Agenda of Finance and Performance Committee

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.

Finance and Performance Committee

27 February 2018

Auckland Regional Amenities Draft Funding Plan 2018/2019 - proposed Auckland Council submission

File No.: CP2018/00352

Te take mō te pūrongo / Purpose of the report

1. To approve the Auckland Council submission to the Auckland Regional Amenities Funding Board Draft Funding Plan 2018/2019.

Whakarāpopototanga matua / Executive summary

2. The Auckland Regional Amenities Funding Act 2008 (the Act) provides for ten regional organisations to submit annual funding applications to the Auckland Regional Amenities Funding Board (Funding Board). The Funding Board must analyse these applications and prepare a draft funding plan, before finalising and levying Auckland Council for the total amount. The Act requires the Funding Board to prepare a draft funding plan that provides any information that is necessary to enable an informed assessment of the annual levy (s25(2)(i)). The Draft Funding Plan 2018/2019 can be found at Attachment A.

3. Council’s ability to influence the Funding Board is limited. Council can make a submission on the draft funding plan every year, appoint directors to the Board, and set funding principles. It is not council’s role to make decisions regarding individual amounts given to specific organisations.

4. This report seeks approval of council’s submission on the Draft Funding Plan 2018/2019. A report in March 2018 will consider the levy itself.

5. The Draft Funding Plan 2018/2019 seeks a total levy from council of $16,786,500. This is $621,000 or 3.8 per cent higher than the levy for 2017/2018.

6. The Draft Funding Plan 2018/2019 proposes no increase for two of the amenities, and increases ranging from $45,000 to $124,000 for the remaining eight amenities.

7. It is recommended that the proposed council submission note the following matters:

· total funding under the Act increased from $8,700,000 in 2009 to $16,165,500 in the 2017/2018 year

· council request that the Funding Board includes a statement in its final funding plan confirming that the amenities funding applications are compliant with the funding principles in the Act

· council requests the Funding Board to include a summarised statement of how each of the amenities align their activities to the Auckland Plan, so it is clear to council and the public how the investment of ratepayer funds contribute to Auckland Plan outcomes. This is required by a funding principle added by council to those in the original legislation

· council notes its concern with the proposed increases in future funding requests for 2019/2020 being $18,644,572 and 2020/21 being $19,104,415.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) agree the Auckland Council submission to the Auckland Regional Amenities Funding Board Draft Funding Plan 2018/2019 cover the following issues as discussed in this report:

· note the increase in total funding since the Auckland Regional Amenities Funding Act was established in 2008

· request a statement of compliance with the funding principles be included in the funding plan that will be submitted to council

· request a statement of individual amenities’ alignment with Auckland Plan outcomes

· note council’s concern at future projected levy increases

b) delegate to the manager: council-controlled organisation governance and external partnerships the ability to make any minor edits or amendments to the submission, to correct errors or reflect decisions made by the Finance and Performance Committee

c) authorise the chairperson and deputy chairperson of the Finance and Performance Committee to sign the submission on behalf of Auckland Council.

Horopaki / ContextDecision-making authority

8. The Act was put in place to establish a mechanism to provide adequate, sustainable and secure funding for ten specified amenities that provide arts and culture, educational and rescue services throughout the Auckland region. It was passed in the pre-amalgamation context to ensure that all councils in the region contributed equally to the funding of the amenities.

9. At amalgamation, the levy regime passed over to Auckland Council. Council’s role is confined to reviewing the total levy, appointing some of the Funding Board’s directors, and setting funding principles which funding applications must be assessed against. Individual allocations to amenities are the role of the Funding Board, not council. The Act requires that the funding plan must provide any information that is necessary for council to make an informed assessment of the annual levy (s25(2)(i)).

10. The Act established a Funding Board, which is an independent body responsible for allocation of the annual funding provided by Auckland Council for the amenities. The role of the Funding Board is to assess the annual funding applications received from the amenities against the funding principles within the Act and any additional principles adopted by Auckland Council. The funding principles include the following:

· funding is primarily for provision of facilities or services by the amenities (i.e. operational)

· funding is not available for capital expenses

· funding is not for any part of facilities or services provided outside the Auckland region

· funding is available only if the amenity has made all reasonable endeavours to maximise their funding from other available sources (council is funder of last resort)

· the Funding Board must have regard to council’s proposed rates increase for the forthcoming year

· the amenities should align their activities to the Auckland Plan, and adopt relevant performance measures.

11. Council provides a submission to the annual draft funding plan. This year submissions are due by 28 February 2018.

12. The Funding Board will consider the public submissions and make any amendments it considers necessary to the funding plan. The board then submits the funding plan and levy to Auckland Council for consideration.

13. If the council considers that the funding plan and the consequential levy is not acceptable, the legislation states that the board and the council must seek a binding arbitration decision.

The Draft Funding Plan 2018/2019

14. For information, the following table sets out the amount of funding applied for, the provisional allocation of funding to each of the amenities and how much they received in 2017/2018.

15. The Draft Funding Plan 2018/2019 includes an allocation for the New Zealand Maritime Museum (Maritime Museum). Staff are aware that Regional Facilities Auckland and the Maritime Museum are negotiating for the Maritime Museum to become part of Regional Facilities Auckland. A report will be provided to the March 2018 Finance & Performance committee meeting regarding the proposed amalgamation. If necessary, at that meeting, the committee could provide guidance to the Funding Board as to whether the levy should include funding for the Maritime Museum.

16. The Draft Funding Plan 2018/2019 notes that a significant portion of the annual levy is used to pay for council services such as the rental, hire charges, rates, and regulatory charges for the ten amenities, and is estimated at $2.7 million for the 2018/2019 funding year. Whilst this may appear to be a ‘money go-round’, staff’s view is that this is preferable to providing the amenities with discounted or free venue hire or rentals. The current situation makes transparent the level of subsidy the amenities receive from council.

Amenity	Grant Allocated by Funding Board 2017/2018	Amenity Funding Application 2018/2019	Provisional Allocation of Grant 2018/2019	Difference	Change as a percentage
Auckland Festival Trust	$3,337,000	$3,600,000	$3,437,000	$100,000	3% increase
Auckland Philharmonia	$3,112,000	$3,157,000	$3,157,000	$45,000	1.4% increase
Auckland Regional Rescue Helicopter*	$450,000	$633,409	$450,000	$0	No change
Auckland Theatre Company	$1,520,000	$1,780,000	$1,600,000	$80,000	5.3% increase
Coastguard Northern Region	$712,000	$763,935	$764,000	$52,000	7.3% increase
Drowning Prevention - Watersafe Auckland	$1,050,000	$1,050,000	$1,050,000	$0	No change
New Zealand Maritime Museum	$2,139,500	$2,603,725	$2,184,500	$45,000	0.2% increase
New Zealand Opera	$1,025,000	$1,260,000	$1,100,000	$75,000	7.3% increase
Stardome Observatory and Planetarium	$1,239,000	$1,439,000	$1,363,000	$124,000	10% increase
Surf Life Saving Northern Region	$1,266,000	$1,653,000	$1,366,000	$100,000	7.9% increase
Total	$15,850,500	$17,940,069	$16,471,500	$621,000
Funding Board Administration	$315,000		$315,000	0	No change
Total Levy payable by Auckland Council	$16,165,500		$16,786,500	621,000	3.8% increase

Tātaritanga me ngā tohutohu / Analysis and adviceAnalysis

17. The total increase of $621,000 is a 3.8 per cent increase over last year’s levy. The percentage increases for the three previous years were:

· 2017/2018: $23,000 (or 0.14 per cent)

· 2016/2017: $994,100 (or 6.56 per cent)

· 2015/2016: $837,400 (or 5.85 per cent).

18. Each year, the Funding Board must assess what would be a reasonable contribution towards the amenities operating costs. This is a ‘needs based’ assessment, and it is up to the Funding Board to exercise its judgment as to how much funding each amenity should receive.

19. Council staff are not in a position to comment on the amount of the funding being provided to the individual amenities, as it is the role of the Funding Board to analysis the funding requirements of each amenity.

20. In terms of the Act, council’s role is to consider the total levy proposed by the Funding Board in terms of the funding principles. In this regard, staff recommend that further information should be included in the funding plan submitted in March 2018 to allow council to consider the levy properly. Details of what additional information should be included is set out in the options section below.

Proposed submission to the Draft Funding Plan 2018/2019

21. Staff recommend that council’s submission should cover the following points.

a. That council notes the overall increase in the levy amount since the beginning of the Auckland Regional Amenities regime in 2008. This shows the degree to which council has recognised the important role of the amenities, and the pressures they have faced as the Auckland region has grown.

b. Additional information should be provided in the funding plan to allow an informed consideration of the levy. Council staff are aware that each of the amenities must supply significant information to the Funding Board in their annual applications, and that each application must also contain a statement that it is compliant with the funding principles. However, council does not see the funding applications. Therefore, additional information in the funding plan should be sought in order to demonstrate:

· that each of the amenities funding applications are compliant with the funding principles. This will ensure that council can fulfil its obligations under the Act, when it considers funding plan and levy in March 2018

· in particular, that the funding principle relating to alignment with Auckland Plan outcomes is being met. We propose that a short summary statement of how each amenity meets Auckland Plan outcomes is included in the funding plan submitted to council.

Options

22. Given the limits of council’s role in the Auckland Regional Amenities Funding Act levy process and given that this paper is simply considering the content of council’s submission on the Draft Funding Plan 2018/2019, there are a limited number of other options which can be considered.

· Option One – do not provide a submission on the Draft Funding Plan 2018/2019. This option is not recommended because it means missing an opportunity to comment on the levy request.

· Option Two – approve the submission as recommended by staff. The draft submission points have been designed to indicate council’s view that the funding plan could provide more information that would enable council to fulfil its obligation under the Act to consider the funding plan and the total levy by having consideration to the funding principles. Councillors may wish to raise other matters for inclusion in the submission (see option three, below).

· Option Three - amend the submission to include other matters, such as indicating comfort (or otherwise) with the funding plan and the proposed level of the levy. This option is not recommended because our preference is for the Funding Board to be given the opportunity to provide additional information before the issue of the levy amount is considered. Councillors may wish to raise other matters.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

23. Local board views have not been canvassed. Decision-making and oversight in respect of regional activities are the responsibility of the Governing Body. This report relates to the funding relationship between the council, the Funding Board and the amenities.

Tauākī whakaaweawe Māori / Māori impact statement

24. The amenities have the ability to make positive contributions to Māori wellbeing, and to deliver on Auckland Plan outcomes and contribute to effective Māori capacity.

25. However, this report does not consider the amenities contribution to Māori wellbeing, as that is not an issue covered by the Draft Funding Plan 2018/2019.

26. One of the Funding Board members must be a person who is appropriate to represent the interests of Māori in the Auckland region. Therefore, a Māori perspective is considered whenever the Funding Board makes a decision.

Ngā ritenga ā-pūtea / Financial implications

27. Funding for the Draft Funding Plan 2018/2019 will need to be provided for in the Long-term Plan 2018-2028.

Ngā raru tūpono / Risks

28. The ongoing risk to council is that the Auckland Regional Amenities Funding system provides little ability for council to ensure value for money from the amenities. While there are benefits for the sustainability of the amenities, it is difficult for council to ensure accountability for the funding provided and ensure the services delivered by the amenities align with council priorities.

Ngā koringa ā-muri / Next steps

29. Once the content of the submission is approved, staff will draft the submission to reflect decisions made by the committee.

30. The chair of the Finance and Performance Committee will sign the submission on behalf of the council. The deadline for submissions is 28 February 2018.

31. The Funding Board will consider the public submissions and make any amendments it considers necessary to the funding plan. The board then submits the funding plan to Auckland Council for consideration. The board needs to adopt its final funding plan by 30 April 2018, so it is likely the funding plan and proposed levy will be brought to council for consideration at Finance and Performance Committee in March 2018.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Auckland Regional Amenities Draft Funding Plan 2018/2019	19

Ngā kaihaina / Signatories

Authors

Josie Meuli - Senior Advisor

Edward Siddle - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

27 February 2018

Disposal recommendations - February 2018

File No.: CP2017/26786

Te take mō te pūrongo / Purpose of the report

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

Whakarāpopototanga matua / Executive summary

2. For the 2017/2018 financial year, Panuku’s statement of intent (SOI) requires it 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.

3. Proposed Lot 14, 61-117 Clark Road, Hobsonville is vacant land that was intended to be retained by council for open space purposes. The balance of 61-117 Clark Road, Hobsonville and the adjoining stopped road (shown as Areas 2, 3 and 4 in the attachment to this report) was approved for disposal in June 2016. This land was intended to be disposed to Homes, Land, Community (2017) Limited (HLC) for urban renewal and housing purposes. HLC requested council consider divestment of the entire site. Council’s Parks and Recreation Policy team subsequently reviewed the site and advised that it was not required for future open space purposes as there is adequate parks provision in the locality. Retaining the site would be an overprovision in terms of council’s Open Space Provision Policy and could be rationalised. HLC wish to purchase the site along with Areas 2, 3 and 4 for housing and urban renewal purposes.

4. Consultation with council departments and its CCOs, iwi authorities and the Upper Harbour Local Board has now taken place. No alternative service use has been identified for the site. The Upper Harbour Local Board oppose the proposed disposal of the site due to concerns regarding the loss of open space in an area where residential intensification is planned. As no planned or funded alternative service use was identified, and as council’s Parks and Recreation Policy team has advised that this site is not needed for open space purposes, Panuku recommends it be divested.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) approve, subject to the satisfactory conclusion of any required statutory processes, the disposal of approximately 3,370m²(subject to survey) at 61-117 Clark Road, Hobsonville, comprised of an estate in fee simple more or less being Lot 1 DP 308781, contained in computer freehold register CFR 34081 to Homes, Land, Community (2017) Limited for housing and urban renewal purposes; and

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

Horopaki / Context

5. Panuku is required to undertake ongoing review of council’s non-service property assets. This includes identifying properties from within council’s portfolio that may be suitable for potential sale, and development if appropriate. Panuku has a particular focus on achieving housing and urban regeneration outcomes. Identifying properties suitable for potential sale contributes to the Long Term Plan 2015-2025 (LTP) and the Auckland Plan focus of accommodating the significant growth projected for the region over the coming decades and by providing council with an efficient use of capital and prioritisation of funds to achieve its activities and projects.

Tātaritanga me ngā tohutohu / Analysis and advice

6. Panuku and council’s Land Advisory Services team 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.

7. 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 Finance and Performance Committee.

Property information

8. Proposed Lot 14, 61-117 Clark Road, Hobsonville comprises approximately 3,370m². It is part of a larger vacant site which was formed from residual land originally transferred from the Crown to the former Waitakere City Council for the purpose of a future public work in 2004. While the nature of the public work was not specifically defined, the purchase of the land was seen as a strategic land acquisition due to its proximity to the proposed future Hobsonville town centre.

9. Land shown as Areas 2, 3 and 4 in the attachment to this report was approved for disposal by the Finance and Performance Committee in June 2016. It was intended that Areas 2, 3 and 4 be sold to HLC for its development partner AVJennings to develop into residential housing.

10. The subject portion of 61-117 Clark Road, Hobsonville was intended to be retained by council for open space purposes in accordance with the Buckley B Precinct, Hobsonville Point scheme plan. The retention of the site was also intended to mitigate the effects of surrounding residential development on the sightlines for the adjacent historic settler’s church.

11. Following the 2016 divestment approval, negotiations commenced with HLC about it acquiring Areas 2, 3 and 4. During negotiations HLC requested council consider divestment of the entire site. Council’s Parks and Recreation Policy team subsequently reviewed Proposed Lot 14, 61-117 Clark Road, Hobsonville and advised that there is adequate parks provision in the locality with the creation of an additional neighbourhood park. Further, the Parks and Recreation Policy team found that retaining the site for open space would result in an overprovision of open space in terms of council’s Open Space Provision Policy. As such, it was proposed that the site be rationalised.

12. If Proposed Lot 14, 61-117 Clark Road, Hobsonville is approved for sale, HLC will undertake, at its cost, the construction of the new Clark Road Extension, the upgrading of existing road frontages and the remediation of the stopped road area.

13. The Auckland Unitary Plan zoning is Residential – Mixed Housing Urban Zone; Hobsonville Point sub-precinct B.

14. Proposed Lot 14, 61-117 Clark Road, Hobsonville is indicatively valued at $1.8 million.

Internal consultation

15. The internal consultation for this site commenced in October 2017. No alternative service uses were identified.

16. Council’s Heritage team assessed the site and advised that while the proposed future use of residential development across the road from the historic church does have the potential to affect the heritage values of the church, this could likely be mitigated through careful design. For example, ensuring the proposed residential development included generous front yard setbacks and a landscaped road reserve/development edge would provide the necessary buffer between the historic church and the proposed residential development. This approach would ensure most of the sightlines and landscaped qualities identified in the Buckley B Precinct, Hobsonville Point scheme plan were maintained, and would achieve similar outcomes in relation to heritage values.

17. The results of the rationalisation process are that this site is not required for future open space purposes in accordance with council’s Open Space Provision Policy or for any other current or future service requirements. As such, Panuku recommend that Proposed Lot 14, 61-117 Clark Road, Hobsonville be divested to HLC for housing and urban renewal purposes. The final terms and conditions would be approved under the appropriate delegations.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

18. 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.

19. 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.

20. The Upper Harbour Local Board opposed the proposed disposal of Proposed Lot 14, 61-117 Clark Road, Hobsonville at its 14 December 2017 business meeting on the basis it is opposed to the loss of open space in an area where residential intensification is planned.

Tauākī whakaaweawe Māori / Māori impact statement

21. 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 regarding council owned-land subject to rationalisation and requested to give feedback.

22. 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 notes regarding any preferred outcomes that the group would like Panuku to consider in our formal reporting to council. Possible outcomes could include commemoration or physical acknowledgment in the form of plaques or other mutually agreed means of recognition.

23. Mana whenua groups are also invited to express potential commercial interest in the subject properties. 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.

Record of mana whenua engagement

24. 12 mana whenua iwi authorities were contacted regarding the potential sale of Proposed Lot 14, 61-117 Clark Road, Hobsonville. The following feedback was received:

a) Ngāti Manuhiri

No feedback received for this site.

b) Te Runanga o Ngāti Whatua

No feedback received for this site.

c) Ngāti Whatua o Kaipara

Ngāti Whatua o Kaipara confirmed it is interested in potentially acquiring this site. Panuku replied to Ngāti Whatua o Kaipara confirming its commercial interests had been noted on the property file. If approved for disposal to HLC, Panuku will follow up with Ngāti Whatua o Kaipara advising that this site has been divested for urban renewal purposes.

d) Ngāti Whatua Ōrākei

No feedback received for this site.

e) Te Kawerau a Maki

This site is within an area of cultural significance to Te Kawerau a Maki, which advised it will require engagement on any future development. However, there are no known site-specific issues of a cultural nature. Panuku replied to Te Kawerau a Maki confirming its cultural interests had been noted on the property file, and will also be provided to HLC. If approved for disposal to HLC, Panuku will follow up with Te Kawerau a Maki advising that the site has been divested for urban renewal purposes.

f) Ngāi Tai ki Tāmaki

Ngāi Tai ki Tāmaki advised there is no interest in this property.

g) Te Ākitai – Waiohua

No feedback received for this site.

h) Ngāti Te Ata – Waiohua

No feedback received for this site.

i) Ngāti Paoa

Ngāti Paoa advised it does not have a 'lead cultural interest' in this area, and will defer to the iwi mana whenua of the area. Ngāti Paoa also confirmed its general interest in commercial opportunities for any council property approved for disposal, however again advised that they will take direction from the lead iwi mana whenua for this specific site.

j) Ngāti Whanaunga

Ngāti Whanaunga advised that the site could be an opportunity for a future “Kokiri” development for a community benefit. Panuku replied to Ngāti Whanaunga confirming its interests had been noted on the property file, and will also be provided to HLC. If approved for disposal to HLC, Panuku will follow up with Ngāti Whanaunga advising that the lot has been divested for urban renewal purposes.

k) Ngāti Maru

No feedback received for this site.

l) Ngāti Tamatera

No feedback received for this site.

Ngā ritenga ā-pūtea / Financial implications

25. In accordance with the Local Government Act 2002, the annual SOI states the activities and intentions of 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.

26. Should the recommended disposal of Proposed Lot 14, 61-117 Clark Road, Hobsonville not be approved, there may be a consequential impact in meeting the forecasted LTP and SOI revenue targets.

27. If the entire site is approved for sale, HLC will undertake, at its cost, the construction of the new Clark Road extension, the upgrading of existing road frontages and the remediation of the stopped road area. Council will need to fund these additional costs should the recommended disposal of the site not proceed. The indicative cost of the works is $3.7 million plus GST.

Ngā raru tūpono / Risks

28. The site has been assessed against council's significance policy and it was determined that a decision on the proposed disposal is not deemed to be significant. The operational impacts are below the quantitative thresholds for significance. The disposal enables the council to continue to deliver on the well-being of the local areas and region and does not negatively impact service levels.

Ngā koringa ā-muri / Next steps

29. The results of the rationalisation process for the site is that it is not required for current or future service requirements. Due to this, we recommend that it be divested.

30. If this site is approved for sale, Panuku will negotiate the disposal of the entire site to HLC for housing and urban renewal purposes. The final terms and conditions would be approved under the appropriate delegations.

31. Should the site be approved for disposal, the Buckley B Precinct consent holder obligations relating to the ongoing retention and maintenance of the site as a park in perpetuity will need to be varied to enable the proposed redevelopment of the site for residential purposes.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Images of Proposed Lot 14, 61-117 Clark Road, Hobsonville	97

Ngā kaihaina / Signatories

Author

Anthony Lewis - Senior Advisor, Portfolio Review, Panuku Development Auckland

Authorisers

Letitia Edwards - Team Leader Portfolio Review, Panuku Development Auckland

Marian Webb - Manager Portfolio Strategy, Panuku Development Auckland

David Rankin - Chief Operating Officer, Panuku Development Auckland

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

27 February 2018

Service Property Optimisation - 37 New Windsor Road, Avondale

File No.: CP2018/01251

Te take mō te pūrongo / Purpose of the report

1. To seek approval for a portion of a council owned service property to be sold with the sales proceeds resulting from the optimisation of this asset to be reinvested into eligible local projects in the Whau Local Board area.

Whakarāpopototanga matua / Executive summary

2. Optimisation is a new approach to the way service property is developed and funded which alters the balance of incentives to local boards by providing the opportunity to create direct local benefits and reinvestment. The policy was approved by the Finance and Performance Committee in 2015.

3. It is self-funding, maximises efficiencies from service assets and maintains levels of service whilst releasing property for sale or development. A key element of the proposal is that service property is optimised and that sale proceeds are locally reinvested to advance approved council projects or activities on a cost neutral basis.

4. Optimisation will contribute to a number of broader strategic outcomes and is a step towards implementing Panuku’s expanded development and regeneration role to facilitate, enhance and speed up the delivery of housing and town centre redevelopment activity.

5. The property recommended for optimisation in this report comprises part of 37 New Windsor Road, Avondale. This property is currently part of the council’s open space network and incorporates approximately 1055sqm of land which contains a standalone residential dwelling that is scheduled as a category B heritage item in the Unitary Plan.

6. The Whau Local Board identified the residential portion of this property as a potential candidate for optimisation and requested that Panuku assess it.

7. The optimisation process for 37 New Windsor Road commenced in July 2017. Panuku has completed the investigations and confirms that there is a viable optimisation project to progress further. This involves the divestment of the residential portion of the property comprising approximately 1055sqm as it is not currently utilised for open space purposes. The sales proceeds will be reinvested into other local projects anticipated in the LTP or other strategic documents such as the Open Space Network Plan.

8. The Whau Local Board and council’s Parks, Sports and Recreation department confirmed that the property does not serve the New Windsor community well in its current form. They supports the divestment of the residential portion of 37 New Windsor Road, Avondale to enable the sale proceeds to be reinvested.

9. The Parks, Sports and Recreation Department have proposed several reinvestment projects for New Windsor, identified within the Whau Open Space Network Plan 2017 that currently require funding to progress. These range from the provision of new park equipment to fill a gap in the current provision through to the purchase and development of new open space in the area. In line with the optimisation policy, the sales proceeds from the optimisation of this site can be ring-fenced and allocated to one or more of these eligible projects.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) approve:

i) subject to the satisfactory conclusion of any statutory processes the disposal of approximately 1055sqm (subject to survey) of 37 New Windsor Road, Avondale;

ii) that the sale proceeds resulting from the optimisation of this service property be ring-fenced for reinvestment into one of the Whau Local Board’s eligible projects; and

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

Horopaki / Context

10. The service property optimisation policy was approved by the Finance and Performance Committee in March 2015. Economic realities have promoted a critical review of expenditure across council in order to reduce or slow down capital and operational outlay and optimise investment decisions.

11. There is also a greater focus on the realisation of value from assets no longer required for service purposes. However, potentially significant opportunities in the service portfolio remain untapped due to the perception that no local benefits are returned from the release of underperforming, but potentially valuable, local service property. As a result, less than optimal and often costly service property remains held and its latent value is not realised. Optimisation seeks to maximise efficiencies from service assets while maintaining levels of service and releasing some or all of that property for sale or development. A key element of optimisation is that the sale proceeds are locally reinvested to advance approved projects and activities on a cost neutral basis.

12. Once a property has been identified as a viable optimisation project, Panuku engages with relevant council departments to establish whether the property meets the optimisation principles and agreed criteria, or whether it must be retained in its current form for a future funded project or public work.

13. Once a property has met the criteria, Panuku then consults with local boards and mana whenua. All sale recommendations must be approved by the Panuku board before a final recommendation is made to Auckland Council’s Finance and Performance Committee.

Tātaritanga me ngā tohutohu / Analysis and advice

37 New Windsor Road, Avondale

14. 37 New Windsor Road, Avondale was acquired by the former Auckland City Council for a park. The site is currently utilised as a relatively undeveloped green space. A residential dwelling, managed by Panuku, is located on a portion comprising approximately 1055sqm, and is partially closed off from the rest of the site with a fence. The residential dwelling has heritage status and is a Category B Historic Heritage Place listed under Schedule 14.1 of the Auckland Unitary Plan. 37 New Windsor Road, Avondale is zoned Open Space – Informal Recreation.

15. The optimisation process for this property commenced in July 2017 when the Whau Local Board approached Panuku requesting it consider 37 New Windsor Road as a candidate for optimisation.

16. Panuku worked with the Parks, Sports and Recreation department and the Whau Local Board to investigate whether the divestment of approximately 1055sqm of the reserve would meet the criteria set out in the Council’s optimisation policy to enable the proceeds of sale to be redirected into more optimal open space outcomes within the Whau Local Board area.

17. Council’s Parks, Sports and Recreation department confirmed that the park at 37 New Windsor Road does not serve the New Windsor community well in its current form, and supports the optimisation of the residential portion of land by way of divestment.

18. The relevant council departments were subsequently consulted with by Panuku to determine the suitability of this property for optimisation. As the residential dwelling at 37 New Windsor Road has is a Category B Historic Heritage Place listed under Schedule 14.1 of the Auckland Unitary Plan, advice was sought from Council’s heritage department as part of the internal consultation process. Council’s Heritage department advised that it would like to ensure the historic heritage values of the subject portion of 37 New Windsor Road are acknowledged and protected against any future changes, and recommended that controls are put in place to protect the dwelling following any potential divestment.

19. No other issues were raised during the internal consultation process for 37 New Windsor Road, Avondale. On this basis, Panuku proceeded with the next steps of the optimisation process.

20. A market valuation has also been obtained on the assumption that the residential portion of the site is rezoned to be consistent with the Mixed Housing Suburban zoning of the adjacent properties. The current independent market value of the site is approximately $1.2 million.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

21. The Whau Local Board initially identified the residential portion of 37 New Windsor Road as a potential candidate for optimisation. Numerous workshops were subsequently held with the Whau Local Board.

22. The Whau Local Board formally endorsed the potential sale of the approximately 1055sqm of 37 New Windsor Road, Avondale at its November 2017 business meeting to enable the sale proceeds to be reinvested into delivery of the Whau Local Board Open Space Plan’s projects in the surrounding area.

Tauākī whakaaweawe Māori / Māori impact statement

23. Panuku undertook mana whenua engagement to understand if there were any issues of cultural significance or potential commercial interest in the subject site. 13 mana whenua iwi authorities were contacted regarding the potential sale of 37 New Windsor Road, Avondale on 9 January 2018. The following feedback was received.

a) Te Runanga o Ngāti Whatua

No feedback received for this site.

b) Ngāti Whatua o Kaipara

No feedback received for this site.

c) Ngāti Whatua Ōrākei

No feedback received for this site.

d) Te Kawerau a Maki

No feedback received for this site.

e) Ngāi Tai ki Tāmaki

No feedback received for this site.

f) Ngāti Tamaoho

No feedback received for this site.

g) Te ākitai - Waiohua

No feedback received for this site.

h) Ngāti Te Ata - Waiohua

No feedback received for this site.

i) Te Ahiwaru

No feedback received for this site.

j) Ngāti Paoa

Ngāti Paoa has advised that the area is of cultural significance. Ngāti Paoa did not specify how it wished for its cultural interest to be recognised but they would like to be involved in any further dialogue on potential outcomes. Should the divestment of the subject portion of this site be approved, Panuku will work with Ngāti Paoa regarding how they would like their interest to be recognised.

k) Ngāti Maru

No feedback received for this site.

l) Ngāti Tamatera

No feedback received for this site.

m) Waikato-Tainui

No feedback received for this site.

Ngā ritenga ā-pūtea / Financial implications

24. Optimisation seeks to alter the balances of incentives to those local boards and communities prepared to deal constructively with underperforming service-assets by providing the opportunity to receive direct local benefits and tap into efficiencies. A key element of the proposal is that service property is ‘optimised’ and sale proceeds are locally reinvested to advance approved projects or activities on a cost neutral basis. Reinvestment seeks to advance planned LTP projects and current business strategies and plans.

25. The proceeds of optimisation are reinvested locally in to eligible community projects at a neutral cost and no cost to the ratepayer. Optimisation by way of direct reinvestment will result in the Whau Local Board utilising the proposed divestment proceeds from the subject site to reinvest into an eligible local project of its choosing.

Ngā raru tūpono / Risks

26. Optimisation of this property will reduce holding costs and on-going maintenance costs and generate latent value. It will generate a financial return that can be reinvested in to local eligible community projects within a potentially quicker time frame.

Ngā koringa ā-muri / Next steps

27. Should the residential portion of 37 New Windsor Road, Avondale be approved for divestment, Panuku will seek to sell this site at market value.

28. As 37 New Windsor Road, Avondale is not a formal park or reserve subject to the Reserves Act 1977 or Local Government Act 2002, council’s Parks department seek to classify the balance of the land as park under the Local Government Act 2002. Panuku will use the Public Works Act 1981 to set apart the portion of land proposed to be retained for the purpose of park.

29. The divestment of the residential portion of 37 New Windsor Road will be subject to a plan change to change the zoning from Open Space – Informal Recreation to reflect the intended land use of private residential activity. In this case, given that the site sits within a Mixed Housing Suburban zone the recommendation is that any proposed plan change adopts this zoning.

30. The subject site is exempt from the offer back obligations set out in section 40 of the Public Works Act 1981.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Attachment 1: Arial plan of 37 New Windsor Road, Avondale	105

Ngā kaihaina / Signatories

Authors

Marian Webb - Manager Portfolio Strategy, Panuku Development Auckland

Lori Butterworth - Property Management, Panuku Development Auckland

Authorisers

David Rankin - Chief Operating Officer, Panuku Development Auckland

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

27 February 2018

Monthly budget update

File No.: CP2018/00890

Te take mō te pūrongo / Purpose of the report

1. To approve proposed budget changes relating to the following non-budgeted expenditure items:

· Rawene remedial works

· updated City Centre Targeted Rate funded programme of work (TR7)

· Wynyard Quarter land acquisition

· new head office lease for Auckland Tourism, Events and Economic Development (ATEED)

Whakarāpopototanga matua / Executive summary

2. The Finance and Performance committee holds delegation for 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.

3. This report supports the committee in exercising that delegation by presenting the proposed budget changes summarised below. Full detail of these items have been collected from relevant business areas of the council and provided in the later part of the report.

Rawene remedial works

4. Two landslides occurred at a car park at Rawene Reserve, Birkenhead on 9 October and 28 November 2017. The road, carpark, stormwater, and wastewater assets were destroyed by the landslides. The causes are still being determined.

5. Emergency remedial works were undertaken over the Christmas holiday period and were completed on 19 January 2018. These works were intended to make the properties on Mokoia Road safe until a permanent stabilisation solution for the whole landslide is designed and built.

6. Staff seek the approval of $3.85 million unbudgeted capital expenditure (capex) to cover $2 million for the emergency works completed and $1.85 million for the design and ongoing construction supervision of permanent stabilisation works.

7. As the scale of remediation will not be known until the design is progressed, staff will report back with the full cost of the permanent solution in March 2018.

Updated City Centre Targeted Rate funded programme of work (TR7)

8. In November 2017, the Auckland City Centre Advisory Board (ACCAB) endorsed the updated City Centre Targeted Rate funded programme of works (TR7), as part of the regular review. The programme is predominately funded from the City Centre Targeted Rate (CCTR).

9. This update involves mainly timing adjustments to projects, which reflects the dynamic environment in the city centre. Key budget changes to 2017/2018 are highlighted below:

· Quay Street Public Realm Upgrade: $400,000 brought forward from outer years.

· Albert Street upgrade (Public realm improvement): $5 million deferred to later years.

· City feature lighting project: new operational expenditure (opex) of $45,000.

· Beach Road cycleway rehabilitation work: new opex of $35,000.

10. Overall, $6.6 million of targeted rate funding is re-phased to be spent in later years, reducing the planned spend for the current year from $21.3 million to $14.7 million. The City Centre Targeted Rates reserve maintains a positive balance.

Wynyard Quarter land acquisition

11. Auckland Transport (AT) is responsible for delivering Wynyard Quarter (WQ) South Road Upgrades project. The scope involves the development of Central Park and the continuation of the Daldy Street Linear Park from Pakenham Street to Fanshawe Street. AT is delivering parks element on behalf of Panuku Development Auckland and Auckland Council.

12. Property acquisition is required to enable the delivery of the parks within the WQ Central package of the overall work programme. The two sites are 155-167 Fanshawe Street (conditional offer made) and 100 Halsey Street (verbal agreement reached).

13. To enable the project delivery, avoid delays and misalignment between the road and park upgrades, and private development, $16 million is required for the two property acquisitions in 2017/2018. It is proposed that AT complete the acquisitions in the current year with the potential capex underspend and defer corresponding delayed projects into future years (i.e. timing adjustment).

New head office lease for ATEED

14. ATEED’s lease for its head office at 139 Quay Street expires on 31 December 2018, with no automatic right of renewal. The ATEED board approved entering into negotiation for a new lease following a recommendation by the ATEED Leadership Team.

15. The preferred option has an estimated fit-out cost of $3.2 million. In addition, an operational cost of $0.8 million is required for the make good of the current lease. ATEED has no budget for either expenditure. Whilst ATEED would incur the costs in the next financial year, it needs certainty on budget now before signing any lease agreement.

16. ATEED has advised that the preferred option represents the best value for money in terms of net rent over the proposed nine-year lease term, costing $4.7 million less than staying in the current premise. In addition, the preferred option aligns with the council’s work place strategy principles and is close to Auckland Council, other council-controlled organisations (CCOs), commercial partners and the Wynyard Quarter Innovation Precinct.

Overall budget impact

17. Overall the financial impacts of the budget changes considered in this report are summarised below:

· $3 million increase in net borrowing for 2017/2018

· $4 million increase in net borrowing for 2018/2019

· $65,000 impact on the group operating result for 2017/2018

· $1 million additional general rates requirement for 2018/2019.

Item ($m)	FY18 Debt	FY18 Result	FY19 Debt	FY19 General Rates
Rawene remedial works	3.00	(0.07)	0.85	0.19
CCTR funded programme of works	0	0	0	0
Wynyard Quarter land acquisition	0	0	0	0
New head office lease for ATEED	0	0	3.20	0.90
Total impact	3.00	(0.07)	4.05	1.09

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) approve $3.85 million of capital expenditure for Rawene remedial works, including:

(i) $2 million for emergency works competed

(ii) $1.85 million (of which $0.85 million is a variable estimate) for the consultancy, investigation and design costs for the permanent stabilisation solution in 2017/2018 and 2018/2019.

b) note that the approval for unbudgeted physical works to stabilise the site will be brought back to the Finance and Performance Committee in March 2018.

c) approve the updated City Centre Targeted Rate funded work programme for 2017/2018 as per Attachment A.

d) approve the following property acquisitions at a total cost of up to $16 million, provided for from Auckland Transport’s capital programme timing adjustment in 2017/2018:

(i) 155-167 Fanshawe Street, Auckland

(ii) 100 Halsey Street, Auckland

e) approve $3.2 million of capital expenditure budget in 2018/2019 for the fit-out of the new head office of Auckland Tourism, Events and Economic Development (ATEED).

f) approve $0.8 million of operational expenditure budget in 2018/2019 for the make good of ATEED’s current head office at 139 Quay Street.

Rawene remedial works

Horopaki / Context

18. Rawene carpark and reserve in Birkenhead are built upon a closed un-engineered landfill that infilled two gullies with construction waste from developments in the area in the mid-twentieth century. The closed landfill also has a number of other infrastructure assets such as stormwater, wastewater and other utilities running through it.

19. On 9 October 2017, a landslide occurred on Rawene Road and carpark. The road, carpark, stormwater, and wastewater assets were destroyed by the landslide. The causes are yet to be determined and a full report on this incident and future costs will be provided to the Finance and Performance Committee in March 2018.

20. Auckland Transport started remedial works on 14 November 2017. However, a second, larger landslide occurred on 28 November 2017. This second failure raised concerns that some buildings to the back of the carpark (and fronting Mokoia Road) may be at risk of damage.

21. The risk to buildings and occupants triggered the need for emergency stabilisation works at the top of the landslide. These were constructed over the Christmas holiday period and were completed on 19 January 2018. After these works, management of the landslide stabilisation transferred from Auckland Transport to Auckland Council.

22. The landslide continues to move slowly and remains a significant risk. To address this risk, it is proposed to undertake permanent remediation works over summer 2018 and 2019. While the nature of the ground conditions makes work over the winter period more challenging, some work will occur in this period to manage risks.

Tātaritanga me ngā tohutohu / Analysis and advice

23. Auckland Council’s Engineering and Technical Services department is managing the remediation and ongoing works on behalf of the council group.

24. Urgent works to make upper section of the slope safe were undertaken over the Christmas holiday period and completed on 19 January 2018. As these works were urgent and unbudgeted, it is requested that the committee retrospectively approve the emergency works capital expenditure of $2 million.

25. While the emergency works will enable the permanent stabilisation works to be constructed safely, they are a temporary solution.

26. A contract for design and supervision of future construction works was awarded and works commenced on 22 January 2018. The design of works was left open enough to not constrain future development and funding opportunities, and is only for stabilising the site, not wider development design. The designers scope requires the first stabilisation construction works to be procured, consented and on site by March 2018.

27. The appointment of designers and associated unbudgeted expenditure for 2018 and 2019 (covering design and construction works supervision) is estimated to be $1.85 million, of which $1 million of cost is certain, whereas $850,000 is an estimate because of uncertainty in how the problem will be solved.

28. As the costs and scale of remediation construction will not be known until the design is progressed, the approval for additional unbudgeted works will be sought in March 2018.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe / Local impacts and local board views

29. The Rawene Road carpark and reserve are within the Kaipātiki Local Board area. Local boards have delegated responsibilities for local parks and reserves and have an interest in local economic development. The Kaipātiki Local Board Plan 2017 commits the board to a natural environment that is protected for future generations to enjoy and vibrant urban centres.

30. The landslide has created disruption and concern for local residents and businesses. The local board and local businesses have also expressed concern that the planned start of construction for the Birkenhead Road upgrade will further impact local businesses, as the landslide has impacted on car park numbers in the town centre. Auckland Council will consider these concerns when making a decision about the planned construction start date for the Birkenhead Main Street Upgrade early in 2018.

31. Council staff will keep local residents, businesses and the local board well informed about the remedial works and will work to mitigate any disruption, where possible. Staff will also work closely with the local board on the eventual remediation of the local reserve.

Tauākī whakaaweawe Māori / Māori impact statement

32. Due to the urgent nature of the works, no consultation or engagement with mana whenua as kaitiaki was undertaken. The impact of the landslide and proposed works on mana whenua values and Māori outcomes has not yet been analysed. Consultation and engagement with mana whenua is likely to occur through the resource consent process.

Ngā ritenga ā-pūtea / Financial implications

33. All of the works are unplanned. They are not covered by and cannot be funded from existing budgets.

34. As detailed in the table below, staff seek approval for the unbudgeted cost of $2 million for the emergency works, as well as $1 million fixed cost and $850,000 estimated costs for the design and ongoing construction supervision. These costs will be capital expenditure.

Key financial breakdown:

$m	FY18	FY19	FY20	10-year impact
Additional operational expenditure	0	0	0	0
Additional capital expenditure	3	0.85	0	3.85
Emergency work	2	0	0	2
Investigation, design, supervision	1	0.85	0	1.85
Any other funding sources	0	0	0	0
Total additional funding requested	3	0.85	0	3.85

35. While the current consultancy works will scope and determine the final works, preliminary assumptions around construction indicate it may cost between $10 million and $20 million, depending on the extent of contamination from the landfill.

36. As there is a degree of uncertainty, it is recommended that committee consider this expenditure in March 2018 when more information is available.

Ngā raru tūpono / Risks

37. There are several risks associated from not undertaking further work to remediate the site, including potential further land movement and instability, permanent access issues, costs associated with managing infrastructure, environmental risk and reputational risk from no action.

38. The land instability risk is well understood. Without remediation, the land will continue to move, and more contaminated material will slowly migrate to private properties at the south of the site. There is no stability risk to these houses, but their land will be affected by the contamination. There are also safety risks to any people who access the moving slope from private land or from closed-off walkways into the reserve.

39. Without remediation, sudden failures of the slope are likely, and the area of land in front of the emergency works will fail over time, leaving a retained sheet pile face of up to 7 meters within private properties at the back of the shops. This may in time further impact on the stability of adjacent land to the sides of the slip. The car park and back access to the shops and properties will remain fenced off for public safety at the council’s cost.

40. The stormwater and wastewater that is currently being pumped out of the landslide will continue to need to be pumped, at growing operational expense (currently $80,000 per month), because it cannot be fixed safely. These systems will fail at times when the land beneath them moves, leading to environmental risks from the uncontrolled release of raw sewage and stormwater that will not only contaminate the site further but also the downstream reserve and ponds.

41. The current risk of instability above the proposed stormwater improvement project at Chelsea Estate will mean that the project cannot be built as planned for safety reasons. It may have to be cancelled or subject to significant cost and programme over-runs if the remediation works at Rawene are not progressed, because the risk of sudden slips means that construction workers will not have time to evacuate the site safely.

42. The remedial works will stabilise the site, without which there is no opportunity for further development. There is a risk that the community may become confused between the council’s plans to stabilise the site, and wider development plans which may bring car parking or other amenity. For clarity, this funding request only covers remediating the site.

43. Inaction and failure to remediate this landslide would negatively impact on the council’s trust and confidence score through community dissatisfaction.

Ngā koringa ā-muri / Next steps

44. Subject to committee approval, staff will progress the remediation design works at Rawene with a view to seeking committee approval for the unbudgeted expenditure for construction remediation in March 2018.

Updated City Centre Targeted Rate funded Programme of work

Horopaki / Context

45. The City Centre Targeted Rate funded programme of work is regularly reviewed, updated and discussed with the Auckland City Centre Advisory Board to respond to any significant changes or new proposals.

46. The Auckland City Centre Advisory Board endorsed the previous City Centre Targeted Rate funded programme of work (TR6) on 6 March 2017 (resolution CEN/2017/12).

Tātaritanga me ngā tohutohu / Analysis and advice

47. The most recent update of the programme of works (TR7) contains mainly timing adjustments to existing projects, which reflects changing priorities in the city centre and the delivery pace. Key changes include:

a) Quay Street Public Real Upgrade is proposed to be brought forward. Whilst this forms part of the infrastructure programme for the America’s Cup (AC36), Quay Street upgrade needs to proceed irrespective of the final decision on AC36.

b) Albert Street upgrade is proposed to be deferred by one year as informed by the progress of City Rail Link construction.

c) Additional funding of $45,000 is proposed for the Heart of the City Queen Street feature lighting project. This is due to an increase in budget required by the Heart of the City since the project was first endorsed.

d) Additional funding of $35,000 to complete Beach Road cycleway rehabilitation work. This work is being jointly funded by Community Facilities and the City Centre Targeted Rate.

e) The Communications budget has been decreased by $300,000 per annum to reflect the actual spend over the last three years and the anticipated spend over the next seven years.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe / Local impacts and local board views

48. The latest iteration of the programme of works has not been discussed independently with the Waitematā Local Board. However, there is a local board representative on the Auckland City Centre Advisory Board.

Tauākī whakaaweawe Māori / Māori impact statement

49. Engagement with mana whenua will be ongoing throughout the implementation of the programme of works.

Ngā ritenga ā-pūtea / Financial implications

50. The planned spend of the city centre targeted rate fund is $21.3 million for 2017/2018. The revised spend is $14.7 million for the current year, which means overall $6.6 million spend is deferred. The targeted rate reserve balance remains positive.

Ngā raru tūpono / Risks

51. There is no material risk identified.

Ngā koringa ā-muri / Next steps

52. The Auckland City Centre Advisory Board is anticipating a more significant review of the programme during 2018 that will most likely include greater movement and changes.

Wynyard Quarter land acquisition

Horopaki / Context

53. The Wynyard Quarter (WQ) South Road Upgrades project seeks to give effect to the objectives of the Auckland City Council District Plan – Plan Change 4. The objectives include providing a high quality public realm and a fully functioning, multimodal transport network.

54. The scope of the project involves the streetscape, public space and civil infrastructure upgrades to the roads (shown in Figure 1), the development of Central Park (also known as Wynyard Common) and the continuation of the Daldy Street Linear Park from Pakenham Street to Fanshawe Street.

55. The overall project has three overarching delivery packages defined as the WQ Eastern Package, WQ Central Package and WQ Western Package as shown in Figure 1.

Figure 1: WQ South Road Upgrades extent

56. An overarching Heads of Agreement (HoA) between then Auckland City Council and Viaduct Harbour Holdings Limited was formed in 2010. This determines the upgrade works are to occur concurrently with private development. A subsequent HoA was formed between Auckland Council, Infratil Infrastructure Property Limited and Transport Auckland Corporate Limited (NZ Bus) in 2015, where the council intended to acquire the leasehold interests of the other parties for the purpose of the Central Park under the Public Works Act 1981.

57. Auckland Transport, on behalf of Panuku Development Auckland, is leading the development of the park elements.

Tātaritanga me ngā tohutohu / Analysis and advice

58. Planning is underway to deliver the road and park upgrades within the WQ Central package from June 2018 to December 2019.

59. Property acquisition is required to enable the delivery of the park elements within the WQ Central Package. The two sites are identified as follows, at an estimated total cost of up to $16 million.

· 155-167 Fanshawe Street Auckland - Mansons Fanshawe Ltd (Property Owner)

Current status: conditional offer made

· 100 Halsey Street, Auckland - Infratil Infrastructure Property (Lessee)

Current status: verbal agreement reached

60. To enable the delivery of this package, and to avoid delays to the project or a misalignment between the road and park upgrades, and private development, budget is required for the two property acquisitions this financial year.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe / Local impacts and local board views

61. The park design was workshopped with the Waitematā Local Board on 24 October 2017. The board directed staff to further consider the following issues:

· select plant species that will attract bees

· consider enclosing the sheltered space in front of the public toilet to prevent rough sleeping and monitor the situation

· consider incorporating a drinking fountain into the design

· share the outcome of mana whenua engagement on selection of tree species

· consider incorporating cycle parking and seats with backs in the design

· assess the play provision.

62. The Waitematā local board provided formal approval for the linear and central parks adoption on the 12 December 2017.

Tauākī whakaaweawe Māori / Māori impact statement

63. Engagement with mana whenua has occurred over several years for the development of public spaces (streets and parks) in Wynyard Quarter. Outcomes from the engagement have been integrated into a range of aspects including suggested names, plant species selection, stormwater management (e.g. rain gardens), art interpretation, and commercial opportunities (e.g. maintenance contracts).

64. Ongoing engagement has informed many aspects of the overall design approach for Wynyard Quarter and particularly the park designs.

65. Most recently, the concept design for the neighbourhood park was presented to Panuku’s working group at its 28 August 2017 meeting. The working group has mana whenua representation.

Ngā ritenga ā-pūtea / Financial implications

66. The parks element within the Wynyard Quarter South Road Upgrade is in the top quartile of priorities in terms of delivery from Auckland Transport’s perspective in the context of Long-term Plan 2018-2028.

67. Given the progress of the negotiations, the purchase is likely to occur in 2017/2018 and $16 million capital expenditure budget would be required now.

68. AT has indicated that it could complete the acquisition with the potential capex underspend in the current year, and at the same time defer the projects of underspend to the future years, resulting in little change to the capex profile across years. In another word, it is proposed that the capex for land acquisition could be provided for in the current financial year through project timing adjustment. Auckland Transport is seeking the council’s approval on this approach.

Key financial breakdown:

$m	FY18	FY19	FY20	10-year impact
Additional operational expenditure	0	0	0	0
Additional capital expenditure	16	(16)	0	0
Land acquisition	16	(16)	0	0
Any other funding sources	0	0	0	0
Total additional funding requested	16	(16)	0	0

Ngā raru tūpono / Risks

69. Delaying the property acquisition will have wider programme and cost implications. Changes in the market may lead to an increase in cost to acquire the land necessary to deliver the project. As development occurs in Wynyard Quarter, ground rentals go up and therefore the cost to acquire interests in land will also go up. Given that America’s Cup is a driver for development, construction within the quarter is progressing at speed to get tenants in.

Ngā koringa ā-muri / Next steps

70. If approved, Auckland Transport will proceed with the land acquisition, provided for from the capex underspend in the current year. Auckland Transport board and management will determine the appropriate projects for deferral, with a view to retaining the current profile of the capital programme across years.

New head office lease for ATEED

Horopaki / Context

71. ATEED’s lease at 139 Quay Street expires on 31 December 2018, with no automatic right of renewal. The ATEED board approved the negotiation of a new lease, following a recommendation by the ATEED Leadership Team.

Tātaritanga me ngā tohutohu / Analysis and advice

72. A detailed business case recommended a preferred lease option chosen from a shortlist of four (including 135 Albert Street). The preferred option was approved by the board on 25 January 2018.

73. The preferred option was favoured because the floor space:

· represents the best value for money in terms of net rent ($4.7m less than staying in the current location) over the proposed nine-year lease term.

· can be fitted out without incurring the cost of temporary decanting of staff (estimated at $0.6m), and associated disruption.

· provides a space and floor configuration in line with the council workplace strategy principles, and allows an improved customer experience as ATEED collaborates with partners to deliver its strategic priorities.

· is closer to Auckland Council, other CCOs, commercial partners and the Wynyard Quarter Innovation Precinct.

· is part of a modern building with a five star energy efficiency rating, and the best end-of-journey facilities of all the options.

74. The process has been facilitated by the council’s Corporate Property Team, with specialist input from Panuku Development Auckland’s commercial property manager. This ensured that ATEED used the specialist advice and expertise available through the shared service agreement, and decisions align with the council group workplace and property strategies.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe / Local impacts and local board views

75. Local boards were not consulted as this issue is a corporate matter and not specific to any particular local boards.

Tauākī whakaaweawe Māori / Māori impact statement

76. ATEED will seek consultation with the appropriate parties to incorporate Maori principles and design into a new workplace over the next ten months.

Ngā ritenga ā-pūtea / Financial implications

77. The cost of the lease and associated capital expenditure costs of up to $3.2m for the fit-out has been included in the ATEED’s 2018/19 business plan, but not in the Long-term Plan 2015-2025.

78. In addition, there is one-off opex of $0.8 million for the make good of the current head office at 139 Quay Street which ATEED has not budgeted.

Key financial breakdown:

$m	FY18	FY19	FY20	10-year impact
Additional operational expenditure	0	0.8	0	0.8
Make good	0	0.8	0	0.8
Additional capital expenditure	0	3.2	0	3.2
Building and Construction	0	2.1	0	2.1
Furniture and Office Equipment	0	0.8	0	0.8
Design Work	0	0.2	0	0.2
Consultancy	0	0.1	0	0.1
Any other funding sources	0	0	0	0
Total additional funding requested	0	4.0	0	4.0

Ngā raru tūpono / Risks

79. There is a risk that a delay may add costs. ATEED’s 2018/19 Business Plan includes $3.2m for fit out costs (as advised by the council Corporate Property team). If the signing of the final lease is delayed beyond early March, it may impact on the subsequent timing and cost of the fit out programme. To mitigate this risk, ATEED will work with Panuku and Auckland Council Corporate Property teams to manage delays within the fit out programme.

80. ATEED will prepare a communications plan and inform councillors of any material milestones or decisions in the process as part of the ‘no surprises’ policy.

81. ATEED will communicate the benefits of the new premises to staff and business partners and address any concerns associated with the relocation away from 139 Quay Street. Through developed plans and processes enabling agile working, ATEED will adapt to new ways of working and use collaboration spaces within new premises to enhance ATEED’s partnership opportunities and subsequent outcomes for Auckland.

Ngā koringa ā-muri / Next steps

82. Subject to committee approval, ATEED will undertake a Workplace programme of work. In late February a business case will recommend to ATEED’s Leadership Team a vision, purpose, and scope of work for the new premises.

83. A project Steering Group which includes representatives from Panuku Development Auckland and Council Corporate Property team will be accountable the delivery of the relocation in December 2018.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Final City Centre Targeted rate funded programme of works (TR7)	119

Ngā kaihaina / Signatories

Authors

Tracy Xu - Financial Analyst

Neil Huang - Principal Advisor

Authorisers

Ross Tucker - Acting General Manager, Financial Strategy and Planning

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

27 February 2018

Accomodation Provider Targeted Rate Remission

File No.: CP2018/01436

Te take mō te pūrongo / Purpose of the report

1. To agree options for consultation on an Accommodation Provider Targeted Rate (APTR) remission scheme.

Whakarāpopototanga matua / Executive summary

2. The 1 June 2017 meeting of the Finance and Performance committee directed officers to develop a remission scheme for accommodation providers who were unable to pass on the cost of the APTR through higher charges. Remissions only apply where contracts were entered into before the decision to apply the rate on 1 June 2017.

Serviced apartments

3. Many serviced apartments are under contract to a hotel operator where the ratepayer is unable to pass on the cost of the rate and cannot exit the contract.

4. Officers recommend remission where the ratepayer owns no more than two serviced apartments as this represents an average investment of $485,000. Smaller investors are less able to assess, and more exposed to, the risks of contracts they enter into. This remission would cost up to $1.2 million in 2018/2019. Consideration was also given to extending eligibility to investors owning up to four apartments at an additional cost of $110,000 in 2018/2019, but is not recommended

5. Officers recommend phasing out the remission for serviced apartments in equal steps over ten years. This reduces the impact on other ratepayers, and recognises that owners of serviced apartments should bear some responsibility for the contracts they entered into. A phased remission will expire in 2028, with an estimated cost $4 million (uninflated) over the period.

Emergency accommodation

6. Where a property is contracted to provide emergency accommodation, officers recommend that the APTR should be remitted in proportion to the time and the share of the property that is put to this use.

Forward contracts

7. Officers do not recommend remissions for forward contracts. All businesses book accommodation in advance and should manage the risk of the contracts they enter into. Most of the contracts viewed expire in 2018, all include exit clauses and some already allow the cost to be passed on. If the committee wishes to offer a remission it should only be for business to business contracts for 2018/2019. The estimated cost of a remission for 2018/2019 is $700,000 based on contracts viewed to date. There is a risk the remission will be higher if more hotels apply.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) agree to consult on a remission scheme to remit the Accommodation provider targeted rate (APTR) with the following criteria:

i) a remission of the APTR will be available for rating units used as serviced apartments, where the ratepayer owns no more than two rating units that attract the APTR and has a contract with an accommodation operator that:

A. was entered into before 1 June 2017

B. does not allow the ratepayer to pass on the cost of the rate

C. cannot be exited before the start of rating year.

ii) a partial remission under a) above will apply where the contract with the accommodation operator expires during the rating year.

b) the remission scheme for serviced apartments will expire 30 June 2028, with the amount of rate remitted declining in equal steps each year, from 100 per cent in 2018/2019 to 10 per cent in 2027/2028

c) a remission of the APTR will be available for rating units used as emergency accommodation, in proportion to the amount of time and the part of the property that is put to this use.

Horopaki / Context

8. In 2017 the council adopted the APTR to fund around half the visitor attraction and major events expenditure of Auckland Tourism Events and Economic Development. The rate applies to all commercial accommodation providers, including hotels, motels and serviced apartments. The rate is applied differentially based on the type of accommodation and location of the provider, see Attachment B: Accommodation provider targeted rate.

9. During consultation on the APTR, feedback from the accommodation sector noted that not all recipients of the rate would be able to pass it on through higher accommodation prices. This was because:

· some providers have entered into forward contracts for some of their future capacity which means they cannot raise prices

· some owners of serviced apartments have long-term agreements with hotel operators under which they are liable for the payment of rates but cannot influence the price for which rooms are sold.

10. In response to this feedback, council agreed to consider remissions of the APTR under the remission scheme for miscellaneous purposes. The Remission of rates for miscellaneous purposes is suitable for transition purposes. The council also directed staff to report back on a remission scheme designed to address these issues from 2018/2019. Developing an APTR remission scheme allows the council to specifically consider these issues in detail.

11. As at January 2018 $1.8 million has been remitted under the Remission of rates for miscellaneous purposes as follows:

· 1,432 applications due to the ratepayer not being able to pass the cost of the remission to the hotel operator. Of these 793 have been approved at a cost of $1.63 million. 481 requests have been declined as the ratepayer and hotel accommodation provider were related entities. The remainder are awaiting further information.

· Three applications for accommodation booked in advance have been received from properties with a combined APTR of $930,000. To date $220,000 has been remitted based on the number of rooms committed and duration of booking. A further five hotels (with a combined APTR of $2 million) have indicated they will apply.

Tātaritanga me ngā tohutohu / Analysis and advice

12. A summary of options is in Attachment A to this report.

Serviced Apartments

13. Many serviced apartments and some hotels are owned by investors as landlords who have a contract with a hotel operator. Whether the landlord is required to pay rates, or is able to re-coup the cost, depends on the contract and the nature of the relationship between the two parties.

14. Officers have reviewed a range of leases for commercial accommodation. Some lease contracts pay a share of the gross revenue to the landlord. As the effect of the APTR is to lift hotel room prices revenue should increase for these properties. Officers do not recommend remission of the APTR for these arrangements.

15. Officers recommend that remission of APTR be considered where the lease contract:

· was entered into before 1 June 2017, when the APTR was agreed by council.

· is not able to be exited before the start of the rating year in which remission is sought

· where the amount of rent is fixed and the ratepayer bears the cost of the rate.

16. In considering eligibility for a remission officers note that all investors should understand the risks of contracts they enter into. As size of investment increases, the greater the requirement for due diligence to be undertaken.

17. Compared to large investors, small investors tend to have less access to advice, less ability to negotiate the terms of the contracts before signing, and are less able to manage increasing costs. Staff therefore recommend that the remission scheme should focus on smaller investors, who own a limited number of serviced apartments. Ratepayers who own large numbers of apartments or entire hotel buildings should be excluded.

18. The table following shows the number of ratepayers owning serviced apartments within buildings that are known to use leases that meet the proposed criteria for remission, and where leases extend beyond 30 June 2018. (Not all rating units within each building may be subject to the same contract).

No of ratepayers	No of apartments owned by ratepayer	Total APTR	Average total value (CV) of apartments owned by ratepayer
387	1	$775,050	$265,103
37	2	$134,932	$485,811
8	3	$43,855	$747,500
3	4	$18,013	$853,333
2	5-6	$20,548	$1,570,000
2	45-60	$212,784	$13,112,000

19. Based on the above officers consider that the remission should be available for ratepayers who own one or two serviced apartments.

20. It is estimated that a remission scheme available to ratepayers that own no more than two serviced apartments would cost up to $1.2 million in 2018/2019. This is based on:

· $900,000 for apartments in building known to have leases that would qualify for remission

· $300,000 for apartments in buildings where the nature of the lease is unknown as no applications have yet been received for these properties.

21. Extending the remission scheme to ratepayers who own up to four apartments would increase the cost by $110,000 for 2018/2019.

Duration of remission for serviced apartments

22. Landlords with the most restrictive leases can be locked into the contracts for up to 30 years. The longest running lease viewed by officers expires in 2047. Officers recommend that the remission be phased out over ten years to:

· reduce the impact on other ratepayers

· reflect that small investors entered into their leases freely, and should bear some of the cost of their investment decisions.

23. The amount of remission available would decline equally each year, so that 100 per cent remission would be granted in 2018/2019, declining to 10 per cent in 2027/2028. A remission scheme on this basis would cost $4 million (uninflated) over the ten years.

24. If the remission scheme is not phased out then applications for remission could continue to be made until 2047, with an additional cost of $10 million (uninflated) over the lifetime of the scheme.

Emergency Housing

25. Some motels have leased units to Work and Income New Zealand (WINZ) which are then used as accommodation for WINZ clients requiring emergency housing. Properties used as emergency housing by central government on a long-term basis are rated as residential and do not attract the APTR.

26. The number of units and duration of the lease to WINZ can vary, with the units reverting to commercial accommodation when not use by WINZ. Officers recommend that a partial remission of the APTR be offered in these circumstances to align our rating treatment with permanent emergency accommodation. Any remission should be a proportion of the rate based on the number units/nights utilised by WINZ compared to the total number/nights available of motel rooms.

27. Two applications have been received for the current year for a remission on this basis. Estimated potential remissions are less than $50,000.

Forward Bookings

28. Officers have reviewed forward booking contracts from three hotels that have applied for remission. Contracts viewed included seven for long-term accommodation bookings for businesses such as airlines. A large number of individual contracts were also received for bookings by tour companies. These were either recurring bookings for tour groups, or advanced booking for large events.

29. All contracts sighted expired within three years, and had termination clauses of three months or less. Contracts often allow cancellations or variations. Two contracts enabled pass through of the rate. Companies entering into such contracts have the ability to negotiate the terms and should bear the risks.

30. Officers do not recommend offering remissions for forward bookings. All accommodation providers take bookings in advance. The council has provided remissions for the 2017/2018 year to facilitate a transition to the new rate. Reviewing applications requires significant council resource. In some instances officers have been required to view contracts offsite.

31. If the council wishes to support accommodation providers with forward bookings, then remissions should only be offered for long-term business to business contracts (not individual bookings). A remission expiring 30 Jun 2019 would capture 90 per cent of current contracts (based on our analysis of contracts viewed.)

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

32. The governing body has decision making authority for the Rates remission and postponement policy. Local Boards will have the opportunity to provide feedback on the proposed policy including the APTR remission scheme in May.

Tauākī whakaaweawe Māori / Māori impact statement

33. The council does not hold information on the ethnicity of ratepayers so is not able to identify the exact impact of policy changes on Māori. The impact of the policy options on Māori will be similar to that on other residents in Auckland.

Ngā ritenga ā-pūtea / Financial implications

34. The cost of the APTR remission as set out in this report will be funded from general rates. Costs will decline over ten to 30 years.

Ngā raru tūpono / Risks

35. Officers cannot determine the maximum possible remission for serviced apartments. There is uncertainty regarding remissions for forward bookings in the first year. Large hotels (the most likely to apply) account for 60 per cent of total APTR applied. The financial risks of the proposed policy are not material.

Ngā koringa ā-muri / Next steps

36. The remission scheme for the APTR will be included in the draft Rates remission and postponement policy for public consultation which is to be agreed at this meeting.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Options table	141
b ⇩	Accomodation provider targeted rate	143

Ngā kaihaina / Signatories

Authors

Beth Sullivan - Principal Advisor Policy

Andrew Duncan - Manager Financial Policy

Authorisers

Ross Tucker - Acting General Manager, Financial Strategy and Planning

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

27 February 2018

Rates remission and postponement policy review

File No.: CP2018/01393

Te take mō te pūrongo / Purpose of the report

1. To agree proposed changes to the rates remission and postponement policy for consultation.

Whakarāpopototanga matua / Executive summary

2. The council is required to review its rates remission and postponement policy every six years. The current policy includes seven regional schemes and eleven legacy schemes carried over from the former councils that are only available within the former districts.

3. The regional schemes have been reviewed and the following amendments are proposed:

· remission for residents of licence to occupy retirement villages and Papakāinga housing:

remove references to retirement villages to reflect change in legislation that enables such properties to access central government’s rates rebate scheme

remove references to interim transport levy should council remove this rate.

· remission of rates penalties: reduce criteria to simplify administration

· remission for rates transition management policy changed properties: to be removed as it is redundant following the expiry of legislation allowing rates transition.

4. The legacy schemes have been reviewed and it is proposed that they be replaced with regional or local grants as appropriate (excluding the postponement for Manukau sports clubs). A three-year transition is proposed for current recipients during which they will receive their current funding via a grant. At the end of transition they would need to apply for renewal. The use of grants and a three-year transition ensures that:

· spending decisions are transparent and subject to the same scrutiny of value for money as other expenditure

· affordability is managed for existing recipients.

5. It is proposed that the postponement for Manukau sports clubs is removed after a three year transition period.

6. Officers will report back within the transition period on the integration of the legacy grants with the council’s strategies for funding local community and sports facilities.

Policy for Consultation

7. The statement of proposal and draft Rates remission and postponement policy for consultation are in Attachments D and E to this report, respectively. The consultation materials include the proposed Remission for the accommodation provider targeted rate which is reported on separately on the agenda for this meeting.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) agree to consult on the proposed amendments to the Rates remission and postponement policy attached to this report

b) note that the proposed amendments to the rates remission and postponement policy include:

i) amendments to regional schemes

ii) removal of legacy remission schemes and the Great Barrier Island postponement for commercial properties from the policy, to instead be provided for through regional and local asset-based services grants schemes (with a three year transition period)

iii) removal of postponement for two golf clubs in the former Manukau District after three years

c) direct officers to report back on options for integrating local legacy grants into a broader approach to delivering community and sporting facilities within three years.

d) delegate responsibility for finalising consultation material to the Chair of the Finance and Performance Committee and the Chief Financial Officer.

Horopaki / Context

8. The Rates remission and postponement policy was adopted in June 2012. The Local Government Act 2002 requires the council to review this policy every six years.

9. The policy has seven regional schemes that are available to all ratepayers:

· Remission of rates to top-up the rates rebate	· Remission of rates penalties
· Remission for residents of licence to occupy retirement villages and Papakāinga housing	· Remission of rates for miscellaneous purposes
· Remission of uniform annual general charges and targeted rates levied as uniform annual charges on certain rating units	· Remission for rates transition management policy change properties
· Postponement of rates for residential properties.

10. There are eleven legacy remissions and postponement schemes:

Outcome supported	Type of support	Area offered
Community and sporting organisations	Remission	Auckland Regional Council (5% of rates) Franklin, North Shore, Rodney
Community and sporting organisations	Postponement	Manukau
Natural, cultural or heritage	Remission	Auckland City, Franklin, Papakura, Auckland Regional Council (5% of rates), Rodney
Commercial	Postponement	Great Barrier Island

11. A description of each scheme, along with the number of recipients and the total cost of the scheme can be found in Attachment B.

Tātaritanga me ngā tohutohu / Analysis and advice

Regional schemes

12. Officers have reviewed these schemes and consider they are meeting the objectives of the policy. The following changes are recommended to accommodate legislative change and facilitate administration.

Remission for residents of licence to occupy retirement villages and Papakāinga housing

13. This scheme provides a remission of the UAGC and the Interim Transport Levy (ITL) for residents of retirement villages and Papakāinga who have a licence to occupy ($518 in 2017/2018). In 2016/17 $740,000 was remitted for 1,450 residents. The scheme provides assistance to these ratepayers because the government’s rates rebate scheme was not open to those who are liable for rates under licence to occupy agreements.

14. The government has recently passed legislation^{^[1]} that makes residents of licence to occupy retirement villages eligible for the rebate^{^[2]}. The legislation does not cover Papakāinga housing. In addition the council is proposing to remove the ITL.

15. Officers recommend that the scheme be amended to:

· remove eligibility for residents of licence to occupy retirement villages

· remove the reference to the ITL if it is removed as a rate.

16. The remission for Papakāinga housing will be retained. The effect of these changes will be to save $740,000 in remissions.

Remission of rates penalties

17. This scheme allows the council to remit rates penalties where it would be fair to do so. In 2016/2017 $1.6 million was remitted for 16,300 ratepayers (an average of $95 per applicant).

18. Some criteria in this scheme are unnecessary. Circumstances such as the ratepayer has experienced “significant family disruption” such as illness, death, fire or theft can be addressed through the criterion allowing remission if the ratepayer enters into and keeps an agreement to pay their arrears. Officers recommend reducing the number of criteria in this scheme to facilitate administration and reduce the distress on those where penalties have accumulated due to unfortunate personal circumstances. The changes will not change eligibility for remission. The changes are cost neutral.

Remission for rates transition management policy change properties

19. This scheme supported the application of the Rates transition management policy[3] that expired on 30 June 2015. The scheme is redundant and will be removed.

Legacy Remission Schemes

Proposal: Legacy remission schemes and Great Barrier Island commercial postponements

20. It is proposed to remove the legacy schemes (including the Postponement of rates for commercial properties on Great Barrier Island) and replace them with grants with a three year transition period. This would provide certainty for recipients with no change in the level of support for three years.

21. During the three-year transition period it is proposed that current recipients will receive the same level of support adjusted for any changes in their rates. The types of outcomes the remissions support are delivered in different forms across the city reflecting the approaches taken by the legacy councils. In some areas the council owns facilities and in others supports community owners. The transition period allows decisions on the future of the grants to be integrated into wider decision making on the council’s delivery of these outcomes.

22. The following table sets out how the relevant remissions can be assigned to grants. Support for organisations that operate regionally is proposed to be allocated to regional budgets to facilitate consistent treatment.

Remission/Postponement For	Aligns with	Proposed allocation of grant to
Natural heritage	Regional	Regional Environment and Natural Heritage Grants Programme
Historic Heritage	Regional	Regional Historic Heritage Grants Programme
Regional or sub-regional sports facilities	Regional	Regional Sports and Recreation Grants Programme
Local sports clubs and facilities	Local	Local Board where property receiving remission is located
Regional or sub-regional community facilities	Regional	Regional Community Development Grants programmes
Local community organisations and facilities	Local	Local Board where property receiving remission is located
Great Barrier businesses	Local	Great Barrier Local Board

23. This options ensures the expenditure of ratepayers money to support these activities is:

· subject to the same scrutiny of value for money as other expenditure

· integrated with decision making on other similar expenditure decisions

· transparent

· affordable for existing recipients.

24. Recipients of the scheme who are GST registered will not be impacted by having to pay GST that is currently remitted. Those who are not will have to pay the GST and face a 13 per cent reduction in council support.

25. There is no net cost to ratepayers of converting rates remissions to grants. This option will increase the council’s grants and other budget lines by $900,000. This increase is offset by the increase in rates revenue of $900,000 resulting from remissions no longer being applied. The amount of grants will be adjusted for the increase in rates in the subsequent two years.

Alternative options

26. Consideration was given to three alternatives. Retaining the current schemes is not recommended as it is inequitable for other parts of the region. Immediate removal of the schemes would provide no opportunity for the current recipients to adjust to the change in council support. Extension of the schemes to the entire region is not recommended as the potential cost ($4.5 to $6.0 million per year) is too high relative to the likely benefits in terms of outcomes.

A full analysis of the options is set out in Attachment A

Proposal: Postponement for sports clubs in the district of the former Manukau City Council

27. It is proposed that the scheme be amended to:

· restrict the scheme to the current recipients

· remove the clause permitting the council to write off the debt

· set an expiry date for the scheme of 30 June 2021.

28. The current beneficiaries of the scheme are two golf clubs. The total current liability including interest is $880,000. One club has repaid a portion of its liability following the sale of part of the property for development, and has chosen to pay rather than postpone the current year’s rates. One further property is eligible under the scheme, but has never applied for postponement.

29. This postponement scheme should be ended after a transition period. Offering postponements to an extremely limited number of clubs is inequitable to other clubs in similar circumstances. Future funding for these clubs should be in accordance with the principles of the Sports Facility Investment Plan, which does not recommend the use of rates postponements.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe /
Local impacts and local board views

30. Local boards considered a proposal to transfer legacy remissions to grants at their December meetings. Feedback from the boards is in attachment F to this report.

31. Eight local boards supported replacing the legacy schemes with grants and nine were opposed. Six of the boards that were opposed have a legacy local council scheme for community and sporting activities and receive $350,000 (85 per cent) of the local community and sporting rates remissions.

32. The boards supporting retention of remissions were concerned that the proposal:

· did not address the existing inequities between board areas in how community and sports facilities are supported by council

· lacked certainty regarding ongoing funding

· did not integrate with the draft Sports Facility Investment Plan.

33. In response to this feedback the proposal has been modified so that:

i) remissions classed as local are transferred to a new local asset based grants budget

ii) officers are directed to report on the integration of the legacy grants with the council’s investment strategies for sports and community facilities within the three year transition.

Tauākī whakaaweawe Māori / Māori impact statement

34. None of the properties presently receiving remissions or postponements under the legacy schemes recommended to transfer to grants are known to be Māori owned or operated. The remission scheme for Papakāinga house will remain unchanged.

Ngā ritenga ā-pūtea / Financial implications

35. Removing remissions from licence to occupy retirement villages will result in a reduction of rates requirement of $740,000. The other changes are cost neutral.

Ngā raru tūpono / Risks

36. There are no significant risks with this proposal.

Ngā koringa ā-muri / Next steps

37. Consultation including direct correspondence with all current recipients.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Options table for Legacy remissions	151
b ⇩	Summary of current remission and postponement schemes	153
c ⇩	Current Rates remission and postponement policy	159
d ⇩	Proposal to amend the Rates remission and postponement policy	177
e ⇩	Draft Rates remission and postponement policy	185
f ⇩	Local Board feedback	195
g ⇩	List of remissions for community and sports organisations - Confidential

Ngā kaihaina / Signatories

Authors

Beth Sullivan - Principal Advisor Policy

Andrew Duncan - Manager Financial Policy

Authorisers

Ross Tucker - Acting General Manager, Financial Strategy and Planning

Matthew Walker - Acting Group Chief Financial Officer

[1] Rates Rebate (Retirement Village Residents) Amendment Act 2018.

[2] The government scheme provides up to $620 depending on the level of rates and income whereas the council scheme provides a flat $518 to those who would have been eligible for any level of government rebate. As a result some current recipients of the remission will be better off and others slightly worse off.

[3] The Local Government (Auckland Transitional Provisions) Act 2010 enabled the council to adopt a Rates Transition Management Policy for three years ending 30 June 2015.

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

No.	Title	Page
a ⇩	Implementation Progress Report - Three Waters Review	211
b ⇩	Implementation Progress Report - Domestic Waste Services Review	219
c ⇩	Implementation Progress Report - Investment Attraction & Global Partnerships Review	229
d ⇩	Implementation Progress Report - Communication & Engagement	231

No.	Title	Page
a ⇩	Finance and Performance Forward Work Programme to 30 June 2018	235
b ⇨	Memo from Acting General Manager of Community Facilities, dated 18 January 2018 (Under Separate Cover)
c ⇨	7 February 2018 – Workshop minutes (Under Separate Cover)

Author	Sandra Gordon - Senior Governance Advisor
Authoriser	Matthew Walker - Acting Group Chief Financial Officer

Authors	John Bishop - Treasurer and General Manager Financial Transactions
Authorisers	Matthew Walker - Acting Group Chief Financial Officer