of the costs associated with upgrading or replacing a failing OSWW system to a maximum of $35,000 per property. The voluntary targeted rate would be attached to the property and repaid via rates over a maximum 15 year period. This repayment period is consistent with the Kumeu scheme mentioned above and is considered an affordable timeframe.

38. The programme would also be subject to interest charges at Council’s long-term average rate of borrowing plus an additional 1% to cover the cost of programme administration. While the cost of Council borrowing is variable, an approximate interest rate of 7% (council cost of borrowing plus 1% administration charges) is used for modelling purposes.

39. Based on these pilot parameters, information on minimum repayment and the total cost of assistance (principal plus interest) is provided in Table 1 below.

Table 1: Minimum repayment and total assistance costs

Amount of Voluntary Targeted Rate (financial assistance provided)	Minimum Payable each year via targeted rate (approx.)	Minimum Payable in quarterly rates instalment (approx.)	Total cost of assistance over 15 years (principal and interest)
$15,000	$1,680	$420	$25,198
$20,000	$2,240	$560	$33,597
$25,000	$2,800	$700	$41,996
$30,000	$3,360	$840	$50,396

Expected Uptake (Response Rate) & Debt Facility

40. The pilot period will used to test the effectiveness of an incentive programme to encourage homeowners to upgrade or replace septic systems and therefore there is some uncertainty regarding response rate. It is estimated that uptake for the financial assistance could be 3% of eligible households per year. This is based on uptake levels for the 2012 KHR Wastewater Connection voluntary targeted rates programme however with both KHR and the Retrofit Your Home programme other local and central government initiatives (including grants) may have influenced response rate.

41. Table 2 below shows the projected debt associated with uptake. At 3% uptake it is expected the maximum number of households accessing the programme will be 30 per annum. Based on an average intervention cost of $20,000, a total financial assistance facility of $600,000 per annum is proposed.

Table 2: Financial Assistance Debt Facility by Uptake

Uptake (Response rate)	1%	2%	3%	4%	5%	6%
Total number of households (pilot area 1,000)	10	20	30	40	50	60
Total financial assistance facility per annum	$200,000	$400,000	$600,000	$80,000	$1,000,000	$1,200,000

Impact of the Pilot on the current RYH interventions

42. The current RYH programme provides up to $5,000 in repayable financial assistance per household for insulation, clean heat and water efficiency interventions. The average intervention per household provided is $3,000 with around 3,000 retrofits provided annually.

43. The proposal would mean that the number of households accessing clean heat, insulation and water efficient devices interventions would reduce by 200 to 2,800 (currently 3,000) per annum for the two years of the pilot, making way for an estimated 30 septic tanks per annum to be upgraded or replaced.

Debt Funding the Pilot Programme

44. It is proposed that the financial assistance is provided from within the $35 million debt cap and annual assistance cap of $9 million approved in the Long-term Plan 2015-2025 for the Retrofit Your Home Programme. This is considered prudent, given the nature of the programme (i.e. pilot) and the uncertainty of the uptake level.

45. In order to stay within the existing debt cap, financial controls reducing the level of annual financial assistance available (from $9 million) are already in place. This pilot will not impact on these controls. The proposal will not lead to material impact on the council’s prudential debt ratios.

46. The potential for external debt provision will be explored as part for the options analysis for a possible region-wide programme. The scale of the pilot proposed does not warrant consideration currently. The two year pilot period will provide an opportunity to understand more of the programme parameters needed to inform further options analysis, including external debt provision.

Evaluation of the Pilot Programme

47. At the conclusion of the pilot period the success of a voluntary targeted rate as an incentive to address water quality issues resulting from OSWW system failure will be reviewed and options for a regional programme will be considered.

48. Pilot evaluation will consider the technical limitations of different systems, uptake rate and the extent and level at which a voluntary targeted rate programme addressed barriers to OSWW system replacement or upgrades. Individual systems will be subject to “before” and “after” inspections as part of the application approval process.

49. The pilot evaluation will consider the likely impact that replacing or upgrading systems has on water quality. However these are unlikely to be demonstrable within the proposed two year pilot period. Longer term monitoring in place to track changes within these pilot locations.

Consideration

Local Board views and implications

50. A number of local boards have expressed concern regarding the impact of contamination from onsite waste water systems on their local waterways.

51. As part of their advocacy points for the development of the 2016/17 Annual Plan the Waitakere Ranges Local Board noted the following key advocacy point ‘iv) Protecting Waitakere Ranges: Improving water quality: regional support for establishment of a retrofit scheme for septic tanks which stays with properties as an encumbrance on the title.’

52. Remediation of Little Oneroa Lagoon is cited as a key initiative in the Waiheke Local Board Plan and the board has supported work by the Waiheke Resources Trust and council in this area, more detail on this is provided in the table in attachment A to this report.

53. In September 2015 staff sought informal feedback regarding an OSWW financial assistance proposal from local boards with OSWW in September 2015. Feedback was received from Great Barrier, Franklin, Hibiscus and Bays, Waiheke and Waitakere Ranges local boards and is summarised in the table in Attachment A to this report. Unanimous support for an OSWW proposal was received from these boards and local board investment in aligned projects is also noted in the table attached.

54. Other boards with septic tanks in their area (Upper Harbour, Papakura, Otara-Papatoetoe, Henderson-Massey, Māngere-Ōtāhuhu and Whau local boards) were also invited to provide feedback in late September but have not done so to date.

55. While Hibiscus and Bays Local Board recommended that Stillwater and Okura catchments be included in the pilot financial programme, given the pilot selection considerations outlined above, this is not recommended at this stage.

Māori impact statement

56. It is recognised that environmental management, water quality and land management has integral links with the mauri of the environment and concepts of kaitiakitanga.

57. Te Kawerau a Maki considers itself mana whenua for the catchments around the west coast lagoons and have endorsed actions to address the water quality issues including the provision of financial assistance repaid a voluntary targeted. Ngāti Whātua has expressed an interest, particularly in relation to actions in the Karekare catchment, but has not yet taken up the opportunity to meet to discuss these further.

58. Feedback has not yet been sought from Ngāti Paoa regarding the pilot for Little Oneroa. However, feedback was sought from Ngāti Paoa during the development of the Little Oneroa Action Plan with the iwi giving permission for Piritahi Marae to represent tangata whenua views. Piritahi Marae will be involved in the implementation of the action plan as its capacity allows.

Implementation

59. The pilot programme will be developed and promoted as part of the action plans already underway in both pilot catchments with the input and support of the community and local boards. Programme specifications will be developed by a technical working group and the programme administered by the operations teams responsible for the Retrofit Your Home Programme.

60. Operational costs of the pilot programme would be cost neutral to council, with programme development and administration costs recovered via the administrative charge included in the interest paid by programme customers.

Attachments

No.	Title	Page
a View	Summary of Local Board Feedback and Investment in Onsite Wastewater initiatives	79

Signatories

Author

Viv Sherwood, Catchments & Incentives Manager Environmental Services

Authorisers

Dean Kimpton - Chief Operating Officer

Stephen Town - Chief Executive

Governing Body

17 December 2015

Annual Plan 2016/2017 - Mayoral Proposal

File No.: CP2015/26742

Purpose

1. To present the Mayoral proposal for the Annual Plan 2016/17 to the Governing Body for decision-making.

Executive Summary

2. This Annual Plan proposal is built on a platform of an existing strong financial position and the Long-term Plan 2015-2025 (LTP) which reset some of our key financial parameters. Having been through a major review of service and investment levels in the LTP, and having had several years of significant change in our rating system from amalgamation – this Annual Plan is about stability and delivering on our previous decisions.

3. Projected rate increases and debt have been reduced significantly in the current LTP from previous projections.

4. Costs are tracking below the 2009 levels on a per capita basis and investment in the assets that Aucklanders, current and future, need continues at an unprecedented level.

5. The only changes proposed for consultation in this Annual Plan are those that have come from discussion through the Finance and Performance committee and Local Boards and are all related to rating policy.

6. The reports supporting the Mayoral Proposal, which were considered at the 28 October 2015 Finance and Performance Committee meeting, are appended as Attachments A – D:

· Māori Land Rates

· Rural Rates Review

· Annual Review of Uniform Annual General Charge

· Interim Transport Levy Structure.

7. The decisions of the 28 October 2015 Finance and Performance Committee meeting relating to those reports are appended as Attachment E.

Recommendation/s

That the Governing Body agree that the 2016/17 Annual Plan consultation document include:

a) consultation on the quantum of the Uniform Annual General Charge over the range of $350 to $650.

b) consultation on the following options:

i) an increase in the share of the interim transport levy met by businesses from 14.7 per cent to 32.7 per cent for 2016/2017 and 32.3 per cent for 2017/2018

ii) share the business interim transport levy amongst business ratepayers on the

basis of capital value rather than via a fixed charge.

c) consultation on the following amendment to the:

i) Māori freehold land rates remission and postponement policy to:

a) remit rates for marae and urupa that exceed the two hectare limit for non-rateability

b) increase the adjustment for the number of owners up to the ten per cent maximum, where properties have significant barriers to development such as owners being deceased or not succeeded to

c) adjust rates to the equivalent of those that would have been charged, had the property been valued excluding any potential use that is unlikely to be achieved within Māori ownership

ii) rates remission and postponement policy (remission scheme for fixed charges) to remit fixed rates for Māori land, including non-contiguous properties, that are managed as a single property that would not be levied if they were in single ownership

iii) policies referred to in c) i) and c) ii) above and that further detailed and specific policy changes be sought from Māori (including Māori landowners and the Independent Māori Statutory Board) as part of the consultation process and that these be assessed by officers and be reported back to the committee for consideration in the post review policies and/or to initiate other actions and responses by Council.

d) consultation on the following option to:

i) reduce the differential for large farm/lifestyle properties(over 50 ha) from 80 per cent to 60 per cent of the urban residential general rate and recover the lost revenue from the entire rating base

ii) amend the rates remission and postponement policy to remit the difference in rates between what a property is charged for its smaller individual blocks, and what it would be charged if it was rated as a single combined property.

Background

8. Since amalgamation, Auckland has been through significant change and faced considerable challenges. Our focus in the first few years was very much about getting the foundations in place – and getting them right. We have largely achieved that and now is the time for a steady and predictable approach. The LTP maps out an ambitious investment programme for Auckland. In 2016/17 we need to be methodically implementing that programme – it is a year for delivery to Auckland and Aucklanders.

9. It needs to be acknowledged that amalgamation has been hard on some people – delivering much greater rate increases than the average. This was an inevitable but unfortunate consequence of bringing together the eight previous rating systems. Having been through this, we are now in the position of having properties of similar value across the region being rated at similar levels. Going forward there will be a smoother and more balanced impact of rates movements across the region.

Financial Position

10. One of the most misunderstood issues about Auckland Council is the state of our finances. The way that our financial position is often portrayed leaves the public with the impression we are in difficulty – over extended on debt and struggling to meet our commitments. Nothing could be further from the truth. You do not obtain and maintain an AA credit rating from Standard and Poors without a very strong financial base, supported by sound and prudent financial management and planning. We have all of those elements in place. The extremely robust state of our finances was recently confirmed in the reports from EY and Cameron Partners.

11. There is a common perception that the council has ballooning costs, staff and debt. The amalgamation of the legacy councils is painted as having not delivered on the expected efficiency and, if you were to believe some commentary, to have delivered less projects and services than those legacy councils. It is as exasperating as it is untrue.

Let us look at the facts rather than the rhetoric:

Rates and cost increases:

Myth – Since the Super city was formed rates have gone up faster than under the legacy councils

12. The forecast rate increases under the combined legacy council LTPs compared to the actuals achieved by Auckland Council are shown below.

Note: ITL excluded as LTP 2012-22 included alternative transport revenue.

13. The actual increases are below that of legacy councils in each and every year. Similarly the 2015/25 LTP proposes significantly lower increases than those proposed in 2012.

Myth – since the Super city, costs are out of control

14. The ongoing reduction of projected rate increases was achieved by driving costs out of the organisation through efficiency savings of over $200 million per annum so far. Council core operating costs from 2010 to 2015 (as reported in our audited accounts) were:

15. Over the same period we added a city the size of Tauranga to our population. Given that most of our core costs are driven by the size of the community we serve it is useful to look at how that translates per capita. As can be seen from the graph below we are still well below the level of 2009 – immediately prior to amalgamation.

Debt

Myth – Auckland Council’s debt is spiralling out of control

16. Debt is our mechanism for paying for infrastructure that future generations will use. By borrowing, we ensure that those costs are shared by the current and future generations rather than expecting today’s ratepayers to pay for tomorrow’s users. Having said that, we do of course need to maintain our debt within prudential limits. In the 2015-25 LTP one of the major steps we took was to look at maintaining our debt at levels that kept interest capped at 12per cent of our total revenue, a significant reduction from the 15per cent in the previous LTP. To achieve this we undertook a fundamental review of our capital programme. In the assessment of our credit rating this ratio is a key element.

Delivery

Myth – The Super City is not delivering as much as the old councils

17. Over the last five years we have started to address the shortfall of previous investment in infrastructure for both current residents and the 838 people that arrive every week.

However, before we talk about what those investments look like it is worth reflecting on the costs of running the largest council in Australasia. Yes we have a very large budget, but most of it goes on the day to day services that Aucklanders expect and value.

· Renewing and maintaining our over 7000km of road, 7000km of footpaths, 41 rail stations, 21 wharves, 14 ferry facilities and 6 busway stations costs $310 million per annum

· Over $110 million each year to assist the funding of public transport trips

· Mowing our 241 sports parks and 3000 local parks costs $17 million per annum

· Renewing and maintaining 927 playgrounds and 43 aquatic and recreation centres has an annual cost of $18 million

· Running 54 local libraries along with the central library is $50 million each year

· Watercare run water and sewage services at a cost of over $200 million per annum

· It costs $90 million to provide, rubbish collection, recycling and inorganic collections every year

· Providing funding assistance to some major facilities such as Auckland War Memorial Museum $29 million, MOTAT $12 million, Auckland Zoo $8 million, Auckland Art Gallery $11 million.

· Grants of $60 million support a range of regional and local community, arts and cultural groups and facilities` e.g. ATC, Auckland Arts Festival, Auckland Philharmonia, Howick Historic Village, Te Tuhi, Lopdell House, Q Theatre, North Shore Theatre and Arts Trust.

· We will invest over $18 million next year on major and regional events including the NRL 9s, the V8s in Pukekohe, the Pasifika festival and preparation for the World Masters Games.

18. In addition to those day-to-day services that keep Auckland running and provide a great place to live, there is the investment in new or upgraded assets – the infrastructure that we need to grow.

19. Over the last five years we have spent:

· Almost a billion dollars on roads and footpaths including Tiverton Road and Wolverton Street in New Lynn, Albany Highway, Te Atatu Road and continued investment in the AMETI project

· $1.1 billion on public transport including the rollout of 57 electric trains, the new rail station and transport hub at Manukau, upgraded stations and bus interchanges across the network, and new ferry facilities and services to Hobsonville and Beach Haven.

· $220 million on land for parks – including local parks in new developments

· $190 million on our stormwater network

· $900 million on water and sewerage infrastructure including the upgrade of the Waikato Water Treatment Plant, the expansion of networks to support urban growth and wastewater solutions to protect our harbours

· $50 million on new or upgraded libraries including Otahuhu, Ranui, Devonport, Wellsford and Waiheke

· $25 million on other community facilities across the region, including Birkdale, Glendene and Kelston

· $30 million on upgrading regional facilities including the redevelopment of Auckland Art Gallery, the Viaduct Events Centre and Te Wao Nui at Auckland Zoo

· $160 million on the waterfront including the delivery of public spaces is the Wynyard Quarter and the upgrade of Queens wharf.

LTP reset

20. As we have previously acknowledged, the budgets for the first few years of Auckland Council were set based on the commitments of the legacy councils with some slight reshaping of priorities in the LTP 2012-22. However, the LTP 2015-25 was the first real opportunity we had, post amalgamation, to start re-aligning our priorities to the directions of the Auckland Plan. It was also our first opportunity to have a broad conversation with the community about the need for transport investment and their willingness to pay for it.

21. The LTP we adopted in June of this year – not quite six months ago – reprioritised our spending. There were some minor cuts to service levels with resulting savings, but the biggest area of reduction was in the capital budgets. We recognised the need to reduce our projected debt levels from those in the previous LTP and the way to do this was through resetting our capital budget.

22. A large part of the reduction in capital spend was in the transport area – where we have recognised that until there is an additional revenue stream, the level of investment needed to be pulled back. Conversations with central government continue on this issue but in the meantime we have put in place the Interim Transport Levy (for three years) which will enable us to maintain our investment in transport until we can secure alternate funding mechanisms.

23. The net result of both the reduction in operating costs and in the capital programme has allowed us to:

a) cap our rate increases at 3.5 per cent in the 2015-25 LTP compared to the 4.9 per cent in the previous LTP and;

b) cap our interest to revenue ratio at 12 per cent over the life of the LTP.

24. However, while maintaining this financially prudent approach we have also adopted a work programme which will continue to deliver on our key strategic priorities – transport (particularly public transport) and catering for growth. Much of our new investment is in the basic infrastructure ($5.2 billion for transport and $3.8 billion for water/wastewater/stormwater) which supports those objectives. However, alongside that basic infrastructure there in an ongoing programme of investment in local communities through parks, libraries and other local amenities.

25. This LTP also set the platform for further work – both ongoing discussions with government about the funding of the infrastructure needs of New Zealand’s only international city, and examination of our own options for alternative funding mechanisms. The latter piece of work has started this month and will generate some interesting discussion within the council and the wider community leading into the next term of the council.

ANNUAL PLAN 2016/17

Approach

26. This will be our first Annual Plan prepared under the amended Local Government Act. The new legislation changes the approach in that we are no longer required to produce a draft Annual Plan. We are now only required to produce a consultation document which outlines any proposed changes to the LTP (year two). Given it is less than six months since we signed off the LTP after one of our largest consultation processes and a historic 27,383 submissions, it is my view that this Annual Plan is one of minimal change.

27. We have also changed the process leading up to the point of a Mayoral Proposal for the Annual Plan. Issues that may need to be consulted on have been canvassed through the Finance and Performance Committee and this has resulted in a relatively small number of matters for consultation with the public.

This proposal brings together those issues.

What the Annual Plan 2016/17 will deliver

28. The 2016/17 programme continues to address the challenges of growth and improving our transport infrastructure. The capital programme of $1.9 billion includes a transport programme of $720 million, water and wastewater of $440 million and investment in parks, sport and recreation of $170 million. This is very much a programme of building on the progress we have been making to date with no significant new projects. Having said that, Aucklanders will continue to see progress as we deliver projects such as:

· Redevelopment of the Pioneer Women’s and Ellen Melville Hall and Freyberg square

· The Ormiston town centre development

· Upgrade to the Pukekohe town centre

· Development of the Westhaven marina village

· The Wynyard Quarter innovation precinct

· Rolling out organic bins and an organics processing facility

· The Massey North community centre

· The Albany stadium pool

· The Myers Park upgrade

· The Warkworth showgrounds

· The Waiuku sports park

· Commencing construction of the City Rail Link bringing to an end 90 years of debate on the project

· Flat Bush main street collector link

· Lincoln Road and Te Atatu Road corridor improvements

· Tamaki Drive and Ngapipi intersection

· Warkworth western collector roading project

· Continued rollout of cycleways (utilising the increased government funding)

· Stage 2 of the Silverdale park’n’ride

· Public transport interchanges at Manukau, Otahuhu, Te Atatu, and Pukekohe.

29. The rates increase included in the LTP for year two, based on the above capital works programme and continuation of our day to day services at current levels is 3.2 per cent. I would like to see this reduced to 2.5 per cent or very close to that level. However, having just been through a major consultation exercise in the LTP, I am not proposing that we consult on any further reductions to service levels. I am however, asking that staff continue to scrutinise our costs, particularly those macro issues of inflation and interest rates, along with issues such as the way we fund the Auckland War Memorial Museum asset replacement reserve. I expect that this review, which will be reported back to us before we go into final deliberations on the Annual Plan, should enable us to achieve a more acceptable rates increase.

Issues for consultation

30. Following the discussions with the Finance and Performance Committee we have a short list of rating policy issues for consultation with the community. Local Boards have also raised a number of issues that they would like considered by the Governing Body as part of this Annual Plan process. As already mentioned, I see this Annual Plan as one of minimal change. Local Boards will consult on their own local issues and there is still the opportunity for minor reprioritisation decisions following the review of budgets in the early part of the new year and before final adoption of the Annual Plan. However, the Waitakere Ranges Local Board, supported by the Deputy Mayor, has raised the issue of extending our “retrofit your home” programme to incorporate septic tank replacement. Staff advise that this could be run as a pilot for the west coast lagoons, and have also suggested incorporating Little Oneroa on Waiheke Island. Both of these areas already have significant community buy-in and other complementary initiatives in place and can be managed within the current funding envelope. Because this programme is funded via a targeted rate we would need to consult on this as part of our rating policy issues.

31. Therefore the only issues I am proposing for consultation are related to rating policy options, including the septic tank issue.

Rating Policy

32. I believe there is a good argument for some stability in our rating policy in this year. It would be the first year since the formation of the Auckland Council where the effects of amalgamation and valuation would not impact on the ratepayers. All ratepayers (within the relevant sectors of business and non- business) would have a uniform level of increase. However, I also recognise that there is a view that the community should be consulted on the UAGC on an annual basis – because of the impact that it has on different groups of ratepayers; and, after the first months of introduction of the Interim Transport Levy the community may wish to express their views on how that levy is distributed between business and non-business ratepayers. There are also three other proposed rating policy options for consultation with the community – the rating of Maori Freehold Land, the rating of large farms and the extension of the “retrofit your home” scheme to include septic tanks.

UAGC

33. As we are all aware, changing the level of the UAGC affects the distribution of rates between higher and lower value properties. Through the Finance and Performance Committee we have agreed to test the community’s appetite for change once more and that the appropriate range of UAGC levels for consultation is $350-$650.

Interim Transport Levy

34. As part of the LTP we resolved to include an interim transport levy for three years while discussions continued with the government on alternative funding mechanisms for transport infrastructure. This levy was set at $182.85 (incl GST) for business ratepayers and $113.85 (incl GST) for all other ratepayers. An alternative option has been put forward to change the distribution of the transport levy to collect more from the business sector (in line with the general rate) and reduce the imposition on other ratepayers. This option would:

a) increase the share of the interim transport levy to be met by businesses from 14.7 per cent to 32.7 per cent for 2016/17 and 32.3 per cent for 2017/18; and

b) share the business interim transport levy among business on the basis of capital value rather than a fixed charge.

Māori Freehold Land Rates Remission

35. An extensive piece of work has been carried out by staff looking at the options for the rating of Māori freehold land. This work included significant engagement with Māori stakeholders and the resulting proposal, having been slightly amended and approved by the Finance and Performance Committee, is included in my proposal as an option for consultation.

Rates for large farms

36. Another issue that has been canvassed through the rural community is the rating of large farms (those over 50 hectares). While the initial proposal was to reallocate rates within the rural sector so that the amount that was reduced from large farms was reallocated to smaller farm and lifestyle blocks, the Finance and Performance Committee altered the proposal to reallocate the reduction from large farms across the entire rating base. This option is also included for consultation.

Targeted rate for septic tank replacement

37. This is a proposal to extend the existing “retrofit your home” scheme, in specific pilot areas, to incorporate the replacement of septic tanks. A separate report on the issue will be presented to the Governing Body on 17 December 2015.

Attachments

No.	Title	Page
a View	Maori Land Rates report to 28 October 2015 Finance and Performance Committee	91
b View	Rural Rates Review report to 28 October 2015 Finance and Performance Committee	109
c View	Annual review of Uniform Annual General Charge report to 28 October 2015 Finance and Performance Committee	121
d View	Interim Transport Levy Structure report to 28 October 2015 Finance and Performance Committee	129
e View	Resolutions of the 28 October 2015 Finance and Performance Committee	135

Signatories

Author

His Worship the Mayor, Len Brown

Governing Body

17 December 2015

Annual Plan 2016/2017- Other consultation content

File No.: CP2015/26899

Purpose

1. This report sets out the other consultation content for the Annual Plan 2016/2017 and recaps the next steps leading up to consultation with Aucklanders ahead of final decision making in May/June 2016.

Executive Summary

2. Due to legislative change there is no longer a requirement to produce a draft annual plan for consultation. Instead the council must produce a consultation document which includes any proposed significant or material changes to year two of the Long-term Plan 2015-2025 (LTP). The consultation document must also include:

a) content relating to local board agreements

b) content relating to the Maunga Authority Operational Plan.

3. The Mayoral proposal for the Annual Plan 2016/2017 was presented to the Finance and Performance Committee on 10 December 2015. This set out a list of rating policy issues for consultation. The Mayoral proposal, including resolutions, will be considered in another report on the agenda for this meeting.

4. The Mayoral proposal also asked for staff to report back on a proposal to trial an extension of the “retrofit your home” programme to incorporate septic tank replacement. This issue will be considered in another report on the agenda for this meeting.

5. Local boards have been undertaking a series of workshops to discuss their budgets and priorities for 2016/2017. During December, local boards are due to agree proposed content for annual plan consultation.

6. Staff have been working with the Maunga Authority to develop content relating to its operational plan. This is also being prepared for consultation.

7. Staff will be undertaking the standard annual review process across all council budgets for the 2016/2017 year in February and March 2016. In preparing for the budget review, a small number of potential capital programme changes have been identified that require consultation to allow decisions to be made next year. As such, staff recommend that these be included for consultation. A briefing on the budget, including any proposed changes, will be provided to the Finance and Performance Committee and local board chairs in April 2016.

8. Following feedback from the community, final decisions will be made in May 2016 before adopting the annual plan in June 2016.

Recommendation/s

That the Governing Body:

a) agree that the following be included for consultation in the Annual Plan 2016/2017:

i) Maunga Authority Operational Plan

ii) local board priorities

iii) potential capital programme changes.

Comments

Background

9. All councils are required by legislation to adopt a long-term plan (LTP) and review it every three years. Councils are also required to adopt an annual plan in each of the two intervening years between each LTP.

10. Annual Plan 2016/2017 budgets, priorities and funding envelopes have been set in the second year of the current LTP. Any significant or material changes to the budget or service levels from the LTP will require consultation.

11. Auckland Council is also required to include local board agreements and the Maunga Authority Operational Plan in its annual plan. The proposed content of the local board agreement and Maunga Authority Operational Plan must also be included in annual plan consultation.

Developing the AP 2016/2017

12. The process to develop council’s Annual Plan 2016/2017 began with a programme briefing to the Finance and Performance Committee in August 2015. Workshops on financial policy changes and the budget for 2016/2017 have also been held in September, October, and November 2015.

13. In October 2015 the Finance and Performance Committee agreed its preference to consult on the following financial policy issues:

· the quantum of the Uniform Annual General Charge

· increasing the share of the interim transport levy met by businesses and sharing it amongst business ratepayers based on capital value

· an option to reallocate a portion of rates from large farm/lifestyle properties over all other ratepayers

· amending the Maori Freehold Land Remission and Postponement policy.

14. During these workshops staff also provided information and analysis to assist understanding of the existing budgets. This included:

· draft three-year activity review programme

· six year revenue and expenditure trends

· social and economic spend analysis

· grants budgets for 2015/16

· opportunities to discuss aspects of this analysis with representatives from ACE, ATEED, AT and Governance.

This has not resulted in any significant proposed change to budgets.

15. In November the Finance and Performance Committee received two independent reports from Ernst & Young and Cameron Partners on alternative sources of financing available to Auckland Council. A workshop will be held in February 2016 to consider preferred direction on specific options provided in the reports.

16. On 10 December 2015 the Finance and Performance Committee received the Mayoral proposal for consultation on the annual plan. This set out a list of rating policy issues for consultation. The Mayoral proposal, including resolutions, will be considered in another report on the agenda for this meeting.

17. The Mayoral proposal also asked for staff to report back on a proposal to trial an extension of the “retrofit your home” programme to incorporate septic tank replacement. This issue will be considered in another report on the agenda for this meeting.

Next steps

Preparing for consultation

18. Following decisions made by the Governing Body at this meeting, staff will prepare the consultation document and supporting information. A Governing Body workshop will be held on 4 February to review and provide feedback on the consultation material. On 10 February the Governing Body will meet to adopt the consultation material.

Annual budget review

19. No new major projects or changes to the services levels have been proposed compared to what was set out for 2016/2017 in the council’s recently adopted 10-year budget. However, staff will be undertaking the standard annual review process across all council budgets for the 2016/2017 year in February – March 2016. This will include a review of cost pressures, progress against savings targets and any changes to the capital programme. It will also include an update on planning assumptions for key items such as inflation, interest and dividend expectations, along with issues such as the way we fund the Auckland War Memorial Museum asset replacement reserve.

20. This review is likely to result in some budget changes when our final budgets for 2016/2017 are agreed by June 2016. Staff will focus on ensuring that we continue to deliver the best value of money for ratepayers and aim to reduce the 3.2 per cent overall average rates increase for 2016/2017, if it is possible to do so while continuing to deliver all of the council’s planned services and investments.

21. Because the final budgets agreed by June next year might vary from the financial projections for 2016/2017 in the 10-year budget, it is appropriate to include some information on the likely changes in the consultation document and its supporting information.

22. At this stage, we consider that there are unlikely to be material or significant variation in the projections for annual operating costs or 10-year capital expenditure. However, because the council’s capital programme includes many large and complex multi-year projects, that are dependent on external funders and that need to be responsive to changing development patterns, projected capital expenditure requirements in any particular year will always be subject to change.

23. Some of the potential changes to the capital programme include:

· Changing the quantum and timing of the transport land acquisition budget to support infrastructure route protection activity. The properties acquired would have no barriers to on-selling if the land is not ultimately required for transport purposes, and many would likely have dependable rental streams

· Reallocation and rephasing of capex budgets for the city centre to progress works such as the agreed redevelopment of public open space at the water’s edge by lower Albert Street and around the historic ferry building

· Realignment and rephasing of development budgets for Panuku Development Auckland, including changes to reflect decisions made by the Auckland Development Committee

· Bringing forward budget to develop an organic waste processing plant as part of the Waste Management and Minimisation Project. The 10-year budget assumed that this service could be delivered on a contract basis before the council would need to invest in a new plant. If this kind of arrangement is not feasible, then council may need to invest in the new plant earlier in order to deliver the planned service.

24. A briefing on the budget following this review will be provided to combined Finance and Performance Committee and local board chairs on 12 April 2016 ahead of final decision making for the annual plan. At this stage, it is expected that any potential capex changes would not have a material impact on the overall rates or debt requirement for 2016/2017.

Finalising the annual plan

25. Consultation will run from 15 February to 15 March 2016. Following feedback from the community, final decisions will be made in May 2016 before adopting the annual plan in June 2016. The table below sets out the high level process to finalise the annual plan.

Table One: Finalising the AP following today

Phase	Timing
Governing Body meets to agree consultation issues	17 December
Governing Body meets to workshop consultation document and supporting material	4 February
Governing Body meets to adopt consultation document and supporting material	10 February
Finance and Performance Committee workshop to consider preferred direction on specific options for alternative sources of financing	24 February
Public consultation	15 Feb- 15 Mar
Budget review briefing	12 April
Finance and Performance Committee hold discussions with local boards	28 April – 1 May
Finance and Performance Committee make final decisions for the annual plan	16 May
Local boards meet to adopt their local board agreements	6-16 June
Governing Body meet to adopt the final annual plan	30 June
Documentation will be published and made available to the public and information on the decisions made will be shared with people who participated in the consultation process.	July / August

Consideration

Local Board views and implications

26. Local board views were considered within each of the relevant Annual Plan 2016/2017 reports provided to the Finance and Performance Committee in October and November 2015.

27. Local board members were also provided with a briefing on the Finance and Performance Committee preferences for consultation on financial policy issues in cluster sessions held between 2 and 5 November 2015.

28. Local boards held a series of workshops between 7 October and 20 November 2015 to discuss their budgets and priorities for 2016/2017.

29. Local boards met with the Finance and Performance Committee on 27 and 30 November 2015 to discuss their priorities, advocacy and feedback on the financial policy issues.

30. A report covering local board feedback and advocacy has been included on agenda for this meeting.

Māori impact statement

31. The impact on Māori was considered within each of the relevant Annual Plan 2016/2017 reports provided to the Finance and Performance Committee in October and November 2015.

32. Targeted engagement with Mana Whenua will take place during consultation.

Implementation

33. Decisions on the consultation issues are required by 17 December 2015. This is to enable sufficient time for staff to prepare the necessary consultation materials in time for adoption on 10 February 2016.

Attachments

There are no attachments for this report.

Signatories

Authors

Aaron Matich - Acting Programme Director

Ross Tucker - Manager Financial Planning and Strategy

Authorisers

Matthew Walker - GM Financial Strategy and Planning

Sue Tindal - Group Chief Financial Officer

Stephen Town - Chief Executive

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