Agenda of Finance and Performance Committee

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

Date:

Time:

Meeting Room:

Venue:

Wednesday, 14 November 2018

9.30am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

Komiti ā Pūtea, ā Mahi Hoki /
Finance and Performance Committee

OPEN AGENDA

MEMBERSHIP

Chairperson	Cr Ross Clow
Deputy Chairperson	Cr Desley Simpson, JP
Members	Cr Josephine Bartley	Cr Penny Hulse
	Cr Dr Cathy Casey	Cr Mike Lee
	Deputy Mayor Cr Bill Cashmore	Cr Daniel Newman, JP
	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	Cr Paul Young
	IMSB Member Terrence Hohneck

(Quorum 11 members)

Sandra Gordon

Senior Governance Advisor

8 November 2018

Contact Telephone: (09) 890 8150

Email: sandra.gordon@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

Terms of Reference

Responsibilities

The purpose of the Committee is to:

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

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

Key responsibilities include:

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

o Local Board agreements

o Financial policy related to the LTP and AP

o Setting of rates

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

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

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

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

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

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

· Approving the financial policy of the Council parent organisation

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

· Write-offs

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

· Recommending the Annual Report to the Governing Body

· Te Toa Takatini

Powers

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

a. approval of a submission to an external body

b. establishment of working parties or steering groups.

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

a. the power to establish subcommittees

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

Exclusion of the public – who needs to leave the meeting

Members of the public

All members of the public must leave the meeting when the public are excluded unless a resolution is passed permitting a person to remain because their knowledge will assist the meeting.

Those who are not members of the public

General principles

· Access to confidential information is managed on a “need to know” basis where access to the information is required in order for a person to perform their role.

· Those who are not members of the meeting (see list below) must leave unless it is necessary for them to remain and hear the debate in order to perform their role.

· Those who need to be present for one confidential item can remain only for that item and must leave the room for any other confidential items.

· In any case of doubt, the ruling of the chairperson is final.

Members of the meeting

· The members of the meeting remain (all Governing Body members if the meeting is a Governing Body meeting; all members of the committee if the meeting is a committee meeting).

· However, standing orders require that a councillor who has a pecuniary conflict of interest leave the room.

· All councillors have the right to attend any meeting of a committee and councillors who are not members of a committee may remain, subject to any limitations in standing orders.

Independent Māori Statutory Board

· Members of the Independent Māori Statutory Board who are appointed members of the committee remain.

· Independent Māori Statutory Board members and staff remain if this is necessary in order for them to perform their role.

Staff

· All staff supporting the meeting (administrative, senior management) remain.

· Other staff who need to because of their role may remain.

Local Board members

· Local Board members who need to hear the matter being discussed in order to perform their role may remain. This will usually be if the matter affects, or is relevant to, a particular Local Board area.

Council Controlled Organisations

· Representatives of a Council Controlled Organisation can remain only if required to for discussion of a matter relevant to the Council Controlled Organisation.

1 Apologies

An apology from Cr E Collins for absence on council business has been received.

2 Declaration of Interest

Members are reminded of the need to be vigilant to stand aside from decision making when a conflict arises between their role as a member and any private or other external interest they might have.

3 Confirmation of Minutes

That the Finance and Performance Committee:

a) confirm the ordinary minutes of its meeting, held on Tuesday, 23 October 2018, including the confidential section, as a true and correct record.

4 Petitions

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

5 Public Input

Standing Order 7.7 provides for Public Input. Applications to speak must be made to the Governance Advisor, in writing, no later than one (1) clear working day prior to the meeting and must include the subject matter. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders. A maximum of thirty (30) minutes is allocated to the period for public input with five (5) minutes speaking time for each speaker.

At the close of the agenda no requests for public input had been received.

6 Local Board Input

Standing Order 6.2 provides for Local Board Input. The Chairperson (or nominee of that Chairperson) is entitled to speak for up to five (5) minutes during this time. The Chairperson of the Local Board (or nominee of that Chairperson) shall wherever practical, give one (1) day’s notice of their wish to speak. The meeting Chairperson has the discretion to decline any application that does not meet the requirements of Standing Orders.

This right is in addition to the right under Standing Order 6.1 to speak to matters on the agenda.

At the close of the agenda no requests for local board input had been received.

7 Extraordinary Business

Section 46A(7) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“An item that is not on the agenda for a meeting may be dealt with at that meeting if-

(a) The local authority by resolution so decides; and

(b) The presiding member explains at the meeting, at a time when it is open to the public,-

(i) The reason why the item is not on the agenda; and

(ii) The reason why the discussion of the item cannot be delayed until a subsequent meeting.”

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a) That item may be discussed at that meeting if-

(i) That item is a minor matter relating to the general business of the local authority; and

(ii) the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b) no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

Finance and Performance Committee

14 November 2018

Auckland Council Group, the Council entity and CCO quarterly performance reports to 30 September 2018

File No.: CP2018/20170

Te take mō te pūrongo / Purpose of the report

1. To inform the Finance and Performance Committee of the financial and non-financial performance of the Auckland Council Group, the Council entity and its Council Controlled Organisations (CCOs) for the three months to 30 September 2018.

Whakarāpopototanga matua / Executive summary

2. This paper covers the financial and non-financial performance of the council group, the Council entity and CCOs, for the three months ended 30 September 2018.

3. The quarterly reports provide an update on strategic issues, achievements, risks and key projects.

4. The report does not include reporting at a local board level. Each local board receives reports specific to their area. Accordingly, the views of local boards have not been sought.

5. In line with current reporting obligations, it is the responsibility of the Auckland Council management and the board of each CCO to keep the committee informed of key risks and issues, and the status of their operating and financial performance.

6. As representatives of the Auckland Council entity and CCOs have recently presented at the 17 October 2018 Finance and Performance committee, they will not be in attendance. They will attend the Finance and Performance committee 20 March 2019 to report back on quarter two results.

7. Attachment A is the Auckland Council Group Statutory Financial Report Summary.

8. More details of CCO performance are available in the full reports in attachments B-F.

9. Attachment G (which will be circulated under separate cover) will feature a new look summary. This is the first iteration of the new reporting format proposed for the Group, the Council entity and CCOs. The intent is to produce better and more transparent reporting of progress against the 10-year Budget. The CCO summaries have been created by the council finance team as part of the pilot for new quarterly reporting, drawing on information from the board approved detailed quarter one report for each CCO.

10. Auckland Transport and Haumaru Housing will be in attendance to report on the progress of the Regional Fuel Tax and housing for older people respectively.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) note the financial and non-financial performance of the Council Group (including the Council entity and CCOs) for the three months to 30 September 2018

b) note the first quarter reports from the following council-controlled organisations:

i) Auckland Transport (AT)

ii) Panuku Development Auckland (Panuku)

iii) Watercare Services Limited (Watercare)

iv) Auckland Tourism, Events and Economic Development Limited (ATEED)

v) Regional Facilities Auckland (RFA)

c) note the following presentations:

i) Auckland Transport (AT) on the progress of investment on the Regional Fuel Tax

ii) Haumaru Housing.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Auckland Council Group Statutory Financial Report 30 September 2018	13
b ⇩	Auckland Transport first quarter report ending 30 September 2018	19
c ⇩	Panuku Development Auckland first quarter report ending 30 September 2018	57
d ⇩	Watercare Services Limited first quarter report ending 30 September 2018	81
e ⇩	Auckland Tourism Events and Economic Development first quarter report ending 30 September 2018	109
f ⇩	Regional Facilities Auckland first quarter report ending 30 September 2018	131
g ⇨	Summary Information period ending 30 September 2018 (Under Separate Cover)

Ngā kaihaina / Signatories

Authors

Ross Tucker - Acting General Manager, Financial Strategy and Planning

Kevin Ramsay - General Manager Corporate Finance and Property

Robert Irvine - Head of Group Financial Planning

Francis Caetano - Group Financial Controller

Hinewairere Warren - Project Manager

Authoriser

Matthew Walker - Group Chief Financial Officer

Finance and Performance Committee

14 November 2018

PDF Creator

Finance and Performance Committee

14 November 2018

Update on Tāmaki Redevelopment Company

File No.: CP2018/20983

Te take mō te pūrongo / Purpose of the report

1. To update the committee on recent developments with Tāmaki Redevelopment Company (TRC), note the draft accountability documents provided to council and to update council delegations for TRC liaison and authorisations.

Whakarāpopototanga matua / Executive summary

2. Auckland Council owns 41 per cent of the shares in TRC. The Crown owns the other 59 per cent of the shares. TRC’s role is to lead the urban regeneration activity in Tāmaki to achieve four objectives relating to social transformation, economic development, placemaking and housing resources. The Tāmaki area is home to a significant number of social houses, totalling 2,800 of the approximately 5,000 existing homes in the area. TRC has been responsible for both managing the existing social housing properties and for leading on housing redevelopment in Tāmaki.

3. Over the last year, the crown has requested a number of changes with regard to the delivery model of TRC including appointing HLC (2017) Ltd (a subsidiary of Housing New Zealand) as the master developer in Tāmaki. These changes have had a significant impact on TRC’s operating model, funding arrangements and governance arrangements. While these changes are being worked through, interim arrangements are currently in place.

4. Once finalised, the changes will mean that several accountability documents will need to be amended and will require shareholder input and approval. Staff propose that any substantial accountability changes are workshopped with councillors and reported to the Governing Body.

5. In the interim, the existing delegations relating to TRC are no longer current and require updating. These new delegations will allow councillors and staff to liaise with TRC over the next year and to better understand what the changes will mean for TRC’s work programmes and council’s objectives in Tāmaki. They will also ensure that council is able to meet its shareholding obligations in a timely manner and reduce any risk to council.

6. Tāmaki Redevelopment Company have provided council with the following documents in final draft form and are seeking council feedback by the 14 November 2018.

· Tāmaki Redevelopment Company Limited Statement of Intent 2018-2022 (SOI)

· Tāmaki Redevelopment Company Statement of Performance Expectations 2018-2019 (SPE)

· Tāmaki Redevelopment Company Annual Report

7. This feedback will be discussed when TRC attend the 14 November 2018 Finance and Performance Committee.

8. Staff note that these documents reflect council’s strategic direction for Tāmaki and the priorities agreed as part of the Tāmaki outcomes framework. Staff also note that these documents reflect the interim arrangements currently in place and that there is an expectation that TRC will need to provide a new SOI and SPE in 2019 to more fully reflect their final business model. It is expected that these documents will provide improved performance measures, outputs and costings.

Ngā tūtohunga / Recommendation/s

That the Finance and Performance Committee:

a) receive Tāmaki Redevelopment Company’s draft Statement of Intent 2018-2022, draft Statement of Performance Expectations 2018-2019, and their 2017/2018 Annual Report

b) delegate to the elected member shareholding representatives for Tāmaki Redevelopment Company (those being the mayor, the chair of the Planning Committee and the Maungakiekie- Tāmaki Ward councillor) the authority to engage with Tāmaki Regeneration Company on shareholding matters and to attend shareholding meetings

c) agree that the members of the Tāmaki Coordination Group are Councillor Darby, Chair of the Planning Committee, Councillor Bartley, Ward Councillor for Maungakiekie-Tāmaki, and Chris Makaore, Local Board Chair Maungakiekie-Tāmaki

d) delegate to Auckland Council chief executive and the mayor the authority to execute any shareholding documents.

Horopaki / Context

Background

9. Tāmaki Redevelopment Company was established in 2012 as a Schedule 4a company under the Public Finance Act by the crown to support the regeneration of Tāmaki. Auckland Council is a minority shareholder in TRC with 41 per cent shareholding.

10. Tāmaki Redevelopment Company has two subsidiaries:

· Tāmaki Regeneration Limited (TRL, an asset owning company that owns the social housing in Tāmaki)

· Tāmaki Housing Association Limited (THA, responsible for tenancy and property management).

11. The council has no financial interest in either of these companies. The crown established these entities to be under the strategic direction of TRC (and in turn the shareholders). These subsidiary arrangements were put in place to protects the Crown’s 100% ownership of the social housing assets that were vested in TRL.

12. In May 2018 HLC was appointed the master developer of Tāmaki by TRL under which the portfolio of 2,500 state houses and land that TRL owns will be redeveloped into 5,000 houses in private ownership and 2,500 new state houses to be owned by TRL. This decision did not require shareholder approval.

13. The Minister of Housing and Urban Development approved an extension to the deadline that TRC is required to submit its SOI from 30 June 2018 to 1 October 2018. This extension was granted on the basis that TRC was unable to complete its SOI and SPE within the statutory timeline of 30 June 2018 as a result of the significant change to its business model requested by the Minister.

14. Tāmaki Redevelopment Company provided council with the following documents in final draft form and are seeking council feedback by the 14 November 2018, when they will be attending the Finance and Performance Committee.

· Tāmaki Redevelopment Company Limited Statement of Intent 2018-2022 (Attachment A)

· Tāmaki Redevelopment Company Statement of Performance Expectations 2018-2019 (Attachment B)

· Tāmaki Redevelopment Company Annual Report (Attachment C)

15. The shareholders’ agreement provides that the council shall be involved in the preparation, review and amendment of TRC’s Statements of Intent and Statements of Performance Expectations.

16. Tāmaki Redevelopment Company’s 2017/2018 Annual Report has been provided to Auckland Council for its information at the same time as it is being provided to the Crown (as required by the Crown Entities Act 2004).

17. Tāmaki Redevelopment Company will present to the Finance and Performance Committee at its 14 November 2018 meeting on its performance, its progress on key issues affecting or likely to affect business and any significant events that have arisen.

Tātaritanga me ngā tohutohu / Analysis and advice

Council’s governance arrangements

18. In the course of 2019, as the operational model is confirmed between TRC and HLC, staff expect TRC to seek the Crown’s and Auckland Council’s approval to amendments to the TRC and TRL constitutions and the TRC shareholders’ agreement. These decisions will require approval from the Governing Body, close liaison with the local board and may require public consultation.

19. In the interim the existing delegations relating to TRC provided by the Auckland Development Committee to councillors, local board members and the chief executive in 2015 and 2016 are no longer current and require updating. The proposed updates are provided in the table below.

Governance	Delegates	Role/Delegations
Elected member shareholder representatives	Mayor Councillor Darby, Chair of the Planning Committee Councillor Bartley, Maungakiekie-Tāmaki Ward Councillor	Attend shareholder meetings Engage with TRC on shareholding matters such as input to Statements of Intent.
Tāmaki Coordination Group (TCG)	Councillor Darby, Chair of Planning Committee Councillor Bartley, Maungakiekie-Tāmaki Ward Councillor Chris Makaore, Local Board Chair, Maungakiekie-Tāmaki	Provide communications between key Council staff involved in the Tāmaki regeneration programme and the three delegated elected representatives of the Auckland Council
Specific Delegations	Mayor and Auckland Council chief executive	To execute shareholding documents and to report back to council

20. Over the last year, while TRC has been considering how to implement changes requested by the Minister, the TCG has not been meeting. With the changes now coming into effect, it is recommended that this group is reconvened to act as a liaison between the council and TRC and to consider the council’s respective role and responsibilities to TRC.

Tāmaki Redevelopment Company’s Statement of Intent

21. On 23 October 2018 council received copies for feedback of Tāmaki Redevelopment Company’s 2017/2018 Annual Report, draft Statement of Intent (SOI) and draft Statement of Performance Expectations (SPE).

22. The documents provide an improvement over what could have been provided within the statutory deadline and reflect that TRC is operating in a period of change. As TRC are now in breach of their company obligations we understand that the crown will be recommending to the Minister approval of the SOI and SPE, acknowledging that TRC is now in the process of finalising it business model.

23. Both documents reflect the government’s and council’s strategic direction and how TRC plans to contribute to the government’s policy programme and the Auckland Plan 2050. There is an expectation that TRC will need to provide a new SOI and SPE in 2019 to more fully reflect the final business model and arrangements with HLC, and that these documents will reflect:

· the final agreement between TRC and HLC on how HLC’s will take forward the master developer role

· an improvement in the measures of TRC’s performance. More work is recommended to ensure that TRC’s performance measures relate to directly attributable outputs, outcomes and ultimately benefits

· an improved view of the costs associated with the projects that TRC undertakes.

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

24. The governance of council organisations is the responsibility of the Governing Body and its committees. Therefore, staff have not sought feedback from local boards.

25. However, the Maungakiekie-Tāmaki Local Board has a close interest in the activities of TRC and this report has been forwarded to them for their information. The chair of the local board is recommended to be included onto the Tāmaki Co-ordination Group to ensure local board input and engagement.

Tauākī whakaaweawe Māori / Māori impact statement

26. Iwi engagement around the urban regeneration programme is the responsibility of TRC. The proposed draft SOI states that TRC have responsibilities to engage with mana whenua and iwi organisations including with Ruapotaka Marae, and these responsibilities will continue.

Ngā ritenga ā-pūtea / Financial implications

27. The decision to approve the draft and final SOI have no direct financial implications.

Ngā raru tūpono / Risks

28. Tāmaki Redevelopment Company is currently not complying with its obligations to provide an SOI by their statutory deadline and exemption. There is a reputational risk around their performance as a company if clear statements of TRCs intentions and key performance measures are not documented. This risk will be mitigated by council putting in place the delegations outlined in this report.

Ngā koringa ā-muri / Next steps

29. Following feedback to TRC representatives attending this meeting, the elected members shareholder representatives group will be reconvened to provide Auckland Council comment on the draft SOI and to liaise with TRC on any proposals to amend accountability documents. These will be reported back to the appropriate committee as soon as possible.

Ngā tāpirihanga / Attachments

No.	Title	Page
a ⇩	Tamaki Redevelopment Company: Draft Statement of Intent 2018-2022	165
b ⇩	Draft Statement of Performance Expectations 2019-2019	189
c ⇩	Tamaki Redevelopment Company: Annual Report	241