Agenda of Extraordinary 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

· 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

31 May 2018

10-year Budget 2018-2028 – local board feedback and advocacy

File No.: CP2018/08536

Te take mō te pūrongo / Purpose of the report

1. To provide an overview of local board feedback and advocacy on the 10-year Budget 2018-2028 (the 10-year Budget).

Whakarāpopototanga matua / Executive summary

2. As part of Auckland Council’s shared governance model, local boards have an important statutory role in the development of the 10-year Budget. This happens in three key ways:

· engaging with local communities and then preparing local board agreements, which are included in the 10-year Budget (Volume 3). Local board agreements detail local projects, budgets, performance measures and local fees and charges for 2018/2019

· providing feedback on regional topics

· advocating for projects/issues that are important to communities in their local board areas.

3. From 28 February to 28 March 2018, Council consulted with the public on the 10-year Budget. Each local board has now considered community feedback received for their local area and resolved feedback on the 10-year Budget for the consideration of the Governing Body.

4. Local board agreements will be approved by each local board between 5-7 June 2018, before being adopted by the Governing Body on 28 June 2018.

5. This report summarises feedback and advocacy from local boards on the 10-year Budget and focuses on common themes. As such, it does not include all of the matters raised in local board resolutions. A complete list of local board advocacy priorities is included in Attachment A, and a complete set of the local board resolutions on the 10-year Budget are provided in Attachment B.

6. Key themes arising from those local boards that resolved on regional issues in the 10-year Budget include:

· support for a regional fuel tax

· support for a water quality targeted rate and a natural environment targeted rate (the latter at the higher average rate of $47 per year per residential ratepayer)

· support for a rates increase of 2.5 percent for the first two years and 3.5 percent for years three to 10

· support for online accommodation providers that meet particular thresholds paying an accommodation provider targeted rate

· that the council-controlled organisations accountability policy should include engagement and relationships with local boards and should require council-controlled organisations to give effect to local board plans.

7. In general, the advocacy issues and key advocacy projects raised by local boards had a focus on what will be required to cope with the demands of Auckland’s projected population growth, development and intensification. The key themes include:

· the need for integrated transport infrastructure to support growth and development, including various transport improvements, particularly roading and rail priorities, and well-connected networks

· the provision of community facilities (including pools and multi-use sports and recreation facilities), particularly to accommodate growth

· addressing environmental concerns, such as coastal erosion, pest and weed management, waste management and water quality issues.

Ngā tūtohunga / Recommendation

That the Finance and Performance Committee:

a) consider feedback and advocacy from local boards when making decisions on the 10-year Budget 2018-2028.

Horopaki / Context

8. The 10-year Budget sets out Auckland Council’s priorities and how to pay for them. The Governing Body is responsible for the regional elements of the 10-year Budget and local boards develop annual local board agreements.

9. From 28 February to 28 March 2018, Council consulted with the public on the 10-year Budget. Overall Auckland Council received feedback through the following channels:

· written feedback – 26,556 hard copy and online forms, emails and letters

· in person – Council interacted with a total of 5,374 people through around 100 have your say events and community events

· social media – 114 comments were received through Facebook and Twitter.

10. Local boards considered consultation feedback related to their local board area and then passed resolutions detailing their feedback and advocacy to the 10-year Budget.

Tātaritanga me ngā tohutohu / Analysis and advice

11. This report outlines local board input into the regional elements of the 10-year Budget as follows:

· feedback on regional topics (transport, natural environment, rates and other changes and budget information)

· advocacy on projects/issues that are important to communities in each local board area, including the key advocacy projects.

Local board feedback on regional topics in the 10-year Budget 2018-2028

12. After considering feedback from their communities, local boards resolved on both their regional feedback and advocacy projects at their business meetings between 1-10 May 2018. This report summarises feedback from local boards, and focuses on common themes. As such, it does not include all of the matters raised in local board resolutions. The full set of local board resolutions are provided in Attachment B.

Topic 1: Transport

13. As the population grows, congestion (and the pollution it creates) is getting worse, safety is declining and businesses are struggling to move freight and people. As part of consultation on the 10-year Budget, Aucklanders were asked whether they would support a regional fuel tax of 10 cents per litre (plus GST) to help pay for improvements to the transport system.

14. The majority of local boards that provided views on this issue supported a regional fuel tax, these local boards are: Albert-Eden, Devonport-Takapuna, Franklin, Henderson-Massey, Hibiscus and Bays, Kaipātiki, Māngere-Ōtāhuhu, Maungakiekie-Tāmaki, Ōtara-Papatoetoe, Puketāpapa, Rodney, Waitākere Ranges, Waitematā and Whau (14 local boards).

15. While noting their support many local boards also made qualifications, with the key themes being:

· that public transport should be prioritised (Albert-Eden, Henderson-Massey, Mangere-Otahuhu, Maungakiekie-Tāmaki, Puketāpapa, Waitakere Ranges and Waitematā)

· the fuel tax should be spent equitably around the region, including on local projects (Franklin, Hibiscus and Bays, Mangere-Otahuhu, Ōtara-Papatoetoe, Rodney and Whau).

16. The Howick and Manurewa Local Boards specified that they do not support a fuel tax. The Howick Local Board noted that while transport projects are a priority, projects should be funded from cost savings within council and alternative funding sources. The Manurewa Local Board was concerned with affordability for lower income residents and requested that if a fuel tax is implemented funding should be spent equitably across the region.

17. The Great Barrier Local Board asked for an exemption from the Regional Fuel Tax. This is because the island has no public transport, fuel prices are already high and many residents use fuel for household energy needs.

18. The Franklin, Ōtara-Papatoetoe and Papakura Local Boards noted that they consider that other revenue collection systems should be considered for the future, such as congestion charges or a road tolling network.

19. Four local boards noted their concerns that the regional fuel tax will hit lower socio-economic groups the hardest (Henderson-Massey, Manurewa, Maungakiekie-Tāmaki and Papakura) and that this should be considered further.

Topic 2: Natural environment

Water quality targeted rate

20. Council is proposing to introduce a new targeted rate to accelerate the water quality improvement programme, which would speed up the delivery of cleaner harbours, beaches and streams. The proposed targeted rate would cost the average residential ratepayer $66 per year ($1.30 per week), although this will vary based on property value.

21. The majority of local boards supported the proposed water quality targeted rate: Albert-Eden, Devonport-Takapuna, Great Barrier, Henderson-Massey, Hibiscus and Bays, Kaipātiki, Māngere-Ōtāhuhu, Manurewa, Ōtara-Papatoetoe, Puketāpapa, Rodney, Waiheke, Waitākere Ranges, Waitematā and Whau (15 local boards).

22. While noting their support many local boards also made qualifications, key themes being:

· projects need to be spread equitably around the region (Hibiscus and Bays, Manurewa, Waiheke, Waitakere Ranges and Whau)

· some of the spending should be on local projects, managed by local boards (Devonport-Takapuna, Franklin, Hibiscus and Bays, Kaipatiki, Manurewa and Mangere-Otahuhu).

23. Other local boards supported the desired outcomes, just not the vehicle (targeted rates). For example, three local boards wanted a ‘fixed levy’ or ‘flat rate’ rather than a targeted rate (Orakei, Howick and Franklin). The Papakura Local Board would prefer that additional funding for water quality projects be generated by a rates increase and the Upper Harbour Local Board proposed that Council should re-prioritise its budgets to avoid the need for a water quality targeted rate.

Natural environment targeted rate

24. Auckland’s rapid growth is putting pressure on the environment. Council is proposing to invest more in environment initiatives and to fund this through a targeted rate (based on property value). Two options were provided for the natural environment targeted rate, Option A - a targeted rate at an average rate of $21 per year per residential ratepayer or Option B - a targeted rate at an average rate of $47 per year per residential ratepayer. Both options are based on property value.

25. The majority of local boards supported Option B: Albert-Eden, Devonport-Takapuna, Great Barrier, Henderson-Massey, Hibiscus and Bays, Kaipātiki, Manurewa, Ōtara-Papatoetoe, Rodney, Waiheke, Waitematā and Whau (12 local boards).

26. While noting their support many local boards also made qualifications, key themes being:

· some of the spending should be on projects (often specified) that are managed by local boards (Devonport-Takapuna, Hibiscus and Bays, Kaipatiki and Manurewa).

· projects need to be spread equitably around the region (Hibiscus and Bays, Franklin, Manurewa, Waiheke, Waitakere Ranges and Whau).

27. There was no support for Option A from local boards.

28. The Waitakere Ranges Local Board supported a higher natural environment targeted rate – an average rate of $66 per year per residential ratepayer. This would be to increase funding for the natural environment and to fully fund the Regional Pest Management Plan.

29. The Puketāpapa and Māngere-Ōtāhuhu Local Boards supported a targeted rate, but did not specify a level. The Māngere-Ōtāhuhu Local Board noted that affordability is a challenge for their community and that they already have a targeted rate for adult swimming pool entry.

30. Some local boards supported the desired outcomes, just not the vehicle (targeted rates):

· three local boards wanted a ‘fixed levy’ or ‘flat rate’ rather than a targeted rate (Orakei, Howick and Franklin). The Orakei Local Board also supported investigating a polluter pays targeted rate to specifically benefit the environment.

· the Upper Harbour Local Board believes that Council should re-prioritise its budgets to avoid the need for a targeted rate.

31. The Papakura Local Board has reservations about a targeted rate, is concerned about the focus of the programme and considers that projects need to be spread equitably around the region.

Topic 3: Rates and charges

Rates

32. Aucklanders were asked about a proposed rates increase of 2.5 percent for the first two years and 3.5 percent for years three to 10.

33. The majority of local boards supported the proposed rates increase: Albert-Eden, Devonport-Takapuna, Great Barrier, Henderson-Massey, Hibiscus and Bays, Kaipātiki, Māngere-Ōtāhuhu, Orākei, Puketāpapa, Waitematā and Whau (11 local boards).

34. The Henderson-Massey and Whau Local Boards noted that if the regional fuel tax does not go ahead, they consider that the rates increase would need to be significantly higher.

35. The Kaipātiki Local Board does not support the policy of reducing the business rate differential.

36. The Ōtara-Papatoetoe and Papakura Local Boards would prefer a higher general rates increase instead of the proposed targeted rates.

37. The Waitakere Ranges Local Board would like a higher rates increase of 3.5 per cent to enable more spending on natural environment projects, investment in community facilities and other core infrastructure. The Manurewa Local Board also supports the need for a 3.5 per cent rates increase to ‘cover the bills’.

38. Six local boards expressed concern around rates affordability, including with the additional targeted rates (Hibiscus and Bays, Puketāpapa, Papakura, Māngere-Ōtāhuhu, Manurewa and Ōtara-Papatoetoe).

39. Four local boards noted that there should be transparency about how rates (or targeted rates) are spent (Great Barrier, Maungakiekie-Tamaki, Manurewa and Papakura).

40. The Waiheke Local Board requests that there be a focus within the organisation to reduce costs.

Rating of the online accommodation sector

41. Aucklanders were asked about whether online accommodation providers that meet particular thresholds should pay business rates and the accommodation provider targeted rate.

42. The majority of local boards supported council’s proposal for rating of the online accommodation sector (13 local boards). Local board feedback can be divided into the following three categories:

· five local boards specifically supported online accommodation providers that meet particular thresholds paying business rates and the accommodation provider targeted rate: Albert-Eden, Devonport-Takapuna, Māngere-Ōtāhuhu, Orākei and Waitematā.

· seven local boards supported the accommodation provider targeted rate (but did not mention business rates): Great Barrier, Henderson-Massey, Hibiscus and Bays, Kaipātiki, Puketāpapa, Waiheke and Whau.

· the Rodney Local Board supported online accommodation providers that meet particular thresholds paying the accommodation provider targeted rate, however expressed concern about how the proposed business rate will be applied and administered.

43. The Henderson-Massey Local Board noted that it may be difficult to identify individual providers and this may contribute to avoidance behaviours for property owners who do not intend to operate in a fully commercial capacity.

44. The Whau Local Board noted the need for careful consideration of income thresholds so that, for example, older adults who are receiving a low level of income or accommodating students are not penalised.

45. The Manurewa Local Board recommended that Council do more work on the unintended consequential impacts, before implementing this rate.

Topic 4: Other changes and budget information

46. Eleven local boards passed resolutions on the council-controlled organisations accountability policy review (Albert-Eden, Devonport-Takapuna, Franklin, Hibiscus and Bays, Kaipātiki, Maungakiekie-Tāmaki, Orākei, Papakura, Puketāpapa, Rodney, Upper Harbour), key themes from the resolutions were:

· that the council-controlled organisations and Council (including local boards) should have trust and confidence in each other

· that council-controlled organisations should be obliged to consult with local boards and sufficient time should be provided for genuine engagement

· that council-controlled organisations must give effect and be cognisant of Local Board Plans and where relevant Area Plans to ensure that key local board priorities and projects are supported and integrated.

47. Local boards provided feedback on the Tūpuna Maunga Authority Draft Operational Plan:

· the Albert-Eden and Waitemata Local Boards specifically support the plan, with the Devonport-Takapuna Local Board providing detailed feedback which was generally supportive.

· the Papakura Local Board noted that their board is supportive of the establishment of the Tūpuna Maunga o Tāmaki Makaurau Authority to administer the Tūpuna Maunga.

48. Four local boards passed resolutions requesting that if Land Advisory Services introduce a new charging regime for council-owned land owner approval applications then this should exclude community groups and community organisations (Franklin, Hibiscus and Bays, Rodney and Waiheke).

49. Two local boards resolved on waste service charges (the proposed targeted rate to fund the food waste collection service and standardisation of user-pays refuse collection). The Waitemata Local Board supported the targeted rate, however the Orakei Local Board supported the ability for their residents to be able to opt-in or opt-out. Note that local board feedback on the draft Waste Management and Minimisation Plan has been analysed separately and sent to the Waste Hearings Panel for consideration.

50. Two local boards supported the proposal to disestablish Auckland Council Investments Limited (Waitakere Ranges and Waitemata) and two local boards did not support the proposal (Orakei and Papakura).

Local board advocacy

51. This triennium a three-year approach is being taken to progress local initiatives that are unable to be funded by local board budgets. The approach aims to better utilise the 10-year Budget and local board plan processes to progress and advise on a narrower range of local board initiatives, in a more comprehensive way.

52. As part of the Annual Budget 2017/2018 process, local boards began narrowing their priorities to one key advocacy project (also known as One Local Initiative or OLI). Local boards reconfirmed their OLI, and other advocacy in May 2018 and these are listed in the table below:

Local Board	Key advocacy initiative
Albert-Eden	Continue to implement the Chamberlain Park Masterplan - advocating for funding to reconfigure the existing golf course and creating a flat ‘sport park platform’ for the development of two sports fields.
Devonport-Takapuna	Securing the budget to address congestion issues on Lake Road.
Franklin	Karaka Sports Park - seeking funding of up to $30 million for developing the Karaka Sports Park as a multi-sport and community hub, including upgrades to the playing fields, replacing buildings, and new cycling and walking routes.
Great Barrier	Upgrade the service centre and local board office at Claris with an alternative energy system with electric vehicle chargers.
Henderson-Massey	A pool in the north west - advocating for prioritising construction of a pool for the north west area, including the purchase of land to prepare for the pool and future sports fields and local community facilities.
Hibiscus and Bays	Seeking $18 million capital funding for implementation of the Orewa Beach Esplanade Enhancement Project (OBEEP) using a phased approach.
Howick	Bring forward development of multi-use community facility and library, and the aquatic centre at Flat Bush.
Kaipātiki	Redevelopment of Birkenhead War Memorial Park.
Māngere-Ōtāhuhu	Māngere East Precinct: A priority focus and initiatives to enhance this centre as a thriving, liveable community.
Manurewa	Create Manurewa War Memorial Park as a multi-purpose shared space with improved utilisation of its playing fields and provision of greater access to community facilities.
Maungakiekie-Tāmaki	A transit-oriented development at Onehunga that combines rail and bus stops, and provides for future public transport connections, as part of the Onehunga Transform project.
Orākei	A walking and cycling linkage from Gowing Drive in Meadowbank, joining to the Glen Innes to Tamaki Drive Shared Path.
Ōtara-Papatoetoe	Discontinue paying interest on borrowing for Colin Dale Park.
Papakura	Development of a Park and Ride at the Papakura train station.
Puketāpapa	Liston retirement village - retaining seniors’ housing on the site and allowing for the entrance to Monte Cecilia Park to be expanded.
Rodney	Request a local indoor courts facility on Huapai Domain.
Upper Harbour	A sub-regional multi-use multi-sport indoor facility within the Upper Harbour area.
Waiheke	Matiatia Strategic Plan - that any future development is guided by this plan (once developed) and appropriate funding is allocated for both transport and non-transport infrastructure related priorities.
Waitākere Ranges	Advocating for the Glen Eden Urban Design Framework and Implementation Plan to be fully funded.
Waitematā	Ponsonby Park at 254 Ponsonby Road - Secure funding, resource and support to deliver the community’s agreed vision and chosen design for Ponsonby Park, 254 Ponsonby Road.
Whau	Whau pool and recreation centre – to be funded in the next five years.

53. Council departments provided local boards with information to help inform their position on these initiatives. Local boards then consulted their communities on their key advocacy project in the local board plan and/or the local board agreement process.

54. The OLIs have largely received strong public support, averaging around 65 per cent support where OLIs were specifically consulted on.

55. The process for making decisions on the OLIs post-consultation has been designed to ensure that all OLIs are progressed. Subject to Finance and Performance Committee decisions on the 10-year Budget, it is expected that all OLIs will receive funding for either project delivery, a business case, or investigation work. If funded for a business case or investigation work, there will be a pathway to receive delivery funding.

56. Subsequent to the OLI work being completed leading up to the draft 10-year Budget, cost estimates for some OLIs have increased, principally due to inflation costs based on expected delivery dates. The cost of the combined OLIs exceeds the $200 million OLI funding provisioned in the draft 10-year Budget. In order to progress all OLIs, other funding sources have been identified that could be used to fully or partly fund the OLIs, including the proposed regional fuel tax, development contributions for growth related projects (some dependent on policy changes), unallocated development funding, and some local boards have allocated locally driven initiatives funding.

Other local board advocacy

57. Most boards also identified additional advocacy issues, with common themes across many local boards including:

· the use of development contributions in local areas to deal with growth

· the need for integrated transport infrastructure to support growth and development, including various transport improvements, particularly roading and rail priorities, and well-connected networks

· equitable funding for and adequate provision of community facilities (including pools and multi-use sports and recreation facilities), particularly to accommodate growth

· addressing environmental concerns, such as coastal erosion, pest and weed management, waste management and water quality issues

· addressing social concerns, such as affordable and community housing options, and initiatives to reduce alcohol related harm.

58. The full set of advocacy initiatives identified by local boards are compiled in a table in Attachment A and are also included in the full local board resolutions in Attachment B.

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

59. Local boards have been involved throughout the development of the 10-year Budget. This has included:

· being briefed on key topics, often together with the Finance and Performance Committee

· leading community consultation on the 10-year Budget

· presenting feedback and advocacy to the Finance and Performance Committee.

60. Local board views and feedback on the 10-year Budget are provided in this report.

Tauākī whakaaweawe Māori / Māori impact statement

61. Many local board decisions are of importance to and impact on Māori. The 10-year Budget, including local board agreements, are important tools that enable and can demonstrate Council’s responsiveness to Māori.

62. Of those who submitted to the 10-year Budget, and provided their ethnicity, 1,623 (10 per cent) identified as Māori. There were also 16 submissions from iwi entities. Local boards considered submissions related to their local board rohe when finalising their feedback and advocacy positions for the 10-year Budget.

Ngā ritenga ā-pūtea / Financial implications

63. The 10-year Budget (long-term plan) is a statutory process which must be completed every three years. The Council budget provides for the resourcing to deliver this project. This report details local board feedback and advocacy on the content of the 10-year Budget.

Ngā raru tūpono / Risks

64. The Governing Body needs to consider feedback and advocacy from local boards as this is a legislative requirement and part of Auckland Council’s shared governance model.

Ngā koringa ā-muri / Next steps

65. Local boards will adopt their local board agreements between 5-7 June 2018 and the Governing Body will then adopt the 10-year Budget on 28 June 2018.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Local board advocacy priorities	21
b ⇨	Local board resolutions on the 10-year Budget (Under Separate Cover)

Ngā kaihaina / Signatories

Author

Rachel Wilson - Senior Policy Advisor

Authorisers

Louise Mason - GM Local Board Services

Phil Wilson - Governance Director

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

31 May 2018

Rodney Local Board Targeted Rate: Rodney Local Board Decision

File No.: CP2018/08695

Te take mō te pūrongo / Purpose of the report

1. To consider the decision from the Rodney Local Board in relation to the Targeted Transport Rate to support additional transport investment in the Rodney Local Board area.

Whakarāpopototanga matua / Executive summary

2. The Rodney Local Board considered a report from the Manager Financial Policy on a local transport targeted rate at its meeting on Thursday, 24 May 2018. Attached as Attachment A is the original report to the local board meeting of 24 May 2018. Subsequent to the agenda for that meeting being printed it was noted that the footpath list in the agenda (included from the local board’s meeting of 5 December 2017) differed from the list in the Long-term Plan consultation material. The amended original Attachment B is attached, along with a full version of the consultation material, as Attachment B to this agenda report.

3. The Board was provided with options to recommend to the Governing Body a proposed Targeted Transport Rate to support additional transport investment in the Rodney Local Board area.

4. At its meeting held on 24 May 2018, the Rodney Local Board resolved as follows:

Resolution number RD/2018/61

That the Rodney Local Board:

a) recommend that the Governing Body:

i) adopt an alternative Rodney Local Board Transport targeted rate of $150 per separately used or inhabited part of a rating unit within the Rodney Local Board area, to fund $46 million of transport improvements in the Rodney Local Board area over the next ten years as set out in the updated Attachment B to the agenda report tabled at the meeting and dated 22 May 2018, noting the additional debt impact, provided that the additional $85 million (total $121 million) for road sealing proposed in the Regional Land Transport Plan is adopted, and subject to the following amendments;

a. The Rodney Local Board, in consultation with Auckland Transport, rebalancing the proposed expenditure on the park and ride facilities in Kumeu and Warkworth and the proposed footpath programme set out in the tabled updated Attachment B to the agenda report (dated 22 May 2018) by reducing expenditure in the Wellsford and Kumeu subdivisions and increasing expenditure in the Warkworth subdivision to more equitably spread the level of investment per separately used or inhabited part of a rating unit (SUIP) across the three subdivisions

b. the following additions to the proposed footpath programme set out in the tabled updated Attachment B to the agenda report (dated 22 May 2018):

i) add the following footpaths:

1. Mahurangi East Road, Snells Beach (west side from number 198 to the Gull Service Station)

2. Albert Road to Hudson Road, Warkworth

3. Hudson Road, Warkworth full length

4. Matakana Road, Melwood Drive to Clayden Road (Matakana Link Road)

ii) adopt the Rodney Local Board Transport targeted rate as proposed in the draft 10-Year Budget 2018-2028 if the additional $85 million (total $121 million) for road sealing proposed in the Regional Land Transport Plan is not adopted.

b) request that, if the local transport targeted rate is struck, that Auckland Transport includes the projects to be funded by the targeted rate in the Regional Land Transport Plan.

c) refer this report to the Finance and Performance Committee, along with the local board’s recommendation.

5. The committee is requested to consider the recommendation from the Rodney Local Board.

6. The Governing Body has decision making responsibility for setting rates, including targeted rates. In addition, the proposal includes capital expenditure which requires the Governing Body’s approval for taking on up to $6 million additional debt in 2018/2019 to be repaid by the targeted rate within 10 years of the Long-term Plan. This can be managed within council’s existing debt limits.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) consider the recommendation of the Rodney Local Board, which was made at its 24 May 2018 business meeting, regarding the proposal for a Rodney Local Board Transport Targeted Rate to support additional transport investment in the Rodney Local Board area.

b) decide whether to strike a rate for the Rodney Local Board Transport Targeted Rate.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Original report to the Rodney Local Board meeting of 24 May 2018	57
b ⇩	Amended Attachment B and full version of the 10 year budget consultation document	107

Ngā kaihaina / Signatories

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

Finance and Performance Committee

31 May 2018

Local Transport Capital Fund: options for distribution and size of the fund

File No.: CP2018/08550

Te take mō te pūrongo / Purpose of the report

1. To outline options for the future size and underlying distribution methodology of the Local Transport Capital Fund (LTCF).

Whakarāpopototanga matua / Executive summary

2. In September 2017, the Governing Body agreed, in principle, to an increase to the LTCF as an outcome of the governance framework review. Staff were directed to undertake further work with Auckland Transport and local boards on the size of the increase, and the distribution methodology.

3. The LTCF was established in 2012 and currently sits at $10.8 million per annum. It is allocated on a pure population basis. Two options for the size of funding increase have been modelled, an increase of $6 million and an increase of $10 million per annum.

4. Staff have also modelled three different distribution options: the current population model, a model applying the Local Boards Funding Policy, and a model that includes a mix of a fixed level of funding per board, along with a variable rate determined by the Local Boards Funding Policy.

5. Each of the options has been assessed against a set of criteria. The pure population model is not supported by staff, while each of the other two models has merits. On balance, staff recommend that the Local Boards Funding Policy be applied to the distribution of the LTCF, with an additional amount of $10 million per annum being added to the fund. Feedback has been sought from local boards on their preferences.

Ngā tūtohunga / Recommendation

That the Finance and Performance Committee:

a) recommend to the Governing Body that:

i) the Local Boards Funding Policy allocation methodology of population (90 per cent), deprivation (five per cent) and land area (five per cent), be applied to the distribution of the local transport capital fund

ii) the inclusion of an additional $10 million per annum (inflation adjusted) funding for the local transport capital fund in the Regional Land Transport Plan be endorsed.

Horopaki / Context

6. The LTCF was established by resolution of the Strategy and Finance Committee [SF/2012/40] in April 2012, in order to provide local boards with access to funding for local transport projects that had strong local significance, but which were unlikely to be prioritised through the regional transport planning process.

7. The establishment of the fund is consistent with the government’s original policy intent that local boards would have a role in funding local transport projects out of a dedicated local budget [CAB Minute (09) 30/10] and that “local boards will have an advisory role with respect to transport services and a budget for the transport elements of ‘place shaping’^{^[1]}”.

8. The objectives of the fund are to:

· ensure locally important transport projects are given appropriate priority

· provide local boards with more direct ability to influence local transport projects.

9. Projects must be deliverable, meet transport safety criteria and not compromise the transport network. Auckland Transport retains the responsibility for delivering projects funded by the LTCF and the budget remains with Auckland Transport. Depreciation and consequential operating expenditure are also the responsibility of Auckland Transport, as is the core administration of the fund.

10. The fund was initially set at $10 million per annum (since adjusted for inflation, and now sitting at $10.8 million) and is currently split between the local boards on the basis of population, excepting Waiheke and Great Barrier Island local boards, which receive two per cent and one per cent of the fund respectively. The population figures that the distribution is based on have remained at 2012^{^[2]} levels.

11. At the Governing Body meeting of 28 September 2017, at which the recommendations of the Governance Framework Review Political Working Party were considered, it was agreed [GB/2017/117] that officers would report back to the governing body through the 10-year budget process on options for significantly increasing the LTCF, as well as providing an assessment of options for allocating the additional funding.

12. This report outlines options for the quantum of the proposed increase and the method of allocating the proposed increase among the 21 local boards. Workshops have been held with each local board to discuss these proposals and formal feedback sought through business meetings.

Tātaritanga me ngā tohutohu / Analysis and advice

13. Issues with the local transport capital fund identified through the governance framework review were grouped under two key themes:

· the overall size, or quantum, of the local transport capital fund

· the methodology underpinning its distribution among local boards.

Quantum of funding

14. When the LTCF was initially established at $10 million, the figure was not based on any specific assessment of need, but more on the recognition that smaller, local projects that had a strong place shaping component were unlikely to be funded according to Auckland Transport and New Zealand Transport Agency’s prioritisation formulas.

15. While the fund took some time to get established, it is now delivering valuable transport related outcomes for communities across Auckland. The LTCF spend forecast in 2016/2017 financial year was $17 million, as boards have been able to accumulate funding across years to put towards more significant projects. It has delivered 286 projects over the five-year period.

16. The LTCF contribution to these many local projects has also been complemented through the input of additional funds from Auckland Transport (as well as the New Zealand Transport Agency subsidy) with the value of the work they have delivered to their communities being substantially leveraged through this additional funding.

17. Staff have modelled the impact of the proposed increase on individual local boards according to a range of distribution models. In doing so, two different levels of increase have been used – the $10 million figure, initially proposed by Auckland Transport, and a lower figure of $6 million.

18. Neither figure is based on specific needs assessment, but Auckland Transport is of the view that a baseline of approximately six hundred and fifty thousand dollars a year is desirable to give individual boards the resources to support significant local projects. This would require an increase of at least $6 million per annum.

19. Boards that have had access to higher levels of funding have generally found it easier to leverage that to attract New Zealand Transport Agency subsidies and additional Auckland Transport funding, for example for projects that are being brought forward as a result of LTCF investment. Successful examples include the Half Moon Bay ferry terminal, the Mt Albert Station Bridge and the Māngere Future Streets project.

Distribution methodology

20. This section provides modelling of three distribution options applied to two levels of overall increase (sub-option A being an increase of $6 million, and sub-option B being an increase of $10 million). The options are:

· Option 1: status quo – simple population-based distribution of both the existing fund and any additional funding

· Option 2: applying the current Local Boards Funding Policy to the distribution of the fund

· Option 3: a model that provides for a fixed level of baseline funding for all boards, as well as a variable component based on the Local Boards Funding Policy.

Option 1: Population based distribution

21. In 2012, the governing body elected to distribute the first iteration of the LTCF purely on a population basis, following consultation with local boards^{^[3]}^. The distribution has not been adjusted to account for population distribution changes since the fund was established. This model recognised the low populations of Great Barrier and Waiheke islands and allocated funding to the islands at, respectively,1 per cent and 2 per cent of the total.

22. Attachment A shows the results of modelling the option of applying the population-based distribution methodology (excluding Great Barrier and Waiheke Islands), based on Statistics NZ 2017 population estimates. It is apparent from the modelling that the impact on boards with higher populations is the most significant, in terms of an increase in funding, especially if the additional amount is $10 million.

23. Under this model, however, if the additional amount is $6 million, six boards would still fall short of the $650,000 baseline figure identified by Auckland Transport as being desirable to enable the delivery of viable local transport proposals.

Option 2: Applying the Local Boards Funding Policy to the LTCF

24. During 2013/2014, work was undertaken to develop the current Local Boards Funding Policy, as required under the Local Government (Auckland Council) Act 2009. This policy was adopted in 2014 and uses an allocation methodology incorporating three factors: population (90 per cent), deprivation (five per cent) and land area (five per cent). This funding policy is currently applied to locally driven initiatives funding, including the local capital fund, but was not retrospectively applied to the LTCF.

25. The development of the funding policy involved significant consultation and engagement with local boards prior to final adoption. There are no current plans to review the policy.

26. Attachment B shows the results of modelling the option of applying the Local Boards Funding Policy to the distribution of the LTCF. The modelling has been applied to the existing fund and the additional amounts of $6 million and $10 million. The modelling is also based on 2017 population estimates, with Great Barrier and Waiheke Islands retaining 1 percent and 2 percent respectively of the total funding.

Option 3: Fixed and variable costs distribution

27. As previously noted, Auckland Transport has the view that in order to deliver transport infrastructure of any significance, a certain level of baseline funding is desirable – around $650,000 per annum, based on practical experience.

28. Many local boards have achieved significant results with their local transport projects, but transport infrastructure is inherently costly, and costs tend not to vary according to location. For example, a footbridge and walking path in Pukekohe will tend to cost the same as a comparable one in Glenfield.

29. A distribution model based on a split of fixed and variable costs has also been modelled as an option. The methodology involves fifty per cent of the entire quantum of funding being distributed by an even split (with the exception of Great Barrier and Waiheke Island Boards which receive 1/3 and 2/3 of a single share respectively), thus giving all other local boards the same level of core funding. The other fifty per cent of the funding would be distributed according to the Local Boards Funding Policy.

30. Attachment C shows the modelling of the option of applying this fixed/variable costs model to the distribution of the LTCF.

Assessing the options

31. Each of the three distribution models has elements to recommend it and others that detract from it. In assessing the models, staff applied the following assessment criteria:

· transparency and ease of understanding for communities and stakeholders

· equity and fairness of outcomes across the region

· ensuring delivery of good local transport outcomes

· recognising the role of local boards as leaders of place shaping with their communities.

32. Staff assessment of the options against these criteria is set out below.

Options 1a and 1b – population-based distribution

33. These options have been modelled on 2017 Statistics New Zealand population estimates.

34. A pure population-based approach has the benefits of being objective, transparent and straightforward and means that funding received is proportionate to the number of ratepayers. It was, however, recognised at the time that this approach applied to areas of extremely low population (Waiheke and Great Barrier Islands) would result in those boards receiving insufficient funding to achieve anything practical, hence the application of the one and two per cent formula for the island boards. A similar approach is also used in the Local Boards Funding Policy.

35. The limitations of this approach are that it does not address either the level of need in a given local board area, or the underlying cost drivers of transport infrastructure. Hence, large areas of low population density with significant roading networks and multiple population centres are funded at the same, or lower, level as smaller urban communities of interest with already well-developed transport infrastructure, but higher population density.

36. The distribution methodology is simple and transparent and easy for communities and stakeholders to understand. In terms of delivering equity and fairness, this model delivers the widest differential of funding levels across boards, with the highest funded board receiving 2.78 times the amount of the lowest funded board (excluding the island boards).

37. Option 1a also results in six boards receiving less than Auckland Transport’s benchmark identified as desirable for supporting good local transport outcomes in communities. The model limits the potential for those boards to actively implement their role as local place shapers and to leverage additional investment into their projects. This model, and therefore Options 1a and 1b, is not supported by either Auckland Council or Auckland Transport staff.

Options 2a and 2b – Local Boards Funding Policy based distribution

38. This distribution method involves application of the current Local Boards Funding Policy. The policy is currently applied to distribution of funding for local activities (including local capex) to local boards and is based on the following factors: ninety per cent population^{^[4]}, five percent deprivation^{^[5]}and five per cent land area^{^[6]}^.

39. Applying the Local Boards Funding Policy is a simple methodology that has a clear rationale, is easily described to the community and is consistent with council’s wider approach to funding local boards. It takes account of multiple factors, delivering a more equitable distribution of funding, especially to boards with lower populations but very large land areas and roading networks.

40. Reviewing the projects that have been funded from the LTCF to date, it is clear that much of the local boards’ focus has been on ‘people centred’ transport projects, for example pedestrian safety improvements, walkways and cycleways, footpaths and streetscape improvements. This is consistent with the principles underpinning the Local Boards Funding Policy i.e. that population is the key driver of need for the funding, but that geography and deprivation also need to be taken into account.

41. This distribution methodology evens out the increase in funding across the 21 boards. The boards with a larger land area receive more funding than under the pure population model, and all boards receive the proposed level of baseline funding, but only under the $10 million quantum increase.

42. Under this model, however, the level of funding that accrues to the more populous boards becomes very substantial in relationship to that for the smaller boards, due to the compounding impact of the distribution model. For example, the Howick Local Board would receive over $1.7 million and Henderson-Massey over $1.4 million. Despite these extremes, this option provides an arguably more equitable and nuanced distribution of funding, as well as being consistent with current funding policy.

43. Its variation between the lowest and highest level of funding is still high with the highest funded board receiving 2.57 times the amount of the lowest funded board. Under Option 2a, five boards still receive less than Auckland Transport’s desirable benchmark for delivering good local transport outcomes in communities and it limits the potential for those boards to actively implement their role as local place shapers.

44. This is the preferred option on the basis of consistency with the existing funding policy, assessment against the criteria and recognition of the population focus of projects delivered using this fund. The preferred option is for the $10 million quantum as better providing for good local transport outcomes and delivering local place shaping.

Options 3a and 3b – fixed and variable cost distribution

45. This model is more complex and less transparent to communities and stakeholders than the other models. The identification of the benchmark figure is based on Auckland Transport’s experience of administering the fund over the past five years and the learning that has been gained from this, rather than in-depth financial analysis of infrastructure costs.

46. The results of this distribution are similar to those of applying the Local Boards Funding Policy, in that a similar number of local boards benefit under each model. However, it is different local boards that benefit from each model. In terms of equity and fairness, this model reduces the difference between the highest funded and lowest funded boards and also brings all boards above the $650,000 benchmark, even under Option 3a ($6m increase).

47. The model reduces the impact of population on the distribution of funding, however, which is a core component of current funding policy and the focus of the projects delivered using the LTCF. The model performs well against the criteria of enabling the delivery of good local transport outcomes and supporting the role of local boards as place shapers.

Summary of assessment of options

48. Of the three distribution models assessed, the current model of pure population distribution performed the poorest and is not recommended by either Auckland Council or Auckland Transport staff.

49. The other two models deliver mixed results against the criteria. On balance, staff recommend that the Local Boards Funding Policy distribution best meets the criteria and is consistent with current funding policy. It is also supported by the majority of local boards.

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

50. Workshops were held with every local board and discussion on collective views has also taken place at the Local Board Chairs’ Forum. A report was provided to every local board’s business meeting in April and formal resolutions have been collated.

51. There was general support for an increase to the fund and mixed views on options for allocating the fund. As noted in the assessment of options, each of the options for the amount of increase and the distribution methodology affects individual boards differently.

52. Growth was raised by some boards as a factor that should be considered. Staff’s view is that the population element of each of the models addresses this as current population is the only reliable indicator of growth. Population estimates are updated and will be applied to the fund annually.

53. The majority of boards (12) supported the application of the Local Boards Funding Policy to the fund and an increase of $10 million per annum to the quantum available. The remaining boards supported a population only distribution (four boards) or the fixed/variable model (five boards).

54. At the time of consideration by local boards, the additional cost to Auckland Transport to administer the increased funding was an issue. Local boards supported an increase of funding to Auckland Transport to recognise this. Since then, the preparation of the Regional Land Transport Plan and the preparation of the overall Transport budget has dealt with this issue and there is no need to consider additional funding for administration purposes.

Tauākī whakaaweawe Māori / Māori impact statement

55. A move away from a pure population-based distribution model would take into account other factors, being deprivation and land area. Both options 2 and 3 include a deprivation component, although this is greater in option 2. This would have some positive impact on local board areas where there is a higher Māori population.

Ngā ritenga ā-pūtea / Financial implications

56. The source of the additional funding is not addressed in this report, as it is being considered through the overall budget setting process in the 10-year budget. The proposed size of the increase to the fund (both options) is not significant enough within the overall transport budget to be able to enable transparent trade-offs at a detailed level e.g. which specific transport projects might not be funded in the Regional Land Transport Plan in a given year if the LTCF is increased.

Ngā raru tūpono / Risks

57. No specific risks have been identified.

Ngā koringa ā-muri / Next steps

58. Following the decisions by the Governing Body as part of the 10-year budget process, any new funding and change to the distribution methodology will be applied from 1 July 2018.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Population based distribution modelling	147
b ⇩	Local Board Funding Policy distribution	149
c ⇩	Fixed and variable costs distribution 50/50	151

Ngā kaihaina / Signatories

Author

Linda Taylor - Programme Manager Governance Framework Review

Authorisers

Phil Wilson - Governance Director

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

31 May 2018

Fees, charges and other rating matters

File No.: CP2018/08438

Te take mō te pūrongo / Purpose of the report

1. To consider the feedback received on the rating issues not addressed in other reports on this agenda and the proposed changes to fees and charges that were consulted on for the Long-term Plan 2018-2028, and advises on the adoption of the proposed changes.

Whakarāpopototanga matua / Executive summary

2. The council consulted on a number of proposed changes to fees, charges and other rating matters as part of the Long-term Plan 2018-2028. This includes:

· resume the Long-term Differential Strategy (LTDS) from 2018/2019 to gradually reduce the business sector share of general rates to 25.8 per cent by 2037/2038

· maintain the current policy of increasing the Uniform Annual General Charge (UAGC) in line with the general rate increase

· expansion of the Papakura BID

· new regulatory fees for Deemed Permitted Boundary Activity Notices and Permitted Plantation Forestry Activities monitoring and assessment

· changes to existing fees for land advisory services associated with council-owned land and waiver of fees for the cremation of babies under 1 year old.

3. Four local boards requested that if Land Advisory Services introduce a new charging regime for council-owned land owner approval applications then this should exclude community groups and community organisations. The proposed fees would be waived for any applicants undergoing works or activities on council’s behalf. A discount of 50 per cent would be applied to all community group or registered charity applicants.

4. Very few submissions were received on any of these issues. Officers recommend that they be adopted as proposed.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) recommend to the Governing Body for inclusion in the Long-term Plan 2018-2028:

i) resume the Long-term Differential Strategy (LTDS) from 2018/2019 to gradually reduce the business sector share of general rates to 25.8 per cent by 2037/2038 as proposed

ii) maintain the current policy of increasing the Uniform Annual General Charge (UAGC) in line with the general rate increase as proposed

iii) expansion of the Papakura BID as proposed

b) recommend to the Governing Body that it adopt:

i) the introduction of a new charging regime from 1 July 2018 for Deemed Permitted Boundary Activity Notices and Permitted Plantation Forestry Activities monitoring and assessment which includes a deposit of $400 (including GST) and council’s standard hourly rates for work completed

ii) the new fees and deposits for land advisory services as detailed in Attachment A

iii) the waiver of fees from 1 July 2018 for the cremation of babies under 1 year old.

Horopaki / Context

5. The Local Government Act 2002 requires the council to include a draft Prospective funding impact statement, which incorporates the Rating mechanism, in its consultation materials for each annual and long-term plan. This Draft 10-Year Budget 2018-2028 included the changes to rating policy noted in the Executive summary above along with the other proposed changes to rates discussed in other reports on this agenda. The council is also required to consult on changes to regulatory fees and charges outside of the scope of the provision for inflationary movements provided for in the Revenue and financing policy. These were also included for consultation in the Draft 10-Year Budget 2018-2028.

Tātaritanga me ngā tohutohu / Analysis and advice

Long-term Differential Strategy

6. In 2012, the council adopted the Long-term Differential Strategy (LTDS). The LTDS lowers general rates (UAGC and value-based general rate) for businesses in equal steps from 32.7 per cent of the total requirement in 2016/2017 to 25.8 per cent by 2036/2037. The rate of reduction is set so that the additional increase in rates for residential and farm/lifestyle properties above the underlying general rates increase is around 0.5 per cent each year.

7. Last year, the council paused this policy so that all ratepayers received the same increase. The council proposed to resume this policy from 2018/2019 to gradually reduce the business sector share of general rates to 25.8 per cent by 2037/2038.

8. Of the 19 submitters that commented on the LTDS, 8 thought business should pay more while 11 thought business should pay less.

9. The current differential rating policy proceeds on the basis that businesses are better placed to afford rates than other ratepayers and that the receive increase benefit from stormwater and transport activities. Resuming the policy will reduce the burden on business ratepayers while rates for other ratepayers increase greater than the overall average rates increase.

10. If the proposal to resume the LTDS is adopted

· business rates will be around 1.0 per cent less than the overall rates increase and non-business rates 0.5 per cent more

· the date for achieving the target share of rates for business ratepayers will be 2037/2038.

Uniform Annual General Charge

11. The council’s general rate is made up of the uniform annual general charge (UAGC) and general rates based on property values. The UAGC is a fixed charge that every dwelling or business pays regardless of the value of their property. The council proposed to maintain the current policy of increasing the Uniform Annual General Charge (UAGC) in line with the general rate increase.

12. Of the 96 submitters that commented on the UAGC, 85 thought UAGC too high while 11 thought it was too low.

13. Changing the level of UAGC would impact on the redistribution of rates arising from the revaluation. Analysis shows that lowering the UAGC to $250 would partially mitigate the impact on lower value residential properties. However, a lower UAGC would exacerbate the impact on farm/lifestyle properties and redistribute some of the rates requirement to higher value residential properties.

14. In addition, lowering the UAGC would exacerbate the impact of future revaluations on rates. A lower UAGC raises more of the rates based on property value. The movement in rates at revaluation would therefore be subject to greater variation.

15. Increasing the UAGC would exacerbate the impact of the current revaluation. The recent revaluation has resulted in higher average value increases for lower value properties when compared to higher value properties. This results in lower value properties facing higher than average rates increases while higher value properties face lower average rates increases. A higher UAGC would increase rates for lower value properties and decrease rates for higher value properties.

Business improvement district targeted rates

16. The BID programme forms part of council’s Local Economic Development activity. BID associations are the sole beneficiary of a council operating grant that represents the amount of rates raised from each BID area. Councils administrative costs for running the BID programme are funded from general rates. The BID programme is an established part of councils activities which provides transparency in funding of BID associations. The council proposed an expansion to the Papakura BID. There are no additional costs associated with this proposal.

17. No feedback was received on the expansion of the Papakura BID.

18. The council’s BIDs policy requires a ballot to be held of the all the ratepayers who would be subject to the BID rate and all the businesses in the targeted rate area. For an extension a ballot must be held of all the ratepayers who would be added to the BID area and all the new businesses in the targeted rate area. In order to proceed these ballots require a 25 per cent return rate and of those over 51 per cent must be in support of the proposal. The results for this proposal were a return of 33.3 per cent (60) with 65 per cent for (39) and 30 per cent against (18).

19. The results of the ballot are due to be reported to the Papakura Local Board at their meeting on 23 May. Officers understand that the proposal is supported by the local board and it is expected to be ratified. Officers will update the committee on the outcome of the local boards consideration at the committee meeting.

Regulatory fees

20. The council proposed new regulatory fees for:

· Deemed Permitted Boundary Activity Notices (issued under the Resource Management Act 1991)

· Permitted Plantation Forestry Activities monitoring and assessment under the Resource Management (National Environmental Standards for Plantation Forestry) Regulations 2017.

21. The council also proposed changes to the following existing fees:

· land advisory services associated with council-owned land such as applications for physical works and activities, acquisition or disposal, and strategic development. To be based on deposits between $570 and $1410 and hourly rates between $85 and $180 – all inclusive of GST.

· waiver of fees for the cremation of babies under 1 year old.

22. One key forestry stakeholder, Hancock Forest Management considered the deposit for forestry monitoring was outside the scope of the legislation and didn’t make appropriate provision for the risk and history of an operation. 15 submitters considered that general levels of fees for building activity was too high and should be maintained at their current level. There was one submission in support of the new regulatory fees.

23. One submission indicated support for the land advisory fees proposal. One submission supported the waiver of fees for the cremation of babies under 1 year old.

24. Four local boards requested that if Land Advisory Services introduce a new charging regime for council-owned land owner approval applications then this should exclude community groups and community organisations.

25. The proposed fees would be waived for any applicants undergoing works or activities on council’s behalf (e.g. contractors hired by the council to complete works on council land requiring land owner approval). This waiver ensures that the proposed fees would only apply to situations where the benefit of the works or activities accrues to a private party.

26. In addition, a discount of 50 per cent would be applied to all community group or registered charity applicants. This is on the basis that community group applicants will be seeking approval for works or activities that further their community or public-serving focus.

27. With the exception of the proposed changes to cremation fees, the proposed changes to fees help maintains cost recovery for these services. This aligns with the principles of the Revenue and Financing Policy.

28. Proceeding with the proposal to waive fees for the cremation of babies under 1 year old will result in a reduction in budgeted revenue of around $14,000 per annum. This option represents an increase in service levels compared to those offered by some private crematoria in the region.

Water and wastewater fees and charges

29. Watercare are proposing to increase water and wastewater charges in line with their previously indicated annual increases:

· water charges by 2.5 per cent per annum

· wastewater charges by 3.3 per cent per annum.

30. A few comments were made in opposition to the proposed increase with 1 comment in support.

31. The Board of Watercare will agree the water and waste water charges at their May meeting.

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 setting rates.

33. Local boards considered the proposals for changes at their meetings in April/May. Specific resolutions passed regarding these issues are included in the body of the report under each issue. A detailed report of all local board feedback is included in other items on this agenda.

Tauākī whakaaweawe Māori / Māori impact statement

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

Ngā ritenga ā-pūtea / Financial implications

35. There are no financial implications to the rates policy matters. If the fees and charges are not adopted as proposed then the financial implications will be insignificant. However, they will be inconsistent with council’s general approach to cost recovery for fees and charges.

Ngā raru tūpono / Risks

36. There are no risks associated with the recommendations in this report.

Ngā koringa ā-muri / Next steps

37. Decisions on the items covered in this report will be used to finalise the Long-term Plan 2018-2028 for adoption at the governing body meeting on 28 June. They will also be used to help prepare the rates for 2018/2019 to be adopted at the same meeting.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Fees, charges and deposits for land advisory activities	159

Ngā kaihaina / Signatories

Authors

Aaron Matich - Principal Advisor – Financial Policy

Andrew Duncan - Manager Financial Policy

Eric Wen - Advisor - Financial Policy

Authorisers

Ross Tucker - Acting General Manager, Financial Strategy and Planning

Matthew Walker - Acting Group Chief Financial Officer

Finance and Performance Committee

31 May 2018

Contributions Policy

File No.: CP2018/08551

Te take mō te pūrongo / Purpose of the report

1. To consider the feedback received on the draft Contributions Policy 2018 and advise on the next steps.

Whakarāpopototanga matua / Executive summary

2. The council consulted on the draft Contributions Policy 2018. Key changes from the Contributions Policy 2015 were:

· increase in average urban DC from $21,000 to $27,000 (GST exclusive)

· 4 new transport funding areas

· adjustment to demand factors for aged care rooms and student accommodation

· extended payment timing for residential developments of more than 5 units.

3. The proposal document also noted that officers propose to work on a long-term capital expenditure capex programme to reflect costs to support greenfield development. Officers would report back on the potential impact on the Contributions Policy 2108 by the end of September 2018.

4. Feedback was received from 118 respondents. Key themes in the feedback included:

· support for additional infrastructure investment and recognition of price impacts but concern that price rises would impact on development viability and housing affordability

· concerns that the consultation materials did not provide enough detail and that not enough time was available for respondents to provide feedback and for council to consider that feedback

· support for work to incorporate contributions pricing for greenfields areas.

5. Officers consider that there is value in providing more time for greater engagement with the development community. This would also allow additional time for the council to work through issues raised in submissions to ensure these are appropriately reflected in the council’s response and the final policy.

6. Additional time may also allow the work on contributions pricing for greenfield areas to be incorporated into the policy.

7. To allow more time, officers recommend that the council extend the expiry date for the Contributions Policy 2015 from 30 June 2018 until 31 January 2019 or until such earlier time as a new policy is adopted. In order to extend the expiry date, the council would be required to consult.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) agree to consult on extending the expiry date for the Contributions Policy 2015 from 30 June 2018 until 31 January 2019.

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

Horopaki / Context

8. The council approved a draft Contributions Policy 2018 for consultation on 30 April 2018. The draft policy was based on the:

· capital expenditure programme in the draft Long-term Plan (LTP) 2018-2028

· proposed Regional Land Transport Plan (RLTP) capital expenditure, including projects to be funded by the proposed Regional Fuel Tax (RFT).

9. The capital expenditure to be funded by growth under the draft Contributions Policy 2018 was $1.4 billion higher than under the current policy. The increase in growth cost was primarily transport related but also included an additional $322 million capital expenditure on community infrastructure and parks. As a result of changes to the capital expenditure programme the average urban development contribution price would rise from $21,000 to $27,000 (GST exclusive).

10. The draft Contributions Policy 2018 also included changes to:

· funding areas for transport to reflect the Crown Infrastructure Partnership and Housing Infrastructure Fund investment areas

· the level of charging for some types of development to better reflect the demand they place on infrastructure

· payment timing.

11. Consultation was undertaken alongside the Regional Land Transport Plan and Regional Fuel Tax proposals from 1 May to 14 May. A developer forum was held on 2 May 2018.

Tātaritanga me ngā tohutohu / Analysis and advice

Feedback

12. 118 respondents provided feedback making 219 feedback points. 32 were in support of the policy in general terms and 6 opposed. 19 supported the price increase and 23 were opposed.

13. Key themes from the development community were:

· general support for the Policy

· reduced charges for affordable or social housing

· support the change in payment timings

· support for increased funding areas for transport

· more transparency

· greater detail of planned projects being funded.

14. In addition, developers made a number of comments about the consultation process including concerns:

· about the length of time available to understand the details in consultation material and provide feedback

· that some materials were provided late

· that not enough detail was provided on the projects to be funded by contributions

· about the length of time for council to consider feedback was too short.

15. Nine iwi provided feedback with 3 in support and 3 opposed. A key theme was a recommendation that contributions for development on Maori land be discounted or waived to reflect to support that development and reflect the taking of Maori land historically.

16. Local boards were in general support of the policy, other comments included:

· a desire to allow for more sub-regional funding

· an increased use of targeted rates

· a support for the price increase

· a requirement to accommodate affordable housing

· support for a potential price increase in Greenfield areas

Modifications to process in response to feedback

17. Officers consider that there would be value in allowing more time for developers and the community to consider the changes being proposed in the Contributions Policy. This would also allow further integration of the capital expenditure programme in the LTP, RLTP and RFT into a draft Contributions Policy 2018 at a greater level of detail being sought in submissions. A new timeframe may also allow a draft Contributions Policy 2018 to include the further work on greenfield contributions to be incorporated. A longer time period would also allow more time for the council to consider the feedback before making a decision.

18. Officers recommend that the council consult on extending the expiry date for the Contributions Policy 2015 from 30 June 2018 until 31 January 2019 or until such earlier time as a new policy is adopted. The consultation would seek the views of the community on extending the Contributions Policy 2015 and an appropriate time period for decision making on a Contributions Policy 2018.

19. Given the nature of the issue it is proposed that consultation on extending the expiry date for the Contributions Policy 2015 be for a period of 14 days starting Wednesday 6 June and finishing Tuesday 19 June.

20. The consultation would use our online channels and normal process including communication with our contact list and all those who made submissions on the draft Contributions Policy 2018.

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

21. The governing body has decision making authority for setting a contributions policy.

22. Local boards have not had an opportunity to consider the proposal to extend the Contributions Policy 2015 and develop a process for further engagement. Officers will consider feedback received from local boards on the draft Contributions Policy 2018 in developing their work programme for the next round of engagement. Local boards will have an opportunity to comment on the draft Contributions Policy 2018 as part of next phase of development. Local board views will be communicated to the Governing Body to support decision making.

Tauākī whakaaweawe Māori / Māori impact statement

23. Council does not hold information on the ethnicity of developers. The impact on Maori will be similar to the impact on other developers.

24. Maori have not had an opportunity to consider the proposal to extend the Contributions Policy 2015 and develop a process for further engagement. Officers will consider feedback received from iwi and mana whenua on the draft Contributions Policy 2018 in developing their work programme for the next round of engagement. Iwi and mana whenua will have an opportunity to comment on the draft Contributions Policy 2018 as part of next phase of development. Their views will be communicated to the Governing Body to support decision making.

Ngā ritenga ā-pūtea / Financial implications

25. Extending the expiry of the Contributions Policy 2015 will deliver lower contributions revenue in the first year of the LTP 2018 - 2028 than a new policy may have done.

26. It is estimated that contributions revenue will be lower in the 2018/2019 financial year than expected from the draft Contributions Policy 2018 which was consulted on in May 2018. The difference will depend on the time taken to consult and adopt a new policy. An estimate of $4 million per month has been made. The actual impact will depend on decisions taken in response to consultation on extending the expiry date of the Contribution Policy 2015 and the timeframe for decision making on a Contributions Policy 2018.

27. The 10-year Budget 2018-2028 has made the assumption that following adoption of a Contributions Policy 2018 contributions revenue will fund all growth projects as provided for in the Revenue and Financing Policy.

Ngā raru tūpono / Risks

28. Officers have considered any risks associated with extended timeframes. The council can make decisions on the Contributions Policy 2018 separate from the Long-term Plan 2018-2028.

Ngā koringa ā-muri / Next steps

29. Officers will develop materials to support consultation to be approved by the Chair of the Finance and Performance Committee and Chief Financial Officer.

30. Officers will report the results of that consultation along with recommendations for a timeframe for further consultation on a draft Contributions Policy 2018 by the end of June 2018.

Ngā tāpirihanga / Attachments

There are no attachments for this report.

Ngā kaihaina / Signatories

Author

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

31 May 2018

Approval of Council-Controlled Organisation Accountability Policy

File No.: CP2018/08651

Te take mō te pūrongo / Purpose of the report

1. To approve the council-controlled organisation accountability policy as part of the Long-term Plan 2018-2028 (Attachment A).

Whakarāpopototanga matua / Executive summary

2. Auckland Council is required to have an accountability policy for its substantive council-controlled organisations (CCOs).

3. Amendments to the existing policy were consulted on as part of the Long-term Plan 2018-2028. The scope of the amendments to the existing policy was to update the policy to align the expectations to the council’s current objectives and priorities.

4. Council received eight public submissions on the draft policy, as well as comments from four of the substantive CCOs. All of the public submissions generally supported the policy, while the comments from CCOs largely sought clarification and minor wording changes.

5. Eleven local boards made resolutions on the policy. They generally supported the intent and scope of the policy, with some changes, and noted the importance of ensuring that it is implemented.

6. If the Finance and Performance Committee approves the policy, it will be included in the Long-term Plan 2018-2028 for final approval by the Governing Body on 28 June 2018.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) recommend that the Governing Body approve the council-controlled organisation accountability policy as part of the Long-term Plan 2018-2028.

Horopaki / Context

7. Under the Local Government (Auckland Council) Act 2009, Auckland Council is required to have an accountability policy for its substantive council-controlled organisations (CCOs). The policy forms a basis for accountability to the council as the shareholder.

8. The policy has been revised as part of the Long-term Plan 2018-2028. The scope of the review was to update the policy to align the expectations to the council’s current objectives and priorities.

9. We received eight written submissions. There was no verbal feedback at ‘Have Your Say’ events, and none submitted via the social/digital channel. We also received comments on the policy from some of the substantive CCOs, and 11 local board resolutions.

Tātaritanga me ngā tohutohu / Analysis and advice

Public submissions

10. All of the submissions generally supported the revised policy, with two recommendations for change in specific areas:

· the submissions asked that more emphasis be placed on integrated planning and project design/delivery across the council group, and a ‘do it once, and do it right’ approach, and a commitment to seek input from the Business Improvement Districts where appropriate

· more detailed expectations for each CCO to prepare a carbon emission assessment and low carbon action plans by set timeframes.

11. In response, we have included a common expectation about integrating planning and project delivery across the group. Staff do not recommend including a specific reference to Business Improvement Districts, as this is covered by the general principles of public consultation in section 1.1.1 of the policy. However, we note that a separate piece of work is currently underway to improve the way the council group and Business Improvement Districts work together.

12. Staff do not recommend including more detailed operational requirements for carbon action plans, as this is more appropriate in the annual letters of expectations to substantive CCOs.

Comments from CCOs

13. The comments that each CCO made are summarised in Table 1, along with our advice about changes to the policy.

Table 1: CCO comments on the draft policy and proposed response

CCO	Comments	Proposed response
Auckland Transport	Seeking clarification of how the strategic assets policy works, particularly with regard to council oversight of strategic assets.	We have amended Table 2 to clarify the council’s oversight of operational decisions on strategic assets.
Watercare Services Limited	Watercare made a number of comments relating to its legal obligations and statutory framework. These are listed in Attachment B.	Set out in Attachment B.
Regional Facilities Auckland (RFA)	The ‘Methods’ section mentioned the commercial operation of venues without mentioning the public good aspect of RFA’s role. The ‘Methods’ section requiring RFA to collaborate with the council does not allow the board sufficient space to objectively determine capex and opex requirements.	We propose deleting the line referring to commercial operation, as it essentially repeats RFA’s purpose (which is mentioned earlier in the policy). The intent of this section was to ensure that RFA’s strategies are aligned with the council’s priorities, not to constrain funding bids. The wording has been revised to reflect this.
Auckland Tourism, Events and Economic Development (ATEED)	Noting that ATEED does not have any regulatory mechanisms.	We propose deleting the line referring to regulatory mechanisms.

Feedback from councillors

14. During workshops with councillors, some concerns were raised about the need for the policy to ensure that there is appropriate oversight by the shareholder of feasibility studies into significant proposals. The policy does provide requirements about shareholder oversight of strategic assets (in section 4.2.3) and requires each CCO to inform the council about issues which may “affect the council’s long-term interest in an asset or associated service delivery”. We have included the preparation of a feasibility study of a significant investment as an example of where the shareholder should be informed.

15. We do not recommend adding a specific rule about limiting feasibility studies, as this might have an unintended effect of limiting legitimate activity by CCOs. Other things that would help to address this issue are:

· actively communicating expectations through the induction of board members

· more closely monitoring performance through quarterly reporting

· more closely monitoring the outcomes of board performance reviews

· active communication by CCOs to council regarding proposed significant work.

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

16. Eleven local boards made resolutions on the draft policy. All eleven boards supported the overall intent as well as specific parts of the policy, subject to some amendments (all of the local board feedback is summarised in Attachment C). The amendments are to:

· support the expectation for CCOs to improve outcomes for Māori, and request that the policy refers to both mana whenua and matāwaka

· request that there should be an expectation on CCOs to be good employers

· request that CCOs should be required to give effect to local board plans and, where relevant, town centre plans to ensure support for local board priorities

17. In response, we propose amending the policy to reflect the need to improve outcomes for both mana whenua and matāwaka in section 1.1.4 ‘Improve outcomes for Māori’. This is consistent with the expectations in ‘Our Charter’. We also propose adding an expectation that CCOs should act as a good employer, which is consistent with their legislative obligations.

18. Requiring CCOs to ‘act consistently with’ local board plans has been considered through a separate piece of work in the CCO accountability review, which will be reported back to the Finance and Performance Committee shortly. In general, local board plans are not written in a way that provides clear strategic direction which could reasonably be asked of a CCO to give effect to. In addition, local board plans are aspirational documents, and are not funded until the local board agreements are in place. We do not recommend amending the accountability policy to require CCOs to give effect to local board plans or town centre plans.

Tauākī whakaaweawe Māori / Māori impact statement

19. The revised policy includes a section on outcomes for Māori. This section includes the need to give effect to the council’s Māori responsiveness framework, and to improve outcomes for mana whenua and matāwaka. Bringing these expectations into the policy supports work that is already underway through Te Toa Takitini and other programmes to improve Māori outcomes.

Ngā ritenga ā-pūtea / Financial implications

20. There are no direct financial implications from approving the policy.

Ngā raru tūpono / Risks

21. There are no risks associated with approving the policy.

Ngā koringa ā-muri / Next steps

22. CCOs are aware of the changes proposed in this report. If the Finance and Performance Committee approves the policy, it will be included in the Long-term Plan 2018-2028 for final approval by the Governing Body on 28 June 2018. Once the policy has come into effect, council staff will work with CCOs so that these changes are reflected in any relevant processes and documents.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Revised CCO accountability policy	171
b ⇩	Watercare comments and proposed response	185
c ⇩	Summary of local board resolutions	189

Ngā kaihaina / Signatories

Author

Sarah Holdem – Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Matthew Walker - Acting Group Chief Financial Officer

[1] Cabinet paper: Auckland Governance: Regional Transport Authority Steven Joyce, Minister of Transport 2009

[2] Based on Statistics NZ 2011 population estimates

[3] There was no formal local board funding policy in place at this time

[4] Based on annually revised estimates from Statistics NZ

[5] Based on Index of Deprivation provided by the Ministry of Health

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Deputy Chairperson	Cr Desley Simpson, JP
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	Cr Dr Cathy Casey	Cr Mike Lee
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	Cr Fa’anana Efeso Collins	Cr Dick Quax
	Cr Linda Cooper, JP	Cr Greg Sayers
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