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

· Overseeing and making decisions relating to an ongoing programme of service delivery reviews, as required under section17A of the Local Government Act 2002

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

· Write-offs

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

· Recommending the Annual Report to the Governing Body

Te Toa Takatini

Powers

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

a. approval of a submission to an external body

b. establishment of working parties or steering groups.

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

a. the power to establish subcommittees

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

Exclusion of the public – who needs to leave the meeting

Members of the public

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

Those who are not members of the public

General principles

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

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

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

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

Members of the meeting

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

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

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

Independent Māori Statutory Board

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

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

Staff

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

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

Local Board members

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

Council Controlled Organisations

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

Finance and Performance Committee

22 May 2019

Overview of decision making for the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028

File No.: CP2019/05676

Te take mō te pūrongo

Purpose of the report

1. To provide an overview of the process and note other reports on the agenda requiring decisions to finalise the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028 regarding land transfers.

Whakarāpopototanga matua

Executive summary

2. There are four other reports on the agenda that require decisions today. These decisions enable documentation to be finalised ahead of adoption of the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028 at the Governing Body on 20 June 2019.

3. The consultation material for the Annual Budget 2019/2020 was adopted on 13 February 2019 and covered topics such as:

· rating and fee changes

· proposed amendment to the 10-year Budget 2018-2028 regarding property transfers

· priorities in each local board for 2019/2020.

4. Public consultation ran from 17 February to 17 March 2019 and in total the council received just over 6,500 pieces of feedback, which includes feedback from 115 people who identify as Māori. Lower participation by individuals who identify as Māori was anticipated based on the level of interest and impact, with no significant changes proposed.

5. This feedback was presented to the Finance and Performance Committee at a workshop on 17 April 2019.

6. A hui with mana whenua was held to hear their views on the annual budget and the proposed amendment to the 10-year Budget.

7. Each local board held workshops and meetings to receive a tailored feedback report. These reports helped inform the discussions between the local board chairs and the Finance and Performance committee at the workshop held on 8 May 2019.

8. Feedback received on the Draft Tūpuna Maunga Operation Plan 2019/2020 was jointly received by the Tūpuna Maunga o Tamaki Makaurau Authority and the Finance and Performance Committee on 13 May 2019. The Tūpuna Maunga Authority and the Governing Body will be asked to approve the Operational Plan 2019/2020 and the Summary of the Operational Plan 2019/2020 for inclusion in the Annual Budget 2019/2020.

9. Decision makers must weigh up the information provided on the advantages and disadvantages of each option, consider the feedback received, and then arrive at what they determine to be the best decision.

10. Adopting an annual budget enables rates to be set for the following financial year.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) receive this report as an overview of the process

b) note that other decisions required to finalise the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028 regarding land transfers, are set out in separate reports on this agenda.

Horopaki

Context

Key decisions made

11. Consultation items for the Annual Budget 2019/2020 were agreed by the Governing Body on 13 December 2018. The consultation document and the supporting information were adopted by the Governing Body on 13 February 2019.

12. On 13 February 2019, the Governing Body also agreed to consult on the transfer of waterfront assets currently owned by Panuku Development Auckland to the council. As this proposal would require an amendment to the 10-year Budget 2018-2028, in accordance with the requirements in the Local Government Act 2002, the consultation document that was adopted included content relating to both the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028.

13. Public consultation was held from 17 February to 17 March 2019 and was aligned with the Our Water Future consultation.

14. The consultation document and feedback form included questions on:

· rating and fee changes

· proposed amendment to the 10-year Budget 2018-2028 regarding property transfers

· priorities in each local board for 2019/2020.

15. The consultation document also sought feedback on:

· co-governance of volcanic cones

· any issues that were important to the submitter.

Public consultation and feedback

16. During the consultation process, approximately 60 feedback events were held around the region to engage with the community. These events provided an opportunity for Aucklanders to provide feedback to the council in person. These events were attended by a mix of local board members, ward councillors, Independent Māori Statutory Board members (IMSB) and staff.

17. The council received just over 6,500 pieces of feedback. This feedback is made up from approximately 5,250 written responses, 2,500 people attended the 63 Have Your Say or community events providing 1,200 pieces, and 25 pieces received through digital channels.

18. Feedback was presented to the Finance and Performance Committee at a workshop on 17 April 2019. The summary of consultation feedback report is included as Attachment A of this report.

19. To ensure decision-makers were informed about feedback received through this consultation, staff with specific subject matter expertise reviewed and summarised the feedback.

20. A separate report summarising the feedback received on the draft Tūpuna Maunga Authority Operational Plan 2019/2020 was prepared. This report was considered on 13 May 2019 where joint deliberations were held between the Tūpuna Maunga o Tamaki Makaurau Authority and the Finance and Performance Committee. This report is included as Attachment B of this report.

Deliberations following consultation

21. On 8 May 2019 a workshop was held between local board chairs and the Finance and Performance Committee. These discussions provided an opportunity for local board views to be considered ahead of this committee making final decisions. The feedback from the local boards is set out in separate report on this agenda.

22. Budget discussions between council officers and representatives from some council-controlled organisations (CCOs) were workshopped with this committee on 13 and 15 May 2019.

Finalising the Tūpuna Maunga Authority Operational Plan

23. Auckland Council is responsible for the routine management of the Tūpuna Maunga and the administered lands (under the direction of the Tūpuna Maunga Authority) along with associated costs. The Tūpuna Maunga Authority and Auckland Council must agree the Tūpuna Maunga Authority Operational Plan (Operational Plan) and a Summary of the Operational Plan every year. The Operational Plan sets out how the council will carry out its routine management.

24. On 7 June 2019, the Tūpuna Maunga Authority will consider approving the Operational Plan 2019/2020 and the Summary of the Operational Plan 2019/2020 for inclusion in the Annual Budget 2019/2020. Governing Body will be asked to adopt the Tūpuna Maunga Authority Operation Plan 2019/2020 on 20 June 2019.

Tātaritanga me ngā tohutohu

Analysis and advice

25. The other reports on the agenda today require decisions to finalise the documentation for the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028. These are:

· Mayor’s Proposal

· Amendment to the 10-year Budget 2018-2028 regarding land transfers

· Annual Budget 2019/2020 – local board feedback

· Rates and fees issues for Annual Budget 2019/2020.

26. When making decisions the Local Government Act 2002 requires council to:

· identify all reasonably practicable options to achieve the objective of the decision

· assess those options in terms of their advantages and disadvantages

· give due consideration, with an open mind, to the views and preferences of people likely to be affected by, or to have an interest in the decision.

27. The consultation process ensures those interested in or affected by decisions have an opportunity to have their voices heard by their elected representatives prior to decisions being made. Feedback received during public consultation is one key part of many components that need to be considered when making final decisions. Comments provided as part of the feedback should be considered in order to understand the context and the meanings behind the numbers and percentages presented. The summary of feedback report can be found in Attachment A of this report.

28. The council must weigh up the information provided on the advantages and disadvantages of each option, consider the feedback received, and then arrive at what it determines to be the best decision.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

29. Panuku Development Auckland will be impacted if the amendment to the 10-year Budget 2018-2028 regarding property transfers proceeds. This is covered in a separate report on the agenda.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

30. Information on local projects and priorities were included in the consultation material to inform the local board agreements for 2019/2020. During the consultation process, additional to written and digital channels being available to provide feedback, local boards held events to engage with their communities. These events provided an opportunity for Aucklanders to provide feedback in person to local board members on local issues.

31. Reports summarising the feedback received relevant to each local board area were considered by each local board between 4 April and 1 May 2019. Local board views were then presented to the Finance and Performance Committee at a workshop on 8 May 2019.

32. A separate report on the agenda for this meeting covers local board advocacy for the Annual Budget 2019/2020. Local Board views are also considered in each of the relevant decision-making reports on this agenda.

Tauākī whakaaweawe Māori

Māori impact statement

33. Mana whenua received tailored communication on all three of the consultations, including the proposed amendment to the 10-year Budget to provide clarity on the proposal. Face to face briefings were offered.

34. During public consultation the Governing Body and IMSB held a hui with mana whenua to hear their views on the Annual Budget and proposed amendment to the 10-year Budget. 11 mana whenua representatives attended, representing seven entities.

35. Also, during consultation, three sub-regional live panel discussions were held in partnership with Radio Waatea, with mana whenua, mataawaka and councillor panelists, and reaching an audience of 100 in person, 1,964 online views and more than 12,000 radio audience.

36. A feedback event was held focusing on the Tūpuna Maunga Authority draft operational plan (attended by Tūpuna Maunga Authority members including councillors on the Tūpuna Maunga Authority Board).

37. The total number of submissions from individuals who identified as Māori was 115 compared to 390 in the Annual Budget 2017/2018 consultation. The low participation by those who identify as Māori was anticipated because of the low level of interest and impact, with no significant changes proposed. The summary of feedback report can be found within Attachment A of this report.

Ngā ritenga ā-pūtea

Financial implications

38. Budget decisions made under the separate reports on this agenda will enable the budget for 2019/2020 to be finalised and presented to the Governing Body on 20 June 2019 for adoption.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

39. The council’s annual budget (annual plan) enables rates to be set for the following financial year. Failing to adopt the Annual Budget 2019/2020 could impact the council’s ability to continue to deliver the services and projects that Auckland needs.

Ngā koringa ā-muri

Next steps

40. Following decisions today, the key steps for finalising the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028 are:

Annual Budget 2019/2020 and proposed amendment to the 10-year Budget 2018-2028	2019
Prepare final documentation	21 May – 12 June
Audit New Zealand - review the final amendment to the 10-year Budget 2018-2028	27 May – 31 May
Audit and Risk Committee – review the effectiveness of governance over risks and the operation of internal controls regarding the proposed amendment to the 10-year Budget 2018-2028.	5 June
Governing Body workshop – receive and discuss final documentation ahead of the Governing Body meeting	13 June (if required)
Governing Body meeting – adoption of the final Annual Budget 2019/2020 and amendment of the 10-year Budget 2018-2028	20 June
Close the loop with Aucklanders and distribute final documents to libraries, service centres, local board offices and online.	July

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Summary of consultation feedback	15
b ⇩	Submissions on Tupuna Maunga Authority Operational Plan April 2019	71

Ngā kaihaina

Signatories

Authors

Kylie Thompson - Programme Manager

Hinewairere Warren - Project Manager

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Matthew Walker - Group Chief Financial Officer

Finance and Performance Committee

22 May 2019

Annual Budget 2019/2020 - local board feedback and advocacy

File No.: CP2019/07404

Te take mō te pūrongo

Purpose of the report

1. To provide an overview of local board feedback and advocacy on the Annual Budget 2019/2020 (the Annual Budget).

Whakarāpopototanga matua

Executive summary

2. As part of Auckland Council’s shared governance model, local boards have a legislative role to provide input on regional plans. For the Annual Budget, local boards achieve this in three key ways:

· preparing local board agreements to be included in the Annual Budget (Volume 2) – this includes local board projects, budgets, performance measures and local fees and charges for 2019/2020

· providing feedback on regional topics

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

3. From 17 February to 17 March 2019, council consulted with the public on the Annual Budget. Each local board has now considered community feedback received for their local area and resolved feedback on the Annual Budget for the consideration of the Governing Body.

4. Local board agreements will be approved by each local board between 4-6 June 2019, before being adopted by the Governing Body on 20 June 2019.

5. This report summarises feedback and advocacy from local boards on the Annual Budget and focuses on common themes. As such, it does not include all of the matters raised in local board resolutions. A complete set of the local board resolutions on the Annual Budget including advocacy priorities are provided in Attachment A.

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

· support for all proposed changes to rating and fee charges

· support for the proposed amendment to the 10-Year Budget 2018-2028 regarding property transfers.

7. In general, the advocacy issues and key advocacy projects (the One Local Initiative (OLI)) 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, and the environment. The key themes include:

· equitable funding for and adequate provision of community facilities to facilitate growth, particularly for pools and other recreational and sports facilities

· improving water quality across the region, of both fresh and salt water, through a range of solutions, such as funding for riparian planting, and increased compliance monitoring

· waste management, in particular, the development of sub-regional resource recovery centres in the south, central and on Waiheke Island

· addressing environmental concerns, such as kauri dieback, coastal erosion, and pest and weed management

· delivery of key advocacy projects (the One Local Initiative (OLI)) as soon as possible.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) consider feedback and advocacy from local boards when making decisions on the Annual Budget 2019/2020.

Horopaki

Context

8. The Annual Budget sets out Auckland Council’s priorities and how council plans to pay for them. The Governing Body is responsible for the regional elements of the Annual Budget and local boards develop annual local board agreements which are included in the Annual Budget.

9. From 17 February to 17 March 2019, council consulted with the public on the Annual Budget. Overall Auckland Council received feedback through the following channels:

· written feedback – 5,250 hard copy and online forms, emails and letters

· in person – council received a total of 1,246 feedback points from people through 14 have your say events and 51 community events

· social media – 25 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 relating to the Annual Budget.

Tātaritanga me ngā tohutohu

Analysis and advice

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

· feedback on regional topics (a proposed small number of rating and fee changes, and the proposed amendment to the 10-Year Budget 2018-2028 regarding property transfers)

· advocacy on projects/issues that are important to communities in each local board area, including their key advocacy projects known as One Local Initiative (OLI).

Local board feedback on regional topics in the Annual Budget 2019/2020 and the proposed amendment to the 10-Year Budget 2018-2028 regarding property transfers

12. After considering feedback from their communities, local boards resolved on both their regional feedback and advocacy initiatives at their business meetings between 16 April 2019 and 1 May 2019. This report summarises feedback from local boards and focuses on common themes. As such, it does not include all the matters raised in local board resolutions. The full set of local board resolutions are provided in Attachment A.

Changes to rates and fees

13. As part of consultation on the Annual Budget, Aucklanders were asked their opinion on a small number of proposed rating and fee changes relating to the following:

· increase the waste management targeted rate base service charge to cover cost increases

· extend the food scraps collection targeted rate to 2,000 properties in North Shore trial area

· phase out the Waitākere rural sewerage service and targeted rate

· adjust the urban rating boundary to include 400 properties in urban sub-divisions adjacent to the current boundary

· not charge rates to some land owned by religious organisations

· increase to some regulatory fees to maintain cost recovery.

Annual waste management charges

14. Aucklanders were asked if they support a $20.67 increase to the waste management base service targeted rate to cover increased costs. The costs of providing waste management services have increased due to increased recycling processing costs, inorganic service volumes exceeding forecast and a consequential rise in costs, and lower bin tag revenue due to the new bin service enabling residents in Waitākere and North Shore City to dispose of more refuse than was possible in bags.

15. Eight out of the 14 boards that that provided feedback supported an increase to the waste management base service targeted rate to cover increased costs, these local boards are: Albert-Eden, Henderson-Massey, Māngere-Ōtāhuhu, Maungakiekie-Tāmaki, Ōtara-Papatoetoe, Puketāpapa, Waitākere Ranges, and Waitematā local boards.

16. The Devonport-Takapuna, Hibiscus and Bays, Kaipātiki, Manurewa, Papakura and Waiheke local boards (6 local boards) specified that they do not support an increase to the waste management base service targeted rate. The Papakura Local Board noted that public perception is that waste should be covered under our existing rates, citing the user pays system used in Papakura. The Waiheke Local Board noted that costs should be covered by those who create excess waste rather than applying a targeted rate.

Food scraps targeted rate

17. A free trial of the food scraps collection service started for 2000 properties in the North Shore area in 2014. The food scraps service was introduced in the Papakura area from 2018/2019 and funded from a targeted rate. Aucklanders were asked if they support extending the food scraps targeted rate to those properties in the former trial area to whom the service is available to ensure all properties receiving the food scraps service are treated equally.

18. The majority of local boards that provided views on this change supported extending the food scraps targeted rate to those properties in the former trial area, these local boards are: Albert-Eden, Henderson-Massey, Māngere-Ōtāhuhu, Maungakiekie-Tāmaki, Ōtara-Papatoetoe, Papakura, Puketāpapa, and Waiheke local boards (8 local boards).

19. While noting their support, Puketāpapa and Maungakiekie-Tāmaki local boards noted the need for continued monitoring of the effectiveness and any unintended consequences of this pilot, before rolling out the programme across the wider Auckland region.

20. The Waiheke Local Board noted they support all initiatives which reduce waste however wouldn’t support this programme being extended to Waiheke Island as most of their residents already compost their own food scraps.

21. The Devonport-Takapuna, Hibiscus and Bays, and Kaipātiki local boards (3 local boards) specified that they do not support extending the food scraps targeted rate to those properties in the former trial area. The Hibiscus and Bays Local Board noted that this service should be a user-pays service. The Kaipātiki Local Board noted they support the trial continuing for these properties and being funded through the waste levy as it is currently.

Waitākere rural sewerage targeted rate

22. Aucklanders were asked if they support phasing out the Waitākere rural sewerage service and targeted rate over a two-year period (2019/2020-2020/2021). Around 4,300 properties in the Waitākere area are currently paying the Waitākere rural sewerage targeted rate of $194.54 per year to fund a council provided pump out of their septic tanks every three years. This service has not delivered desired water quality improvements and the pump-out service does not address other maintenance requirements for septic tanks. The council is introducing a region wide compliance scheme for on-site wastewater systems funded by the water quality targeted rate.

23. The majority of local boards did not provide a view on this change (13 local boards), noting that this rate is not relevant to their local board area, or they did not receive sufficient feedback from residents in their area about this proposed change.

24. The majority of local boards that provided views on this change supported phasing out the Waitākere rural sewerage service and targeted rate, these local boards are: Albert-Eden, Henderson-Massey, Māngere-Ōtāhuhu, Ōtara-Papatoetoe, Papakura and Puketāpapa local boards (6 local boards).

25. The Devonport-Takapuna and Waitākere Ranges local boards (2 local boards) specified that they do not support phasing out the Waitākere rural sewerage service and targeted rate. The Waitākere Ranges Local Board noted that of the 184 individuals from their local board area who commented on this issue, 172 did not support it.

Adjusting the urban rating boundary

26. Aucklanders were asked if they support adjusting the urban rating boundary to apply urban rates to 400 properties. Auckland is growing and as a result urban development is now occurring in areas that were previously considered rural. Rural residential properties pay 90 per cent of the value based general rate charged to properties within the urban boundary. The 400 properties have been identified in six areas where urban development has occurred beside the current urban rating area. These properties receive the same level of services as their adjacent urban neighbours.

27. All of the local boards that provided views on this change supported adjusting the urban rating boundary to apply urban rates to these 400 properties, these local boards are: Albert-Eden, Devonport-Takapuna, Henderson-Massey, Kaipātiki, Māngere-Ōtāhuhu, Manurewa, Ōtara-Papatoetoe, Papakura, Puketāpapa, Waiheke, and Waitākere Ranges local boards (11 local boards).

Rating of religious use properties

28. Land used for religious worship, religious education, or as a cemetery is exempt from all rates except for waste management services where these are provided. To recognise the importance of religious organisations and the services they provide to our community, Aucklanders were asked if they support not charging rates on for the following land use:

· presbytery/manse used to house clergy which is onsite or adjacent to the place of religious worship

· halls and gymnasiums used for community not-for-profit purposes

· not-for-profit childcare for the benefit of the community

· libraries

· offices that are onsite, and which exist for religious purposes

· non-commercial op-shops operating from the same title

· car parks serving multiple uses but primarily used for religious purposes.

29. Land used for commercial purposes including car parks, gyms, cafes, and op shops that are operated as a commercial activity will continue to be rated as business.

30. The majority of local boards that provided views on this change supported not charging rates on some parts of the land owned by religious organisations, these local boards are: Albert-Eden, Devonport-Takapuna, Māngere-Ōtāhuhu, Manurewa, Ōtara-Papatoetoe, Papakura, Puketāpapa, and Waitematā local boards (8 local boards).

31. The Hibiscus and Bays and Waiheke local boards (2 local boards) specified they do not support not charging rates on some parts of the land owned by religious organisations. The Hibiscus and Bays Local Board noted that rates should not be applied for activities that are directly religious or for community purposes eg. counselling services and food banks.

32. The Henderson-Massey and Kaipātiki local boards noted that the proposal in the consultation material was poorly expressed and lacked context for the community and the board to understand adequately the impact of the changes, and the wording of the question on the feedback form was unclear. As a result, neither board has expressed a position on this matter.

Increase to some regulatory fees to maintain cost recovery

33. The council consulted on a proposal to change some regulatory fees to maintain cost recovery where cost increases were materially higher than inflation, ensure those using the services were meeting the costs rather than ratepayers, and set deposit levels closer to the likely final charge.

34. Changes were proposed to:

· resource consents – bundled consent deposits, tree consents, boundary adjustments (unit title and cross lease), change of condition and others

· building control – lapsed/refused building consent, waiver/modification of building code, extensions of time to start building work, solid fuel heater/injected wall application and others

· harbour master fees – mooring fees and foreign flagged vessel (over 40 meters in length) anchorage or dynamic positioning within Auckland’s navigable waters

· animal management – impound and sustenance fees.

35. Aucklanders were asked if they support an increase to these regulatory fees to cover increased costs.

36. The majority of local boards that provided views on this change supported an increase to these regulatory fees to cover increased costs, these local boards are: Albert-Eden, Henderson-Massey, Kaipātiki, Manurewa, Maungakiekie-Tāmaki, Ōtara-Papatoetoe, Puketāpapa, Waitākere Ranges, and Waitematā local boards (9 local boards).

37. Whilst noting their support Waitākere Ranges Local Board also raised on-going concern over how costs are passed onto users and that any increase should be subject to council exercising greater control over its own costs in the first instance.

38. The Devonport-Takapuna, Great Barrier, Hibiscus and Bays, Māngere-Ōtāhuhu, Papakura, Rodney, and Waiheke local boards (7 local boards) specified that they do not support an increase to these regulatory fees to cover increased costs. The key theme for not supporting this increase is that fees are already too high, and the time taken to get a consent is too long to justify further increases, and council processes need to be made more efficient to reduce operational cost.

39. The Great Barrier Local Board noted they oppose the proposed building and consenting fees increases as Aotea Great Barrier Island is a unique place with a unique situation. It has extra building costs not associated with urban builds such as extra barge freight costs for building materials; Geotech reports for waste; off the grid power systems; lizard reports; travel costs for planners (flights, parking, and time). The building and consenting process is already expensive for the island and these proposed increases will make matters prohibitive.

40. The Waiheke Local Board noted that they do not support increasing resource consent and building fees as they are already high, and it could deter people from completing minor improvements. They also do not support increasing Harbourmaster fees as responsible boat owners shouldn’t have to pay for those that leave boats damaged or abandoned.

Proposed amendment to the 10-Year Budget 2018-2028 regarding property transfers

41. Panuku, Auckland Council’s urban development agency, currently owns and manages about $790 million of city centre waterfront properties. This ownership model contrasts with the way Panuku operates in other development locations, in which Auckland Council holds legal ownership of the relevant properties while Panuku are given broad delegations to manage and develop them on council’s behalf. This facilitates the transition from development to ongoing maintenance activities without the need for a transfer.

42. Aucklanders were asked if they support the transfer of legal ownership of the city centre waterfront properties to Auckland Council. Panuku would continue to manage the properties. The resulting ownership structure would reduce governance duplication, increase consistency with other development areas and maximise future flexibility.

43. All of the local boards that provided views on this change supported transferring the legal ownership of the city centre waterfront properties, these local boards are: Albert-Eden, Devonport-Takapuna, Great Barrier, Henderson-Massey, Hibiscus and Bays, Howick, Kaipātiki, Māngere-Ōtāhuhu, Manurewa, Maungakiekie-Tāmaki, Ōrākei, Ōtara-Papatoetoe, Papakura, Puketāpapa, Rodney, Waiheke, Waitākere Ranges, Waitematā, and Whau local boards (19 local boards).

Local board advocacy

44. Local boards are requested to approve any advocacy initiatives for consideration by the Governing Body and inclusion (as an appendix) to the 2019/2020 Local Board Agreement, noting that this triennium a longer-term approach has been taken to progress initiatives that are unable to be funded by local board budgets. This approach used the Annual Budget, 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.

45. As part of the 10-Year Budget 2018-2028, additional funding was provided to progress the priority advocacy initiative of each local board (the One Local Initiative (OLI)). All OLIs are progressing with funding either allocated or earmarked in the 10-Year Budget. Many of the local boards are advocating to have their delivered as soon as possible, these local boards are: Henderson-Massey, Howick, Kaipātiki, Māngere-Ōtāhuhu, Manurewa, Maungakiekie-Tāmaki, Ōrākei, Papakura, Puketāpapa, Rodney, Waiheke, Waitākere Ranges, Waitematā, Whau (14 local boards).

Other local board advocacy

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

· equitable funding for and adequate provision of community facilities to facilitate growth, particularly for pools and other recreational and sports facilities

· improving water quality across the region, of both fresh and salt water, through a range of solutions, such as funding for riparian planting, and increased compliance monitoring

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

· waste management, in particular, the development of sub-regional resource recovery centres in the south, central and on Waiheke Island

· addressing environmental concerns, such as kauri dieback, coastal erosion, and pest and weed management

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

47. The full set of advocacy initiatives identified by local boards are included in the full local board resolutions in Attachment A.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

48. Panuku Development Auckland is potentially impacted in relation to the proposed amendment to the 10-year Budget 2018-2028 regarding property transfers. This is covered in a separate report on today’s agenda.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

49. Local boards have been involved throughout the development of the Annual Budget, including:

· Local Board Chairs attending Finance and Performance Committee workshops on the Annual Budget, and a special briefing was arranged for all Local Board Members on the proposed amendment to the 10-Year Budget regarding property transfers

· engaging with communities on the Annual Budget

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

50. Local board views and feedback on the regional aspects of the Annual Budget are provided in this report.

Tauākī whakaaweawe Māori

Māori impact statement

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

52. The total number of submissions relating to the Annual Budget 2019/2020 and the proposed amendment to the 10-year Budget 2018-2028 from individuals who identified as Māori was 115 (compared to 390 in the 2017/2018 annual budget consultation). The low level of feedback this year was anticipated given that no significant changes were proposed.

Ngā ritenga ā-pūtea

Financial implications

53. The Annual Budget (annual plan) is a statutory process which must be completed every year. The Council budget provides for the resourcing to deliver this project.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

54. 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

55. Local boards will adopt their local board agreements between 4-6 June 2019 and the Governing Body will then adopt the Annual Budget on 20 June 2019.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Local board resolutions on the Annual Budget 2019/2020	81

Ngā kaihaina

Signatories

Author

Beth Corlett - Advisor Plans & Programmes

Authorisers

Louise Mason – General Manager Local Board Services

Phil Wilson - Governance Director

Matthew Walker - Group Chief Financial Officer

Finance and Performance Committee

22 May 2019

Land transfers within the council group

File No.: CP2019/05027

Te take mō te pūrongo

Purpose of the report

1. To approve the land transfer of waterfront assets from Panuku Development Auckland Limited (Panuku) to Auckland Council.

Whakarāpopototanga matua

Executive summary

2. The waterfront land is recognised as a strategic asset in council’s Significance and Engagement Policy. The law requires any proposed transfer of ownership or control of a strategic asset to or from Auckland Council to be consulted on and expressly provided for in the council’s long-term plan.

3. Panuku has legal ownership of the council’s waterfront property. These properties are currently valued at around $758 million. For sites Panuku is developing in other parts of Auckland, legal ownership of the relevant properties sits with Auckland Council, and Panuku has the appropriate delegations to manage and develop the properties on behalf of council.

4. Council is proposing to transfer legal ownership of all waterfront properties currently held by Panuku to Auckland Council before 1 July 2019. There is no proposal to transfer ownership or control of these properties outside the council group. Under the proposal, Panuku would continue to lead the development of the city centre waterfront and would be given new delegations to develop and manage the waterfront properties, such that its operations would remain unaffected.

5. Due to changes to tax law, if the transfer were to happen after 1 July 2019 it would attract a substantial tax liability. Therefore, it is prudent to make this transfer of legal ownership of waterfront properties from Panuku to the council now. A binding tax ruling has been obtained from Inland Revenue which confirms that if the transaction proceeds prior to 1 July 2019, then Auckland Council will not be taxed on the derived income from transfer of the land from Panuku.

6. Council sought the community’s views on the proposal as an amendment to the 10-year Budget 2018-2028. The consultation document also included alternative options such as transferring some of the waterfront properties – either transferring completed development properties only or transferring the completed and future development properties only.

7. The majority of respondents (60%) were in support of the council’s preferred option – full transfer, with 25% supporting the proposal in part. Only 14% opposed the proposal. Those in favour of the proposal noted that it made for good governance, with improved oversight and transparency, and fiscal sense.

8. This report recommends council confirm the preferred option in the proposal and sets out the process required to transfer the legal ownership of the bulk of the waterfront assets and the associated delegations to be given to Panuku.

9. Council staff have been working with Panuku to agree the process for transferring any or all of the waterfront assets subject to approval by the Governing Body. This work has included a full legal and financial due diligence process across all of the assets. This work has identified some complexities with transferring a small number of waterspace assets where a third party has some contractual rights. It is recommended that the legal ownership of these assets (valued at approximately $2 million) stay with Panuku indefinitely.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) recommend to the Governing Body to:

i) agree to the transfer of the waterfront assets currently owned by Panuku Development Auckland Limited, as listed in Attachment A, to Auckland Council by 30 June 2019, and

A) to amend the 10-year Budget 2018-2028 to reflect the transfer

B) grant shareholder approval for Panuku to undertake a major transaction in relation to the Companies Act 1993.

ii) approve a shareholder directive to Panuku Development Auckland to transfer the waterfront assets as listed in Attachment A, including all liabilities and obligations of Panuku, to Auckland Council by 30 June 2019

iii) delegate to the chief executive, the authority to authorise any action necessary or desirable to give effect to the transfer of the waterfront assets, liabilities and obligations of Panuku to Auckland Council

iv) endorse Panuku to lead the implementation of the Waterfront Plan 2012 (updated in 2017) and any subsequent update or amendment to the Plan approved by Auckland Council, including the redevelopment and management of the waterfront assets transferred under this resolution (shown in Figure 1 of this report)

v) agree that the Auckland Council chief executive delegates to the chief executive of Panuku Development Auckland authority as set out in the delegation instrument at Attachment B (subject to any required minor or ancillary amendments), which includes:

A) subject to Auckland Council’s Significance and Engagement policy and any statutory limitations, authority to manage the waterfront assets transferred and to generally do anything at any time that Auckland Council could do in relation to them, including without limitation rights to occupy, manage, control, allow others a right to use, exclude others, lease, collect revenue and use any dominant interests that land being part of the waterfront asset contains over other land”. For the avoidance of doubt this does not include the ability to sell or otherwise dispose of waterfront assets.

B) authority to enter into development agreements, including long-term leases, on the properties listed below (following the transfer) that are required to achieve the objectives of the Waterfront Plan 2012 and to enable the running of the 36^th America’s Cup:

Wynyard Quarter commercial development:

28 Madden Street (Lot 3 DP 490387)

143 Beaumont Street (Lot 102 DP 518633)

Wynyard Quarter residential development:

117 Pakenham Street West (Lot 14 DP 490387)

124 Halsey Street (Lot 9 DP 490387)

America’s Cup related sites:

44-56 Hamer Street (Lot 8 DP 133386, Lot 9 DP 13338, Lot 4 DP 456818)

C) authority to manage the Westhaven Marina and Silo Marina and any assets comprising the Viaduct Marina that are owned by Auckland Council, and undertake development, maintenance and renewals to improve amenity and access for both berth holders and Aucklanders in accordance with the Waterfront Plan 2012, Westhaven Plan 2015 and any updated plan or strategy for marinas approved by Auckland Council.

vi) confirm that all prior resolutions, delegations, approvals, agreements, authorisations and requests by the Governing Body or any of its committees relating to Panuku Development Auckland in relation to the waterfront still apply to Panuku Development Auckland; including but not limited to:

A) prior approvals given by the Finance and Performance Committee or the Planning Committee to Panuku Development Auckland to acquire, lease or dispose of land or property

B) prior resolutions, approvals, agreements, authorisations and requests made by the Planning Committee to Panuku Development Auckland in regard to the city centre waterfront

vii) note that the above delegations do not constitute shareholder approval in terms of a future major transaction relating to a strategic asset.

Horopaki

Context

10. Panuku is the sole entity within the council group responsible for urban redevelopment leveraging council-owned property, managing redevelopment and property transactions on behalf of Auckland Council. Panuku owns and manages some of the city centre waterfront property - land, buildings and any associated water rights relating to city centre waterfront public space, development sites and marinas. These properties are currently valued at around $758 million.

11. New Zealand’s tax law is changing. From 1 July 2019, transferring assets from a council-controlled organisation (CCO) to Auckland Council for no cost would be considered taxable income. Therefore, a transfer of waterfront properties after 1 July 2019 is likely to have a significant impact on rates and debt. Depending on the exact make-up of the properties to be transferred this could cost the council approximately $220 million.

12. The Panuku operating model is not premised on owning the land which it is redeveloping on behalf of Auckland Council. The council typically has legal ownership of property and CCOs manage these assets on its behalf.

13. In February 2019, the Finance and Performance Committee considered four options, including an assessment of their advantages and disadvantages (refer Attachment C), in determining where ownership of the Panuku waterfront assets should reside. These were:

i) status quo - no transfer

ii) partial transfer - transferring the completed development properties only with Panuku retaining the working waterfront assets and future development properties

iii) partial transfer - transferring completed and future development properties only, while leaving the working waterfront assets in Panuku ownership

iv) full transfer of waterfront properties from Panuku ownership to council, with Panuku being given appropriate delegations to continue to lead the development of the city centre waterfront and to develop and manage the waterfront properties such that its operations will remain unaffected.

14. Under all options, the land assets will remain in public ownership. Under all options there is no impact on council rates or debt as a result of proposed transfer. Due to the changes to tax law, if these assets were transferred after 1 July 2019 there would be a significant financial impact on the council.

Consultation proposal

15. The waterfront assets under consideration are illustrated in Figure 1 and the lists of assets are provided in Attachment A. In the consultation document the waterfront properties were broken into three categories: completed development properties, future development properties and working waterfront properties.

16. The preferred option in the consultation document was for the full transfer of waterfront properties from Panuku ownership to council, with Panuku being given appropriate delegations to continue to lead the development of the city centre waterfront and to develop and manage the waterfront properties such that its operations will remain unaffected.

Figure 1: Waterfront assets under consideration

17. The Finance and Performance Committee agreed to consult on the option to transfer all of the waterfront assets currently owned by Panuku to council, alongside consultation on council’s Annual Budget 2019/2020. The committee also noted the following:

b) note that the proposed consultation document on the full transfer of waterfront assets currently owned by Panuku Development Auckland to the Council Entity includes information on the alternative options considered and does not preclude a decision on these options following consultation.

Tātaritanga me ngā tohutohu

Analysis and advice

Consultation feedback on the 10-year Budget amendment proposal

18. Consultation feedback was presented to a workshop of the Finance and Performance Committee on 17 April 2019. In total 2458 submissions were received on the proposed amendment.

19. Figure 2 provides a breakdown of the feedback.

20. The majority of respondents (60%) supported the proposal for ownership of the completed and future waterfront development property and the working waterfront property held by Panuku to be transferred to Auckland Council. Those in favour of the proposal noted that it supported good governance, with improved oversight and transparency, and fiscal sense.

21. A quarter of respondents partially supported the proposal. Those who partially supported the proposal felt that they did not know enough about it to fully support the proposal. While others were concerned that the assets might be sold off and wanted assurance that this would not happen.

Figure 2: 10-year Budget Amendment – feedback summary

22. Those who did not support the proposal (14%) felt that reasons for the proposal were not clear. Some were concerned that council was already a large organisation and that the proposal would not lead to efficiency savings. Many also felt that they could not trust the council and that it would sell the assets.

23. There were no submissions expressing clear support for the alternative options.

24. All individual mana whenua groups and the Mana Whenua Kaitiaki Forum were emailed on Monday, 18 February 2019 with information on the proposed amendment, the Annual Budget and the Water Strategy consultation. All Mana Whenua were invited to provide feedback to the governing body on the 13 March 2019. Of the 2385 written responses to this question, 152 submitters identified as Māori. Of these, 59% supported the proposal.

25. A submission was received from the Westhaven Marina Users Association and they were generally supportive of the proposal. They did seek clarity on some aspects of the proposal and a full response to their questions was provided to them. Submissions were also received from the Auckland Marina Users Association and the Auckland Yacht Boating Association. These submitters did not specifically address the proposal but commented on the need for a wider marina strategy and supported the need for public ownership and access to the waterfront land.

Panuku Board

26. The Panuku Board considered the feedback on 26 April 2019. The board wrote to council on 7 May 2019 (refer Attachment D).

27. The Panuku Board notes the importance of these assets to Auckland and Panuku. They highlight the significant redevelopment programme underway, where much is on a critical path for the 36^th America’s Cup.

28. The board understands the issues facing the shareholder and supports transferring the completed development assets, future development sites and completed public realm. They highlight several operational matters where they seek confidence from the council that they will continue to be able to operate in order to meet their purpose and to deliver the same level of service.

29. The board notes the complexity of the waterfront assets, particularly in relation to the Westhaven marina, which was acquired for the people of Auckland to remain in perpetuity. The board also noted the option for Panuku to retain ownership of these assets.

30. To address the matters raised by the Panuku board, a set of delegations are recommended which would enable Panuku to continue to lead the planning, development, and management of assets and place activation of the waterfront. Council staff have also engaged with the Crown to assure them that should the marina assets be novated to council, then the public access to Westhaven Marina will remain in perpetuity as intended under the original agreements.

Land transfer proposal

31. Council’s legal and finance departments, in association with Panuku, have undertaken an extensive due diligence process to identify all assets, contracts, rights and obligations, consents and budgets associated with those assets. This has identified the assets to be transferred and those where there are third-party arrangements. Where there are third-party arrangements, council will seek consent or notification to allow a transfer to proceed.

32. Through the due diligence process, council’s legal department have identified that all of the land-based waterfront properties can be transferred to Auckland Council without any material implementation issues.

33. However, Auckland Council’s legal department and Panuku have agreed that the water space consent and management arrangements in place within the Viaduct Harbour (identified in Figure 3) should remain with Panuku and not be transferred. Transferring these assets comes with potential litigation, commercial and reputational risk that can be avoided by leaving these assets with Panuku. These assets have been estimated at
$2 million, so are not considered significant or material in the context of the proposed transaction.

Figure 3: VHHL Land

34. In accordance with its delegations, Panuku will continue to manage the balance of the neighbouring marina space on behalf of Auckland Council ensuring a consistent approach to the whole of the marina.

35. In line with staff analysis on the options that went to the February 2019 Finance and Performance Committee (refer Attachment C), staff recommend that all of the waterfront property assets, with the exception of the Viaduct Marina arrangements identified above; and the associated operating budgets (utilities, maintenance and depreciation costs offset by property rental revenue) be transferred to Auckland Council. This option is consistent with the way Panuku operates in other development locations. It reduces duplication in governance for approvals and provides a clear focus for Panuku activity.

36. The partial transfer option increases the complexity in the ownership and governance model. If future transformed assets remain with Panuku indefinitely, then developed waterfront properties would have a different ownership arrangement to properties relating to the other development activities undertaken by Panuku (e.g. Manukau, Avondale and Onehunga). Any proposed transfer of the waterfront properties in the future may have a significant impact on rates and debt due to tax law changes.

Process to transfer land assets

37. If the transfer is approved, a process has been agreed with Panuku and council to transfer the assets. Under a Transaction Agreement, Auckland Council will purchase the assets from Panuku at a purchase price equal to fair value. The purchase price will be based on the net book value of the waterfront assets (expected to be approximately $758m). The purchase price owing by Auckland Council will be offset by a dividend (approximately $272m) and share repurchase (expected to be approximately $486m) from Panuku to Auckland Council, at least equal to the amount received by Panuku from Auckland Council, and may include additional return of equity as appropriate. This will result in no cash changing hands.

38. Should council agree the proposal, the following amendments will be made to the 10-year Budget 2018-2028, and the amendment will go to the Governing Body on 20 June 2019 for approval:

· council’s financial statements will include the new assets, revenue, operating and capital expenditure

· the financial statements for Panuku will give effect to these transactions

· the ‘Overview of the Auckland Council’s CCOs’ to reflect the updated responsibilities of Panuku.

· the ‘CCO Accountability Policy’ to reflect updated responsibilities of Panuku.

39. The proposal does not require any amendment to the 10-year Budget’s level of service statement or performance measures.

40. The proposal will constitute a major transaction under the Companies Act 1993 and require approval from council as a shareholder. Council, as shareholder, will need to issue a shareholder’s directive to the board of Panuku to undertake this transaction.

41. As a consequence of the transaction, the Panuku board will need to be assured that Panuku will remain solvent and have requested assurances from the council in this regard. A letter of comfort will be provided to Panuku that confirms that Auckland Council will continue to provide appropriate financial and non-financial support to ensure that Panuku remains a going concern (as reflected in their Statement of Intent). This does not incur any additional cost, but simply provides that council will continue to make available the funding agreed in the 10-year Budget 2018-2028 to Panuku.

Delegations

42. To ensure that Panuku can continue to operate and manage the waterfront land as it currently does, several delegations are recommended. The delegations have been prepared with input from Panuku and are similar in nature to the delegations relating to the other ‘Transform’ and ‘Unlock’ locations in which Panuku is operating.

43. It is recommended that the delegations refer to the Waterfront Plan 2012 (and any subsequent updates and amendments to that Plan) until such time as a refreshed waterfront plan is approved. The Waterfront Plan 2012 provides the vision, goals and strategic direction for the development of the city centre waterfront. The updated direction on implementation of the Waterfront Plan was approved in September 2017 by council’s Planning Committee.

44. Panuku also has Service Level Agreements in place with council departments and other CCOs which set out the key functions of the parties. Where necessary, Service Level Agreements will be put in place (or updated to include the waterfront assets) to effect the intent of the council.

45. The delegations grant Panuku the authority to:

· enter into redevelopment agreements, including long-term leases, that are required to achieve the objectives of the Waterfront Plan 2012 and to enable the running of the 36^th America’s Cup

· act as landowner over the waterfront public spaces and to grant permits for community events and activations in this space, and to deliver the place activation programme

· manage the Westhaven Marina and Silo Marina and undertake development, maintenance and renewals to improve amenity and access for both berth holders and Aucklanders in accordance with the Waterfront Plan 2012, Westhaven Plan 2015 and any updated plan or strategy for marinas approved by Auckland Council.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

46. Panuku staff and board have been engaged in the development of the options that were consulted on and have also been engaged in the development of the recommendations in this report.

47. Staff attended the Panuku Board meeting on 26 April 2019 to discuss the community feedback and the proposal.

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

48. The views of local boards were canvassed as part of the consultation on the 10-year Budget amendment. A separate report summarises the local board feedback to the Annual Budget 2019/2020. This report notes that all of the local boards that provided views on this change supported transferring the legal ownership of the city centre waterfront properties, these local boards are: Albert-Eden, Devonport-Takapuna, Great Barrier, Henderson-Massey, Hibiscus and Bays, Howick, Kaipātiki, Māngere-Ōtāhuhu, Manurewa, Maungakiekie-Tāmaki, Ōrākei, Ōtara-Papatoetoe, Papakura, Puketāpapa, Rodney, Waiheke, Waitākere Ranges, Waitematā, and Whau local boards (19 local boards)

Tauākī whakaaweawe Māori

Māori impact statement

49. Engagement with Mana Whenua took place as part of the 10-year Budget 2018-2028 consultation of the amendment. Of the 2385 written responses to this question, 152 submitters identified as Māori. Of these, 59% supported the proposal.

Ngā ritenga ā-pūtea

Financial implications

50. Some transaction costs have been incurred in the preparation of due diligence associated with the proposal. There is no material financial implication to the Auckland Council Group as a whole, directly from the transaction of the transfer.

51. If the proposal is not supported, should council wish to transfer the legal ownership of the waterfront properties in the future a substantial tax liability will be incurred.

52. Council’s tax advisors have worked with Inland Revenue to obtain a binding ruling to provide certainty about the tax treatment. The binding ruling was received by council on 18 April 2019. This ruling confirms that any amount derived by Auckland Council on distribution by Panuku of the sale proceeds will be excluded income, provided that the distribution occurs on or before 30 June 2019. For avoidance of doubt, this means the transaction is not tax avoidance and any dividend component (actual or deemed) will not be taxable.

53. The Inland Revenue also issued a second binding ruling on 2 May 2019 (valid until 30 June 2022) which confirms that once the assets return to Auckland Council the revenue derived by council will not be subject to tax.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

54. The main risks lie in Panuku losing momentum and leadership over the waterfront development, and any potential impact on their reputation in the market. To mitigate this, a set of delegations are recommended that will ensure Panuku retain their clear mandate to lead redevelopment of the waterfront.

55. Some of the waterfront properties that will be transferred from Panuku to Auckland Council required prior consent of third parties including: Crown Ministries, Auckland Council (regulatory), Ports of Auckland and other business partners. Council’s legal department have identified these parties and where practicable has commenced early engagement with these parties to ensure the tight time frames of the proposed transaction can be met.

Ngā koringa ā-muri

Next steps

56. Should the Governing Body agree to transfer the waterfront properties currently held by Panuku to Auckland Council, staff will work with Panuku to implement the transfer as per the process and recommendations identified in this report.

57. A shareholder directive will be communicated to the Panuku board in respect of the transfer and date as per recommendation a).

58. The amendments to the 10-year Budget 2018-2028 will be presented to the Governing Body for approval on 20 June 2019.

59. The intended transaction date is 26 June 2019.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Itemised list of assets	147
b ⇩	Delegation Instrument	153
c ⇩	Analysis of waterfront property transfer options	155
d ⇩	Panuku Board Letter: Land Transfers - May 2019	157

Ngā kaihaina

Signatories

Author

Claire Gomas - Principal Advisor

Authorisers

Alastair Cameron - Manager - CCO Governance & External Partnerships

Phil Wilson - Governance Director

Matthew Walker - Group Chief Financial Officer

Finance and Performance Committee

22 May 2019

Rates and fee issues for Annual Budget 2019/2020

File No.: CP2019/06942

Te take mō te pūrongo

Purpose of the report

1. To seek agreement on minor changes to rating policy and regulatory fees for inclusion in the Annual Budget 2019/2020 and consequential amendments to the Rates Remission and Postponement Policy and Revenue and Financing Policy.

Whakarāpopototanga matua

Executive summary

2. Council consulted on a number of minor changes to rating policy and regulatory fees for inclusion in the Annual Budget 2019/2020. These changes were proposed to implement decisions previously made by council or to ensure fair treatment of similar ratepayers and users of council services. Feedback received on these proposals was presented at the Finance and Performance Committee workshop on 17 April 2019.

3. Consideration of feedback is one part of the decision-making process alongside assessment of options to address the issues and their advantages and disadvantages. Consultation provides an opportunity for those who may be affected by decisions to have their say and for any new issues to be raised. Officers have listened to the feedback and are recommending changes to some of the proposals.

Phase out Waitākere rural sewerage service and targeted rate

4. Council proposed to phase out the septic tank pump out service and associated targeted rate ($194.54 per year incl. GST), provided to 4,300 properties in the former Waitākere City Council area.

5. Officers recommend that the Waitākere septic tank pump out service and targeted rate be retained until the current contract expires in June 2021. Strong local support was received for the continuation of the service (174 of the 185 responses from the Waitākere Ranges Local Board area).

6. Officers will report on options for integrating this service with the new monitoring regime as part of the development of the Annual Budget 2020/2021. This will include advice on the cost of the options, appropriate level of rate, and the area the service should apply to.

Navigation and safety fee for foreign flagged vessels over 40m

7. Council proposed introducing a fee of $20 per metre per day plus GST for foreign flagged vessels over 40 metres in length using anchorage and/or dynamic positioning. The proposed fee was to recover a share of the costs of maintaining navigation aids and maritime safety functions. Feedback was 476 opposed and 383 in support. A further 174 late responses partially supported the proposal but wanted it extended to domestically owned vessels. The marine community did not support this proposal as they were concerned that the daily charge would discourage visits from vessels planning extended stays such as for the Americas Cup.

8. To avoid discouraging extended stays, officers recommend that foreign flagged vessels over 40 metres be charged an annual navigation and safety fee of $20 plus GST per metre of vessel, rather than a daily fee.

Other proposals

9. Feedback on the other proposals was mixed with support and opposition divided relatively evenly for most. Officers recommend the adoption of the following proposals as consulted on:

· increase the waste management targeted rate base service charge by $20.67 (incl. GST) to cover increases in the cost of services of $10.9 million

· extend the food scraps collection targeted rate of $68.34 (incl. GST) to around 2,000 properties in North Shore currently receiving the service for free as part of a trial so they pay the same as the residents of Papakura who receive the same service

· adjust the urban rating area boundary to include 400 properties in urban subdivisions adjacent to the current boundary so they pay the same rates as their neighbours

· not charge rates for some particular religious land uses reflecting their community benefit and strong link of some land uses to religious worship

· increases to some of the council’s fees for resource consents and building control, harbour master mooring fees and animal control to maintain cost recovery by raising an additional $662,000.

10. Decisions made at this meeting will be incorporated into the Annual Budget 2019/2020 that is presented to the Governing Body for adoption on 20 June 2019.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) recommend to the Governing Body as part of the final Annual Budget 2019/2020 to:

i) retain the Waitākere rural sewerage (pump-out) service and the associated targeted rate until June 2021

ii) adopt the changes to fees as specified in Attachment B of the agenda report

iii) amend the Rating mechanism in the Funding Impact Statement to:

A) increase the base waste management targeted rate to $121.06 (incl. GST)

B) include a food scraps targeted rate of $68.34 (incl. GST) in the Northcote, Milford and Takapuna trial area

C) adjust the urban rating area boundary to include the properties identified in Attachment A to this report

D) introduce a zero-rated general rates differential that includes land owned by religious organisations and used for:

1) housing for religious leaders which is onsite or adjacent to the place of religious worship

2) halls and gymnasiums used for community not-for-profit purposes

3) not-for-profit childcare for the benefit of the community

4) libraries

5) offices that are onsite and which exist for religious purposes

6) non-commercial op-shops operating from the same title

7) car parks serving multiple land uses but for which the primary purpose is for religious purposes

b) recommend to the Governing Body that it agree to amend the:

i) Revenue and Financing Policy to amend the general rates differential categories to include the zero-rated category as specified in Attachment C of this report

ii) Remission and Postponement Policy to remit the Uniform Annual General Charge and fixed charges for zero-rated land as specified in Attachment D of this report

c) agree that officers report back on options for integrating the septic tank pump out service with the new monitoring regime including advice on the cost of the options, appropriate level of rate, and the area the service should apply to.

Horopaki

Context

Decision making

11. When making decisions the Local Government Act 2002 requires council to:

· identify all reasonably practicable options to achieve the objective of the decision

· assess these options in terms of their advantages and disadvantages

· give due consideration, with an open mind, to the views and preferences of people likely to be affected by, or to have an interest in the decision.

12. The consultation process ensures those interested in or affected by decisions have an opportunity to have their voices heard by their elected representatives prior to decisions being made. Feedback received during public consultation is one key part of many components that need to be considered when making final decisions. Comments provided as part of the feedback should be considered in order to understand the context and the meanings behind the numbers and percentages presented.

13. The council must weigh up the information provided on the advantages and disadvantages of each option, consider the feedback received, and then arrive at what it determines to be the best decision.

Consultation and feedback

14. The council consulted on the proposed changes to rating policy and regulatory fees as part of the Annual Budget 2019/2020 consultation. Full implementation of the council’s proposals for the rating of religious properties also requires amendments to the Revenue and Financing Policy and the Rates Remission and Postponement Policy. These proposed amendments were consulted on separately.

15. Analysis of feedback received during the Annual Budget 2019/2020 consultation is contained in the Summary of Feedback report attached to the Overview of Decision-making report to the Finance and Performance Committee on 22 May 2019. Analysis of feedback received during the Revenue and Financing Policy and the Rates Remission and Postponement Policy consultations are included in this report.

16. 6,500 pieces of feedback were received on the Annual Budget 2019/2020 in comparison to over 44,000 received on the 10-year Budget 2018-2028. This reflected the more limited financial impact of the proposals being consulted on. Given the small changes being considered the council decided not to incur the expense of an independent quantitative survey.

Tātaritanga me ngā tohutohu

Analysis and advice

17. The following sections set out for each of the proposed changes to council’s financial policies and fees:

· the proposal that was consulted on

· a summary of feedback received

· consideration of feedback including the advantages and disadvantages of the options

· local board feedback

· recommendations.

18. Council sought feedback from the public on the changes to rates and fees by asking the open-ended question: “Please tell us what you think of some or all of these changes”. Some respondents indicated their views on all the proposed changes as a package while others provided comments on individual changes. Feedback results are shown for the overall responses, and for those responses that specifically commented on the issue. 273 late submissions were received on the matters covered in this report including 260 in response to a mailout by the Auckland Ratepayers Alliance. These are included in the overall responses noted below and noted separately where they materially influence the balance of feedback.

19. The analysis below also records local board feedback on the proposals. Local board feedback is set out in full in a separate report also on this agenda. A number of local boards did not comment on many of the proposals given they did not directly impact on their areas.

Waitākere rural sewerage targeted rate

Proposal

20. The council proposed phasing out the three yearly Waitākere septic tank pump-out service and associated Waitākere rural sewerage targeted rate over the next two years. There are 4,300 properties currently receiving this service that are charged a targeted rate of $194.54 per year (incl. GST) ($584 per pump-out).

21. Under the proposal, by June 2019 around half of the properties in the current pump-out cycle will have either received the pump-out service in 2018/2019 or, due to contract lead times, will receive a pump out in 2019/2020. It was proposed that these properties would continue to pay the targeted rate until the three-yearly cycle ends in 2020/2021. The remaining properties would not receive a service and any targeted rate already paid in 2018/2019 would be refunded.

22. Discontinuing the scheme would deliver around $100,000 per year in cost savings from 2021/2022 when the service is phased out. This is because the targeted rate revenue of around $708,000 is lower than the cost of around $808,000.

New regional compliance programme

23. A regional compliance programme will be put in place over the next two to three years to ensure on-site wastewater systems across the region are adequately maintained and inspected to minimise environmental risk. Implementation will be phased across Auckland, with Waitākere anticipated to come under the programme in 2019. The programme supports the Unitary Plan requirements for property owners to have their on-site systems inspected and maintained to a satisfactory standard, with records to be submitted to council as evidence. Owners will be required to meet the maintenance costs. The council’s inspection record management will be funded from the water quality targeted rate.

24. The regional compliance programme is designed to deliver the environmental outcomes sought by the council. Continuing the septic tank pump-out scheme once the regional compliance programme is in place will not deliver additional environmental benefits. It was therefore proposed in the consultation document for the Annual Budget 2019/2020 that the tank pump-out scheme and associated targeted rate be phased out from 2019/2020.

Feedback

25. Overall, 461 responses did not support the proposal while 404 were in support. Of the 395 responses that specifically commented on the issue, 263 did not support phasing out the Waitākere rural sewerage service and targeted rate, with 85 in support. 174 of the 185 responses from people within the Waitākere Ranges Local Board area opposed the proposal. The most common theme was people wanted to keep the system as it is, liking the convenience of the service or being unsure that people will maintain their tanks themselves.

Consideration

26. Discontinuing the scheme would require owners in the Waitākere area to purchase a pump-out service from private contractors instead. Costs for individual pump-outs can vary widely depending on location as well as conditions of the tank and the site. For easier sites costs can be as low as $350 to purchase a pump-out service from a private contractor. Conversely, certain difficult sites could face pump-out costs of up to $800-$900 from private contractors. Many property owners would pay less or the same over the three-year period. Some owners, particularly in remote areas, will face significant increases in pump-out costs^{^[1]}. Discontinuing the pump-out service and the targeted rate would mean the higher costs associated with these tanks would no longer be subsidised by other tank owners.

27. The pump-out scheme does not adequately address the risk onsite systems pose to the environment. This is because the scheme only pumps the sludge out of the septic tank and does not ensure the maintenance of filters, the allowable flow or the maintenance of disposal fields, which are important for an effective on-site wastewater system. System failures and overflows may occur between the three-yearly pump-outs. The scheme also does not cover approximately 50 per cent of the onsite wastewater devices that are present in the area, as these do not have septic tanks.

28. The majority of feedback received on the proposal, particularly from those directly affected, supported keeping the pump-out service. Keeping the pump-out service requires an evaluation of options to maximise the effectiveness of the scheme so that desired water quality outcomes can be achieved.

29. If the pump-out service is kept then it will need to complement the regional compliance scheme. Keeping the pump-out service will also require considering the area of service and raising the level of the rate to ensure full cost recovery. The direct cost to the council of the existing pump-out scheme was around $808,000 in 2018/2019. As the targeted rates revenue is around $708,000 general ratepayers are subsidising the service by around $100,000 per year. Consideration should also be given to also recovering shared corporate costs (such as finance, IT and HR) estimated to be around $75,000.

30. As the pump-out service runs on a three-yearly cycle the best time to implement changes will be in June 2021 when the current contract cycle ends. Feedback on any future changes can be sought through consultation on the Annual Budget 2020/2021. An important consideration of any future change will be the likely cost of the pump-out service.

31. Keeping the current service will mean that general ratepayers continue to pay for some of the costs of the pump-out service until such time that the targeted rate can be increased. Phasing out the service as proposed would mean that users fully pay for the service from 2021/2022.

Local board feedback

32. Six local boards supported the proposal and two were opposed including the Waitākere Ranges Local Board who noted the strong support in their community for the service.

Recommendation

33. Officers recommend that:

· the Waitākere rural sewerage service and targeted rate be retained until the current contract expires in June 2021

· officers report on options for integrating this service with the new monitoring regime as part of the development of the Annual Budget 2020/2021, including the appropriate level of rate and the area the service should apply to.

Navigation and safety fee for foreign flagged vessels over 40m

Proposal

34. The council proposed to introduce a fee of $20 per metre per day plus GST for foreign-flagged vessels over 40 metres in length anchoring or using dynamic positioning within Auckland’s navigable waters. Warships will be exempted and there will be a 24-hour grace period for vessels awaiting a berth at Ports of Auckland.

Feedback

35. Overall 476 of 1039 responses did not support the fee for foreign flagged vessels, including 176 late submissions. Of the 294 responses that specifically commented on this issue, 114 did not support the proposal with a common theme being that this would discourage such vessels from visiting. A further 174 submissions thought that the charge should not exclude domestically owned vessels. Feedback from the superyacht industry also opposed the proposal due to the potential negative economic impact to Auckland from reduced visits from foreign flagged vessels.

Consideration

36. The number of large foreign flagged vessels visiting Auckland waters is increasing. This includes superyachts and cruise ships anchoring off places such as Waiheke, Great Barrier Island and the inner Waitemata, and cargo ships anchoring in the Hauraki Gulf and Motuihe Explosives anchorage.

37. Currently superyachts and cruise ships only contribute towards the cost of maintaining navigation aids and maritime safety functions if they pay for mooring or a marina berth. Superyachts and cruise ships that anchor or use dynamic positioning receive benefits of the maintenance of navigation aids and maritime safety functions without contributing to their costs.

38. Fee schemes of this nature are already in place in Marlborough Sounds, parts of Canterbury, Chatham Islands and Southland.

39. Following consideration of feedback from key stakeholders in the superyacht industry, officers recommend changing the proposed fee of $20 per metre per day plus GST to a fee of $20 per metre per annum plus GST. The revised fee structure:

· removes the disincentive for vessels to visit for extended stays

· imposes a lower level of charge than the original proposal

· generates a slightly lower level of revenue for council than the proposal ($31,400 per annum compared to $48,000 proposed)

· is similar to charges set in other New Zealand harbours.

40. Auckland Council will invoice the ship’s agent directly.

Local board feedback

41. 9 local boards supported the proposal as part of the overall fee changes and 7 were opposed.

Recommendation

42. Officers recommend an annual fee of $20 per metre of vessel length plus GST for foreign flagged vessels over 40 metres in length anchoring or using dynamic positioning within Auckland’s navigable waters be adopted as set out in Attachment B to the report.

Waste management targeted rate

Proposal

43. Council consulted on an increase in the waste management base service targeted rate by $20.67 (incl. GST) from $100.39 (incl. GST) to $121.06 (incl. GST) to cover cost increases of $10.9 million (excl. GST). The funding required to provide waste management services has increased due to:

· increased recycling processing costs, $5.1 million

· inorganic service volumes exceeding forecast and a consequent rise in costs, $2.2 million

· lower bin tag revenue as residents in Waitākere and North Shore City are able to dispose of more refuse in bins than was possible in bags, $3.1 million.

Feedback

44. Overall 825 responses did not support the proposal, including 260 late responses, while 492 were in support. Of the 896 responses that specifically commented on the issue, 383 did not support the proposal. The most common theme across all submissions was that it was unfair or too expensive. The 260 late responses wanted council to reassess its role in waste management.

Consideration

45. The proposal maintains a standard level of regional charges for base waste management services and keeps the costs transparent. While there are some regional differences in costs, officers consider maintaining a standard base rate is appropriate until all the elements of the Waste Minimisation and Management Plan 2018 (pay as you throw refuse and the food scraps collection) are introduced across the Auckland region in 2020/2021. Raising the base rate means the users and beneficiaries of the services are meeting the costs. If the waste management targeted rate is not increased it will create a $10.9 million budget pressure that would need to be addressed.

46. It is not reasonably practical to increase the prices set for bin tags in the Waitākere and North Shore areas. Current bin tag prices have been set to maximise revenue. A price increase will lead to a loss of market share to competitors and a greater revenue shortfall.

47. It is also not reasonably practical for council to reduce the current costs or services levels for recycling or the inorganic service as these are subject to contract terms.

48. The additional costs are equivalent to a general rates increase of 0.7 per cent above the level set in the 10-year Budget 2018-2028. The council is unable to increase general rates to cover these costs as this was not consulted on as part of the Annual Budget 2019/2020.

Local board feedback

49. Eight local boards supported the proposal and six were opposed.

Recommendation

50. Officers recommend the waste management base service targeted rate be increased by $20.67 (incl. GST) to $121.06 (incl. GST) as proposed.

Food scraps collection service trial on the North Shore

Proposal

51. The council consulted on an extension of the food scraps collection service targeted rate of $68.34 (incl GST) to 2,000 properties on the North Shore in Northcote, Milford and Takapuna. These properties are currently receiving the service free of charge as part of a trial started in 2014.

52. In 2018/2019 council introduced a food scraps collection service in Papakura funded by a targeted rate of $67 (incl. GST) paid by all properties in the service area^{^[2]}. The food scraps service is to be implemented across the whole of urban Auckland from 2020/2021.

53. The service in the North Shore trial area is presently being funded from central government funds raised from the waste levy. The service costs $211,000 per year. The service is popular, with 1,560 of the 2,000 properties in the trial area participating. A survey conducted in 2016 showed strong support (80 per cent) for continuation of the service. Respondents were not asked in this survey about paying a targeted rate for the collection.

Feedback

54. Overall, 490 responses supported the proposal while 468 were opposed. Of the 535 responses that specifically commented on the issue, 277 did not support extending the food scraps targeted rate with 194 in support. 45 responses were from people identified as living within the trial area, of which 35 did not support the proposal. The most common theme was that it should be an optional or user pays system.

Consideration

55. The extension of the foods scraps collection service targeted rate to the North Shore trial area is recommended to ensure these properties are being treated fairly in comparison to those in Papakura who are receiving the same service. The service will have been provided free of charge for five years by the time a rate is introduced. Funding the service with a targeted rate will free up waste levy funding for other waste minimisation projects.

56. The rate is $1.31 per week. The rate would not be payable by those residents renting their properties, including the tenants of the 145 properties in the area owned by Housing New Zealand. These costs will be met by their landlord as the ratepayer.

57. Consideration was given to maintaining the status quo and waiting until the introduction of the service at a region-wide scale before introducing a rate. Officers do not recommend this option as it would not be fair to ratepayers in Papakura who are currently paying for the service. Given the support for the service in the trial area and its pending regional roll out, the alternative option of ending the trial is also not recommended.

58. Officers also do not recommend using a fee on an interim basis (effectively allowing residents to opt out of the charge). As part of the 10-year Budget 2018-2028, the council approved the introduction of a food scraps service which will be made available to all residential properties in urban Auckland. The service will be funded by a targeted rate payable by all properties to which the service is available. Allowing an opt-out would lower the take up of the scheme, increase the cost per household and reduce the environmental benefits from diverting waste from landfill.

Local board feedback

59. Eight local boards supported the proposal and three were opposed. The Kaipātiki Local Board sought retention of the current funding arrangements.

Recommendation

60. Officers recommend the extension of the foods scraps collection service targeted rate of $68.34 (incl GST) to 2,000 properties on the North Shore as proposed.

Adjusting the urban rating area boundary

Proposal

61. The council consulted on a proposal to adjust the urban rating area to include 400 properties in the areas identified in Attachment A. Under the proposal, these properties which are currently rated as rural residential, will be rated as urban residential from 2019/2020.

Feedback

62. Overall, 454 responses supported the proposal while 222 were opposed. Of the 183 responses that specifically commented on the issue, 134 supported the proposal to adjust the urban rating area boundary. The most common theme was that the proposal was fair.

63. Of the respondents who opposed the proposal, two thought that rates were too high. All three of the responses received from property owners affected by the proposal were opposed to the change. Of these, two thought the change to urban rating should be delayed until houses had been built.

Consideration

64. The 400 properties identified for inclusion in the urban rating area are identical to adjacent properties already rated as urban. They receive the same level of services as their neighbours. As such it is equitable that they pay the same rates.

65. Adjusting the rating boundary as proposed will increase rates for the identified properties by an average of $110 for 367 bare lots, $378 for 31 developed residential lots and $1,700 for two larger blocks that are being developed but which have not been subdivided. The total increase in rates from these properties is around $55,000.

66. Just under 80 per cent of the 400 properties are currently bare lots. These properties will not be generating demand for council services such as libraries. It is still equitable to charge these properties urban rates because:

· urban rates are set on capital value, so undeveloped lots will pay less rates than their developed neighbours

· these properties are already being served by council owned roads and stormwater assets that are maintained by general rate funding

· vacant lots in other parts of the urban rating area pay urban rates.

67. Properties that are developed during the rating year will only be charged rates on the value of their improvements in the following rating year.

Local board feedback

68. 11 local boards supported the proposal and none were opposed.

Recommendation

69. Officers recommend that the urban rating area boundary be adjusted as proposed to include the 400 properties identified in Attachment A.

Rating of religious use properties

Proposal

70. The Finance and Performance Committee has previously agreed to consult on not charging rates to some land owned by religious organisations. This is to recognise the importance of religious organisations and the services they provide to Auckland’s community.

71. The council proposed not to charge rates to the following religious land uses:

· presbytery/manse used to house clergy which is onsite or adjacent to the place of religious worship

· halls and gymnasiums used for community not-for-profit purposes

· not-for-profit childcare for the benefit of the community

· libraries

· offices that are onsite and which exist for religious purposes

· non-commercial op-shops operating from the same title

· car parks serving multiple land uses but for which the primary purpose is for religious purposes

72. Land used for commercial purposes including car parks, gyms, cafes, and op shops that are operated as a commercial activity would continue to be rated as business.

73. To implement these changes required separate consultations to amend the:

· Funding Impact Statement (as part of the Annual Budget 2019/2020) to include a zero-rated general rates differential category for this land

· Revenue and Financing Policy to amend the general rates differential categories to include the zero-rated category

· Remission and Postponement Policy to remit the Uniform Annual General Charge and fixed charges for zero-rated land.

Feedback

74. Of the 1740 respondents to the Annual Budget 2019/2020 consultation, 845 supported or partially supported the proposal and 806 did not. Of the 1320 responses that specifically commented on the issue:

· 587 supported the proposal, with the most common themes being that religious organisations provide important services to community. They noted that any rates charged would detract from the religious organisations’ ability to provide these services

· 651 did not support the proposal to change the rating of religious properties, with the most common themes being that no special treatment should be given to religious properties and that they can afford to pay their rates.

75. 86 responses were received from owners of religious use properties. They either supported or partially supported the proposal. In addition to the themes identified above they also commented that:

· council’s interpretation of legislation is too narrow and that the proposed zero-rated land should be considered non-rateable

· an advisory board should be established

· all clergy residences should be zero-rated, not just those on-site or adjacent to the place of religious worship.

76. Of the 114 respondents to the proposed changes to the Revenue and Financing Policy, 72 supported or partially supported the proposal and 41 did not. Of the 218 respondents to the proposed changes to the Rates Remission and Postponement Policy, 189 supported or partially supported the proposal and 28 did not. Comments received for and against the proposal were in line with those received to the Annual Plan 2019/2020 consultation.

77. The InterChurch Bureau representing churches across Auckland supported the proposal. The InterChurch Bureau noted that churches provide for the spiritual, social, educational, or physical needs for all members of society and that their facilities are often made available for community use at no, or a low, charge and provide a valuable community service. They disagreed with council’s interpretation of the non-rateable exemptions in legislation. Their view was that an auditorium, other public meeting spaces and hall, offices and parking spaces are an integral part of modern churches. As such they are all places used as part of religious worship.

Consideration

78. Religious organisations and the services they provide are important to Auckland’s community. The facilities and services they provide reduce the demand on the services that council provides. The proposal to not charge rates to some religious use land supports these organisations to continue providing these services. Any rates charged for land owned by these ratepayers detract from their ability to provide these services.

79. Adopting the proposed approach will reduce the size of the rating base by between
$1 million and $1.5 million. This will result in general rates increasing for all other ratepayers by between 0.06 percent and 0.09 per cent ($1.50 and $2.25 per year for the average residential ratepayer) to offset the reduced revenue. The overall increase in general rates does not change.

80. Officers note adopting this proposal will mean rates paid by religious organisations for land not used for religious worship will be different from the rates paid by other community organisations.

81. Some of the owners of religious use land do not agree with council’s interpretation of the exemptions in the rating legislation. Officers have continued to engage with some of the representatives from religious organisations on this issue. To date this has not resulted in any changes to council’s interpretation of the legislation. However, engagement on this issue is ongoing. If this ultimately results in changes to council’s interpretation of legislation that has an impact on council’s rating policy then this will be reported back to the Finance and Performance Committee.

82. Some respondents also commented that zero-rating of presbytery/manse used to house clergy should be extended to all presbytery/manse used by clergy and owned by their religious organisation. The proposal only includes housing for religious leaders onsite or adjacent to the place of religious worship. Officers do not have information on the numbers of properties that will be affected but an extension of this kind is unlikely to materially change the estimate of impact on other ratepayers noted above.

83. If the proposal is not adopted, then officers recommend that the committee agree to the rating approach recommended in the report to committee on 20 November 2018. This would see small parts of properties that are used for purposes ancillary to religious worship be treated as non-rateable. Libraries would become zero-rated and parts of land used for other purposes would be rated in the same way as other non-religious use properties. Residences will be rated as residential while cafes, shops and car parks operated commercially will be rated as business.

84. Consideration of the matters set out in section 101(3) of the Local Government Act 2002 were included in the Annual Budget 2019/2020 supporting information.

85. Officers consider that the feedback was evenly balanced and no significant issues were raised that weren’t considered when the proposal was adopted for consultation.

Local board feedback

86. Eight local boards supported the proposal and two were opposed

Recommendation

87. Officers recommend that the Funding Impact Statement, Revenue and Financing Policy, and Remission and Postponement Policy be amended to implement the proposed changes to rating of religious use land. Note that to ensure the proposal encompasses all religious institutions officers recommend changing the proposal to not charge rates for “presbytery/manse used to house clergy” to “housing for religious leaders”.

Increase to some regulatory fees to maintain cost recovery

Proposal

88. The council consulted on a proposal to change some regulatory fees to:

· maintain cost recovery where cost increases were materially higher than inflation

· ensure those using the services were meeting the costs rather than ratepayers

· set deposit levels closer to the likely final charge.

89. Changes were proposed to:

· resource consents – bundled consent deposits, tree consents, boundary adjustments (unit title and cross lease), change of consent condition and others

· building control – lapsed/refused building consent, waiver/modification of building code, extensions of time to start building work, solid fuel heater/injected wall application and others

· animal management – impound and sustenance fees

· harbour master fees - increasing mooring permit fees by $57.50 per annum (incl GST) on top of the annual inflationary adjustment to help fund the salvage and disposal of abandoned and wrecked boats from moorings.

90. The changes increase revenue by $662,000 to maintain cost recovery.

Feedback

91. Overall responses did not support the proposed changes to regulatory fees. Opposition was higher among those responses that commented on the specific fee proposals as follows:

· Overall 626 of 1,010 responses did not support the proposed increases to building and resource consent fees. Of the 298 responses that specifically commented on this issue, 272 did not support the proposal. The majority of the responses received were provided at a general level expressing concern about the overall cost and efficiency of council services.

· Overall 749 of 1,155 responses did not support increased mooring fees, including 265 late submissions. Of the 414 responses that specifically commented on this issue, 386 did not support the proposal. The most common theme was that the cost of salvaging and disposal of abandoned boats should not be borne by responsible boat owners.

Local board feedback

92. 9 local boards supported the proposal and 7 were opposed. The primary concern amongst those opposed was the time and cost to secure consents.

Consideration

Building control, resource consent and animal management fees

93. The proposed changes to building control, resource consent and animal management fees are:

· generally in line with similar charges set by other major councils in New Zealand

· forecast to recover an additional $500,000 per annum in revenue (excl GST).

94. The council is actively pursuing efficiency gains in the delivery and costs for these and other regulatory services to ensure users are provided with value for money and better customer service. Setting the fees as proposed will ensure that users meet the full costs of the services they are using.

Mooring fees

95. The council proposed to increase mooring permit fees by $57.50 per annum (incl GST) on top of the annual inflationary adjustment raising an additional $162,000. This proposed increase is to help fund the salvage and disposal of abandoned and wrecked boats from moorings. The Harbourmaster currently disposes of around 20 moored vessels per annum and the cost can be as much as $25,000 each if they sink.

96. The moored fleet is increasing in age and the number of boats falling into disrepair is increasing every year. As there is no vessel registration system in New Zealand, it is often difficult to identify owners of the abandoned or wrecked boats and recover costs. These costs are currently borne by the general ratepayers. The proposed fee increase shifts the burden to vessel owners and greatly reduces the ratepayer subsidy. The first $3,000 of the cost of salvage or disposal will be covered by the increase in fees and the remaining amount will continued to be invoiced to the owner. If the owner can’t be identified the cost will be met by general ratepayers.

97. By salvaging and disposing of abandoned and wrecked boats the Harbourmaster maintains a safe navigation environment for boats. The benefit of the Harbourmaster service primarily accrues to mooring users as opposed to the wider community. As such, it is equitable for a share of the costs of this service to be paid by mooring holders.

Recommendation

98. Officers recommend that the changes to building control, resource consent, animal management and mooring fees be adopted as set out in Attachment B to the report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

99. The changes proposed in this report have been communicated to and agreed on by the following departments of Auckland Council and Auckland Transport:

- Waste Solutions

- Healthy Waters

- Regulatory Services

- Harbourmaster (Auckland Transport).

Ngā whakaaweawe ā-rohe me ngā tirohanga a te poari ā-rohe

Local impacts and local board views

100. Local Boards views on the impacts of regional decisions on their local community are included in the report Local Board feedback to the 22 May 2019 meeting of the Finance and Performance Committee.

Tauākī whakaaweawe Māori

Māori impact statement

101. The council does not hold information on the ethnicity of ratepayers, boat owners or building and resource consent applicants so is not able to identify the exact impact on the proposed changes on Māori. The impact of the proposed changes on Māori will be similar to that on other residents in Auckland.

102. Marae are not affected by the proposed changes to rating of religious use land. Marae have separate rates exemptions up to two hectares under legislation. Rates on marae that exceed two hectares are fully remitted under councils Māori freehold land rates remission and postponement policy.

Ngā ritenga ā-pūtea

Financial implications

103. The financial implications of the recommended charges are noted in the relevant sections above.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

104. There are no risks associated with recommendations in this report.

Ngā koringa ā-muri

Next steps

105. Decisions made at this meeting will be incorporated into the Annual Budget 2019/2020. On 20 June 2019, the Governing Body will be asked to adopt the Annual Plan 2019/2020 and set rates for the 2019/2020 financial year.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Urban Rating Area Boundary Changes	175
b ⇩	Changes to Regulatory Fees and Deposits	179
c ⇩	Revenue and Financing Policy	181
d ⇩	Rates Remission and Postponement Policy	195

Ngā kaihaina

Signatories

Authors

Andrew Duncan - Manager Financial Policy

Beth Sullivan - Principal Advisor Policy

Aaron Matich - Principal Advisor – Financial Policy

Eric Wen - Advisor - Financial Polciy

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Matthew Walker - Group Chief Financial Officer

[1] Note that this relates to the pump-out service only and does not include the cost of meeting other requirements in the regional compliance programme.

[2] Increasing to $68.34 in 2019/2020 to cover cost inflation.

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