Agenda of Finance and Performance Committee

I hereby give notice that an ordinary meeting of the Finance and Performance Committee will be held on:

Date:

Time:

Meeting Room:

Venue:

Wednesday, 26 July 2017

9.30am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

Finance and Performance Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Cr Ross Clow
Deputy Chairperson	Cr Desley Simpson, JP
Members	Cr Dr Cathy Casey	Cr Mike Lee
	Deputy Mayor Bill Cashmore	Cr Daniel Newman, JP
	Cr Fa’anana Efeso Collins	Cr Dick Quax
	Cr Linda Cooper, JP	Cr Greg Sayers
	Cr Chris Darby	Cr Sharon Stewart, QSM
	Cr Alf Filipaina	IMSB Chair David Taipari
	Cr Hon Christine Fletcher, QSO	Cr Sir John Walker, KNZM, CBE
	Mayor Hon Phil Goff, CNZM, JP	Cr Wayne Walker
	Cr Richard Hills	Cr John Watson
	IMSB Member Terrence Hohneck
	Cr Penny Hulse
	Cr Denise Lee

(Quorum 11 members)

Mike Giddey

Senior Governance Advisor

20 July 2017

Contact Telephone: (09) 890 8143

Email: mike.giddey@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

TERMS OF REFERENCE

Responsibilities

The purpose of the Committee is to:

(a) control and review expenditure across the Auckland Council Group to improve value for money

(b) monitor the overall financial management and performance of the council parent organisation and Auckland Council Group

Key responsibilities include:

· Advising and supporting the mayor on the development of the Long Term Plan (LTP) and Annual Plan (AP) for consideration by the Governing Body including:

o Local Board agreements

o Financial policy related to the LTP and AP

o Setting of rates

o Preparation of the consultation documentation and supporting information, and the consultation process, for the LTP and AP

· Monitoring the operational and capital expenditure of the council parent organisation and Auckland Council Group, and inquiring into any material discrepancies from planned expenditure

· Monitoring the financial and non-financial performance targets, key performance indicators, and other measures of the council parent organisation and each Council Controlled Organisation (CCO) to inform the Committee’s judgement about the performance of each organisation

· Advising the mayor on the content of the annual Letters of Expectations (LoE) to CCOs

· Exercising relevant powers under Schedule 8 of the Local Government Act 2002, which relate to the Statements of Intent of CCOs

· Exercising Auckland Council’s powers as a shareholder or given under a trust deed, including but not limited to modification of constitutions and/or trust deeds, granting shareholder approval of major transactions where required, exempting CCOs, and approving policies relating to CCO and CO governance

· Approving the financial policy of the Council parent organisation

· Overseeing and making decisions relating to an ongoing programme of service delivery reviews, as required under section17A of the Local Government Act 2002

· Establishing and managing a structured approach to the approval of non-budgeted expenditure (including grants, loans or guarantees) that reinforces value for money and an expectation of tight expenditure control

· Write-offs

· Acquisition and disposal of property, in accordance with the long term plan

· Recommending the Annual Report to the Governing Body

Te Toa Takatini

Powers

(a) All powers necessary to perform the committee’s responsibilities, including:

a. approval of a submission to an external body

b. establishment of working parties or steering groups.

(b) The committee has the powers to perform the responsibilities of another committee, where it is necessary to make a decision prior to the next meeting of that other committee.

a. the power to establish subcommittees

b. powers that the Governing Body cannot delegate or has retained to itself (section 2).

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 Apologies

Apologies have been received for early departure from Cr Clow, Cr Collins and Mayor Goff.

2 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.

3 Confirmation of Minutes

That the Finance and Performance Committee:

a) confirm the ordinary minutes of its meeting, held on Tuesday, 20 June 2017, including the confidential section, as a true and correct record.

4 Petitions

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

5 Public Input

Standing Order 7.7 provides for Public Input. Applications to speak must be made to the Governance 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.

6 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.

7 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.”

8 Notices of Motion

There were no notices of motion.

Finance and Performance Committee

26 July 2017

Disposals recommendation report

File No.: CP2017/07130

Purpose

1. This paper seeks approval for 12 council-owned properties considered suitable for sale to be disposed of, and two council owned properties to be transferred to Watercare Services Limited (Watercare).

Executive summary

2. Capital receipts from the sale of surplus properties contribute to Auckland Plan outcomes and the Long-term Plan 2015-2025 (LTP) by providing the Council with an efficient use of capital and prioritisation of funds to achieve its activities and projects. In the 2017/2018 financial year, the LTP has forecast the disposal of non-strategic council assets to the combined value of of $67 million.

3. The first two properties presented in this report, 55A Alnwick Street, Warkworth and partof 45 Oraha Road, Huapai are vacant land sites that have been identified as required by Watercare. The balance of 45 Oraha Road, Huapai is to be retained by Council as open space. Consultation with council and its CCOs, iwi authorities and the Rodney Local Board about both of these properties has been undertaken and no issues were raised regarding the proposed transfer to Watercare. .

4. The third and fourth properties presented in this report, 32 Harbour View Road, Te Atatu Peninsula and 145A West Tamaki Road, Glen Innes are reserves that were reviewed by Council’s Parks and Recreation Policy team and found to have little quality open space potential and no strategic purpose to retain. Consultation about these sites has been undertaken with council and its CCOs, iwi authorities and the local boards. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed reserve revocation and disposal of these sites. Final revocation of the reserve status will be subject to completing the statutory requirements of the Reserves Act 1977 and Local Government Act 2002, including public advertising. The Tamaki Regeneration Company (TRC) owns the land adjoining 145A West Tamaki Road, Glen Innes and has expressed interest in acquiring it 145A West Tamaki Road, Glen Innes should it be approved for disposal.

5. The fifth property presented in this report, 343 Swanson Road, Ranui is a vacant site that was reviewed by Council’s Parks and Recreation Policy team and found to have little quality open space potential and no strategic purpose to retain. Consultation with Council and its CCOs, iwi authorities and the Henderson-Massey Local Board has been undertaken. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal.

6. The balance of the properties presented in this report are 24 Waipuna Road, Mt Wellington; Units 1-4, 26 Waipuna Road, Mt Wellington; 27B Waipuna Road, Mt Wellington; 1/77 Waipuna Road, Mt Wellington; 93 Waipuna Road, Mt Wellington; 134A Mt Wellington Highway, Mt Wellington; and 3/136B Mt Wellington Highway, Mt Wellington. These are all residential properties that were released by Auckland Transport as not required for current or future infrastructure or service purposes, and having no strategic purpose to retain. Consultation with council and its CCOs, iwi authorities and the Maungakiekie-Tamaki Local Board has been undertaken for these properties. No alternative service uses were identified for the subject sites and the feedback received was supportive of the proposed disposal. There has been registered interest from Housing New Zealand and iwi housing agencies in acquiring the subject properties should they be approved for disposal.

Recommendation/s

That the Finance and Performance Committee:

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

i) 55A Alnwick Street, Warkworth, comprised of an estate in fee simple more or less being Section 1 Survey Office Plan 64916; and

ii) part of 45 Oraha Road, Huapai, comprised of an estate in fee simple, more or less being Lot 2 DP 169958 comprising approximately 1,268m² (subject to survey) contained in computer freehold register NA103C/837 to Watercare Services Ltd;

b) approve, subject to the satisfactory conclusion of any required statutory processes:

i) the revocation of the reserve status of approximately 600m² of 32 Harbour View Road, Te Atatu comprised of an estate in fee simple more or less being Lot 286 DP 84406; ‘Harbour View Corner’ contained in computer freehold register CT-102D/200 as it is no longer required by Auckland Council for reserve purposes;

ii) the disposal of the land at 32 Harbour View Road, Te Atatu, comprised of an estate in fee simple more or less being Lot 286 DP 84406; ‘Harbour View Corner’ contained in computer freehold register CT-102D/200;

iii) the revocation of the reserve status of approximately 111m² of 145A West Tamaki Road, Glen Innes comprised of an estate in fee simple more or less being Lot 6 DP 41864 111m² contained in computer freehold register CT-20B/1223 as it is no longer required by Auckland Council for reserve purposes;

iv) the disposal of the land at 145A West Tamaki Road, Glen Innes, comprised of an estate in fee simple more or less being Lot 6 DP 41864 111m² contained in computer freehold register CT-20B/1223;

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

i) 343 Swanson Road, Ranui, comprised of an estate in fee simple more or less being Lot 1 DP 397730 and Lot 3 DP 397730 contained in computer freehold register CT-390543 and CT-390545;

ii) 24 Waipuna Road, Mt Wellington, comprised of an estate in fee simple more or less being Lot 22 DP 51781 1204m² contained in computer freehold register CT-93C/804;

iii) Unit 1, 26 Waipuna Road, Mt Wellington, comprised of an estate in fee simple and leasehold more or less being Lot 23 DP 51781 and Flat 1 and Carport 1 on DP 123787 contained in computer freehold register NA72B/114 – ¼ share fee simple and leasehold;

iv) Unit 2, 26 Waipuna Road, Mt Wellington, comprised of an estate in fee simple and leasehold more or less being Lot 23 DP 51781 and Flat 2 and Carport 2 DP 123787 contained in computer freehold register NA72B/115 – ¼ share fee simple and leasehold CT-72B/115;

v) Unit 3, 26 Waipuna Road, Mt Wellington, comprised of an estate in fee simple and leasehold more or less being CT-72B/116 Flat 3 and Carport 3 DP 123787 on Lot 23 DP 51781 contained in computer freehold register NA72B/116 ¼ share fee simple and leasehold;

vi) Unit 4, 26 Waipuna Road, Mt Wellington, comprised of an estate in fee simple and leasehold more or less being CT-72B/117 Lot 23 DP 51781 and Flat 4 DP 123787 contained in computer freehold register NA72B/117 – ¼ share fee simple and leasehold;

vii) 27B Waipuna Road, Mt Wellington, comprised of an estate in fee simple and leasehold more or less being Lot 2 DP 210612 and 1/3 share in Lot 4 DP 210612 contained in computer freehold register NA138D/806;

viii) 1/77 Waipuna Road, Mt Wellington, comprised of an estate in fee simple and leasehold more or less being Lot 5 DP 84624 and Flat 1 DP 89392 contained in computer freehold register CCR NA46B/945 1/3 share fee simple and leasehold;

ix) 93 Waipuna Road, Mt Wellington, comprised of an estate in fee simple more or less being Lot 1 DP 40343 contained in computer freehold register NA2026/25;

x) 134A Mt Wellington Highway, Mt Wellington, comprised of an estate in fee simple more or less being CT-50C/358; Pt Lot 2 DP 43992 contained in computer freehold register NA50C/358;

xi) 3/136B Mt Wellington Highway, Mt Wellington, comprised of an estate in fee simple and leasehold more or less being Flat 3 DP 167297 on Lot 2 DP 167297 contained in computer freehold register NA101C/209 – 1/3 fee simple and leasehold;

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

Comments

7. Panuku and the Auckland Council’s Land Advisory team in the Community Facilities department 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 takes the property through a multi stage engagement process.

8. 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. Once a property has been internally cleared of any service requirements, Panuku then consults with local boards, mana whenua and ward councillors. All sale recommendations must be approved by the Panuku board before a final recommendation is made to the governing body.

Consideration

Local board views and implications

9. 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 attend workshops with the relevant local board and provide information about properties being rationalised in its local board area. A report is subsequently prepared for the local board business meeting so that its views can be formalised.

10. If a local board wishes to retain a site, its views are considered by Panuku 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 service need that will be met by retaining the site, along with how the service use will be funded. Panuku and relevant council departments or CCOs work with local boards in preparing the business case. The business case is then considered by the cross council steering group. If the business case is accepted and funding is identified, the property is transferred back to the service portfolio. If the business case is not accepted, the business case is included in the report to the governing body for a political decision.

11. Property specific feedback received is included in the Local Board engagement section of the property attachments to this report.

Māori impact statement

12. The importance of effective communication and engagement with Māori on the subject of land is understood. Panuku 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.

13. Panuku’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.

14. 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 will work with the relevant council departments to assess the merits of any such requests and keeps the interested parties informed along the way.

15. Mana whenua groups are also invited to express potential commercial interest in any sites and are put in contact with Panuku’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.

16. Panuku acknowledges that it has different requirements for engaging with mana whenua and mataawaka. A framework for engaging mataawaka for the property rationalisation process is currently being considered.

17. Property specific feedback received is included in the Mana Whenua engagement section of the property attachments to this report.

Implementation

18. The results of the rationalisation process for the subject properties are that they are not required for current or future service requirements. Due to this, we recommend that they be divested.

19. Property specific implementation issues are included in the property attachments to this report.

Attachments

No.	Title	Page
a ⇩	55A Alnwick Street, Warkworth property information	17
b ⇩	45 Oraha Road, Huapai property information	21
c ⇩	32 Harbour View Road, Te Atatu Peninsula property information	25
d ⇩	145A West Tamaki Road, Glen Innes property information	29
e ⇩	343 Swanson Road, Ranui property information	33
f ⇩	24 Waipuna Road, Mt Wellington property information	37
g ⇩	Units 1-4, 26 Waipuna Road, Mt Wellington property information	41
h ⇩	27B Waipuna Road, Mt Wellington property information	45
i ⇩	1/77 Waipuna Road, Mt Wellington property information	49
j ⇩	93 Waipuna Road, Mt Wellington property information	53
k ⇩	134A Mt Wellington Highway, Mt Wellington property information	57
l ⇩	3/136B Mt Wellington Highway, Mt Wellington property information	61

Signatories

Author

Anthony Lewis - Senior Advisor Portfolio Review, Panuku Development Auckland

Authorisers

Letitia McColl - Team Leader Portfolio Review, Panuku Development Auckland

David Rankin – Chief Operating Officer, Panuku Development Auckland

Sue Tindal – Group Chief Financial Officer

Finance and Performance Committee

26 July 2017

Purchase of additional trains for Metro Rail - Budget Request

File No.: CP2017/14265

Purpose

1. To approve in principle the procurement of 17 three-car Independently Powered Electrical Multiple Units (IPEMUs) at $207 million, with an initial payment of at least $10 million, but no more than $25 million, in 2017/2018, to meet forecast patronage growth from 2019.

Executive summary

2. Auckland Transport (AT) is seeking council approval to purchase additional rail rolling stock to meet forecast passenger growth from 2019. Approval is being sought now, and ahead of the Long-term Plan (LTP) 2018-2028 deliberations, to ensure the delivery of the rolling stock in 2019.

3. IPEMUs are electrical trains with modern batteries which allow the units to operate off-grid and recharge when in an electrified section. In June 2017, the Auckland Transport Board approved a business case (Attachment A) for procuring 17 IPEMUs to meet forecast passenger growth from 2019, subject to funding confirmation.

4. The additional rolling stock will increase the current peak capacity, which will be reached by 2019. Options to generate additional capacity through improvement in fleet operations are close to being exhausted. Service levels are likely to be affected from 2019. Therefore, additional rolling stock is required to meet demand, and AT recommends they are purchased urgently, given the manufacturing and delivery lead time.

5. The proposal will adequately support the growth areas in the south, replacing the legacy Diesel Multiple Units (DMUs) service between Papakura and Pukekohe. IPEMUs also provide flexibility in the event of scheduled power supply downtime.

6. The total capital expenditure approval required is $207 million. The requirement for additional fleet is not budgeted for in the Long-term Plan (LTP) 2015-2025, nor is it included in the Regional Land Transport Plan (RLTP), as the level of patronage growth currently occurring exceeds what was anticipated. The future requirement was however identified in the Auckland Transport Alignment Project (ATAP).

7. A deposit needs to be made in September 2017 to ensure the delivery of IPEMUs in 2019 to meet rail capacity requirements. AT is seeking the budget approval for this procurement, which is required before the consideration by the NZ Transport Agency (NZTA).

8. Whilst funding options and agreement are subject to negotiation, staff have assumed NZTA would fund half of the capital and operational expenditure in line with the cash flow requirement of the procurement and operation. The preliminary analysis indicates the proposal could result in a debt-to-revenue ratio trending close to the Auckland Council’s limit of 265 per cent between 2022 and 2024, peaking at 266.5 per cent in 2022/2023.

9. Should the council choose to approve the procurement now, it can impose two conditions. Firstly, NZTA has to make at least 50 per cent contribution in line with the cash flow requirement. Secondly, AT has to reprioritise its current capex budget to make available at least $50 million to help fund the IPEMU procurement.

Projected debt-to-revenue ratio (%)	FY18	FY19	FY20	FY21	FY22	FY23	FY24	FY25
17 IPEMUs CAF (without AT reprioritisation)	244.5	248.5	253.7	257.6	264.9	266.5	264.3	250.6
17 IPEMUs CAF (with AT reprioritisation)	244.3	247.7	252.4	256.1	263.5	265.0	262.9	249.1

10. Should the council choose to defer this decision to the LTP 2018-2028 deliberations, there will be a delay in delivering the additional capacity by 2019 due to the manufacturing and delivery lead time.

Recommendation/s

That the Finance and Performance Committee:

a) approve in principle the procurement of 17 three-car Independently Powered Electrical Multiple Units (IPEMUs) at $207 million, with an initial payment of up to $25 million in 2017/2018, to meet forecast patronage growth from 2019, conditional on:

i) the NZ Transport Agency (NZTA) committing to funding at least 50 per cent of the capital and operational expenditure associated with this investment; and

ii) the timing of NZTA funding must align to the cash flow requirement of the procurement and operation; and

iii) Auckland Transport reprioritising its existing capital budget to provide $50 million towards funding the procurement of IPEMUs, such that Auckland Council’s projected debt-to-revenue ratio does not exceed the limit of 265 per cent.

b) note that if the Finance and Performance Committee approves a), then Auckland Transport will make an initial payment of at least five per cent or $10 million, but no more than $25 million, for the order in September 2017.

Comments

Background

11. Auckland has experienced a rapid and steady growth in rail patronage since the Electrical Multiple Units (EMUs) were introduced in 2013. The original business case for acquiring the 57 three-car units forecasted patronage of 17.8 million in 2017 and 20.8 million by 2023 with growth below three per cent per annum between 2016 and 2023.

12. The actual growth is higher than what was anticipated. Patronage for 2016/2017 achieved 19.6 million passenger journeys, representing a 17 per cent increase from the previous year. Patronage is now expected to reach 21.9 million by mid-2019 and 22.8 million by mid-2020. When patronage reaches capacity in 2019, the service levels will be affected.

13. AT has been optimising the use of the existing EMU fleet, particularly during the peak period, over the recent years. Further optimisation is planned through a mid-2018 timetable change, reducing station dwell times and journey times, allowing trains to be repositioned to offer greater capacity. Work is also progressing in parallel on a review of seating and internal layout to increase capacity within policy limits. However, these initiatives will not be able to adequately cater for the observed trend of patronage growth. Consequently, additional rolling stock is required urgently.

14. Significant population growth is forecast for the area serviced by the southern rail network. The congestion benefits in providing a quality service to these new communities are also considerable. It is important that new residents in these areas adopt public transport as a preferred mode of travel.

15. The legacy diesel service, using Diesel Multiple Units (DMUs), requires that passengers transfer at Papakura. This is unpopular and detracts from the passenger experience. The present arrangement is envisaged to remain until electrification extension to Pukekohe within the first decade of ATAP.

Options consideration

16. To address the problems and opportunities, AT shortlisted two main options utilising the Better Business Case methodology, one of which has two variants. The options are:

· Option A: purchase 15 three-car EMUs at $133 million

· Option B: purchase 17 three-car IPEMUs

o with CAF (supplier of the current EMUs) batteries at $207 million, or

o with Korean (LG) batteries at $174 million.

17. Whilst the EMU option requires less capital and provides the same level of monetised economic benefits, it does not provide an opportunity to serve the southern growth areas. In contrast, IPEMUs allow the costly diesel service between Pukekohe and Papakura to be retired, and offer the potential to extend the services further south to growing residential areas in north Waikato, around Pokeno and Tuakau, in the un-electrified network and without having to construct costly electric power supply infrastructure. This option also potentially allows an electric train service in the west beyond Swanson (although this is not proposed as part of the current business case).

18. The operational saving from not running DMUs totals $67 million. In conjunction with the total additional bus operational cost of $84 million that would otherwise be required to facilitate travel for the displaced passengers, the overall saving amounts to $151 million over 40 years. This has more than offset the overall operational cost of the 17 additional IPEMUs, resulting in a net saving of $11 million over 40 years.

19. From a technical perspective, IPEMUs also offer the flexibility during the period of planned disruption on the electrified network to the electrical power supply. During City Rail Link construction there will be periods when power is off to parts of the western line. The availability of IPEMUs will mean a train service will still be able to operate.

20. It is generally expected that advances in battery technology will make IPEMUs more affordable with longer range in the future. Switching to IPEMUs will also reduce greenhouse gas emissions.

21. The $207 million IPEMU option is based on the costs provided by CAF, the supplier of the existing EMUs, for their integrated EMU and battery solution. This solution is well developed and low risk, and is warranted by CAF.

22. An alternative solution was also considered where a Korean (LG) battery solution is installed onto the CAF EMUs. This alternative is more affordable, although further testing of this more innovative solution is required.

23. Overall, a multi-criteria analysis taking account of the cost and risk favours the option to purchase 17 three-car IPEMUs with CAF battery solution at $207 million.

Financial impacts

24. The total capital expenditure approval required is $207 million. The requirement for additional fleet is not budgeted for in the LTP 2015-2025, nor is it included in the RLTP, as the level of patronage growth currently occurring exceeds what was anticipated. The future requirement was identified in ATAP.

25. A deposit of at least five per cent or $10 million is required on placement of the order in September 2017. AT would like the flexibility to increase the deposit to 10 per cent plus a share of the design cost if suitable financial arrangements can be struck with CAF. This would be capped at $25 million for 2017/2018. AT will absorb the cost of the IPEMUs in 2017/2018 within its existing capital allocation and no additional funding is sought from the council at this time.

26. Ordering now will allow delivery of the fleet by 2019 when the current capacity is expected to be reached. From the date a notice to proceed is provided, the first vehicle will be available for service within 27 months, with all in service 36 months from order placement. The notice to proceed is therefore required no later than August 2017.

27. The proposal is subject to NZTA’s consideration and funding approval. AT has indicated that NZTA is aware of the requirement for additional rolling stock and the funding requirement, and is generally supportive of the proposal. NZTA will consider the proposal at the next board meeting, and requires the council’s commitment first before considering the proposal.

28. Assuming NZTA contributes 50 per cent of the capital and operational expenditure associated with this proposal, a preliminary analysis indicates that the council could be in a position where its debt-to-revenue ratio of 265 per cent is exceeded briefly in 2022/2023 as a result of the proposal. The debt impact from option A (15 three-car EMUs) is also outlined as a comparison.

Projected debt-to-revenue ratio (%)	FY18	FY19	FY20	FY21	FY22	FY23	FY24	FY25
Option A: 15 EMUs	244.3	248.3	252.9	256.7	263.9	265.5	263.3	249.5
Option B: 17 IPEMUs CAF (without AT reprioritisation)	244.5	248.5	253.7	257.6	264.9	266.5	264.3	250.6
Option B: 17 IPEMUs CAF (with AT reprioritisation)	244.3	247.7	252.4	256.1	263.5	265.0	262.9	249.1

Note: This analysis has taken into account the impact of the recent Housing Infrastructure Fund decision announced by the government.

29. It is appropriate and prudent that the council’s approval should be conditional on NZTA agreeing to contribute at least half of the overall cost in such a way that the contribution aligns with the cash flow requirement of the procurement and operation.

30. In addition, AT should reprioritise its capital budget to make available at least $50 million to help fund the IPEMU procurement, so that the council’s debt limit is not exceeded.

31. The financial impact analysis shown above assumes a business-as-usual approach to train ownership arrangements. Staff are currently considering alternative ownership arrangements that may reduce the financial burden on the council associated with owning the rolling stock. If preferred arrangements can be identified, these will be proposed for consideration through the LTP process.

Consideration

Local board views and implications

32. Due to the urgency of the proposal, local board views have not been sought on the proposed procurement of 17 three-car IPEMUs.

Māori impact statement

33. Due to the urgency of the proposal and approval processes, there has been no consultation with Maori. The proposed procurement of 17 three-car IPEMUs does not have a specific impact on Māori.

Implementation

34. Section 80 of the Local Government Act 2002 requires the council to identify if any decisions are significantly inconsistent with its policies and plans (or anticipated to have consequences that are significantly inconsistent). This includes any decisions which are significantly inconsistent with the current LTP. The council must identify the inconsistency, explain the reasons for the inconsistency, and any intention to amend the policy and plan to accommodate the decision.

35. The recommendations in this report are significantly inconsistent with the content in the LTP 2015-2025 for the 2019/2020 financial year. This is because this procurement of IPEMUs was not contemplated when the LTP 2015-2025 and previous annual plans were prepared, so was not included in the public transport group of activity capital expenditure budgets. As a result of this proposal, the increase in the capital expenditure for public transport would be 41 per cent in 2019/2020.

36. The recommendations in this report are necessary to provide additional capacity from 2019 due to the growth in rail patronage and delivery lead time for new trains.

37. The council will consider alternative funding options to accommodate this decision, as part of the LTP 2018-2028 process (subject to the usual public consultation processes).

38. Should the council choose to defer this decision to the LTP 2018-2028, section 80 would not be triggered but there will be a delay in delivering the additional passenger capacity.

Attachments

No.	Title	Page
a ⇩	Detailed Business Case: Auckland Metro Train Capacity - June 2017	71

Signatories

Authors

Neil Huang - Principal Advisor

Mark Lambert – Chief AT Metro Officer, Auckland Transport

Authorisers

Matthew Walker - GM Financial Strategy and Planning

Stephen Town - Chief Executive

Sue Tindal - Group Chief Financial Officer

Finance and Performance Committee

26 July 2017

Finance and Performance Committee

26 July 2017

Proposed Change of Ownership of Auckland Film Studios Limited

File No.: CP2017/13749

Purpose

1. To approve the restructure of Auckland Film Studios Limited (AFSL) and request the Directors of Auckland Council Investments Limited (ACIL) to sell ACIL’s subsidiary, AFSL to Auckland Council (Council). This will enable the Auckland Investment Office (AIO) within Council to oversee and ensure that:

· Panuku Development Auckland (Panuku) incorporate the property in their plans for the future development of Henderson.

· Auckland Tourism Events and Economic Development (ATEED) manage the land and buildings as a film studio in an agreement with Panuku until the site is required for the future development of Henderson.

· AFSL is wound up and cash returned back to Council.

Executive summary

2. ACIL own a film studio, AFSL, in Henderson and Panuku wish to retain the AFSL site.

3. The Henderson site is not a strategic asset pursuant to our Significance and Engagement Policy, CCO Accountability Policy and the Local Government Act 2002.

4. Council strategies in support of the film industry do not require long-term ownership of AFSL’s site and ATEED currently provides commercial and managerial support to an alternative film studio development at Kumeu.

5. This report recommends AFSL be wound up and its assets and activities transferred elsewhere in the Council group on the following basis (“Transfer”)

· AFSL will be wound up and removed from the Companies register. This will reduce the number of CCOs in the Council group.

· AFSL’s assets, including the Henderson site, retained earnings and insurance proceeds (which may be tagged), will be distributed to Council as AFSL’s ultimate shareholder.

· The Henderson site will become part of Auckland’s non-service land portfolio to be managed by Panuku on Council’s behalf until any long term decision is made.

· ATEED will enter into an agreement with Panuku to manage the AFSL land and buildings as a film studio, conditional on the Finance and Performance Committee resolving to support Option 4 in paragraph 14. This will enable ATEED to secure revenues against costs already incurred in support of the screen industry.

6. There are two main options for implementing the Transfer: the transfer of AFSL shares to Council followed by wind-up and distribution, or wind up and distribution while AFSL is still owned by ACIL. These make no difference to the final outcome and will be decided at a technical level by Council staff and relevant boards. A short transfer agreement will be signed.

7. As the Henderson site will remain in Council group ownership no strategic asset issues arise. The wind-up of AFSL is itself not sufficiently significant to require any specific consultation under the Local Government Act 2002. Its activities will continue to be supported within the Council group for the foreseeable future.

Recommendation/s

That the Finance and Performance Committee:

a) approve the proposal to wind up Auckland Film Studios Limited and distribute its assets and liabilities to Auckland Council, to be followed by an agreement between Auckland Tourism Events and Economic Development and Panuku Development Auckland to continue to manage the site as a film studio.

b) approve Auckland Council Investments Limited making necessary amendments to its Statement of Intent to reflect the Transfer.

c) request Auckland Council Investments Limited to proceed with the Transfer as contemplated in this report.

d) delegate to Auckland Council’s Chief Executive the authority to approve the transfer and wind-up process on behalf of Auckland Council, enter into any transfer agreement, and approve all related arrangements.

Comments

Background

8. ATEED support a film studio development at Kumeu and are responsible for attracting film production activities to Auckland.

9. AFSL is 100 per cent owned by ACIL and operates as a landlord of land and buildings at 12 Hickory Avenue, Henderson for film and television production.

10. Panuku wish to retain AFSL’s land and buildings for Henderson’s future development with ATEED managing the site as a film studio until required for Panuku’s development plans. Panuku’s Unlock Henderson High Level Project Plan has already been approved by both the Planning Committee, on 2 May 2017, and the Finance and Performance Committee, on 23 May 2017.

11. AFSL has accumulated cash balances of approximately $7 million, including insurance proceeds of $1.6 million from a fire that destroyed one of the buildings in 2014.

12. AFSL’s cash balances can be passed back to Council upon AFSL being wound up and the insurance proceeds can be applied to any building Council may wish to purchase.

13. ACIL seek direction as to the future of AFSL and the management of the film studio at Henderson.

Options

14. Options for the future of AFSL are represented in the table below:

	Options	Comments and Observations
1.	Do nothing and have ACIL continue to own and operate AFSL as a film studio.	· Ongoing financial and regulatory costs of maintaining AFSL as a separate legal entity remain. · Determination/timing of the site’s role in Henderson’s future remains uncertain.
2.	Panuku to acquire the site on behalf of Council and lease the site back to AFSL so AFSL’s directors can continue to operate the site as a film studio.	· Legally separating the land and buildings from the operation of the facility as a film studio and having AFSL continue to manage the facility provides no tangible benefit because Council must continue to meet the ongoing financial and regulatory costs of maintaining AFSL as a separate legal entity.
3.	Panuku to acquire the site on behalf of Council with Panuku leasing the site back to AFSL so AFSL’s directors can identify a third party to operate the site as film studios and to assign the lease to.	· The legal separation of the land and buildings from the operation of the facility as a film studio provides no tangible benefit if AFSL’s directors cannot find a third party to assign the lease to and have AFSL wound up (see Option 2). · Any process to identify an independent third party may be fruitless, or disproportionately time consuming and cost prohibitive in terms of any benefits that might arise. · Any potential “commercial opportunity” may require Council to monetise/include implicit financial support already provided to AFSL by the Council family.
4.	Council to transfer shares of AFSL enabling Panuku to appoint ATEED to manage the existing facilities as a film studio until required by Panuku for other purposes.	· Allows Council to wind up AFSL and return AFSL’s cash balances to Council. · Effectively consolidates Council’s commitment to investing in and operating film studios within ATEED to enable a coordinated approach to managing the Henderson site for Panuku and providing commercial and managerial support to the facility in Kumeu, (thereby allowing ATEED to secure revenues against the costs it incurs).
5.	Council to transfer shares of AFSL so that Panuku may immediately discontinue its use as a film studio.	· Allows Council to wind up AFSL and immediately apply AFSL’s cash balances to other Council priorities. · Relies on the development of the projects at Kumeu and Takanini to come on stream at sufficient pace to overcome the immediate loss of Auckland’s only completed sound stage with council (through ATEED’s support of Kumeu), effectively competing with the private sector development at Takanini.

Discussion

15. Options 3 and 4 (above) are practical options for Council to pursue. Option 3 involves undertaking a public procurement process, and Option 4 involves ATEED assuming increased responsibility.

16. AIO recommend that the Finance and Performance Committee support Option 4 (above)

17. No significant tax or legal arguments arises from this course of action.

18. ACIL, Panuku, ATEED, AFSL, Council’s Legal Services, and the Henderson-Massey Local Board have been consulted in the preparation of this paper.

19. Auckland Council’s Finance and Performance Committee may request the directors of ACIL to transfer shares in AFSL to council so that AFSL may be wound up.

Consideration

Local board views and implications

20. The Henderson-Massey Local Board support the proposal.

Māori impact statement

21. At this point in time, the proposal has no impact on Māori.

Implementation

22. A request to the Directors of ACIL to sell AFSL to Council will be put before ACIL’s directors at the earliest possible opportunity.

23. A determination by the directors of ACIL to sell AFSL to council will be implemented in accordance with legal advice secured by Council’s Legal Services

Attachments

There are no attachments for this report.

Signatories

Author	John Duncan – Executive Director, Auckland Investment Office
Authoriser	Sue Tindal - Group Chief Financial Officer

Finance and Performance Committee

26 July 2017

Establishment of a trust to manage a proposed stormwater reserve in Drury

File No.: CP2017/12014

Purpose

1. To seek approval for an 85ha stormwater reserve in Drury to be managed by a trust, and agree the membership of this trust.

Executive summary

2. Drury South Limited is a wholly owned subsidiary of Stevenson Group Limited, which operates one of Auckland’s largest quarries. Drury South Limited has successfully re-zoned land adjacent to the quarry to a mix of commercial, industrial, residential and open space uses.

3. The Drury South structure plan area incorporates 85ha of stormwater management with open space areas. While some of the primary functions of infrastructure like this are easily understood, its function as public open space is also important for the local and regional population.

4. Drury South Limited has asked Auckland Council to consider creating a trust to jointly manage the open space area that will be created as the area is developed. The trust will have membership from both the public and private sector.

5. The trust would manage the open space and wetland areas as a result of subdivision. The land and assets would then transfer into the trust. Council would fund the operations and maintenance of the open space to the level of expenditure that they would normally spend on an equivalent council park of this nature with a per hectare rate per annum adjusted annually.

6. The trust would initially be established with 15 year tenure with all land and assets transferring to council at the end of that time, unless otherwise agreed between the trust and council.

7. Specific stormwater devices that require technical expertise for maintenance such as dams will be transferred as an asset for the Healthy Waters department to manage and maintain.

8. The trust should be legally established within the next calendar year to allow for any reserve areas created by subdivision to be managed by the trust. The trust will have one council appointed trustee, and two members appointed by Drury South Limited.

Recommendations

That the Finance and Performance Committee:

a) agree that a trust be established for an initial period of 15 years to manage the 85ha stormwater reserve at Drury.

b) agree that the trust should comprise three members with two members appointed by Drury South Limited, and one appointed by Auckland Council in consultation with the Franklin Local Board.

c) note that the future funding of the trust will be subject to the approval of the Finance and Performance Committee.

Comments

9. Drury South Limited have successfully re-zoned their land to enable 145ha of commercial and industrial development, 45ha of residential development, and 85ha of open space (see Attachment A). With demand for industrial and commercial land forecast to exceed supply, development of this land is of strategic importance to the economic and social wellbeing of Auckland. Drury South will provide between 20-25 per cent of the South Auckland’s employment land.

10. The site is currently greenfields and largely in pastoral or lifestyle block land use apart from Stevensons’ quarry. Auckland Council is facilitating the re-development of this site through shared stormwater modelling, streamlined consent processing, and bulk infrastructure planning.

11. The development includes approximately 85 ha of public open space, which also has a stormwater management component (see green areas on Attachment A). The open space area will treat water from a wider catchment area of 57 square kilometres and will also preserve the conveyance of the Hingaia Stream through the site, and will provide recreational and natural habitats in the new urban environment. A stormwater reserve will be created at the time of urban subdivision.

12. Given the scale of the open space and its primary functions it is preferable that it should be held and maintained by a single entity.

13. There are two options for the management of the open space:

· Option one: Status quo - council manages the land as a stormwater reserve as subdivision occurs

· Option two: Establish a trust that would manage the open space to create a high quality, market attractive area.

14. Option one has the advantage of being a business as usual model, where the applicant plans the stormwater reserve at the time of subdivision and then vests the completed asset in council. Council then undertakes its normal maintenance regime. The disadvantage with this model is that Drury South may want the park maintained to a higher standard than council can achieve within its budget.

15. Option two (establishing a trust) has the advantage of being able to source additional funds (from sources other than the council) to maintain the open space to a higher standard, which would benefit the public and marketing for a new growth area. An example of such management can be seen through the Highbrook Park Trust, which currently owns and manages open space in East Tāmaki to a high standard, which has helped attract business investment.

16. The trust should be established to hold the assets on behalf of Auckland residents, and to manage the open space and wetland assets. At the completion of the development or at a date or term agreed by the trust, the assets would vest to Auckland Council under a similar structure to the Highbrook Park Trust. It is recommended that the trust should be set up with an initial 15 year tenure. This length of tenure mirrors that of the Highbrook Park Trust.

17. The recommended process for establishing a trust is to:

· Develop a trust deed between Auckland Council and Drury South Limited, setting out the establishment, objectives, and powers of the trust

· Develop a reserves management agreement between council and Drury South Limited to set out the creation and transfer of open space areas into the trust

· Transfer the land and assets to the trust once the open space areas are completed and titles have been created

· Ensure that the trustees would manage the open space area in accordance with the trust deed.

18. Council would fund the operations and maintenance of the open space to the level consistent with region-wide standards.

19. The trust would arrange for the ongoing management and maintenance of the open space to the agreed standard and recover the standard costs from council on a monthly basis, together with any other costs associated with a higher standard of maintenance from the additional funding sources.

20. The trust would initially be set up with a 15 year tenure with all land and assets transferring to council at that time, unless agreed between the trust and council to further extend the life of the trust past the initial 15 year tenure.

21. Community Facilities has provided a current estimate of between $23,066 and $30,145 per annum to maintain an 85ha reserve to council standards. This sum may need to be revised depending on the level of maintenance required once the open space has been created. The final quantum to be transferred to the trust will be reported back to this committee in due course.

Consideration

Local board views and implications

22. At its 27 June 2017 meeting, the Franklin Local Board agreed in principle to the creation of a trust, provided that it was appropriately funded and had local representation. The local board recommended that Deputy Chair Andy Baker should be the council appointed trustee, due to his knowledge of the area and relationships with the community. The local board indicated its support for the Drury South development, as it will provide for local employment, given the amount of residential growth the area is currently experiencing.

23. This report requests that the Finance and Performance Committee delegate decision-making on the council trustee appointment to the Franklin Local Board in consultation with Stevenson Group Limited. The appointment of the council trustee will be in alignment with the electoral terms.

Māori impact statement

24. The three iwi who identify most strongly with this area are Ngāti Tamaoho, Te Ākitai, and Ngāi Tai ki Tāmaki. Iwi have not been specifically consulted on the trust option, but are regularly consulted on all resource management matters.

25. As a part of the plan changes for the Drury South development, submissions were received from iwi on Māori cultural issues and values. These submissions were considered as part of the plan change approval process. The planning commissioners determined that the applicant had met its obligations to tangata whenua as required under the Resource Management Act 1991 and the relevant statutory planning documents.

26. Previous discussions with iwi have focused on the development of open space areas around the culturally significant Hingaia and Maketu Streams. Cultural impact assessments have indicated overall support from iwi for stormwater management and the planned ecological enhancement planting in the area.

27. While the proposed trust will not have direct impacts on Māori well-being, future investment and the development of jobs in the area has the potential to have a positive impact on Māori well-being.

Implementation

28. Following the Finance and Performance Committee’s agreement to establish a trust, council’s Legal and Risk department will review the trust agreement prepared by Drury South Limited. The specific amount of funding to transfer to the trust will be further reported to the Finance and Performance Committee once a concept for the park and trust deed has been developed.

Attachments

No.	Title	Page
a ⇩	Drury South redevelopment infrastructure overlay plan	163

Signatories

Authors

Alina Wimmer – Manager, Development Programmes

John Dunshea - General Manager Development Programmes Office

Authorisers

Barry Potter - Director Infrastructure and Environmental Services

Dean Kimpton - Chief Operating Officer

Sue Tindal - Group Chief Financial Officer

Finance and Performance Committee

26 July 2017

Te Motu a Hiaroa (Puketutu Island) Governance Trust - council-controlled organisation exemption

File No.: CP2017/11873

Purpose

1. To seek the exemption of Te Motu a Hiaroa (Puketutu Island) Governance Trust as a council-controlled organisation.

Executive summary

2. The Puketutu Island Rehabilitation Project is Watercare Services Limited’s long-term programme to deposit biosolids in an excavated site on Puketutu Island. As part of establishing this programme, long-term governance structures were put in place to manage the rehabilitation of the island and facilitate conversion into a regional park.

3. Three iwi entities hold the freehold title to Puketutu Island through a land-owning trust, Te Motu a Hiaroa (Puketutu Island) Charitable Trust. The charitable trust intends to establish a marae precinct as part of the overall development of the island.

4. In June 2011, the Governing Body resolved its intent to manage Puketutu Island as a regional park. This resolution was with respect to a suite of governance and lease arrangements proposed by Watercare Services Limited in the process of settling appeals to resource consent application for biosolids disposal (the Puketutu Settlement).

5. As part of this settlement process, a separate trust, Te Motu a Hiaroa (Puketutu Island) Governance Trust, was established to help oversee the development and management of the island. The governance trust is a council-controlled organisation, but is currently exempt from the obligations placed on council-controlled organisation

6. The governance trust’s current exemption is due to be reviewed.

7. The Local Government Act 2002 (the Act) allows local authorities to exempt a council-controlled organisation from the accountability requirements of the Act, following an assessment of:

· the nature and scope of the council-controlled organisation’s activities

· the costs and benefits of exempting to the local authority, the council-controlled organisation, and the community.

8. This report recommends the exemption of the governance trust from accountability requirements because there would be little, if any, benefit for this entity or for the ratepayer, from applying the Statement of Intent accountability requirements of the Act. The recommendation also takes into account the compliance costs to both the entity itself and to council.

9. This exemption is recommended for a period until September 2019 in order to align with other existing council-controlled organisation exemptions.

Recommendation/s

That the Finance and Performance Committee:

a) agree to grant an exemption to Te Motu a Hiaroa (Puketutu Island) Governance Trust under section 7(3) of the Local Government Act 2002, on the grounds that the costs associated with meeting the accountability requirements of the Act would outweigh the benefits of such requirements.

b) agree to review this exemption by September 2019 along with the other existing council-controlled organisation exemptions, noting that this exemption can be revoked at any time.

Comments

10. Section 7(3) of the Act allows local authorities to exempt a council-controlled organisation from Statement of Intent accountability requirements following an assessment of the nature and scope of the council-controlled organisation’s activities, as well as the costs and benefits of exempting the council-controlled organisation to the local authority, the council-controlled organisation and the community. The council can revoke an exemption at any time and must review it at least every three years. The council cannot exempt a council-controlled trading organisation which is defined as a council-controlled organisation that has the purpose of generating profit. The governance trust is not a council-controlled trading organisation.

11. The broad intention of section 7(3) of the Act is to avoid unnecessary compliance costs for small council-controlled organisations with a limited scope of activities. For such entities, requiring a Statement of Intent and regular reporting against the performance measures contained in a Statement of Intent would add reporting obligations that are disproportionate to the size and scale of the entity.

12. When a council-controlled organisation is first exempted this must be reviewed within three years and then at no less than three-yearly intervals. Exemption is not automatically granted and must be reconsidered each time.

13. Despite the exemptions from accountability requirements through the Statement of Intent process, Auckland Council does maintain a governance relationship with smaller council-controlled organisations. In particular, the council maintains board appointment responsibilities, and receives financial reports for the council group financial report. These processes allow the council to have oversight, and provide the opportunity to pick up issues that could affect an exemption status. In addition, the review of an exemption status itself provides a chance to review risk and the appropriateness of the status.

14. It is noted that decisions to exempt small council-controlled organisations do not trigger the council’s significance policy.

Context and Background

15. The Puketutu Island Rehabilitation Project is Watercare Services Limited’s long-term programme to deposit biosolids in an excavated site on Puketutu Island. As part of establishing this programme, Watercare Services Limited also established long-term governance structures to manage the rehabilitation of the island and facilitate conversion into a regional park.

16. Three iwi entities – Waikato Tainui Te Kauhanganui Incorporated, Te Kawerau Iwi Tribal Authority Incorporated, and Makaurau Marae Māori Trust. (the iwi entities) - hold the freehold title to Puketutu Island through a land-owning trust, Te Motu a Hiaroa (Puketutu Island) Charitable Trust. The charitable trust intends to establish a marae precinct as part of the overall development of the island.

17. In June 2011, the Governing Body resolved its intent to manage Puketutu Island as a regional park. This resolution was with respect to a suite of governance and lease arrangements proposed by Watercare Services Limited in the process of settling appeals to its resource consent application for biosolids disposal (the Puketutu Settlement).

18. As part of the Puketutu Settlement, a separate trust, the governance trust, was established to help oversee the development and management of the island. The trust has a maximum of twelve trustees. Watercare Services Limited and the council appoint up to four trustees each, and the iwi entities appoint a further four trustees.

19. A diagram of the agreements and resulting trusts is contained in Attachment A.

Te Motu a Hiaroa (Puketutu Island) Governance Trust

20. The governance trust was established in 2011 to oversee and hold a trust fund for the development, management, maintenance and operation of Puketutu Island as public open space. The governance trust collects revenue from the leases and tenancies on the island of approximately $400,000 per annum, and it may receive other discretionary grant funding (from the council or other sources) from time to time. The development of the regional park is to be reported at six-monthly intervals to the Environment and Community Committee.

21. Section 6 of the Act states that a trust in which the council (directly or indirectly) has the right to appoint 50 percent or more of the trustees is a council-controlled organisation. In the governance trust’s case, the council and Watercare Services Limited appoint eight of the 12 trustees. The governance trust is therefore a council-controlled organisation under the Act.

22. The governance trust is the key forum for developing management plans and achieving consensus between Watercare Services Limited, the iwi entities and the council in relation to governance of Puketutu Island. However, the governance trust decisions do not bind the council or any other party, and the council retains control of its funding decisions in relation to the regional park, as well as other rights and obligations under the Puketutu Settlement agreements.

Exemption Criteria and Assessment

23. Having regard to the applicable criteria stipulated in section 7 of the Act, an exemption of the governance trust was given by the Council-controlled Organisation Governance and Monitoring Committee on 2 July 2014. It is now recommended that a further exemption be granted based on the following considerations:

· The governance trust meets the essential criteria for an exemption under section 7(3) of the Act, namely that it is a ‘small organisation’ and is not a council-controlled trading organisation.

· The governance trust does not hold any assets other than its income, as described above and the scope of its activity is limited.

· In lieu of Statement of Intent reporting, the development of the regional park is to be reported at six-monthly intervals to the Environment and Community Committee. The additional council-controlled organisation accountability requirements would therefore add cost and be superfluous.

· The governance trust’s decision making powers are limited to its own assets arising from designated income streams, and it cannot make decisions that bind council. Council retains control over its regional park spend through the Long-term Plan.

Consideration

Local board views and implications

24. The Māngere-Ōtāhuhu Local Board was provided an update on Puketutu Island at the local board workshop in March 2017. While the local board has an interest in the development of the island, the exemption from council-controlled organisation accountability requirements is solely a matter for the Governing Body of council. The local board’s views on this matter were therefore not sought.

Māori impact statement

25. Te Motu a Hiaroa was named after the sister of Rakataura, a tohunga of the Tainui waka. As a site of extended Māori occupation, it is highly significant to tangata whenua and contains many sites and associations of cultural importance. The agreements with iwi have recognised the island as taonga to the people of Tāmaki Makaurau.

26. There are a number of iwi with a communicated interest in Te Motu a Hiaroa. Three iwi entities have been expressly recognised and hold freehold title to the island and Oruarangi Creek through the charitable trust. These three iwi entities are Waikato Tainui Te Kauhanganui Incorporated, Te Kawerau Iwi Tribal Authority Incorporated, and Makaurau Marae Māori Trust.

27. The governance trust supports the current request for an exemption by the council.

Implementation

28. Subject to the resolution of this committee, the governance trust will be notified of its exemption status.

Attachments

No.	Title	Page
a ⇩	Chart of Te Motu a Hiaroa agreements and trusts	169

Signatories

Author

Alastair Cameron - Manager - CCO Governance & External Partnerships

Authorisers

Phil Wilson - Governance Director

Sue Tindal - Group Chief Financial Officer

Finance and Performance Committee

26 July 2017

NewCore: completion of project

File No.: CP2017/13280

Purpose

1. To update the Finance and Performance Committee on the completion of the NewCore project following its final go live on 3 July 2017.

Executive summary

2. The Long-term Plan includes efficiency savings of $2.74 billion forecast over the 10 year budget.

3. Critical to the success of achieving these efficiency savings is the IS Transformation programme. NewCore is one of the most significant projects within the programme that enables the future radical transformation of key customer-facing services while also reducing the cost to serve each customer.

4. The forecast cost for full completion of the NewCore Project will be $2.8 million less than the approved budget of $156.9 million (Capex $150.9m and Opex $6 million) from the November 2014 approved budget.

5. NewCore has successfully deployed the complete solution within the agreed scope, time and budget. Specific commentary on progress to date:

· Full NewCore solution deployed across all of Auckland Council.

· Post go live support on track to be completed by 28 July 2017. Post go live support is when the project team provide additional support to what is normally available to the business as they become familiar with the new solution. It includes having over 60 floor walkers out on site providing support as well as an increased technical team to help resolve any issues identified with the system.

6. The delivery of NewCore means that for the first time:

· Customers can go to any Service Centre to request services.

· All staff can view or process customer information enquiries or requests for services across the entire Auckland Council region.

· Standard processes on one system provides greater flexibility meaning work can more easily be shared across the region.

· A platform for the ongoing development and delivery of digital services is provided.

Recommendation/s

That the Finance and Performance Committee:

a) note that the NewCore project has been successfully deployed across all of Auckland Council. It has been delivered on time, within the agreed scope and at $2.8 million less than the approved budget.

b) note that the project closure report, including the Post Implementation Review (PIR) to be completed by 10 August 2017, will be provided to the Audit and Risk Committee on 25 August 2017 and that this report will be the formal closure of the project.

Comments

7. NewCore is one of the most significant projects undertaken by council and underpins organisational transformation. It enables future and more radical transformation of customer facing services, our digital/on-line interface and will reduce the cost to serve as a result.

Summary of key activity and achievement in the last year are:

8. Full NewCore solution successfully deployed:

· 2016 (Legacy Councils Waitakere, Rodney, North Shore)

o June 2016 - Customer Interactions, Licensing, Property Management, Financial Management

o July 2016 – Rates

o October 2016 - Consenting and Property Information

· 2017 (Auckland, Manukau, Papakura, Franklin and Regional Council)

o June 2017 – Customer Interactions, Property Management, Licensing, Financial Management, Consenting and Property Information

o July 2017 – Rates

9. NewCore is on track to complete handover to the business and ICT of the full solution by 28 July 2017. Progress to date of each value stream:

· Customer - Contact to Request (C2R) – fully handed over to business and ICT

· Credit to Cash (C2C) – 90% handed over to business and ICT. Last 10% relates to rates which is scheduled to be handed over in the week of the 24July 2017

· Lodge to Issue (L2I) – Licensing and Building Control fully handed over to business and ICT. Resource management on track for week of 17 July 2017

· Monitor to Enforce (M2E) - Licensing and Building Control fully handed over to business and ICT. Resource management on track for week of 17 July 2017

· Property Capture to Inform (P2I) – fully handed over to business and ICT

· Order to Fulfil (O2F) - fully handed over to business and ICT

· Value to rate (V2R) – scheduled to be handed over in week of 17 July 2017

10. Upcoming final activities:

· Exit post go live support and handover to Business As Usual – 28 July 2017

· Complete post implementation review – 31 July 2017

· Complete project closure report – 10 August 2017

11. Benefits realisation is a critical on-going requirement to ensure that these are realised. As part of the project closure process a benefits realisation framework will be put in place to enable the on-going tracking of the achievement of benefits identified within the NewCore business case.

NewCore Project Costs Project Life to Date

12. Current year:

· Actual Life to date June 2017 $148.16 million

· Forecast Life of programme July 2017 $149.20 million

· Budget Life of programme $150.90 million

Project Completion forecast

13. The forecast cost for full completion of the NewCore Project will be $2.8 million less than the approved budget of $156.9 million (Capex $150.9 million and Opex $6 million) from the November 2014 approved budget.

Consideration

Local board views and implications

14. Transformation projects are of corporate support in nature. Local board views were not sought.

Māori impact statement

15. This transformation project is corporate support in nature and it is considered that there is no impact on Maori.

Implementation

16. There are no implementation issues.

Attachments

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Signatories

Authors

Paul Tombleson – NewCore Programme Director

Mark Denvir - Director ICT

Authorisers

Dean Kimpton - Chief Operating Officer

Sue Tindal - Group Chief Financial Officer