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

 

Date:                      

Time:

Meeting Room:

Venue:

 

Tuesday, 19 September 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

 

14 September 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

(c)  make financial decisions required outside of the annual budgeting processes

 

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

 

 

 

 

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.

(c)  The committee does not have:

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.

 

 

 


Finance and Performance Committee

19 September 2017

 

ITEM   TABLE OF CONTENTS                                                                                        PAGE

1          Apologies                                                                                                                        9

2          Declaration of Interest                                                                                                   9

3          Confirmation of Minutes                                                                                               9

4          Petitions                                                                                                                          9  

5          Public Input                                                                                                                    9

6          Local Board Input                                                                                                          9

7          Extraordinary Business                                                                                              10

8          Notices of Motion                                                                                                        10

9          Review of funding an Annual Auckland Arts Festival                                            11

10        Hunua Forests Limited - council-controlled organisation exemption                  79

11        Funding of Panuku work in the Unlock locations                                                   83

12        Approval of Group Policies                                                                                        91

13        Approval of Watercare Services Limited Statement of Intent 2017-2020            113

14        Budget update September 2017                                                                               139

15        Finance and Performance Committee - Information Report - 19 September 2017 147  

16        Consideration of Extraordinary Items 

 

 


1          Apologies

 

Apologies from Cr D Quax, Cr L Cooper, Cr M Lee and Cr R Hills have been received.

 

 

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, 15 August 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

19 September 2017

 

Review of funding an Annual Auckland Arts Festival

 

File No.: CP2017/14126

 

  

 

Purpose

1.       To review the decision to provide additional funding to the Auckland Festival Trust to deliver an annual Auckland Arts Festival on a trial-basis.

Executive summary

2.       The Auckland Festival Trust (the Trust) has delivered the Auckland Arts Festival since 2003.

3.       From 2003 to 2015 the festival was held every second year. Beginning in 2011, the Trust looked to move to an annual festival.

4.       In 2014, the council considered a business case setting out the advantages and disadvantages of providing extra funding for an annual festival. Auckland Council’s former Budget Committee supported additional funding for a trial annual festival in 2016, and requested that staff subsequently review the success of moving to an annual festival. 

5.       As a regional amenity, the Trust receives funding under the Auckland Regional Amenities Funding Act 2008 regime. The Auckland Regional Amenities Funding Board (the Funding Board) determines the appropriate level of funding for the Trust.

6.       Following the Budget Committee’s decision, the Funding Board increased the Trust’s funding by approximately $1 million (from $2.3 million to $3.3 million) in 2015/2016 and again in 2016/2017. This enabled the Trust to deliver the trial festival in 2016 together with its planned two-yearly festival in 2017.

7.       Since the 2016 and 2017 festivals have been held, the council needs to review whether it should continue to support an annual festival.

8.       This report reviews whether the anticipated advantages and disadvantages of moving to an annual festival were realised, and recommends that the council continues to support funding for an annual festival.

9.       Staff recommend that the council writes to the Funding Board communicating the resolutions from this committee, and requesting that the Funding Board continues to maintain oversight of the festival’s performance, and keep a watching brief on the impacts of an annual festival on the Trust and other regional amenities that participate in the festival.

 

Recommendation/s

That the Finance and Performance Committee:

a)      continue to support funding for an annual Auckland Arts Festival.

b)      request that the Auckland Regional Amenities Funding Board continues to provide funding to the Auckland Arts Festival Trust to deliver an annual Auckland Arts Festival.

c)      delegate to the manager of the CCO Governance and External Relationships department authority to write to the Auckland Regional Amenities Funding Board communicating council’s support for an annual Auckland Arts Festival and future expectations for the festival.

d)      note that the Auckland Regional Funding Board will make the ultimate decision on the level of funding provided to the Auckland Festival Trust.

 

Comments

Background

10.     The Trust was established as an independent entity in early 2000 by the legacy Auckland City Council. The Trust received seed funding, and has received ongoing council (legacy and current) funding to deliver the festival since the first event in 2003.

11.     The festival currently takes place in March and offers a variety of arts genres, performed by domestic and international artists. The festival has grown to attract strong audience numbers.

12.     As a result of the Trust’s desire to deliver an annual festival, in 2014 council staff completed a business case comparing the advantages and disadvantages of additional funding for an annual festival (Attachment A). Those advantages and disadvantages are summarised below:

Potential advantage

Potential disadvantage

·    Central Auckland focus which is a geographical priority of the Auckland Plan

·    high levels of satisfaction with festival events and experience

·    provides a platform and exposure for smaller arts groups

·    international evidence that most biennial festivals eventually move to an annual event

·    may assist the Trust with a more long-term sustainable financial position (corporate sponsorship, retain staff, attract better programme)

·    consultation showed support for the festival

·    provides balance to other annual events.

·    limited direct economic impact

·    targets audiences already engaged with arts who have money to attend events

·    does not contribute to Auckland Plan transformational shifts

·    might displace other arts sector spend

·    puts pressure on venues, hotels, audiences

·    financial risk to council that revenue might not be achieved

·    financial risk that other regional amenities and arts groups will increase funding requests

·    may not sustain audience numbers

·    may “cannabalise” other arts organisations and events.

 

13.     The business case did not support ongoing funding for an annual festival. Rather it considered that providing funding for a “trial” period would put the council in a better position to assess if:

·    the festival could sustain audiences on an annual basis

·    there was further evidence that an annual festival was beneficial.

14.     The former Budget Committee resolved to:

“… provide additional funding to the Auckland Festival Trust (through Auckland Regional Amenities Funding Board) on a short-term basis for a “trial” annual Auckland Arts Festival in 2016”. [BUD/2014/25, 8 May 2014]

15.     The Funding Board subsequently increased the Trust’s funding to approximately $3.3 milion per year in 2015/2016, and again in 2016/2017. This allowed the Trust to hold the annual festival in 2016, as well as the planned two-yearly festival in 2017.

16.     Since the Budget Committee’s decision, the festival has now been delivered three years in a row 2015, 2016, and 2017.

17.     The Trust receives a significant proportion of its revenue through the regional amenities levy under Auckland Regional Amenities Funding Act 2008 (ultimately paid for by Auckland ratepayers). This is complimented by box office income, funding from Creative New Zealand, various trust grants, and sponsorship.

18.     The Trust’s funding through the levy has increased by approximately $1 million per year as a result of moving to an annual event.

Approach to reviewing “trial” annual festival

19.     The approach to the review was to assess whether the potential advantages, set out in the 2014 business case, occurred. In particular, this includes whether the festival maintained audience numbers, and consideration of any other evidence showing benefits of funding an annual event.

20.     Staff sought comment and information from:

·        the Trust. A report from the Trust is attached.  See Attachment B.

·        the council group:

the Community and Social Policy department and the Arts, Community and Events department

relevant council-controlled organisations, such as Auckland Tourism, Events and Economic Development and Regional Facilities Auckland.

·        some of the major Auckland arts organisations. This included Auckland Philharmonia Orchestra, Auckland Theatre Company, New Zealand Opera, Auckland Live; and

·        the Auckland Regional Facilities Funding Board and Creative New Zealand (a co-funder of the Festival).

21.     Staff would like to acknowledge that the Trust has been cooperative and responsive throughout the review, as they were during the initial business case process in 2014.

Summary of review

22.     A summary of the review of the annual festival is set out below. The full review is at Attachment C.

23.     The report from the Trust sets out the performance of the festival, including its financial performance.

24.     The festival appears to have transitioned well from a two-yearly to an annual event in a short space of time. In particular:

·        the festival had its second highest box office revenue for the festival in 2017 ($2.83 million in 2017; $3.0 million in 2013)

·        the festival had its highest audience numbers in 2017 (196,000 people)

·        audience satisfaction has been maintained at similar levels to 2013 (87 per cent in 2017; 89 per cent in 2013)

·        sponsorship (both contra and cash) has dropped slightly per festival ($1.069 million in 2017; $1.3 million in 2013)

·        other funding (Trusts, Creative New Zealand and other programme-related funding) has dropped per festival ($1.27 million in 2017; $1.68 million in 2013).

25.     The majority of anticipated advantages in moving to an annual festival were realised. In particular:

·    the festival has attracted international works and a strong programme of events

·    the Trust has been able to retain staff and become a more stable organisation

·    anecdotal evidence suggests that Trust is collaborating more with local arts organisations, communities and other events.

26.     The majority of anticipated disadvantages either did not occur, or were mitigated further by the Trust. In particular:

·    the Trust appears to have mitigated some of the concerns about lack of alignment with the Auckland Plan and the council’s objectives by diversifying its programme, audiences, and geographic reach

·    concerns about the festival detracting from other events and organisations do not appear to have occurred. There appears to be more support now from the sector for the annual festival than at the time the 2014 business case was produced. The Trust appears to be working well with the sector and increasing collaboration, co-production of works, and partnerships.

27.     The key concern remains about the festival’s long-term financial sustainability. In particular:

·    the Trust has generally operated at a loss most years.

·    the Trust has commented that its costs are increasing but revenue/sponsorship is not. Like other organisations, it is finding growth in cash sponsorship difficult. While its cash and in-kind sponsorship only dropped slightly overall, this is mainly due to doubling in-kind sponsorship

·    the Trust has sufficient financial reserves to remain solvent for the foreseeable future. However, given the proportion of “at risk” revenue (box office sales, sponsorship and donations) these reserves could be quickly eroded.

28.     Despite the issue with sustainability, the case supporting an annual festival appears stronger now than at the time the council agreed to provide additional funding on a trial-basis.

Options

29.     An analysis of the options, in order of preference, is set out below.

Option

Benefits

Disadvantages

Option one – support ongoing funding so the Trust can continue to deliver an annual Festival (preferred option)

·    the Trust is a more stable organisation having moved to an annual event

·    the festival has maintained audience numbers and box office revenue

·    continue to leverage off work Trust has already undertaken

·    sector now appears to be supportive of annual festival

·    a more frequent festival provides more opportunities for the production and performance of New Zealand work.

·    further ongoing cost. Annual festival requires approximately $1 million per year more than two-yearly festival

·    issue of long-term viability of Trust remains

·    reduced incentives for the Trust to continue to align its activities with council priorities such as diversifying the works and audiences.

 

Option two – support additional funding with further conditions e.g. further trial period

·    provides incentive for the festival to continue to align to the council’s priorities

·    no long-term commitment for the council to provide additional funding

·    the Trust believes it is in a more sustainable position delivering annual event.

·    lack of certainty for Trust

·    the Trust has delivered the anticipated benefits of an annual festival, which were expected of it in order for the council to provide additional funding.

 

Option three funding for an annual festival

·    no additional council funding required.

 

·    festival reverts to every second year. This may have impact on quality of Festival and programming

·    benefits obtained from the trial period are lost

·    may put sustainability of the Trust and festival at greater risk

·    the Trust has delivered the anticipated benefits of an annual festival, which were expected of it in order for the council to provide additional funding.

 

30.     Option one is preferred together with writing to the Funding Board expressing the council’s future expectations for the festival to:

·    increase other non-council funding streams

·    increase alignment to the Auckland Plan and the council’s priorities by furthering the work it has carried out to-date diversifying its offerings and audiences

·    continue to partner and work with local arts organisations and community groups as part of the festival

·    collaborate across the council group to leverage other council-funded activities.

Consideration

Local board views and implications

31.     For the purposes of this report, no specific local board views were sought given the regional nature of the festival.

Māori impact statement

32.     The 2014 business case noted the limited demographic reach of the festival, in particular its limited Māori audience. It also noted that the festival contributed little to Māori outcomes.

33.     The Trust committed to employing a full-time Māori programme manager, which it did. The role has now evolved into a senior programme manager role, supported by Māori staff and management to ensure Māori values and work are incorporated across the organisation and festival programme, as well as wider Trust activities.

34.     Currently six per cent of the festival audience is Māori. While this is double what it previously was (three per cent) there is room for improvement in order to align to the Auckland Plan outcome of a Māori identity which is Auckland’s point of difference.

35.     The council can communicate to the Trust its desire for the festival to continue to deliver works relevant to Māori, as well as showcasing Māori artists and identity.

Implementation

36.     The Trust will submit its formal application to the Funding Board on 25 September 2017 for 2018/2019.

 

37.     Any decision to continue supporting an annual festival is subject to confirmation through Auckland Regional Amenities Funding Act 2008 process. It is expected that the Funding Board will follow the council’s guidance on this matter, although the Funding Board will separately scrutinise whether it considers the funding request by the Trust to be at an appropriate level.

38.     Continuing to support the festival being delivered on an annual basis will likely have limited impact on the overall Act levy claimed from the council.  This levy was $16,165,500 in 2017/2018, including $3,337,000 for the festival.  This level incorporated the increase of $1 million, granted to the festival when it became an annual event. Continuing to support an annual festival will have no further impact on council’s budget.

39.     In addition, supporting an annual festival will not have any direct impact on the funding of other amenities under the Act.  The legislation carries a cap of two per cent of rates across all ten amenities, which was $31,480,000 for 2017/2018.  Funding the festival on an annual basis will not prevent the Funding Board granting additional funds to other amenities, where justified. 

 

Attachments

No.

Title

Page

a

Report to Budget Committee and Business Case 8 May 2014

17

b

Report from the Auckland Festival Trust, September 2017

67

c

2017 review of the annual Auckland Arts Festival

73

      

Signatories

Author

Tania Winslade - Principal Advisor CCO Governance

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Sue Tindal - Group Chief Financial Officer

 


Finance and Performance Committee

19 September 2017

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Finance and Performance Committee

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Finance and Performance Committee

19 September 2017

 

Hunua Forests Limited - council-controlled organisation exemption

 

File No.: CP2017/16088

 

  

Purpose

1.       To seek the exemption of Hunua Forests Limited from the Local Government Act 2002 (the Act) council-controlled organisation accountability requirements.

Executive summary

2.       In January 2017 Watercare Services Limited (Watercare) purchased 100 per cent of the shares of Waytemore Forests Limited. The company’s name was subsequently changed to Hunua Forests Limited, and is a council-controlled organisation.

3.       The Local Government Act 2002 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.

4.       Hunua Forests Limited’s assets have been sold or transferred to Watercare Services Limited.  Hunua Forests Limited is now effectively dormant, and the intention is for the company to be wound up during the 2018 financial year.

5.       This report recommends the exemption of Hunua Forests Limited 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 2002, or having its financial statements subject to an annual audit.  The recommendation also takes into account the compliance costs to the entity itself and to council.

6.       This exemption is recommended for a period until September 2019 in order to align with other existing council-controlled organisation exemptions. However, it is anticipated the entity will be wound up before the next exemption review.

 

Recommendation/s

That the Finance and Performance Committee:

a)      approve the exemption of Hunua Forests Limited under section 7(3) of the Local Government Act 2002, on the grounds that the costs associated with meeting the accountability requirements of the Local Government Act 2002 would outweigh the benefits of such requirements.

b)      recommend the review of 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

Context and background

7.       During January 2017 Watercare purchased 100 per cent of the shares of Waytemore Forests Limited. The company’s name was subsequently changed to Hunua Forests Limited.

8.       The assets of the company were predominantly forestry rights relating to forested areas close to the Hunua catchment. The primary purpose of the transaction was to protect the Hunua water catchment from the impact of commercial forestry activities by acquiring the forestry rights, and then placing restrictions on harvesting activity that will protect the Hunua water catchment.

9.       Since the acquisition of the company, the right to harvest the majority of the forests has been sold to an external forestry company.  The additional restrictions on harvesting activity have been put in place.

10.     During the financial year to June 2017 the Hunua Forests Limited’s forestry assets were either sold or novated to Watercare, so that as at 30 June 2017, Hunua Forests Limited held no forestry assets on its balance sheet.  The company is now effectively dormant, and the intention is for the company to be wound up during the 2018 financial year.

Hunua Forests Limited – council-controlled organisation status

11.     Section 6 of the Act states that a company in which the council (directly or indirectly) has the right to appoint 50 percent or more of the directors is a council-controlled organisation. In Hunua Forests Limited’s case, Watercare appoints both of its directors. Hunua Forests Limited is therefore a council-controlled organisation, as council indirectly (via Watercare) appoints all of the directors.

12.     Section 7(3) of the Act allows local authorities to exempt a council-controlled organisation from the accountability requirements under the Act.  A local authority must first make 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.

13.     The council cannot exempt a council-controlled trading organisation, which is defined as a council-controlled organisation that has the purpose of generating profit.  As Hunua Forests Limited is now dormant, it is not a council-controlled trading organisation, and therefore able to be exempted.

14.     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.

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

Exemption criteria and assessment

16.     Having regard to the applicable criteria stipulated in section 7 of the Act, an exemption is being sought from the Finance and Performance Committee.  It is recommended an exemption be granted based on the following considerations:

(i)         Hunua Forests Limited 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.

(ii)        Hunua Forests Limited does not hold any assets other than a cash balance and an inter-entity receivable with its immediate parent, Watercare.   

(iii)       Hunua Forests Limited is no longer carrying out any commercial forestry or other trading activities and all of its income earning assets have been sold or transferred out of the business. On this basis the additional council-controlled organisation accountability requirements would add an unnecessary compliance burden and superfluous costs.

(iv)       Hunua Forests Limited’s decision making powers are limited and it cannot make decisions that bind council.

Consideration

Local board views and implications

17.     The Franklin Local Board  have been notified of the purchase of Hunua Forests Limited and the positive impact this will have on the security of Auckland’s water supply and the environment through the regeneration of native forests. 

18.     Governance of council-controlled organisations is the responsibility of the governing body, and the views of the Franklin Local Board have not been sought on the issue of exempting Hunua Forests Limited.  Staff are of the view that there are no implications for the local board, either positive or negative, from this report.

Māori impact statement

19.     After the current rotations of pine trees are harvested, Watercare will progressively restore the land back to native forest. This will increase native fauna and flora in the region. Both Waikato Tainui Te Kauhanganui Incorporated and Ngāti Tamaoho Trust are interested in being involved in the planting programmes to restore the area to native forests.

Implementation

20.     Subject to the resolution of this committee, Hunua Forests Limited will be notified of its exemption status.

Attachments

There are no attachments for this report.    

Signatories

Author

Ella Kay - Senior Advisor - CCO Governance & External Partnerships

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Sue Tindal - Group Chief Financial Officer

 


Finance and Performance Committee

19 September 2017

 

Funding of Panuku work in the Unlock locations

 

File No.: CP2017/16571

 

  

 

Purpose

1.       The purpose of this paper is to inform the Committee and provide clarity on the option of funding the Panuku Development Auckland Transform and Unlock urban redevelopment programme by way of the reinvestment of proceeds of property sales from within the programme locations.

Executive summary

2.      Panuku was established to facilitate the high quality urban redevelopment of strategic brownfield locations and to drive the strategic and commercial value from existing and planned assets. Panuku will play a critical part in supporting and delivering on the goals of the Auckland Plan.

3.      Panuku manages a property portfolio, much of which is held for future infrastructure or service purposes. Panuku has a role to create value from strategic assets and leads a property disposal programme to deliver revenue to Auckland Council. An annual sales target is agreed as part of the Statement of Intent and in the current year is $100m.  There is a tension between the disposal target and other strategic objectives.

4.       The Panuku priority locations form a regionally significant redevelopment and regeneration programme approved by Council which will make a significant contribution to the delivery of the growth strategy in particular the intensification of the urban area and focus of growth in centres aligned with good transport accessibility and transport investment.

5.       The funding of Panuku projects in priority locations will be discussed as part of the Long-term Plan 2018-2028 (LTP) process. Panuku has been invited to present an option, building on the support given to the reinvestment of proceeds in identified Transform locations (Manukau and Onehunga) early in 2016.  As indicated during the establishment of Panuku, the funds within the Long-term Plan (LTP) budgets do not include funding for any capital or operating expenditure in the priority locations and at that time no clear mandate on funding source was provided. It has been acknowledged that the existing Panuku budgets, based on the legacy organisations and more limited mandate, are not sufficient.

6.       This paper proposes that the Transform and Unlock locations are viewed as a programme which is funded, at least to the extent possible, from reinvestment of proceeds from properties which are disposed within the transform and unlock locations (with the exception of the waterfront). It also proposes that Panuku has the mandate to invest those funds in projects included within High Level Project Plans that have been approved by the Planning Committee and the mandate to transact sites has been approved by the Finance and Performance Committee. The investment of the funds would be subject to business cases approved by the Panuku Board and referred to the Finance and Performance Committee for consideration and prioritisation as part of the 2018-2028 LTP process.

7.       The disposal of property in some Unlock locations will create a significant surplus, while in other unlock locations the reinvestment of the proceeds of property sales will not be sufficient to deliver the agreed outcomes of the approved High Level Project Plans. The ability to reinvest proceeds across the programme will enable Panuku to make credible progress across all locations as well as ensure that resources are applied to agreed priorities.  Some surpluses generated would still come back to Council in addition to the surpluses generated from the disposal of Support sites, and other disposals.

 

8.       The reinvestment of proceeds from property sales will enable Panuku to catalyse private sector investment early, deliver strategic objectives and increase the value of council sites. Importantly it will help to strengthen local community and stakeholder support for intensification and change in their neighborhood. It would also provide Panuku with additional certainty and agility to work with partners, as well as building confidence with investors, developers and potential home owners.

9.       The concept of reinvestment has been accepted for the Panuku Transform areas, giving certainty to those programmes. The concept of reinvestment is a key tool for the multi-year redevelopment of the network of villages making up the Housing for Older Persons Portfolio. Reinvestment has also been agreed for the optimisation of service properties within Local Board areas. In all of these cases the approach provides certainty, agility and builds community support. Most importantly it enables the transformation that the Council is seeking to progress, and supports it’s “brownfields” growth strategy.

10.     A portion of the property sales proceeds will also be needed, as part of the High Level Project Plan approval process, to fund non recoverable operating costs associated with implementation.

 

Recommendation/s

That the Finance and Performance Committee:

a)      notes the proposal to reinvest the proceeds of property sales from the agreed Unlock and Transform locations (with the exception of the waterfront)  to fund capital projects and initiatives in the Transform and Unlock programme to deliver the outcomes articulated in the Council-approved High Level Project Plans, while still returning some surpluses to Council

b)      notes that the proposed reinvestment of the funds would be for projects endorsed in High Level Project Plans and would be subject to business cases approved by the Panuku Board and referred to the Finance and Performance Committee for consideration and prioritisation as part of the 2018-2028 LTP process.

 

Comments

Background - Panuku role, mandate and expectations

 

11.     Panuku was established to facilitate the high quality urban redevelopment of strategic brownfield locations and to drive the strategic and commercial value from existing and planned assets. Panuku will play a critical part in supporting and delivering on the goals of the Auckland Plan. In particular, Panuku has a significant role in the transformational shift “Radically improving the quality of urban living”.  Panuku has been charged with finding the right balance between financial and non-financial outcomes (economic, environmental, social and cultural). Among other things, there is an expectation that Panuku will deliver a range of housing choices, public realm and housing projects that demonstrate accessible design and innovative place-led engagement to harness the local community’s identity, attributes and potential.

12.     An urban locations analysis to identify regional priorities for urban regeneration and redevelopment was undertaken by Auckland Council in 2015 and informed the choice of priority locations for Panuku. The short listed locations were further analysed by Panuku and presented back to Auckland Council for approval.

 

 

13.     Two Transform locations in addition to the waterfront and Tamaki (Manukau and Onehunga) and seven Unlock locations (Northcote, Takapuna, Henderson, Papatoetoe, Hobsonville, Ormiston, the Housing for Older Persons portfolio) were approved by Auckland Council at the end of 2015. Avondale was endorsed by Planning Committee as an Unlock in March 2017. The Panuku Board agreed in mid-2017 to include Panmure in the programme of work as a collaboration with Auckland Transport and Tamaki Regeneration Company (TRC) within Transform Tamaki.

14.     This forms a regionally significant programme approved by Council to make a significant contribution to the delivery of the growth strategy in particular the intensification of the urban area in centres aligned with good transport accessibility and transport investment.

15.     Panuku has prepared High Level Project Plans (HLPPs) for the Transform and Unlock locations. The HLPPs set out the scope, vision and outcomes, identify development plans for the surplus council sites and seek mandate to transact the sites, subject to any statutory or other obligations. HLPPs have been approved for Northcote, Takapuna, Henderson, Papatoetoe and the Housing for Older Persons portfolio. The development programmes for Hobsonville and Ormiston have legacy approvals and these projects are significantly advanced. HLPPs for Avondale and Panmure will be submitted to the Planning Committee and the Finance and Performance Committee for approval within the next 3-6 months.

16.     The locations are all identified as centres for growth in the revised development strategy as part of the Auckland Plan refresh. The locations were chosen for their combination of opportunities in relation to emerging market attractiveness, land and influence, scale, partnerships, previous investment and locational factors. These centres have long been  identified for residential and commercial growth in legacy plans,  however the policy and regulatory approach and advocacy has not led to  significant market activity, and the use of other levers is clearly required.

17.     In adopting these locations it was understood that these new projects will require operating and capital expenditure budgets to give effect to the strategies and objectives contained in the approved High Level Project Plans (HLLP).

18.     The principle of reinvestment has been established.

19.     The reinvestment of the proceeds of sales in Transform locations was approved by the Finance and Performance Committee in April 2017, in adopting the first High Level Project Plan for Manukau, as recommended by the Planning Committee.

20.     In order for Panuku to lead a long term programme to redevelop and improve of the network of villages for older people, the reinvestment of the proceeds of sales into the HfOP portfolio was agreed by the Finance and Performance Committee in 2015.

21.     Optimisation of service assets follows a similar principle and was addressed in a report to the Finance and Performance Committee in March 2015 from Auckland Council Property Limited (ACPL).  Panuku has the mandate to work with Local Boards to optimize the use of council service property by co-locating or rationalizing services to release properties for disposal or development. It has been agreed a Local Board which supported the redevelopment and/or sale of a funded service site in its area was able to retain the proceeds for reinvestment in another service asset in that Local Board area. This “ring fencing” did not apply to non-service sites or to the properties on the Auckland Transport fixed register.

Sources of funding and adequacy of existing budgets

 

22.     The 2015-25 Long-term Plan approved by Council in June 2015, before the establishment of Panuku, did not contain budgets for Transform and Unlock Projects. The 2018-2028 LTP process is now underway and Panuku will set out the programme of work that requires funding for consideration and prioritisation by the Governing Body.

23.     The Unlock Projects require investment in public good and non-financial outcomes in order to unlock private sector interest and attract investment. The nature of investment required has been set out in the approved High Level Project Plans, and will be presented to the Finance and Performance Committee LTP Workshop (infrastructure workstream)  on 26 September 2017.

24.     However there is no clear mandate on funding source for anticipated significant capital expenditure and there is no capital budget allocation in the current LTP for these locations. 

25.     There is no operating budget to fund the Unlock Projects development non-recoverable operating expenditure. This includes master planning, design, engagement and feasibility work that need to be undertaken. Generally this is expenditure incurred prior to the decision to transact individual sites and is not recoverable as cost of sales or capital investment. These costs cannot realistically be funded from current LTP budgets. They are general costs over the Unlock area and cannot be loaded into particular sites.

26.     In terms of Business as Usual, Panuku has access to the following funding options:

a)   LTP approved funding:

·        Pre-approved projects funding in the LTP

·        Strategic Development Fund (SDF) to acquire land for development purposes, which has to be repaid within a defined timeframe

·        Development Fund, funded by a small portion of sales proceeds

·        Value compression on disposal[1] - to facilitate desired intervention outcomes on a particular site, such as decontamination or public amenity outcomes at that site, noting that there is a tension here with the asset sales target.

27.     For clarity, the Panuku Development Fund is not sufficient to fund opex costs for the Transform and Unlock locations as well as the rest of the development programme unrecoverable costs. The Panuku Strategic Development Fund is not appropriate as it requires a commercial outcome that is repayment of all costs plus interest.

28.     Panuku is also considering the applicability of targeted rates linked to redevelopment of sites. This work is incomplete.

Proposal to reinvest proceeds of sales within identified Unlock locations

 

Reinvestment of property sales proceeds – for capital projects

29.     The proposal is to reinvest the proceeds of properties sold and value created, within the  identified Unlock locations,  to be spent on unfunded public amenity and facilities upgrades and strategic outcomes (included in approved High Level Project Plans) but which may not be covered or are only partially covered by commercial transactions. Improving the amenity of a centre is a critical component of attracting private sector investment to deliver housing and other outcomes.

30.     These projects have been articulated through a High Level Project Plan.  They will progress the non-financial public good objectives in our purpose and statement of intent which will require funding to be meaningful.  They may include public realm upgrades, property acquisition and exemplar residential projects – things that are game changers which will add financial value over time. 

 

31.     The Unlock locations have different issues and opportunities including the number and scale of surplus property assets for disposal and the nature of public good investment required to drive market interest. For some unlock locations, the reinvestment of sales proceeds could fully fund the investment required, such as in Takapuna. In other unlock locations, reinvestment of sales proceeds will only partially fund the investment required. For the remaining unlock locations significant surplus funds will be generated, such as in Hobsonville, Ormiston and Avondale.

32.     The net position for each location (sales versus spend on public realm) over 10 years commencing 1 July 2018, based on indicative figures being developed for the LTP, is illustrated in the table below. This excludes any proposed investment from other parts of the Council in these locations. Based on the current numbers there is a modest surplus overall across the programme.

 

Priority Location

HLPP approved by Auckland Council

 

Unlock

 

 

Avondale

Oct 2017

 

Henderson

May 2017

 

Hobsonville

Legacy approvals

 

Northcote

March 2016

 

Ormiston

Legacy approvals

 

Papatoetoe

July 2017

 

Takapuna

March 2016

 

 

Transform

 

 

Manukau

April 2016

 

Onehunga

March 2017

 

 

Positive net position

 

Negative net position

 

 

33.     For this reason it is proposed that the Transform and Unlock locations (with the exception of the waterfront) are viewed as a programme and that that the reinvestment of sales proceeds from within the programme is used to fund the programme of work. The “package” approach will ensure that resources are applied to approved priority projects and ensure that credible progress is being made across the whole programme consistent with the staging expressed in the approved High Level Project Plans. Depending on the funding available through reinvestment or through the LTP, it is likely that further prioritisation will need to be undertaken.

34.     The proposed reinvestment is to fund Panuku-led projects in Council-approved High Level Project Plans and does not include the projects delivered in those locations by other departments and CCOs.

35.     It is proposed that the reinvestment in capital projects will be subject to a business case approved by the Panuku Board, within its delegations, or to an appropriate committee.

 

 

 

36.     The rationale and benefits of this approach are as follows:

·        It will enable the early investment by Panuku in amenity and infrastructure improvements.  It will increase the value of council sites and the potential to catalyse private sector investment, as has been the case in the Wynyard Quarter. It will also build confidence of developers, investors and potential home owners.

·        This approach would provide Panuku with additional certainty and agility to work with partners and to make early progress. The sooner we get going, the sooner we can catalyse private sector activity.

·        It would enable flexibility to ensure that resources are applied to the most value-adding strategies across the programme, rather than distortions that may occur where reinvestment is considered only within a single location and where some locations would remain unfunded.

·        A consequential benefit of the reinvestment of proceeds is that it will help strengthen local community and stakeholder support for the necessary commercial dimensions to our work including development density.

·        The reinvestment of sale proceeds within the project area is a common approach for international development agencies. 

·        The overall value creation over time will justify the investment. Panuku is undertaking Total Value Analysis for the locations as part of programme business case development in order to be able to articulate the net community benefits created.

·        This proposal seeks an exception to the general approach whereby the proceeds from asset sales are non-tagged and used for general citywide capex. The scale and opportunity of the Unlock Projects justifies an alternative funding approach.

Timing issue and financing

37.     To address the timing difference between expenditure and property sales realisation, it is proposed that Panuku has access to a facility enabling it to incur expenditure (both operational and capital) while it facilitates the sale of properties.

38.     Overall the principal and interest relating to financing capital expenditure will be reimbursed from property sales proceeds, minimising the impact on ratepayers.

Implications for Panuku and for Auckland Council

 

39.     The key impact of not resolving the funding issues is delay in the achievement of outcomes identified for Unlock locations.

40.     This reinvestment approach is essential to achieve the sort of transformational outcomes the Council is seeking. While the redevelopment of the Unlock locations is not of the scale of Wynyard Quarter, they seek to catalyse significant private sector investment and facilitate the delivery of quality housing.   Around $120m has been available to drive the transformation of the waterfront and delivery of the Waterfront Plan 2012, delivering $800m or private investment ($230m completed and the remainder underway).

41.     Panuku disposals and development projects, across the Support locations, will also deliver positive community benefits including providing housing supply and choice, amenity improvements and in some cases public realm and infrastructure upgrades, increasing the attractiveness and vibrancy of those areas.  Importantly, these activities also provide the shareholder with regular contributions to the LTP asset sales targets.

 

42.     The intention of the former organization ACPL was to provide revenue to the shareholder from property sales. While there was an intention to also deliver good urban design, the key objective was revenue. While Panuku has picked up this revenue obligation there is a stronger set of strategic objectives in our mandate. The tension between the disposals target and the strategic redevelopment objectives has recently been discussed in a workshop of the Finance and Performance Committee. The Annual sales target is agreed as part of the Statement of Intent which in the current year is $100m.

43.     The Council’s general position is that the revenue from all property sales is untagged. The revenue is part of the consolidated budget and is used to help fund the LTP capex programme. This enables the delivery of priority projects across Auckland and delivers benefits over a wide area, based on overall priorities. 

44.     The proposal to fund the Unlock and Transform work programme from the reinvestment of the proceeds of property sales, at least to the extent possible, is an exception to this general approach, building on exceptions agreed for optimization of service assets and the redevelopment of the Housing for Older Persons portfolio. It seems an appropriate way to fund investment in the Council’s growth strategy.

45.     The funds earmarked for reinvestment would not be available to the consolidated budget for unrelated and alternative Council priorities. The proceeds of sale from the support development sites and the general disposals will continue to be attributed to the general council funding pool.

46.     Other options would be to continue to fund Council’s priority redevelopment programme delivered by Panuku through the LTP and current funding arrangements (listed in paragraph 24).

Consideration

Local board views and implications

47.     The Governing Body is responsible for funding policy and for decisions on transformation programmes. Panuku was invited to bring forward this discussion at this time.  Panuku has therefore not formally consulted on this report with Local Boards. 

48.     Since the principle of reinvestment was agreed for Transform locations, the question of the funding for Unlock Locations has been raised by a number of Local Boards. Some Local Boards in Unlock locations have discussed the concept of reinvestment of the proceeds property sales in the area. In particular the Whau Local Board and Otara–Papatoetoe Local Board have expressed support for the principle. 

49.     Whau Local Board has expressed support in Local Board workshops for the Governing Body to invest the proceeds from any sales within the Avondale metropolitan area back into the development of Avondale in line with the draft Unlock Avondale High Level project plan.

50.     In supporting the Henderson High Level Project Plan, the Henderson-Massey Local Board, resolved:

·        c v) Requests the Governing Body invest the proceeds from any sales within the Henderson metropolitan area back into the development of Henderson in line with the Unlock Henderson High Level project plan. (Resolution number HM/2017/26)

51.     Panuku is aware that there may be a range of views from other Local Boards which are not captured here. The Governing Body may wish to request Panuku to undertake engagement on this.

Māori impact statement

52.     The Unlock locations offer significant scope and opportunity to deliver positive cultural, social, environmental and economic outcomes for Māori. These activities are a catalyst for significant change, and promote exemplar initiatives that can be undertaken through this reinvestment.  

53.     Māori are identified as a significant potential commercial partner. The ability for Panuku to act with certainty and agility will help to catalyse Māori investment, as a commercial partner, where there is interest.

54.     Panuku is working closely with mana whenua in all Unlock locations based on a foundation charter and through development of cultural narratives. Mana whenua have, or are, currently involved in the preparation of High Level Project Plans for each location. The kaitiaki project group meets regularly and the Governance Forum six times per year.  This work includes identifying priority outcomes such as the application of Te Aranga Design Principles as a foundation for future activity. This work is expected to produce public good opportunities including cultural expression, environmental enhancement, place-making projects and other social outcomes that will benefit not only Māori but all Aucklanders.

55.     If reinvestment is not achieved, or alternative LTP funding for the approved High Level Project Plans, then outcomes agreed with mana whenua may not be achieved.

Implementation

56.     The Finance and Performance Committee will resolve the funding of Panuku programmes in the 2018-2028 LTP budget discussions.

Attachments

There are no attachments for this report.    

Signatories

Author

Brenna Waghorn - Manager Strategic Planning

Authorisers

David Rankin - Chief Operating Officer, Panuku

Sue Tindal - Group Chief Financial Officer

 


Finance and Performance Committee

19 September 2017

 

Approval of Group Policies

 

File No.: CP2017/18871

 

  

 

Purpose

1.       To approve group policies for insurance and procurement and note the progress on the group policies for treasury, sensitive expenditure and business cases.

Executive summary

2.       Council parent and the substantive CCO’s have developed group policies for insurance, procurement in line with the protocol for the development of group financial policies approved by the Governing Body on 27 April 2017.

3.       The insurance and procurement policies are attached for approval as Attachments A and B respectively.

4.       Council and the CCO’s are also working on group policies associated with treasury and business cases.

5.       Policies on sensitive expenditure (including travel hospitality and gifts) are being developed as part of new approach to corporate policies which will see policies being simplified and move to a principled base approach. These are expected to be completed by the end of calendar 2017.

 

Recommendation/s

That the Finance and Performance Committee:

a)      approve the group policies on insurance and procurement as outlined in Attachments A and B of the agenda report.

b)      note the progress on the development of policies on treasury, sensitive expenditure and business cases.

 

Comments

6.       The protocol for the development of group financial policies was approved by the Governing Body on 27 April 2017.

7.       Council and the CCO’s have worked collaboratively in line with the protocol to develop group policies on procurement, insurance and treasury.

8.       The policies included in Attachments A and B have been approved by each CCO (either by their Boards or management depending on the delegation applicable to each CCO). The policies have also been reviewed by the Mayoral Office.

9.       The group insurance policy together with the insurance strategic objectives and work plan will be presented to the Audit and Risk Committee on 14 September 2017 and then provided to the Finance and Performance Committee for approval in October 2017.  Application of the group insurance policy has been evidenced by the group renewal for the 2017/18 year.

10.     The group treasury policy is a requirement of the Local Government Act 2002. It has been approved by all the CCOs with the exception of Watercare in the form appended as Attachment C. We are working with the Mayoral office and Watercare to resolve outstanding issues as soon as possible.

11.     A group policy on business cases is also being developed.

12.     Policies on sensitive expenditure are being developed as part of a new approach to our enterprise-wide corporate policies such as health and safety, travel, gifts and hospitality, integrity, fraud and information security. The Council group is moving to a principle based approach to simplify existing policies and empower our staff to exercise their good judgement. The slides attached on Attachment D will provide an insight into the direction we are taking and what it could look like.

13.     It is intended to provide these to a future Finance and Performance Committee for approval no later than December 2017.

Consideration

Local board views and implications

14.     Local boards were not consulted on this report as this is a region-wide issue and not specific to a particular local board.

Māori impact statement

15.     The development of the Corporate policies has involved discussions with IMSB and Te Waka Angamua and Te Ao Maori is being incorporated into the design phase and implementation planning.

Implementation

16.     Implementation of the procurement and insurance group policies will be effective immediately following Finance and Performance Committee approval.

Attachments

No.

Title

Page

a

Group Procurement Policy

93

b

Group Insurance Policy

99

c

Group Treasury Policy

103

d

Approach to Group Corporate Policies

109

     

Signatories

Authors

John Bishop - Treasurer and General Manager Financial Transactions

Cecilia Tse - Head of Risk

Authoriser

Sue Tindal - Group Chief Financial Officer

 


Finance and Performance Committee

19 September 2017

 


 


 


 


 

 


Finance and Performance Committee

19 September 2017

 


 


 


 


Finance and Performance Committee

19 September 2017

 


 


 


 


 


Finance and Performance Committee

19 September 2017

 


 


 


Finance and Performance Committee

19 September 2017

 

Approval of Watercare Services Limited Statement of Intent 2017-2020

 

File No.: CP2017/18831

 

  

 

Purpose

1.       To approve Watercare Services Limited’s (Watercare) Statement of Intent for 2017-2020. 

Executive summary

2.       The Statement of Intent is the main document for recording what Auckland Council wants to achieve through its council-controlled organisations.

3.       Consideration of Watercare’s Statement of Intent 2017-2020 was deferred from the Finance and Performance Committee meeting on 15 August 2017.  This was to allow further discussions about the group treasury function and Watercare’s participation in it to occur. 

4.       These discussions are progressing well, and reflect the commitment in Watercare’s final Statement of Intent to participate in the design and implementation of group-wide policies.

5.       Watercare’s final Statement of Intent incorporates all the shareholder comments supplied to it by council in April 2017, and staff recommend agreement of its Statement of Intent. 

 

Recommendation/s

That the Finance and Performance Committee:

a)      agree the Watercare Services Limited Statement of Intent for 2017-2020.

 

 

Comments

6.       The Statement of Intent is the main document for recording what council wants to achieve through the activities of its council-controlled organisations for the next three years.  The requirements and process for Statements of Intent are prescribed in the Local Government Act 2002, Schedule 8. 

7.       Along with the other council-controlled organisations, Watercare supplied council with its draft Statement of Intent on 1 March 2017, reflecting the Letter of Expectation delivered to it in December 2016. Council considered its comments on this draft Statement of Intent on 27 April 2017 and advised Watercare of these comments. 

8.       On 30 June 2017 Watercare provided council with its final board-approved Statement of Intent, incorporating council’s comments (Attachment A).  A reconciliation of how Watercare has incorporated those comments is at Attachment B. 

9.       The Finance and Performance Committee agreed the majority of the council-controlled organisations’ statements of intent on 15 August 2017.  Approval of Watercare’s Statement of Intent was deferred until further discussions were held with Watercare’s board on 29 August 2017 about the centralised treasury function. 

10.     These discussions are progressing well, and reflect the commitment in Watercare’s Statement of Intent to participate in the design and implementation of group-wide policies (page 13).  Watercare’s commitment to working with the council group is reinforced by the inclusion of a new page since the March 2017 draft, which outlines the various ways in which it will work to achieve group-wide outcomes.  This includes specific reference to the western isthmus water quality improvement programme, Safe Swim, and development of a Three Waters Strategy, among other things. 

Consideration

Local board views and implications

11.     The governing body is responsible for providing shareholder comments on the draft Statements of Intent.  The Local Board Services department of council was consulted in the preparation of the shareholder comments, including those for Watercare.  The reconciliation exercise between final Statements of Intent and the shareholder comments ensured that issues relating to local boards were addressed as required in the shareholder comments. 

Māori impact statement

12.     The secretariat of the Independent ori Statutory Board was supplied with copies of the final Statements of Intent (including that of Watercare) and has confirmed that issues raised in the shareholder comments have been addressed as required. 

Implementation

13.     No significant implementation issues are envisaged. 

 

Attachments

No.

Title

Page

a

Final Watercare Statement of Intent 2017-2020

115

b

Reconciliation of Watercare's final Statement of Intent with shareholder comments

137

     

Signatories

Author

Edward Siddle - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Sue Tindal - Group Chief Financial Officer

 


Finance and Performance Committee

19 September 2017

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


Finance and Performance Committee

19 September 2017

 


 


Finance and Performance Committee

19 September 2017

 

Budget update September 2017

 

File No.: CP2017/19435

 

  

 

Purpose

1.       To approve budget changes relating to the Gasometer public car park in Takapuna and Panuku’s Transform programmes in Manukau and Onehunga.

Executive summary

Gasometer public car park

2.       In March 2016, the Auckland Development Committee (ADC) endorsed the High Level Project Plan (HLPP) for Unlock Takapuna, giving Panuku the mandate to sell specified properties to achieve the outcomes in the plan (Attachment A). The approved disposal is conditional on Auckland Transport being satisfied that the transport needs of Takapuna can still be met as a precondition of the development of the sites. 

3.       The Panuku board approved a business case for the construction of the Gasometer car park, which will provide approximately 450 car park spaces in the Takapuna town centre as required by Auckland Transport. The total cost is estimated to be $25.3 million.

4.       In July, the Devonport-Takapuna Local Board recommended this committee release approximately $4.3 million in the Takapuna off-street car park reserve fund for the delivery of the Gasometer car park (Attachment B). The proposed use of the reserve is consistent with the purpose of the reserve.

5.       Staff recommend that the remaining funding be sourced from the Strategic Development Fund (SDF) administered by Panuku.

Release of initial funding for Panuku’s Transform programme

6.       Panuku is requesting the council release a further $6.1 million in 2017/2018 from Transform Manukau programme budget to commence the implementation of its initial programme of actions in two Transform locations, Manukau and Onehunga.

7.       Panuku is still committed to delivering a business case to access the full $20.0 million budget that the council set aside before substantial asset sale proceeds are realised. An interim programme business case is being finalised by the Panuku board subject to the availability of funding. Panuku is requesting the release of $6.1 million to maintain the momentum of the programme.

8.       This funding would enable the property sales work to proceed in both locations, as well as to fund initial design work and a capital works project (Putney Way) in Manukau, as it is prudent to complete the works in advance of the new bus station opening in May 2018.

9.       Panuku has advised that the alternative is to either stop the property sale activity or undertake limited property sales without public realm investment, until the full programme business case is approved or additional funding is sought through the Long-term Plan 2018-2018.


 

 

Recommendation/s

That the Finance and Performance Committee:

a)      agree to release and allocate the Takapuna off-street car park reserve fund of $4,269,611 to the Gasometer public car park project.

b)      agree that the remaining funding for the Gasometer public car park project be sourced from the Strategic Development Fund (SDF), which will be replenished by asset sale proceeds, including properties approved for disposal in the Unlock Takapuna High Level Project Plan.

c)      agree to release $6.1 million from existing Transform Manukau programme budget for:

i)        Transform Manukau ($2.6 million capital expenditure and $2.0 million operational expenditure)

ii)       Transform Onehunga ($1.5 million operational expenditure).

 

Comments

Gasometer public car park

Background

10.     Takapuna was selected as an Unlock location due to long-standing intentions to redevelop key council-owned sites in the heart of Takapuna. 

11.     In March 2016, the Auckland Development Committee (ADC) endorsed the High Level Project Plan (HLPP) for Takapuna. ADC gave Panuku the mandate to dispose a number of sites including the Anzac Street and Gasometer car park sites and the properties on Hurstmere Road to achieve the outcomes in the plan (Attachment A).

12.     The sites that form the Unlock Takapuna project are currently surface carpark spaces managed by Auckland Transport. ADC’s approval of Panuku’s ability to sell and develop these sites is on the condition that 400 off-street carpark spaces are provided for the spaces lost together with the ability to provide a further 350-500 car spaces over the next 30 years.

13.     The recommended option to meet Auckland Transport’s car park requirements is to construct a standalone car park building on part of the Gasometer site that provides approximately 450 car park spaces. This will be future-proofed to enable at least 150 additional car parks to be built if required. The balance of the future-proof requirement of 200 car parks can be built over two additional floors on top of the current Killarney Street car park.

Funding

14.     The estimated cost to deliver the Gasometer car park project is $25.3 million. The Devonport -Takapuna Local Board recommended the Takapuna off-street car park reserve fund of $4,269,611 be used towards the construction of the Gasometer Public Carpark (Attachment B).

15.     The Takapuna off-street car park reserve fund was collected by the former Norther Shore City Council for the provision of off-street parking in Takapuna, and was inherited by Auckland Council at the time of amalgamation. The use of this fund is restricted for parking facilities in the Takapuna commercial centre. The council’s Legal Services department has confirmed that the Takapuna off-street car park reserve fund can be used for the construction of the Gasometer public car park building.

16.     The remaining project cost for the construction is proposed to be sourced by Panuku through the Strategic Development Fund (SDF). No new funding is recommended for this project. 

 

Release of initial funding for Panuku’s Transform programme

17.     Panuku is requesting the council to release $6.1 million in 2017/2018 from Transform Manukau programme budget to commence the implementation of its initial programme of actions in two Transform locations, Manukau and Onehunga. This request is in addition to the release of $1.3 million approved for Putney Way streetscape in Manukau in December 2016.

Background

18.     The funding model for Transform areas relies on capital receipts from property sales to invest in public place-making projects. Regarding Transform Manukau, the council approved a High Level Project Plan and Framework Plan. It set aside $20.0 million capex budget for the programme to commence and continue before substantial asset sale proceeds are realised. This $20.0 million is ultimately funded by the asset sale proceeds, the drawdown of which is subject to a business case (was due in April 2017). An interim Programme Business case is being finalised by the Panuku Board subject to the availability of funding to enable it to proceed.

19.     There are high expectations from the community and stakeholders for Transform Manukau. Action to achieve property sales in Manukau is progressing with a tender process underway for Barrowcliffe Place land. Negotiations are being initiated in respect of a significant property interest approved for sale. Panuku is confident of receiving significant capital receipts in 2018/2019.

Funding

20.     In the meantime, Panuku is seeking the release of further funding ($2.6 million capex and $2.0 million opex) in 2017/2018 to maintain the momentum of Transform Manukau. The general allocation of project funding to Panuku for its area-based work is fully committed elsewhere in its agreed programme of activity. Panuku recognises the business case requirement for the release and is committed to providing a business case to the satisfaction of the council.

21.     The funding for Transform Manukau will enable the previously approved Putney Way footpath and carriageway works to be completed, commencement of design work for the Puhinui Stream pathway in conjunction with the District Health Board, concept design work for the first tranche of public realm projects, sales activity for commercial sites, negotiations with Scentre Group, place-making activities and legal action to remove restrictive covenants that currently prohibit retail activity in areas adjacent to the Westfield Shopping Centre.

22.     Similarly in Onehunga, interim funding is required to support actions related to preparing properties for sale, place-making, completing the Framework Plan. Panuku is requesting $1.5 million opex (converted from the capex budget) for that.

23.     Details of the expenditure requirements are as follows.

Transform area

Activity

FY18

Manukau

Public Realm CAPEX new

$2.6m

 

Opex (converted from capex)*

$2.0m

 

 

 

Onehunga

Opex (converted from capex)*

$1.5m

 

Total

$6.1m

 

Note: capex to opex conversion has no impact on debt or rates as the budget is funded by asset sale proceeds.

24.     Panuku is developing a programme business case that will reflect the planned market testing and the current property sales programme. This will be considered as part of the LTP 2018-2028.

Consideration

Local board views and implications

Gasometer public car park

25.     The allocation of the Takapuna off-street car park reserve fund towards the construction of the Gasometer Public Carpark was recommended by the Devonport-Takapuna Local Board (Attachment B).

Release of initial funding for Panuku’s Transform programme

26.     Panuku is working closely with the Ōtara-Papatoetoe and Manurewa Local Boards, and provides monthly briefings on the progress of Transform Manukau. The funding requested allows a previously agreed Putney Way project to proceed to construction. The balance of the funds allows concept design work to proceed. The relevant local board will be fully engaged on ongoing design work.

Māori impact statement

Gasometer public car park

27.     There is an opportunity to work with mana whenua on the design of the Gasometer public car park building. Engagement with mana whenua on this is planned for the design phase of the car park delivery programme.

Release of initial funding for Panuku’s Transform programme

28.     Panuku is working closely with iwi in Manukau and has a number of Memorandums of Understanding in respect of the project work. Currently iwi are involved in the tender process for 20 Barrowcliffe Place. There is a strong commitment in Panuku to involving iwi in design development associated with public realm works.

Implementation

29.     Budgets would be amended in core financial systems and used for internal management reporting, regular reporting to councillors and financial control for the 2017/2018 financial year.

 

Attachments

No.

Title

Page

a

Extract of Auckland Development Committee OPEN MINUTES 10 March 2016

143

b

Extract of Devonport-Takapuna Local Board OPEN MINUTES 18 July 2017

145

     

Signatories

Authors

Tracy  Xu - Financial Analyst

Neil Huang - Principal Advisor

Authorisers

Matthew Walker - GM Financial Strategy and Planning

Sue Tindal - Group Chief Financial Officer

 


Finance and Performance Committee

19 September 2017

 


 


Finance and Performance Committee

19 September 2017

 


 


Finance and Performance Committee

19 September 2017

 

Finance and Performance Committee - Information Report - 19 September 2017

 

File No.: CP2017/18977

 

  

 

Purpose

1.       To receive a summary and provide a public record of memos or briefing papers for the Committee’s information and any other information that may have been distributed to committee members since 20 June 2017.

Executive summary

2.       This is a regular information-only report which aims to provide greater visibility of information circulated to committee members via memo or other means, where no decisions are required.

3.       The following information only report is attached:

·   Finance and Performance Committee Forward Work Programme to 30 June 2018 (Attachment A)

4.       The following presentations/memos/reports were presented/circulated as follows:

·    22 August 2017 – Long-term Plan 2018-2028 workshop minutes (Attachment B)

·    22 August 2017 – Mayoral Intent for the 10-year Budget (Long-term Plan) 2018-2018 (Attachment C)

·    Sixth Quarterly Report on Non-Rateable Property Rating Treatment (Attachment D)

·    7 September 2017 – Long-term Plan 2018-2028 workshop minutes (Attachment E)

·    Auckland Transport Wharf Network access fees and recovery note (Attachment F)

·    Attachment 5 to Auckland Transport Wharf Network access fees and recovery note (Confidential – no attachment)

5.       The workshop papers and any previous documents can be found on the Auckland Council website at the following link: http://infocouncil.aucklandcouncil.govt.nz/

·    at the top of the page, select meeting “Finance and Performance Committee” from the drop-down tab and click ‘View’;

·    under ‘Attachments’, select either HTML or PDF version of the document entitled ‘Extra Attachments’.

6.       Note that, unlike an agenda decision report, staff will not be present to answer questions about these items referred to in this summary. Committee members should direct any questions to the authors.

 

Recommendation/s

That the Finance and Performance Committee:

a)      receive the information report – 19 September 2017.

 

 


 

 

Attachments

No.

Title

Page

a

Finance and Performance Committee Forward Work Programme to 30 June 2018

149

b

Long-term Plan 2018-2028 workshop minutes - 22 August 2017 (Under Separate Cover)

 

c

Mayoral Intent for the 10-year Budget (Long-term Plan) 2018-2028 (Under Separate Cover)

 

d

Sixth Quarterly Report on Non-Rateable Property Rating Treatment (Under Separate Cover)

 

e

Long-term Plan 2018-2028 workshop minutes - 7 September 2017 (Under Separate Cover)

 

f

Auckland Transport Wharf Network access fees and recovery note (Under Separate Cover)

 

     

Signatories

Autho

Mike Giddey - Senior Governance Advisor

Authoriser

Sue Tindal - Group Chief Financial Officer

 


Finance and Performance Committee

19 September 2017

 


Finance and Performance Committee

19 September 2017

 


Finance and Performance Committee

19 September 2017

 


Finance and Performance Committee

19 September 2017

 


Finance and Performance Committee

19 September 2017

 

    

    



[1] There is no actual budget for value compression in the LTP, however the disposal $ values approved in the SOI are viewed as net of any value compression realised in the period.