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:

Tuesday, 24 October 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

17 October 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 from Cr D Newman and Mayor P Goff 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 Thursday, 21 September 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.

6.1 Local Board Input - Orakei Local Board - proposed disposal of 10 Felton Mathew Avenue, St Johns

Purpose

1. To endorse the proposed disposal of 10 Felton Mathew Avenue, St Johns which is included in the Disposals Recommendation report.

Executive summary

2. Colin Davis, Orakei Local Board Chairman has asked to attend to attend the meeting to speak in support of Panuku Development Auckland’s recommendation to dispose of 10 Felton Mathew Avenue, St Johns.

Recommendation/s

That the Finance and Performance Committee:

a) receive the presentation from Colin Davis, Orakei Local Board Chairman and thank him for his attendance.

6.2 Local Board Input - Hibiscus and Bays Local Board - proposed disposal of 19 Anzac Road, Browns Bay

Purpose

1. To speak to the proposed disposal of 19 Anzac Road, Browns Bay which is included in the Disposals Recommendation report.

Executive summary

2. Julia Parfitt, Hibiscus and Bays Local Board Chairperson has asked to attend the meeting to speak to Panuku Development Auckland’s recommendation to dispose of 19 Anzac Road, Browns Bay.

Recommendation/s

That the Finance and Performance Committee:

a) receive the presentation from Julia Parfitt, Hibiscus and Bays Local Board Chairperson and thank her for her attendance.

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

24 October 2017

Disposals recommendation report

File No.: CP2017/05847

Purpose

1. To obtain approval to dispose of four council-owned properties that Panuku Development Auckland (Panuku) considers suitable for sale.

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. In accordance with the Local Government Act 2002, the annual Statement of Intent (SOI) states the activities and intentions of Panuku Development Auckland (Panuku), the objectives that those activities will contribute to and performance measures and targets as the basis of organisational accountability. For the 2017/2018 financial year Panuku is required to identify properties from within council’s portfolio that may be suitable for potential sale to a combined value of $60 million and to sell $100 million of property by 30 June 2018.

4. This report re-presents 19 Anzac Road, Browns Bay. This site was previously presented to the Finance and Performance Committee in April 2017. The Hibiscus and Bays Local Board requested the retention of this site on the basis that it is required for current car parking purposes and future town centre growth. The Committee deferred a decision so that an Auckland Transport (AT) parking survey for Browns Bay could be undertaken and reported back.

5. That work has now been completed. The parking survey results indicate the Browns Bay town centre has parking capacity available and confirms AT’s position that 19 Anzac Road, Browns Bay is not required for current or future service needs and has no strategic purpose to retain. AT discussed the results of the study with the Hibiscus and Bays Local Board in May 2017 and reported to the board’s September 2017 meeting. The Browns Bay Town Centre Parking Review Report is included in the property attachments to this report. As no alternative service uses have been identified for this site, Panuku recommends it be divested.

6. The second property presented in this report, 28 Lockwood Road, Papakura is a residential property that is the residue from land originally acquired for a works depot, parks staff residence and bulk-water supply. Council’s Regional Parks team have reviewed the property and consider it is no longer required for open space purposes or as a regional park asset. Consultation with council departments and its CCOs, iwi authorities and the Franklin Local Board about the subject site has been undertaken. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal, as such Panuku recommends it be divested.

7. The third property property in this report, 10 Felton Mathew Avenue, St John is vacant land that was 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 departments and its CCOs, iwi authorities and the Orakei Local Board about the subject site has been undertaken. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal, as such Panuku recommends it be divested.

8. The fourth property presented in this report, Part Allotment 13 Bombay Road, Bombay has been identified as potentially surplus to council requirements. The subject site is a reserve subject to the Reserves Act 1977. Consultation with council departments and its CCOs, iwi authorities and the Franklin Local Board about the subject site has been undertaken. No alternative service uses were identified through the rationalisation process and the feedback received was supportive of the proposed disposal. Due to this, Panuku recommends that the reserve status be revoked and that it be divested. 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.

Recommendation/s

That the Finance and Performance Committee:

a) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at 19 Anzac Road, Browns Bay, comprised of an estate in fee simple more or less being Section 1 SO 489800 contained in computer freehold register CT 714533;

b) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of the land at 28 Lockwood Road, Papakura, comprised of an estate in fee simple more or less being Lot 1 DP 198461 Block II Opaheke, Papakura contained in computer freehold register NA127B/725;

c) approve, subject to the satisfactory conclusion of any required statutory processes: the disposal of the land at 10 Felton Mathew Avenue, St Johns, comprised of an estate in fee simple more or less being Lot 7 DP 51549 contained in computer freehold register NA49C/30;

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

i) the revocation of the reserve status of the land at Bombay Road, Bombay, comprised of an estate in fee simple more or less being Part Allotment 13 Mangatawhiri Parish-Local Purpose Reserve contained in computer freehold register CT-1608/42;

ii) the disposal of the land at Bombay Road, Bombay, comprised of an estate in fee simple more or less being Part Allotment 13 Mangatawhiri Parish-Local Purpose Reserve contained in computer freehold register CT-1608/42;

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

Comments

9. 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.

10. 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

11. Local boards are informed of the commencement of the rationalisation process for specific properties. Following the close of the EOI period, relevant local boards are engaged with. Panuku 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.

12. 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.

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

Māori impact statement

14. 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.

15. 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.

16. 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.

17. 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.

18. 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.

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

Implementation

20. 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.

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

Attachments

No.	Title	Page
a ⇩	19 Anzac Road, Browns Bay property information	17
b ⇩	Browns Bay parking review report	23
c ⇩	28 Lockwood Road, Papakura property information	49
d ⇩	10 Felton Mathew Avenue, St Johns property information	53
e ⇩	Part Allotment 13 Bombay Road, Bombay property information	57

Signatories

Author

Anthony Lewis - Senior Advisor Portfolio Review, Panuku Development Auckland

Authorisers

Letitia Edwards - Team Leader Portfolio Review, Panuku Development Auckland

David Rankin – Chief Operating Officer, Panuku Development Auckland

Kevin Ramsay – Acting Group Chief Financial Officer

Finance and Performance Committee

24 October 2017

Built Heritage Acquisition Fund - Vos Building and Yard

File No.: CP2017/15817

Purpose

1. To transfer $2.3 million from the Built Heritage Acquisition fund to Panuku Development Auckland to enable the redevelopment of the Vos building and yard.

Executive summary

2. The Vos building and yard, located at 38 Hamer Street at Wynyard Quarter, is believed to be the last remaining wooden boat building facility in Auckland. Previous Council decisions have resulted in the building and yard being in Council (Panuku) ownership.

3. In 2015 the Finance and Performance Committee resolved to commit $2.3 million from the Built Heritage Acquisition Fund towards the restoration and redevelopment of the building and yard, subject to the balance of $2.4 million being raised by Panuku.

4. The original intention was for the balance of the funds to be raised through the establishment of a private trust. Circumstances have now changed. It has been difficult to establish the trust, private contributions have not been as forthcoming as expected and the cost has escalated. At the same time the building is slowly deteriorating.

5. As a result Panuku has redesigned the project to focus simply on the restoration of the building. Panuku has also confirmed that the balance of $2.4 million is now available from within their budget and hence the first stage of the project is not dependent on external funding.

6. The Committee could request Panuku to continue to explore opportunities to gain private sector funding although this could take time and result in further deterioration of the building.

7. It is recommended that the Committee transfer the Council’s contribution of $2.3 million to enable the restoration of the Vos building and yard to commence. Further it is recommended that Panuku continue to seek commercial and private sector funding for subsequent stages of the redevelopment.

Recommendation/s

That the Finance and Performance Committee:

a) transfer $2.3 million from the Built Heritage Acquisition Fund to Panuku Development Auckland to enable the restoration, including the removal of contamination, of the Vos building and yard at Lot 3, 38 Hamer Street, Wynyard Quarter.

b) request Panuku Development to continue to explore commercial and private sector funding for Stages 2 and 3 of the redevelopment, including restoration of the slipway.

Comments

8. In July 2015 the Finance and Performance Committee considered a report requesting funding for the redevelopment of the Vos building and yard, located at 38 Hamer Street, Wynyard Quarter on Lot 3 (1115m²) with 2043m² of water space. The buildings and associated features have significant heritage value as the last remaining wooden boat building facility in Auckland, associated with a notable boat builder, Percy Vos. The interior of the 1937 gabled shed remains, with its original roof structure, stairs and original office and rails.

9. Through the 2012/2013 Long-term Plan, Waterfront Auckland obtained funding from Council of $1million to acquire the site from Sanfords who, at the time, had consent to demolish and plans to redevelop.

10. At the July 2015 Finance and Performance Committee meeting Waterfront Auckland presented a possible redevelopment scenario and funding model that supported the building and yard’s restoration and maintenance. The estimated cost was $4.7 million. In response, the Finance and Performance Committee resolved to support a contribution of $2.3 million from the Built Heritage Acquisition Fund (Resolution number FIN/2015/57).

11. The key requirement in the committee resolution to unlock the Built Heritage Acquisition Fund funding was for Panuku to advise the committee prior to December 2017 that it had raised the balance of $2.4 million.

12. At the time the council agreed to fund $2.3 million it was envisaged that the balance would be raised through private funding sources. It was proposed that a private trust be established which would seek philanthropic donations to secure the balance of the funding.

13. Panuku have advised that the private trust proposal is now not able to raise the funds by December 2017. Due to the ongoing deterioration of the building, the Panuku Board has committed the necessary funds from within its own budget to satisfy the committee resolution.

14. The Panuku Board resolved on 26 July 2017 (Resolution number 10-07/17) to proceed to Stage 1 of the Vos building and yard restoration and approved the reallocation from the Commercial Asset Renewal Budget FY 17/18 to fund up to $1,450,000 for restoration works; and the reallocation from the Capital Expenditure Budget FY 17/18 to fund up to $850,000 for contamination remediation associated with the restoration works.

15. The result of this development is that the Council family would fund the first stage of the restoration in its entirety. Given the changed circumstances the Council has the opportunity to reconsider its original $2.3 million contribution.

Options

16. Option 1 is to advise Panuku that it prefers the balance of $2.4 million to be raised by external funding as per the original understanding. In order for this to be realistic an extension of the December 2017 timeframe would be required.

17. This option has the advantage of minimizing the cost to council although there would be some expectations from external funders which are as yet unknown. There is no guarantee that external funding will become available and the additional time required to raise the funds could lead to greater costs due to the further deterioration of the building and the pressure of further cost escalation.

18. Option 2 is to proceed with the $2.3 million contribution as per the original committee resolution and accept that the balance is funded from Panuku. This is the recommended option.

19. It is noted that the allocation from Panuku’s Commercial Asset Renewal Budget FY 17/18 to fund up to $1,450,000 for restoration works was enabled due to a budget saving on the delivery of Madden and Pakenham Construction which was completed in September 2017. This means that there is limited impact on the ability of the Renewal Budget to fund other budgeted projects.

20. The third option is not to proceed with the $2.3 million contribution in light of the changed circumstances. This is not recommended as this is a council owned asset that is scheduled for its heritage values. Not restoring the building and letting it deteriorate simply delays the time when restoration needs to occur and will likely incur greater costs as time goes by.

21. Option 2 is the preferred option as the funding is available and it results in the immediate restoration of a Council owned heritage asset. The building in its current state is a liability. Due to health and safety concerns the building is not tenanted and hence there is no income. Due to the buildings frail state there is concern that it may collapse. Should funding be approved then work can commence immediately with an expected completion date of mid 2018. Once restored an annual return of approximately $127,000 could be achieved. At the moment the building is incurring little in the way of holdings costs.

Update on overall project

22. Panuku has also undertaken further work to refine the proposed redevelopment. In conjunction with Mathews and Mathews Heritage Architects the original scope, staging and key objectives have been revisited. The result of this review increased the costs of the original design from $4.7 million to $8 million. Two reasons for the cost escalation are the general increase in construction costs and the discovery of asbestos on site. As a result the review has proposed a simplified staged scheme costed at $6.4 million designed to deliver in Stage 1 a fully restored and refurbished boatshed structure and associated office, and in Stage 2, a workshop with an operating slipway.

23. Stage 1 costing $4.6 million, will result in the complete restoration of the building bringing it up to current code and remediate contamination. This will ensure the retention of the building and create a usable commercial and publicly accessible space. Stage 2 costing $1.8 million, will result in a restored certified fully functional slipway enabling the restoration of wooden heritage boats with a commercial return.

24. The priority is to deliver Stage 1 resulting in the protection of the heritage building. This is what the Council’s $2.3 million contribution would go towards. When Panuku is in a position to proceed to Stage 2, private funders would be re-engaged with plans for the facility to become a functional working wooden boat shed with some commercial uses to help with costs.

25. Stage 3 provides for potential food and beverage opportunities. Stages 1 and 2 will be future-proofed to allow flexibility to adapt to the future use of the building. Future-proofing the scheme will also enable the opportunity to achieve a commercial return for Panuku based on land and water space value. It is proposed that this stage would be progressed without the need for further funding from the Panuku.

26. The revised concept addresses the objectives for the original 2012/13 purchase, in that it enables restoration of the Vos building and yard. It will also activate the site and assist in developing the facility as a social hub for the public, visitors and the marine community.

Consideration

Local board views and implications

27. The Waitemata Local Board resolved at its 9 July 2013 meeting to strongly support, in principle, the restoration of Vos building and yard through the Built Heritage Acquisition Fund.

Māori impact statement

28. One of the names associated with Auckland is Tāmaki Herenga Waka, meaning “the resting place of many waka” or “where canoes may be tethered safely”.

29. In the 2015 restoration plan, a number of opportunities to provide positive outcomes for Māori were identified, including the establishment of a formal relationship with Māori with regard to carving apprenticeships and waka build/restoration projects. Given the staged nature of the reviewed proposal, these opportunities will need to be considered once Stage 2 is underway.

30. The proposal presents no conflict with, and is therefore potentially beneficial to Māori.

Implementation

31. Panuku has engaged a suitably qualified heritage expert to guide the redevelopment proposal, and the Council’s Heritage unit will be involved in processing any necessary resource consent applications.

32. As a result of the Committee’s 2015 resolution, a budget of $2.3 million has been carried forward into the 17/18 financial year in anticipation of the Committee’s previous requirement being met.

Attachments

There are no attachments for this report.

Signatories

Authors

Noel Reardon - Manager Heritage

Katelyn Orton – Project Development Director Waterfront, Panuku Development Auckland

Authorisers

David Rankin - Chief Operating Officer, Panuku Development Auckland

John Duguid - General Manager - Plans and Places

Jim Quinn - Chief of Strategy

Kevin Ramsay – Acting Group Chief Financial Officer

Finance and Performance Committee

24 October 2017

Budget update October 2017

File No.: CP2017/20689

Purpose

1. To approve budget changes relating to:

· the agreed purchase of additional trains for Metro Rail,

· the approved relocation cost for a second elephant, and

· the release of Franklin parking reserve fund.

2. To note the Governing Body’s approval of an additional operational budget to conduct two by-elections and approve an additional operational budget for a third by-election.

Executive summary

Change to the purchase of additional trains for Metro Rail

3. In July, this committee approved in principle the procurement of 17 three-car Independently Powered Electric Multiple Units (IPEMUs) at $207 million to meet forecast patronage growth from 2019, subject to equal share of the cost by the NZ Transport Agency (NZTA). The resolutions are in Attachment A.

4. A key consideration for the IPEMUs over the standard Electric Multiple Units (EMUs) as the base case option was the ability to operate IPEMUs in the un-electrified network between Pukekohe and Papakura, based on the assumed date of electrification to Pukekohe of 2027/2028.

5. Subsequent to the council’s decision and just prior to the intended confirmation to proceed by the NZTA board, the government announced its intended funding of electrification from Papakura to Pukekohe. The NZTA board therefore considered that it could not approve the 17 IPEMUs purchase if early electrification would provide a similar service level with the lower cost EMUs.

6. Consequently, it only approved the base case of 15 EMUs (Attachment B), for the network requirements with recognition the matter may be readdressed when there was more clarity on electrification timing and its impact on the business case. This is anticipated to occur before 15 December 2017

7. The EMU option required less capital at $133 million. NZTA agreed to fund 51 per cent of the total cost, a share of $67.8 million, and the remaining $ 65.2 million is required from Auckland Council.

8. AT is seeking the approval from this committee to progress with the base case option of purchasing 15 EMUs in the interim to ensure an order can be placed with CAF (supplier of the current EMUs) in order to ensure the delivery of the rolling stock in 2019. CAF has agreed to a variation by 15 December with no impact on delivery time.

Funding for elephant relocation

9. In September, Regional Facilities Auckland’s (RFA) request for an operational expenditure (opex) budget update for transporting the second elephant was not resolved by this committee as more information was required.

10. As part of the 2011/2012 Annual Plan process, the council approved $3.2 million budget for transporting two elephants gifted by the Sri Lankan government. The original proposal is in Attachment C. The approved budget was to cover the transport and quarantine costs of two elephants.

11. The first elephant, Anjalee arrived at the Auckland Zoo in 2015 at a cost of $1.6 million. The remaining budget of $1.6 million should have been available for delivering the second elephant. However, only $1.1 million is in the 2017/2018 budget.

12. A correction of $549,000 needs to be made to RFA’s opex budget, as this was an omission through the Annual Plan 2017/2018 process and should have been submitted as part of the adopted group budgets.

Upgrade of the Kitchener Road car park in Waiuku

13. In September, the Franklin Local Board considered upgrading the surface of the Kitchener Road car park in Waiuku to encourage and improve use by the public and relieve on-street parking demands.

14. The Kitchener Road car park in Waiuku is in a poor state. The required work includes upgrading of the surface to remove potholes, laying asphalt and marking lines for parking spaces. The estimated cost is $123,351.

15. The local board has no other budget available but has identified the Franklin Parking Reserve Fund held by the council as a funding source. The fund has a balance of $128,214 as at 11 October. The fund was collected from the legacy Franklin District and must be used for the provision of off-street parking in the same area. The proposed use of the reserve is consistent with the purpose of the reserve.

16. The local board is advocating to this committee for the Franklin Parking Reserve Fund to be released for upgrading the car park surface at Kitchener Road, Waiuku (attachment D). Staff recommend the full amount of $128,214 in the reserve be released to cover the cost of upgrade and any contingency.

By-elections

17. On 28 September, the Governing Body approved an additional opex budget of $228,000 in 2017/2018 to conduct two by-elections subject to resignation and final vote count, following the New Zealand general election on 23 September. The resolution is in Attachment E and will be implemented now that resignations have been received.

18. Further to the above approval, a third by-election is required following the resignation of Waitematā Local Board member Mark Davey. The resignation is un-related to the general election. The estimated cost is $115,400.

Recommendation/s

That the Finance and Performance Committee:

a) rescind its decisions (resolution number FIN/2017/98) on the procurement of 17 three-car Independently Powered Electric Multiple Units (IPEMUs).

b) approve the procurement of 15 three-car Electric Multiple Units (EMUs) at a cost of $133 million, conditional on the timing of NZ Transport Agency funding aligning to the cash flow requirement of the procurement and operation.

c) note the procurement contract will include an option to upgrade the order to 17 three-car IPEMUs pending further funding approval and future decisions on electrification of the North Island Main Trunk from Papakura to Pukekohe.

d) approve the correction of $549,000 to Regional Facilities Auckland’s operational expenditure budget in 2017/2018.

e) approve releasing $128,214 of the Franklin Parking Reserve Fund to enable the Franklin Local Board to upgrade the car park at Kitchener Road, Waiuku.

f) note the Governing Body’s in-principle approval of an additional operational expenditure budget of $228,000 in 2017/2018 to conduct two by-elections, as a result of the New Zealand general election 2017.

g) note that this budget is needed now that resignations have been received.

h) approve an additional operational budget of $115,400 to conduct a by-election for the Waitematā Local Board.

Comments

Change to the purchase of additional trains for Metro Rail

Background

19. In July 2017, this committee approved in principle the procurement of 17 three-car Independently Powered Electric Multiple Units (IPEMUs) at $207 million to meet forecast patronage growth from 2019, subject to co-funding of the NZ Transport Agency (NZTA).

20. The following two options were shortlisted by Auckland Transport (AT) in the business case and discussed in the paper at that time:

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

· Option B: purchase 17 three-car IPEMUs at $207 million

21. It was assumed in the business case that electrification to Pukekohe would occur at the end of the first decade of the Auckland Transport Alignment Project (ATAP). Although the EMU option required less capital and provided a similar level of monetised economic benefits, it does not provide an opportunity to serve the southern growth areas or the ability to operate in an un-electrified network. 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 in the un-electrified network.

22. Taking into account other technical and environmental factors, the IPEMU option was recommended by AT board and approved by this committee.

NZTA’s decision

23. Subsequent to the council’s decision and just prior to the intended confirmation to proceed by the NZTA board, the government announced its intended funding of electrification from Papakura to Pukekohe. The NZTA board therefore considered that it could not approve the 17 IPEMUs purchase if early electrification would provide a similar service level with the lower cost EMUs.

24. Consequently, it only approved the base case of 15 EMUs, for the network requirements with recognition the matter may be readdressed when there was more clarity on electrification timing and its impact on the business case. This is anticipated to occur before 15 December 2017.

25. The contract will therefore have to include the flexibility to upgrade if necessary pending further approval by the council and NZTA respectively. CAF has agreed to a variation by 15 December with no impact on delivery time.

Financial impacts

26. The total cost of $133 million for purchasing additional EMUs would mean a reduction from the $207 million previously approved for 17 IPEMUs.

27. AT assumed a 10 per cent deposit or $13.3 million would be required in 2017/2018, to which NZTA is committed to contributing 51 per cent or $6.8 million. The remaining $6.5 million will be covered by AT’s existing budget for 2017/2018 and accommodated within known delays to some capital projects including AMETI and Flatbush development. Therefore, no additional funding is sought from the council at this time.

28. NZTA will fund 51 per cent of the remaining $120 million over the next few years and this provision will be made in the forthcoming Regional Land Transport Programme. The council’s share ($58.8 million) will need to be included as a committed project in the Long Term Plan 2018-2028, a reduction from the capital budget for the IPEMU option.

29. A portion of the ongoing operational cost will also be met by NZTA. It funds 50 per cent of the cost of all public transport operations subject to not exceeding the overall cap for its Public Transport Activity Class.

Funding for elephant relocation

30. The original investment proposal (Attachment C) for shipping two elephants for Auckland Zoo at an estimated cost of $3.2 million was approved by the RFA board and then the council, as part of the 2011/2012 Annual Plan. The approved funding was to cover associated transport and quarantine costs of two elephants gifted by the Sri Lankan government.

31. Due to uncertainty in the timing of delivery, the budget was ring-fenced and deferred from year to year to allow the relocation to take place. The first elephant, Anjalee arrived in 2015 at a cost of $1.6 million, leaving a balance of $1.6 million for relocating a second elephant.

32. The second elephant has subsequently been identified for transfer. The dates of this remain uncertain, but the Auckland Zoo expects this work will commence in the current financial year.

33. The intended spend of $1.6 million is broken down below.

Category	Amount ($m)
Staff	0.07
Quarantine (Sri Lanka)	0.10
Transport costs	1.10
Quarantine (NZ)	0.25
Insurance	0.08
Total budget for FY18	$1.60

34. During the 2017/2018 Annual Plan process, RFA included $1.1 million for the relocation of the second elephant, which should have been $1.6 million. The omission of $549,000 was due to an oversight.

35. RFA has a commitment to relocate the second elephant as per the agreement signed with Sri Lanka and Niue governments. Therefore, staff recommend that $549,000 of correction be made to RFA’s opex budget in 2017/2018 for this commitment.

Upgrade of the Kitchener Road car park in Waiuku

36. At the Franklin Local Board workshop in August, members considered possible options for use of the Franklin Parking Reserve Fund and upgrading the surface of the Kitchener Road car park in Waiuku was identified as the preferred project.

37. The Kitchener Road car park in Waiuku is in a poor state of repair and there is no other budget available in the Franklin Local Board to return it to a good condition.

38. The quote for the Kitchener Road carpark is $123,351 that covers the upgrade of the surface to remove potholes, lay asphalt and mark lines for parking spaces.

39. In September, the Franklin Local Board supported the allocation of the Franklin Parking Reserve Fund to the upgrading of the car park surface at Kitchener Road, Waiuku (Attachment D).

40. The fund has a balance of $128,214 as at 11 October. It was collected by the former Franklin District Council for the provision of off-street parking in the Franklin district, and was inherited by Auckland Council at the time of amalgamation. The use of this fund is restricted for parking facilities in the legacy Franklin District Council area. The council’s Legal Services department has confirmed that the fund can be used for upgrading the surface of the Kitchener Road car park in Waiuku.

By-elections

41. The 2017 General Election took place on 23 September 2017. Two Auckland Council elected members stood as electorate or list candidates and were successful: Denise Lee, Councillor for Maungakiekie-Tāmaki and Simeon Brown, Manurewa Local Board Member. The Chief Executive has recently received their resignations. The Local Electoral Act 2001 requires elections to be held to fill the vacancies.

42. On 28 September, the Governing Body approved an additional opex budget of $228,000 in 2017/2018 to conduct two by-elections subject to resignation and final vote count. The resolution is in Attachment E and will now be implemented.

43. Subsequently, a vacancy arose following the resignation of Mark Davey from the Waitematā Local Board. His resignation is not related to the general election. The estimated cost of conducting the by-election is $115,400, comprising $93,000 for contracting election services and $22,400 for communications.

Consideration

Local board views and implications

44. The Franklin Local Board supports the allocation of the Franklin Parking Reserve Fund to upgrading the car park at Kitchener Road, Waiuku. It is advocating to this committee for the fund to be released for the upgrade.

45. Local board views on other items discussed in this report have not been sought.

Māori impact statement

46. The items discussed in this report do not have specific impacts on Māori.

Implementation

47. Budgets would be amended in core financial systems and would be used for internal management reporting, regular reporting to council committees and annual financial reporting for the 2017/2018 financial year.

Attachments

No.	Title	Page
a ⇩	Resolution on the procurement of IPEMUs	77
b ⇩	NZTA decision on the procurement of EMUs	79
c ⇩	RFA Investment Proposal – Two Elephants	81
d ⇩	Resolution of the Franklin Local Board on Franklin Parking Reserve Fund	87
e ⇩	Resolution of the Governing Body on budget for by-elections	89

Signatories

Authors

Tracy Xu - Financial Analyst

Neil Huang - Principal Advisor

Authorisers

Ross Tucker – Acting GM Financial Strategy and Planning

Kevin Ramsay – Acting Group Chief Financial Officer

Finance and Performance Committee

24 October 2017

Alteration of Previous Resolution from Finance and Performance Committee 21 September 2017 - Value for Money (s17A) Review Programme

File No.: CP2017/22292

Purpose

1. To revoke and replace a resolution relating to the Value for Money (s17A) Review Programme.

Executive summary

2. The Value for Money Political Oversight Group was established by the Finance and Performance Committee at its 21 March 2017 as a “steering group to give political oversight”.

Resolution number FIN/2017/23

That the Finance and Performance Committee:

c) endorse the establishment of a steering group to give political oversight, consisting of the Chair and Deputy Chair of the Finance and Performance Committee, the Chair of the Environment and Community Committee, the Chair of the Planning Committee, the Chair of the Independent Maori Statutory Board and the Deputy Chair of the Audit and Risk Committee, to monitor progress of the value for money programme at key milestone points.

3. From a legal point of view, it would be preferable if the Value for Money Political Oversight Group is tasked with making recommendations to the Finance and Performance Committee on the services for future reviews and associated terms of reference, with the Finance and Performance Committee retaining decision-making authority.

4. At its meeting on 21 September 2017, the Finance and Performance Committee resolved:

Resolution number FIN/2017/128

That the Finance and Performance Committee:

b) delegate to the Value for Money programme’s political oversight group authority to approve the services for future reviews as well as the associated terms of reference.

5. The Governing Body Terms of Reference (GB TOR) enable the Finance and Performance Committee to establish working parties and steering groups, but not to establish sub-committees.

6. This prohibition (which applies to all three of the Committees of the Whole) suggests an intention by governing body that political decision-making power not be devolved to groups/bodies below the committee level.

7. Further, the terms “working parties” and “steering groups” in the GB TOR suggest an advisory rather than a decision-making role.

8. Taking this into consideration, the resolution passed by the Finance and Performance Committee at the meeting on 21 September 2017 does not meet the GB TOR.

9. Therefore, clause b) of resolution number FIN/2017/128 (as outlined in paragraph 4 above) will need to be revoked and replaced.

Recommendation/s

That the Finance and Performance Committee:

a) revoke clause b) of the following decision carried at its 21 September 2017 meeting:

Resolution number FIN/2017/128

That the Finance and Performance Committee:

b) delegate to the Value for Money programme’s political oversight group authority to approve the services for future reviews as well as the associated terms of reference.

and replace with:

b) request that the Value for Money programme’s political oversight group recommend to the Finance and Performance Committee services for future reviews as well as the associated terms of reference.

Attachments

There are no attachments for this report.

Signatories

Author	Sarndra O'Toole - Team Leader – Governance Advisors
Authoriser	Kevin Ramsay – Acting Group Chief Financial Officer

Finance and Performance Committee

24 October 2017

Finance and Performance Committee - Information Report - 24 October 2017

File No.: CP2017/20871

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 19 September 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:

· 27 September 2017 – Panuku Performance Reporting (Confidential – no attachment)

· 26 September 2017 – Long-term Plan 2018-2028 workshop minutes (Attachment B)

· 26 September 2017 – Long-term Plan 2018-2028 enquiries and workshop actions (Confidential – no attachment)

· 12 October 2017 – Health, Safety and Wellbeing update report referred by the Audit and Risk Committee which will be considered by the Governing Body on 31 October 2017 (Attachment C)

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 – 24 October 2017.

Attachments

No.	Title	Page
a ⇩	Finance and Performance Committee Forward Work Programme to 30 June 2018	95
b	Long-term Plan 2018-2028 workshop minutes - 26 September 2017 (Under Separate Cover)
c	Health, Safety and Wellbeing update report (Under Separate Cover)

Signatories

Author	Mike Giddey - Senior Governance Advisor
Authoriser	Sue Tindal - Group Chief Financial Officer

Authors	Colin Homan - Group Manager Transport Services Development Mark Lambert - Chief Transport Services Officer
Authoriser	Kevin Ramsay – Acting Group Chief Financial Officer