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

 

Date:

Time:

Meeting Room:

Venue:

 

Thursday, 17 September 2020

10.00am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

 

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

 

OPEN AGENDA

 

 

MEMBERSHIP

 

Chairperson

Cr Desley Simpson, JP

 

Deputy Chairperson

Cr Shane Henderson

 

Members

Cr Josephine Bartley

Mayor Hon Phil Goff, CNZM, JP

 

IMSB Member Renata Blair

Cr Richard Hills

 

Cr Dr Cathy Casey

Cr Tracy Mulholland

 

Deputy Mayor Cr Bill Cashmore

Cr Daniel Newman, JP

 

Cr Fa’anana Efeso Collins

Cr Greg Sayers

 

Cr Pippa Coom

Cr Sharon Stewart, QSM

 

Cr Linda Cooper, JP

IMSB Chair David Taipari

 

Cr Angela Dalton

Cr Wayne Walker

 

Cr Chris Darby

Cr John Watson

 

Cr Alf Filipaina

Cr Paul Young

 

Cr Christine Fletcher, QSO

 

 

(Quorum 11 members)

 

 

 

Sandra Gordon

Kaitohutohu Mana Whakahaere Matua / Senior Governance Advisor

 

11 September 2020

 

Contact Telephone: (09) 890 8150

Email: sandra.gordon@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 


 


 

Terms of Reference

 

Responsibilities

 

The purpose of the committee is to:

 

a)    advise and support the mayor on the development of the Long-term Plan (LTP) and Annual Plan (AP)

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

c)    make financial decisions required outside of the annual budgeting processes.

 

The committee will establish an annual work programme outlining key focus areas in line with its key responsibilities, which include:

 

·         advising and supporting the mayor on the development of the LTP and 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

·         approving the financial policy of the council parent organisation

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

·         approve the council insurance strategy and annual insurance placement for Council

·         performance measures and monitoring

·         write-offs

·         acquisition of property in accordance with the LTP

·         disposals in accordance with the LTP

·         recommending the Annual Report to the Governing Body

·         funding for achieving improved outcomes for Māori.

 

Powers

 

(i)         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.

(ii)        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.

(iii)       If a decision is a budgetary or financial decision that relates primarily to the Finance and Performance Committee responsibilities, the Finance and Performance Committee has the powers to make associated decisions on matters that would otherwise be decided by other committees. For the avoidance of doubt, this means that matters do not need to be taken to multiple committees for decisions.

(iii)       The committee does not have:

(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

17 September 2020

 

ITEM   TABLE OF CONTENTS                                                                                         PAGE

1          Apologies                                                                                                                        7

2          Declaration of Interest                                                                                                   7

3          Confirmation of Minutes                                                                                               7

4          Petitions                                                                                                                          7  

5          Public Input                                                                                                                    7

6          Local Board Input                                                                                                          7

7          Extraordinary Business                                                                                                8

8          Presentation from Eden Park Trust Board                                                                 9

9          Panuku and Auckland Transport Park and Ride integrated development programme                                                                                                                                       13

10        Emergency Budget 2020/2021 - Update September 2020                                       27

11        Emergency Budget 2020/2021 Asset Recycling implementation                          37

12        Summary of Finance and Performance Committee information memoranda and briefings, including the Forward Work Programme - 17 September 2020          217  

13        Consideration of Extraordinary Items 

PUBLIC EXCLUDED

14        Procedural Motion to Exclude the Public                                                               227

C1       CONFIDENTIAL: Auckland Council Group and Auckland Council quarterly performance reports to 30 June 2020                                                                     227

C2       CONFIDENTIAL: Exchange of Land with Watercare Services Limited (Covering report)                                                                                                                          227  

 


1          Apologies

 

At the close of the agenda no apologies had been received.

 

 

2          Declaration of Interest

 

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

 

 

3          Confirmation of Minutes

 

That the Finance and Performance Committee:

a)         confirm the ordinary minutes of its meeting, held on Tuesday, 11 August 2020, including the confidential section, as a true and correct record.

 

 

4          Petitions

 

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

 

 

5          Public Input

 

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

 

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

 

 

6          Local Board Input

 

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

 

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

 

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

 


 

 

7          Extraordinary Business

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 


Finance and Performance Committee

17 September 2020

 

Presentation from Eden Park Trust Board

File No.: CP2020/12299

 

  

Te take mō te pūrongo

Purpose of the report

1.       To provide a further opportunity for the Eden Park Trust Board (which is partially funded by the Auckland Council) to present to the committee on its performance and financial projections. Their last appearance before the committee was on 19 March 2020.

2.       To provide a further update on progress against the resolutions of this committee on 19 March 2019 (FIN/2019/24, FIN/2019/25, FIN/2019/26 and FIN/2019/27).

Whakarāpopototanga matua

Executive summary

3.       The Eden Park Trust Board were provided with funding on 19 March 2019 (Resolutions FIN/2019/24, FIN/2019/25, FIN/2019/26 and FIN/2019/27) as follows:

a)      authorise and delegate all necessary powers to the chief executive to:

i)       reach an agreement with Eden Park Trust and ASB Bank for Auckland Council to take over the $40 million loan from ASB Bank to Eden Park Trust together with other facilities provided by ASB Bank to Eden Park Trust before 30 September 2019.

ii)       reach an agreement with Eden Park Trust to consolidate the loans acquired from ASB Bank and Auckland Council loans into one or more new facilities on commercial terms including:

A)      first-ranking security over Eden Park Trust’s assets

B)      a term of up to ten years

C)      an interest rate set at council’s cost of funds plus a margin.

b)      authorise the chief executive to agree a grant to fund capital expenditure of up to $9.8 million over a three-year period from 1 July 2019 under a Development Funding Agreement.

c)      agree that the chief executives of Auckland Council, Eden Park Trust and Regional Facilities Auckland jointly prepare an operational partnering proposal to be completed by March 2020.

d)      invite Eden Park Trust Board to report to the Finance and Performance Committee on at least a six-monthly basis to outline its performance and financial projections.

e)      initiate discussions with the Government to seek amending the Eden Park Trust Deed to appropriately align the governance of Eden Park with funding.

4.       In accordance with clause d), representatives of the Eden Park Trust Board will attend the meeting.

Update on previous resolutions

5.       Resolution a) – Loan: Auckland Council took over ASB Bank loans and facilities to Eden Park Trust:

a)      On 30 September 2019, Auckland Council took over ASB Bank loans and facilities to Eden Park Trust by paying ASB Bank $40 million (the par value of all amounts outstanding from Eden Park Trust to ASB Bank as at 30 September 2019) and consolidating $6.5 million of existing Council loans into one $54 million revolving facility with a drawn loan balance of $46.5 million.

b)      In April 2020 Council agreed to grant Eden Park Trust a waiver on its financial covenant relating to the loan from Council until 31 January 2021.  The waiver was granted due to the impact that Covid-19 was having (and is still having) on Eden Park’s business (mainly in the form of reduced revenue).  The situation makes it highly possible that Eden Park will be unable to meet this covenant.

c)      In simple terms the financial covenant states that the ratio of EBITDA (earnings before interest, tax, depreciation and amortisation) to interest for the financial year in question will be equal to or greater than 1.1.

d)      On 2 September 2020 the Eden Park Trust Board made a request for a further extension of the waiver through to 31 October 2021 (their financial year end next year).  This is currently being considered, noting that the previous agreement by council to the waiver is similar to what other lenders have agreed to in similar situations where the revenue of a business has fallen significantly due to the impacts of COVID-19.  For example, the bankers to Auckland International Airport have agreed to waive covenants until December 2021 due to the sharp fall in the airport’s revenue. This committee will be kept updated on any decisions about extending this waiver.

e)      Council will continue to monitor the situation in conjunction with the Eden Park Trust.

f)       Eden Park’s loan balance as at 31 August 2020 was $45 million, compared to $44.5 million at the end of April 2020. The maximum amount that may be borrowed under the facility at any point in time is $54 million.

g)      Eden Park Trust continues to pay interest on the loan.

6.       Resolution b) – Funding: A Development Funding Agreement was executed with Eden Park Trust in late 2019.

a)      The Trust has been drawing down against the grant – a total of $2,434,032 for replacement of emergency lighting and new turf and a new video replay screen has been released to date.

7.       Resolution c) – Operational Partnering Proposal: Work on a proposal was progressed but ultimately put on hold to await the outcomes of the CCO Review. 

a)      The CCO review findings were released in August 2020. The recommendations include a merger of Regional Facilities Auckland Limited (RFAL) and Auckland Tourism, Events and Economic Development (ATEED) and that “The merged entity explores, at the council’s direction, the critical need for joint management and operation of the city’s four stadiums with the Eden Park Trust.”

b)      On 27 August 2020 the Governing Body agreed (GB/2020/90) to the establishment of a merged council controlled organisation by amalgamating RFAL and ATEED (and to all other recommendations in principle).

c)      The entity is expected to legally come into being on 1 December 2020. The council can direct the new entity to explore joint management and operation with the Eden Park Trust in its initial statement of intent.

8.       Resolution d) – Eden Park reporting to Finance & Performance Committee: the Eden Park Trust Board previously presented to this committee on 19 March 2020 and will present to the committee at this meeting. This reporting is to continue on at least a six-monthly basis.

9.       Resolution e) – Governance: Previously staff had been engaging with government officials from the Ministry for Culture and Heritage. 

d)      In light of the CCO review recommendations which were released in August 2020, and include a recommendation for joint management and operation of the city’s stadiums, staff will engage with government officials to prepare advice about options for changes to the trust’s governance, as well as the trust board.

Eden Park Trust Board presentation

10.     In accordance with resolution d), representatives of the Eden Park Trust Board will attend the meeting. They will present high level financial information and discuss their response to COVID-19.

11.     Council finance staff have considered the presentation prior to this meeting and do not have any risks or issues to raise with the committee.

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      thank the representatives of the Eden Park Trust Board for their attendance and the information provided.

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.     

Ngā kaihaina

Signatories

Author

Anita Furniss - Executive Officer - Finance Division

Authoriser

Kevin Ramsay - Acting Group Chief Financial Officer

 


Finance and Performance Committee

17 September 2020

 

Panuku and Auckland Transport Park and Ride integrated development programme

File No.: CP2020/07979

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To obtain approval to utilise selected Park and Ride sites for integrated transport orientated redevelopment as part of the Panuku Development Auckland and Auckland Transport Park and Ride Integrated Development programme.

Whakarāpopototanga matua

Executive summary

2.       An Auckland Plan transformational shift is to ‘radically improve the quality of urban living’.  A key aspect of improving the quality of urban living is the delivery of high-quality integrated development.  Auckland Transport (AT) and Panuku Development Auckland (Panuku) have the ability to partner and collaborate to deliver transport infrastructure that is integrated with high-quality development on properties in the AT fixed asset register. 

3.       A number of credible development companies have enquired with AT and Panuku about the prospect of partnering to progress opportunities. Potentially significant opportunities have remained untapped to date. AT and Panuku have worked together to scope the opportunities which exist in the AT managed portfolio and develop a framework to progress the opportunities.

4.       The focus is on current park and ride sites which have the potential for the airspace above the site, or another disposal component (or components), to be sold for development while the underlying transport asset is retained in council ownership and will continue to be maintained and operated by AT.  The AT and Panuku boards have approved a strategic approach for integrating transport service requirements at designated council owned park and ride sites with mixed use development to create transit-orientated developments (TOD).

5.       The outcomes of this programme are anticipated to include increased public transport patronage and strong urban regeneration and urban design outcomes at selected park and ride sites.  This programme seeks to increase density and intensification around transport nodes and provide the Auckland region with additional housing supply and a range of housing typologies.  

6.       The net proceeds generated from the redevelopment of selected park and rides sites are intended to be optimised and reinvested back into regional transport priorities.  This is in accordance with the Finance and Performance Committee resolution of 20 March 2018 to extend the Optimisation of Service Property approach to Auckland Transport managed assets (resolution number FIN/2018/40).

7.       Nine sites have been selected to progress as potential TOD opportunities.  These comprise eight Auckland Council owned park and ride sites and one asset jointly owned by both NZTA and Auckland Council.


 

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      approve the Panuku Development Auckland and Auckland Transport Park and Ride Integrated Development programme;

b)      approve, subject to the satisfactory conclusion of any required statutory processes, disposal of a component (or components) of the following properties that Auckland Transport have confirmed are not required for the delivery of transport operations to enable integrated transport orientated development, and agree that final terms and conditions be approved under the appropriate delegations:

i)        Ōrākei Train Station Park and Ride located 240 Ōrākei Road, Ōrākei;

ii)       Manurewa Station Park and Ride located at 33 Station Road, Manurewa;

iii)      Selwyn Road car park located at 8 Selwyn Road, Manurewa;

iv)      Homai Station Park and Ride located at 2R Dalgety Drive, Manukau;

v)      Sturges Train Station Park and Ride located at 76 Swanson Road, Henderson;

vi)      Papakura Train Station Park and Ride located at 18-22 Railway Street West, Papakura;

vii)     Constellation Park and Ride located at 62 Parkway Drive, Rosedale;

viii)    Albany Park and Ride located at 250 Oteha Valley Road, Albany; and

ix)      Silverdale Park and Ride located at 1 Hibiscus Coast Highway, Silverdale;

c)      note that the specified current and future transport operations at the above-listed properties will remain in council ownership and continue to be maintained and controlled by Auckland Transport.

Horopaki

Context

8.       A key aspect of improving the quality of urban living in Auckland is to enable and deliver high-quality integrated development.  The Auckland Plan states:

“Integrating land use and transport is particularly important for rapid transit. Unlocking growth around rapid transport corridors and stations is essential to address Auckland’s housing and transport challenges. It will also maximise the benefits from the large investment required to build and operate rapid transport.”

9.       AT and Panuku have complimentary roles to play in this area, with many properties in the AT fixed asset register presenting opportunities to deliver transport infrastructure that is integrated with high-quality development.  Panuku has been mandated by Auckland Council to deliver on its commitment to prioritise urban redevelopment. Panuku will achieve this through facilitating urban redevelopment and public good activities at selected park and ride sites, while AT will ensure the necessary transport requirements are achieved on a site by site basis.

10.     As part of the Park and Ride Integrated Development programme, net proceeds generated from the redevelopment of selected park and rides facilities will be reinvested back into regional transport priorities.  This is in accordance with the service property optimisation framework, which is a policy tool that aims to deliver improved community outcomes with no impact on rates.  It previously only applied to Auckland Council’s community assets; not properties on the AT fixed asset register. On 20 March 2018, the Finance and Performance Committee resolved (resolution number FIN/2018/40):

1.                “the extension of the Optimisation of Service Property approach to Auckland Transport noting that this will enable reinvestment of net proceeds by Auckland Transport in transport priorities arising from the commercial development of service property undertaken in partnership with Panuku as part of an urban development project where airspace is being sold above a transport service site”.

Tātaritanga me ngā tohutohu

Analysis and advice

Background

11.     AT and Panuku have worked together to identify and assess prospective opportunities by utilising current and past investigations undertaken by both AT and Panuku. The land on which AT operate park and rides is typically single use with untapped potential in which large amounts of capital is locked up. Such sites provide opportunities to undertake integrated TODs close to amenities with links to reliable and frequent public transport. 

12.     Sites were assessed at a high level to ascertain if any development potential could be realised, such as the sale of the airspace above each site or another disposal component based on the development strategy, while the underlying transport asset is retained in council ownership.  Sites with latent development potential can be optimised; unlocking the value to provide funding for reinvestment back into the transport network, providing improved access, service delivery and a mixture of additional uses.

13.     A full schedule of the sites across the region proposed for the Panuku and AT Park and Ride Integrated Development programme is contained in Attachment A to this report.

14.     In January 2019, Panuku commissioned PricewaterhouseCooper (PwC) to produce a Commercial Development Strategy for this programme of work. The Commercial Development Strategy proposed adopting a phased approach to delivery. We accepted this proposal and divided the ten sites into three tranches based their respective marketability, timing and effect on transport objectives. Subject to obtaining Finance and Performance Committee approval, we will take a phased approach to delivery. 

Objectives

15.     The objectives of the Panuku and AT Park and Ride Integrated Development programme are:

·    increasing density and intensification around transport nodes;

·    increased public transport patronage, active modes and safe access;

·    future proofing for imminent strategic transport requirements;

·    strong urban regeneration and urban design outcomes;

·    increasing housing supply and delivery of a range of housing typologies as a priority;

·    the release of capital / latent value from park and ride sites; and

·    the ability to partner with developers capable of delivery.

Anticipated programme of works

16.     It is anticipated that completion of the full programme of works will take 20 plus years. Subject to Finance and Performance Committee approval, the AT Board will approve and confirm the functional requirements for the transport component which will highlight the potential development envelope for each site. Panuku will undertake all necessary due diligence to understand all relevant legal, technical and historical information and council’s statutory obligations in respect of each site The Panuku Board will confirm the essential design outcomes, market strategy and commercial requirements for each site.

17.     A joint AT and Panuku panel will review proposals received and select the preferred development partner. Final terms and conditions of the disposal of any component of the selected sites to enable development will be approved under the appropriate delegations.  Elected members and key stakeholders will be kept informed regarding the appointment of the development partner for each site, the agreed transport requirements and the development outcomes and timeline for delivery.

Tauākī whakaaweawe āhuarangi

Climate impact statement

18.     The Panuku and AT Park and Ride Integrated Development programme is intended to help address some of the issues the Auckland region faces due to climate change by:

·     creating density in and around transport nodes;

·     helping to create walkable communities;

·     increasing public transport accessibility;

·     providing communities with more options to be less reliant on traditional forms of transport such as cars; and

·     reducing transport related emissions.

19.     Subject to Finance and Performance Committee approval, analysis will be undertaken on a site by site basis of the climate change impact, with potential risks such as if the site is in flood plains and the potential for coastal inundation considered and mitigation strategies formed if necessary. 

20.     We recognise that any form of construction and development can increase emissions.  Emissions associated with any potential redevelopment could be reduced through development standards agreed through a future development agreement, utilisation of Panuku’s Homestar 6 policy and requirements to reduce carbon emissions in commercial developments.

21.     The long-term benefits of there being a reduced reliance on private motor vehicles is also anticipated to offset construction related emissions by the creation of density in and around transport nodes.  This will contribute to helping to create walkable communities, improving access to public transport and reducing transport related emissions.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

22.     An Auckland Plan transformational shift is to ‘radically improve the quality of urban living’.  A key aspect of this is improving the quality of urban living by delivering high-quality integrated development.  AT and Panuku have worked together in the development of the Panuku and AT Integrated Development programme.

23.     Should this programme be approved by the Finance and Performance Committee, engagement will take place within the council group on a site by site basis to identify any potential issues and any opportunities for collaboration and input from other parts of the council group.

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

Local impacts and local board views

24.     Informal engagement was undertaken with the Hibiscus and Bays, Henderson-Massey, Manurewa, Ōrākei, Papakura and Upper Harbour Local Boards in 2019 regarding this proposal and the sites in the respective local board areas.  Panuku and AT also provided an update to the local boards by way of an information memorandum in March 2020. This memorandum included the offer of Panuku and AT attending a further workshop with the local boards following the recent local government elections.  The Ōrākei Local Board requested an additional workshop, which was held in May 2020.

25.     Following informal engagement, the Hibiscus and Bays, Henderson-Massey, Ōrākei, Papakura, Upper Harbour and Manurewa Local Boards formalised views at the respective June 2020 local board business meetings. The full resolutions of the local boards are contained in Attachment B of this report. 

26.     In summary, the Hibiscus and Bays, Henderson-Massey, Ōrākei, Papakura, Upper Harbour and Manurewa Local Boards supported the Panuku and AT Park and Ride Integrated Development programme and the park and ride sites in the respective local board areas being utilised as part of an integrated transport orientated development.

27.     In addition, the following points were raised.

a)      The Ōrākei Local Board requested:

·   any potential development to be in accordance with the controls contained in the Auckland Unitary Plan;

·   increased Park and Ride capacity from the current number, and for sole use of transport passengers rather than any development residents as part of any potential development;

·   the design of any potential development will need to provide access to the walkway;

·   Panuku and AT to address concerns raised about potential access to the proposed Ōrākei Train Station Park and Ride integrated asset redevelopment and the need for a comprehensive traffic safety plan to be developed.

b)      The Papakura Local Board:

·   sought assurance from Panuku and Auckland Transport that parking operations and commuter parking will not be affected by future development;

·   to ensure good quality development and outcomes in the Papakura Town centre and seeks further engagement from staff when development options for the site materialise and prior to a decision on the preferred option;

·   noted that staff from Panuku and AT advised there are no plans to reduce current parking capacity located at 18-22 Railway Street West, Papakura. 

c)      The Upper Harbour Local Board requested:

·   an outline of how “future proofing for imminent strategic transport requirements”, especially relating to future car park requirements at the Albany and Constellation bus stations, can be met given the rapid predicted growth in the Upper Harbour Local Board area;

·   that consideration be given to the revenue derived from asset disposal being allocated to projects that will benefit services provided at the park and ride facilities within the Upper Harbour Local Board area, or to projects that are in the Auckland Transport Regional Land Transport Plan;

·   that the local board be involved in the planning assessment of each site and during any proposed developments.

d)      The Manurewa Local Board:

·   noted its expectation it play an active role in the implementation of this strategy in Manurewa through influencing the type, design and scale of development;

·   requested that any integrated transport development undertaken in Manurewa as part of this strategy reflects a high quality of urban design, including incorporation of Māori design, universal access and sustainable design, provides or maintains green spaces and is compatible with Auckland’s Urban Ngahere Strategy and any Urban Ngahere strategy or programme adopted by the board;

·   requested further engagement with the board and key stakeholders, including Manurewa and Wiri business associations, mana whenua and the Manurewa Town Centre Steering Group, when development options for the site are known and prior to a decision on the preferred option;

·   noted its expectation that the current number of free park and ride carparks at the sites subject to this report be maintained in any development.

28.     The local board feedback received has been noted by Panuku and AT.  Subject to Finance and Performance Committee approval, Panuku and AT will work with the impacted local boards on the potential development options and address the site-specific feedback above.

Tauākī whakaaweawe Māori

Māori impact statement

29.     The importance of effective communication and engagement with Māori on the subject of land is understood. As a first step, AT and Panuku attended three hui with mana whenua to discuss the proposed Park and Ride Integrated Development programme.  The purpose of attending the hui was to engage early with mana whenua to ensure they were informed about the proposed approach.

30.     At the hui we sought feedback on our proposed framework for working with mana whenua on site specific opportunities. Our proposed approach is to understand if there are any historical issues of significance or sites of cultural significance for mana whenua for any of the sites.  Following this, we propose contacting each mana whenua group independently and requesting feedback on the specific proposal. This engagement will seek to understand any potential issues of cultural significance the group would like to formally express and any preferred outcomes that the group would like considered.

31.     We will also invite mana whenua to express potential commercial interest in the subject properties. We will also seek input into, and collaboration on, any related public realm design.

32.     The feedback received at the hui was supportive of the proposed approach outlined above.  Subject to Finance and Performance Committee approval, we will undertake site specific mana whenua engagement prior to progressing any potential development at selected sites.

Ngā ritenga ā-pūtea

Financial implications

33.     The Park and Ride Integrated Development programme seeks to reinvest the net proceeds generated from the redevelopment of selected park and rides facilities into regional transport priorities.  This is in accordance with the service property optimisation framework, which is an Auckland Council policy tool that aims to deliver improved community outcomes with no impact on rates. 

34.     Service property optimisation previously only applied to Auckland Council’s community assets; not properties on the AT fixed asset register. On 20 March 2018, the Finance and Performance Committee resolved the extension of the Optimisation of Service Property approach to Auckland Transport to enable reinvestment of net proceeds by Auckland Transport in transport priorities arising from the commercial development of service property undertaken in partnership with Panuku.

35.     Accordingly, the delivery of the Park and Ride Integrated Development programme will provide Auckland Council an additional funding stream for reinvesting into regional transport priorities which is not derived from rates. The potential quantum is subject to further work, particular requirements of the relevant site and the proceeds that can be realised on a site-specific basis.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

36.     There are risks associated with undertaking any form of development in and around transport functions.  These will need to be carefully managed, with current and future transport requirements and operations continuing to be maintained and controlled by Auckland Transport.

37.     There may be insufficient appetite from the development community for new development opportunities, particularly given the potential post COVID-19 impacts on the property market. There may also be an oversupply of development sites on the market.  The Panuku and AT Park and Ride Integrated Development programme enables the sale of sites to be sequenced to mitigate any potential downturn in the property market or lack of demand.

38.     Given the interest AT and Panuku have received from a number of credible development companies about the prospect of partnering to progress such opportunities, a delay in taking these sites to the market may erode private sector interest. Should the Panuku and AT Park and Ride Integrated Development programme be approved by the Finance and Performance Committee, the development community will be kept appraised about progress.  Feedback received and property market expertise will be utilised in forming the sequencing of these sites to the market.

Ngā koringa ā-muri

Next steps

39.     Subject to Finance and Performance Committee approval, a phased approach will be taken to the delivery of this programme, with the development of selected sites being progressed over the next 20 years.

40.     Site specific due diligence will be undertaken on each site. AT will confirm the functional and commercial requirements for the transport component and the potential development envelope available. Panuku will undertake a planning assessment of each site. Further site-specific engagement will also be undertaken with the impacted local boards and mana whenua. 

41.     The planning assessment, site-specific feedback received from local boards and mana whenua will inform the site-specific essential outcome brief which will be taken to the market.  Panuku will undertake all necessary due diligence to understand all relevant legal, technical and historical information and council’s statutory obligations in respect of each site. The Panuku Board will confirm the essential design outcomes, market strategy and commercial requirements for each site.

42.     Following sites being taken to market, a joint AT and Panuku panel will review proposals received and select the preferred development partner. Final terms and conditions of the disposal of any component of selected sites to enable development will be approved under the appropriate delegations.

43.     Elected members and key stakeholders will be informed of the appointment of the development partner for each site, the agreed transport requirements and development outcomes and the timeline for delivery.

 


 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Schedule of sites

23

b

Local board resolutions

25

     

Ngā kaihaina

Signatories

Authors

Letitia Edwards – Head of Strategic Asset Optimisation (acting), Panuku Development Auckland

Kevin Jones- Manager Strategic Projects (North & West), Auckland Transport

Authorisers

Marian Webb – General Manager, Assets and Delivery (acting) – Panuku Development Auckland

Chris Morgan – Group Manager, Strategic Projects – Auckland Transport

Kevin Ramsay – Acting Group Chief Financial Officer

 


Finance and Performance Committee

17 September 2020

 

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Finance and Performance Committee

17 September 2020

 

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Finance and Performance Committee

17 September 2020

 

Emergency Budget 2020/2021 - Update September 2020

File No.: CP2020/11902

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To provide the committee with financial update information since the Emergency Budget was adopted, including the monitoring of emergency budget savings.

Whakarāpopototanga matua

Executive summary

2.       The Emergency Budget 2020/2021 was adopted by the Governing Body on 30 July 2020.

3.       The final budget included a projected reduction in cash operating revenue of around $450 million for 2020/2021 as a result of COVID-19 and a range of measures such as reductions in operating expenditure, temporarily elevated debt levels, capital expenditure deferrals, and  asset recycling to mitigate the impact of this revenue shortfall as well as the unprecedented drought situation.

4.       As the COVID-19 situation is still evolving, its financial impacts on council remain uncertain. Finance staff will monitor the progress for 2020/2021, including the financial performance of Auckland Council and its CCOs, and progress on other key mitigations to ensure the group can respond to any material changes to the Emergency Budget. Staff will report on progress to the Finance and Performance Committee on a monthly basis.

5.       This month the key updates are:

·    progress for 2020/2021 against the Emergency Budget

·    update on the Value for Money (VfM) programme

·    Watercare’s drought-related debt mitigation

·    Auckland Transport’s request to accelerate the LED streetlights retrofit programme.

Progress for 2020/2021 against the Emergency Budget

6.       A verbal update on the group financial performance for August 2020, accompanied by a performance dashboard, will be provided at the meeting.

7.       Auckland Council continued to make progress towards the $120 million savings target in the month of August 2020. A further $14 million of savings was achieved, bringing the total achieved savings to $69 million.

Update on the Value for Money (VfM) programme

8.       COVID-19 presents challenges for the council but the drivers for demonstrating value for money are unchanged.

9.       Value for money remains core to council operations in the context of the Emergency Budget. The short-term focus for the VfM programme is appropriately on meeting the Emergency Budget parameters through the reduction of cost. The medium-term focus will be to review and challenge current service delivery models, achieve tighter integration across the group and to drive improved cost-effectiveness. 

10.     Cost reductions through removing duplication, process improvement, technology investments and smarter ways of working are considered as ‘value for money’ improvements. As savings initiatives with a value for money focus are implemented, they will be captured in the monthly progress update on the council parent’s $120 million savings target to this committee. 

Watercare’s drought-related debt mitigation

11.     The Emergency Budget included additional budgets for Watercare in 2020/2021 of $224 million capital expenditure and $15 million of operating expenditure to respond to Auckland’s drought situation, noting that Watercare will mitigate $121 million of the impact on group debt as a result of this funding request.

12.     Watercare provided an update on their proposed measures, below is a table outlining the measures and their debt mitigation impact:

Mitigating measures

FY21 forecast
($million)

FY21 forecast debt impact mitigation
($million)

Reinstate original infrastructure growth charge revenue budget*

21

56

Non-strategic asset disposal

15

15

Capital expenditure deferral 

15

15

Inventory utilisation

15

15

Infrastructure growth charges increase*

8

21

Maximum debt mitigation achievable:

122

*Based on the council group’s internal prudential limit on a debt to revenue ratio of 265 per cent, it is assumed that each $1 increase in revenue will mitigate $2.65 of debt impact.

13.     The impact of this update on 2020/2021 will be neutral if these proposed measures are achieved.

14.     Watercare have indicated that they will seek further measures during the year to ensure the $121 million mitigation of debt is achieved.

15.     To minimise the risk that this agreed target is not realised in 2020/2021, staff recommend that the Finance and Performance Committee request Watercare to provide updates when there are material changes to the proposed measures and report progress against the proposed measures through its quarterly performance reporting.

Acceleration of Auckland Transport’s LED streetlights retrofit programme

16.     The Emergency Budget allowed for a capital budget of $7 million for Auckland Transport (AT) to procure LED lights as part of its LED streetlights retrofit programme. This programme is mostly funded through the funding assistance rate (FAR) offered by Waka Kotahi NZ Transport Agency (NZTA), which is 85 per cent of the total cost of activity.

17.     NZTA have confirmed that they don’t intend to continue with this level of FAR into the future and plan to reduce it to 51 per cent from the following financial year. Therefore, AT has requested to accelerate this programme and bring-forward installation work of the lights in 2020/2021 to maximise the funding assistance from NZTA. 

18.     Installation of the LED lights requires an additional capital spend of $10 million to be invested. As the programme has already been approved by NZTA, 85 per cent of the extra investment will be funded by NZTA with the remainder (approximately $1.5 million) to be covered within AT’s current capital funding envelope. Therefore, the net increase in capital budget requested by AT is $8.5 million.

19.     Apart from accessing a higher FAR, the programme demonstrates Auckland Transport’s commitment towards sustainability and delivers savings from lower energy consumption and reduced maintenance costs.


 

20.     Staff recommend additional capital expenditure of $8.5 million, and equivalent associated funding from NZTA be approved for AT to accelerate the programme in this financial year.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      receive the update on progress for financial year 2020/2021.

b)      receive the update on the Value for Money programme.

c)      note Watercare’s proposed measures to mitigate the $121 million impact on group debt through:

i)    reinstating the original infrastructure growth charge revenue budget of $21 million

ii)   non-strategic asset disposal of $15 million

iii)   capital expenditure deferral of $15 million

iv)  inventory utilisation of $15 million

v)   infrastructure growth charges increase of $8 million.

d)      request that Watercare provides updates when there are material changes to the proposed mitigating measures and report progress against the proposed measures through the quarterly performance reporting.

e)      approve $8.5 million additional capital expenditure for Auckland Transport, and equivalent associated funding from Waka Kotahi NZ Transport Agency, to accelerate the LED streetlights retrofit programme in 2020/2021.

Horopaki

Context

21.     The Emergency Budget 2020/2021 was adopted by the Governing Body on 30 July 2020.

22.     The financial implications of COVID-19 were highly uncertain at the time when the Emergency Budget was prepared. Therefore, the adopted budget was developed based on a set of forecasting assumptions for a “most likely scenario”. Key assumptions included government decisions on alert levels and the economic outlook.

23.     The final budget included a projected reduction in cash operating revenue of around $450 million for 2020/2021 as a result of COVID-19 and a range of measures including reductions in discretionary expenditure, temporarily elevated debt levels, capital expenditure deferrals, temporary reductions in operating service levels and asset recycling to mitigate the impact of this revenue shortfall as well as the unprecedented drought situation.

24.     As the COVID-19 situation is still evolving, its financial impacts on council remain uncertain. As the 2020/2021 year progresses, staff will monitor the financial performance of the council and its CCOs to ensure the group can respond to any material variations from the Emergency Budget. Staff will report on progress to the Finance and Performance Committee on a monthly basis.

Tātaritanga me ngā tohutohu

Analysis and advice

Progress for 2020/2021 against the Emergency Budget

Financial performance

25.     A verbal update on the group financial performance for August 2020, accompanied by a performance dashboard, will be provided at the meeting.

26.     The dashboard summarises August year to date financial performance for Auckland Council and its CCOs, and captures progress on other key financial metrics that were included in the Emergency Budget.

Savings progress for council parent

27.     The Emergency Budget included savings and cost reductions of over $200 million compared to the group budget submitted in March 2019. The progress towards the savings target for Auckland Council of $120 million is reported monthly. Progress of the CCOs towards their savings targets will be reported through the quarterly performance reporting.

28.     As at the end of August, Auckland Council has achieved $69 million towards the $120 million savings target, an increase of $14 million savings from July. Savings of note in the month include:

·    $6.3 million from a lower than budgeted annual pay rise (refer to more detail below)

·    $2.1 million savings from organisational design changes

·    $3.7 million saved by reducing spend in outsourced work and professional services:

$2.06 million from reducing spend in outsourced work due to the optimisation and automation of consenting processes, such as billing, to simplify processes and reduce costs in Regulatory Services

$0.7 million from pausing induction, graduate and training programmes for one year in Regulatory Services

$0.9 million reducing spend in outsourced work in Customer and Community Services in line with their 5% target

$0.08 million additional reduction in professional services budget in Development Programme Office

·    $1.1 million from staff reduction initiatives, including governance support arrangement

·    $0.9 million community centres and arts facilities programmes reduced

·    $0.3 million reduction in budget for catering and entertainment.

29.     In August, Auckland Council agreed the annual pay rise, effective 1 September 2020. Under the Public Service Association (PSA) Main Collective Employment Agreement, the council was contractually obliged to an increase of 1.9 per cent, which was the Consumer Price Index at December 2019. However, given the extraordinary financial pressures caused by the COVID-19 situation, agreement with the union and its members was needed to vary that contractual entitlement.

30.     Following negotiations with the PSA, the majority of the members voted in favour of a variation of their contract. This meant that all staff on lower salary bands have received an increase of 1.3 per cent. Staff on higher salary bands who are not members of the PSA have not received an increase this year.


 

Update on the Value for Money (VfM) programme

Value for money remains core to council operations

31.     COVID-19 presents challenges for the council but the drivers for demonstrating value for money are unchanged. These drivers include:

·    political drive to demonstrate and communicate that council provides good value for money

·    management drive to achieve tangible savings and good practice to continually review cost effectiveness

·    macro financial challenges faced by council (transport, housing, climate adaptation, environmental) which have been exacerbated by COVID-19

·    statutory requirements of section 17A of Local Government Act 2002.

32.     The financial implications of the COVID-19 pandemic for the council group also present an opportunity for the council group to continue to demonstrate value for money. 

33.     The short-term focus is appropriately on meeting the Emergency Budget 2020/2021 parameters through the reduction of cost. The medium-term value for money focus will be to review and challenge current service delivery models, achieve tighter integration across the group (CCO review recommendations) and to drive improved cost-effectiveness. 

VfM programme focused on benefit realisation

34.     Benefit realisation has continued for the value for money reviews that were completed during the last term of council. This table summarises that information:

VFM Review area

What has been done?

What value has been realised?

Domestic waste

·    Procurement and implementation of three bins waste collection

·   Savings of $7.6m per annum included in budgets plus other costs avoided

Procurement

·   Increasing number of procurement activities across the group.  Including:

Electricity

Voice and data

Insurance

Re-negotiation of professional services rates (Covid-19)

·    Embedding sustainable and social procurement across group

·   Group sourcing identified $83m of benefit for 2020/2021 (cost saving and cost avoidance)

·   120 suppliers offered professional service discounts

·   Increasing spend with Maori businesses

Finance

·    Shared service approach being developed particularly around office accommodation, printing and fleet management

·   Work has commenced across the group to optimise our staff accommodation footprint

·   Fleet was merged from Auckland Transport into Auckland Council

Legal and risk

·    Business case developed for replacing practice management software

·   $500k cost reduction included in Emergency Budget

 

Value for money related activities from the CCO review

35.     The CCO review panel used parts of the council’s value for money framework to inform their assessment criteria of improvement opportunities. Successful implementation of the review panel recommendations will increase value for money, particularly the effectiveness of how council operates as a group.

36.     Some of the recommendations are also aligned to value for money reviews which have already been completed or where adopting the value for money framework would assist the implementation. These recommendations include:

·    the merger of Auckland Tourism, Events and Economic Development and Regional Facilities Auckland Limited (which was approved by Governing Body on 27 August 2020 (GB/2020/90))

·    council assuming responsibility for the disposal of non-service property

·    the development of a property strategy and future operating model

·    the development of policies for shared services; and making the procurement shared services policy mandatory.

Value for money in the context of the Emergency Budget

37.     The proposed savings measures included in the Emergency Budget 2020/2021 can be classified as two types:

·    reduction in cost from stopping activities or doing less of an activity

·    reduction in cost through removing duplication, process improvement, technology investment and smarter ways of working. 

38.     We consider the second type of cost reductions as ‘value for money’ improvements.

39.     As savings initiatives with a value for money focus are implemented, they will be captured in the monthly progress update on parent’s $120 million savings target to this committee. 

40.     Some examples of value for money related activities underway as part of the council parent achieving the budget target of $120 million, and across the group include:

·    optimisation and reduction of the vehicle fleet

·    increasing sharing of services where it makes sense to do so

·    removal of duplication between council departments

·    improvement of process, in particular Regulatory Services with a focus to reduce cost and improve customer outcomes.

41.     Progress on savings realised for these activities have been covered in the savings section of the report.

Watercare’s drought-related debt mitigation

42.     Since the start of this calendar year, the Auckland region has experienced the most severe drought in its history. In response to the drought situation, additional budgets for Watercare in 2020/2021 of $224 million capital expenditure and $15 million of operating expenditure were approved to be included in the Emergency Budget on 16 July 2020, noting Watercare will mitigate $121 million of the impact that this funding request will have on the council group’s overall projected debt to revenue ratio.

43.     At the time of preparing the budget for adoption, Watercare were committed to finding ways to mitigate $121 million out of the $239 million group debt impact through measures such as revenue increases, asset disposals and capital deferrals but still determining the final mix of these levers. In lieu of this, the budget assumed the below mitigations.


 

·    Watercare will achieve an additional $80 million of asset sales.

·    Watercare will generate $13.7 million of revenue which, with leveraging will mitigate $41 million of debt impact.

44.     Watercare recently provided an update to the council on their proposed measures. Each measure and its respective debt mitigation impact is set out in the table below, adding up to the maximum debt impact mitigation achievable of approximately $122 million.

Mitigating infrastructure growth charge measures

FY21 forecast
($million)

FY21 forecast debt impact mitigation
($million)

Reinstate original infrastructure growth charge revenue budget*

21

56

Non-strategic asset disposal

15

15

Capital expenditure deferral 

15

15

Inventory utilisation

15

15

Infrastructure growth charges increase*

8

21

Maximum debt mitigation achievable:

122

*Based on the council group’s internal prudential limit on a debt to revenue ratio of 265 per cent, it is assumed that each $1 increase in revenue will mitigate $2.65 of debt impact.

45.     The calculation used for arriving at the $122 million debt impact mitigation is largely the same as we used for the Emergency Budget assumptions, although the mix of mitigating measures is different. If the proposed measures are achieved, the financial impact on 2020/2021 will be neutral.

46.     Watercare have indicated that they will seek further measures during the year to ensure the $121 million target is achieved.

47.     To minimise the risk that this agreed target is not realised in 2020/2021, staff recommend that the Finance and Performance Committee request Watercare to provide updates when there are material changes to the proposed measures and report progress against the proposed measures through its quarterly performance reporting.

Acceleration of Auckland Transport’s LED streetlights retrofit programme

48.     Waka Kotahi NZ Transport Agency (NZTA) has been promoting the transition to energy efficient LED road lighting from sodium lighting and other sources throughout the country over the past years.

49.     To encourage councils to transition to LED streetlights NZTA is offering a funding assistance rate (FAR) which is equal to 85 per cent of the total cost of the activity. The Emergency Budget included a capital expenditure of $7 million for Auckland Transport to procure LED lights and the budget required for installation was deferred given the overall restricted funding envelope.  

50.     NZTA have confirmed that they don’t intend to continue with the current level of FAR into the future and indicated the rate is going to be reduced to 51 per cent from the next financial year. In order to maximise NZTA funding assistance for this activity, Auckland Transport has requested to accelerate its LED retrofit programme in the current financial year, which means they plan to complete installation of the LED lights as part of their capital programme for 2020/2021.


 

51.     Currently, the funding assistance for this programme has been approved by NZTA. The installation work will require additional capital spend of $10 million, 85 per cent of which will be funded by NZTA and the remaining 15 per cent (approximately $1.5 million) will be managed within Auckland Transport’s current capital funding. Therefore, there is no additional funding required from the council.

52.     AT is planning to find the local share of $1.5 million from the Rosedale and Constellation Bus Station project as a result of timing delays. This project is delivered by NZTA and there is a budget allocation of approximately $33 million in 2020/2021 as AT’s contribution. AT is confident that they will be able to manage the local share within this bucket at this stage and there will be no impact on local board and safety budgets.

53.     In addition to accessing a higher FAR in 2020/2021, accelerating the LED retrofit programme this year brings further benefits such as:

·    reduced power consumption, enabling council services and activities to be delivered in a sustainable manner

·    immediate operating cost savings from reductions in electricity bills and reduced maintenance costs as LED lights have longer useful life

·    improving visibility and reaction times for drivers and pedestrians, resulting in fewer vehicle crashes and injuries.

54.     Overall, staff recommend additional capital expenditure of $8.5 million, and equivalent associated funding from NZTA be approved for AT to accelerate the programme in this financial year.

Tauākī whakaaweawe āhuarangi

Climate impact statement

55.     Updates on the financial progress for 2020/2021 provided in this report do not have any direct impact on climate change. However, close monitoring and providing visibility to this committee enables continued prudent financial management of the Auckland Council Group. Achieving efficiency savings and maximising financial benefits will assist in freeing resources for applying to the council’s strategic priorities such as climate change. 

56.     Auckland Transport’s request to accelerate its LED streetlights retrofit programme will enable energy savings to be made earlier, reducing impact on the environment and allowing council services and activities to be delivered in a sustainable manner.

57.     There are no climate impacts from Watercare’s update on proposed measures to mitigate the $121 million.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

58.     Progress against the Emergency Budget is closely monitored across the entire council group, based on performance information provided by the council and respective CCO finance teams.

59.     Input from Watercare and Auckland Transport for their respective items was received and incorporated when preparing this budget update report.

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

Local impacts and local board views

60.     Local board views and preferences were taken into account during the Emergency Budget process. The monitoring of progress against the Emergency Budget includes local board budgets.

61.     There are no additional local board impacts in relation to the updates provided in this report.

Tauākī whakaaweawe Māori

Māori impact statement

62.     Māori impacts were a key consideration in the Emergency Budget process.

63.     There are no additional Māori impacts in relation to the updates provided in this report.

Ngā ritenga ā-pūtea

Financial implications

64.     The implications on the council’s budgets are discussed in the main body of the report above.

65.     Overall, the items covered in this report require no additional funding from the council.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

66.     As the financial year progresses and the COVID-19 situation develops, there is a risk of further impacts on the council’s financial projections. This will require close monitoring to ensure council is able to best respond to these changes.

67.     There is also a risk that insufficient debt mitigations are realised from Watercare’s proposed measures to achieve the agreed target of $121 million. If the level of mitigation achieved by Watercare is lower than forecast it will result in changes to the level, and pace of capital investment that the council group (including Watercare) can prudently undertake.

68.     To mitigate this risk, Watercare have committed that they will seek further measures during the year to ensure the $121 million mitigation of debt is achieved. Staff also recommend the committee request Watercare to provide updates when there are material changes to the proposed measures and report the progress against the proposed measures through its quarterly performance reporting.

Ngā koringa ā-muri

Next steps

69.     Finance staff will continue to monitor the financial performance and projections and update this committee when there are further developments.

70.     Subject to committee approval, Auckland Transport will proceed with procuring the LED lights and start engaging contractors for installation of the lights.

 

Ngā tāpirihanga

Attachments

There are no attachments for this report.     

Ngā kaihaina

Signatories

Authors

Tracy Xu - Senior Analyst
Ross Chirnside – Programme Lead, Value for Money

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Kevin Ramsay - Acting Group Chief Financial Officer

 


Finance and Performance Committee

17 September 2020

 

Emergency Budget 2020/2021 Asset Recycling implementation

File No.: CP2020/12923

 

  

Te take mō te pūrongo

Purpose of the report

1.       To update on progress implementing the asset recycling budget and to seek approval in relation to several properties.

Whakarāpopototanga matua

Executive summary

2.       Asset recycling is an important lever for the council allowing capital to be invested in the most strategically important activities. The Emergency Budget includes $244m proceeds to be realised from asset recycling in 2021/2022. This is an increase of over $200m from the 10-year budget and will be achieved from two focus areas – property rationalisation and alternative commercial arrangements.

3.       Principles to support decision making and guide implementation were agreed by the Finance and Performance Committee and Governing Body on 16 July 2020 (GB/2020/71) and these are being effectively used.

4.         The Audit and Risk Committee will review the property rationalisation process at their meeting on 15 September 2020 meeting with a verbal update to be provided to this Committee.  A process improvement has already been implemented.  The legal team will now be involved earlier in the rationalisation process.

5.       The initial focus has been on preparing approved properties for sale and assess the potential opportunity from the sale of car park concessions. Optimisation of fleet vehicles has been added to the asset recycling budget.

6.       Approval is sought for 14 properties (Attachment A) identified as candidates for rationalisation. These properties are in 5 local board areas with the local boards providing their views and preferences to the committee. The approval sought is subject to the completion of statutory processes including engagement with mana whenua.

7.       The property rationalisation process is dynamic with properties being added (as new opportunities are identified) and removed (when investigation indicates the property is no longer a rationalisation candidate).

8.       Further approvals together with progress reporting will be provided to the Finance and Performance Committee at future meetings.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      note the status update on implementing the asset recycling budget.

b)      agree the changes (additions and deletions) made to the property rationalisation portfolio summarised at Attachment E (of the agenda report), noting that deletions of properties previously approved by Governing Body will be reported to Governing Body in due course.

c)      approve subject to the satisfactory conclusion of any required statutory processes (including mana whenua engagement) the disposal, and where appropriate any reserve revocation of the following properties (legal description detailed in Attachment A of the agenda report) with the final terms and conditions to be approved under the appropriate delegations:

i)        2 Wiremu Street, Balmoral

ii)       20 (part) Uxbridge, Howick

iii)      2R (part) Bucklands Beach Road, Bucklands Beach

iv)      65 Haddington Drive, Flatbush

v)      116R Reeves Road, Pakuranga Heights

vi)      2R Ti Rakau Drive, Pakuranga

vii)     80 Vincent Street, Howick

viii)    9R Fortyfoot Lane, Sunnyhills

ix)      76R Aberfeldy Avenue, Highland Park

x)      111R Golfland Drive, Howick

xi)      31 Aspiring Avenue/ 17R Hilltop Road, Clover Park

xii)     119A May Road, Mt Roskill

xiii)    7 Waitai Road, Waiheke

xiv)    300 (part) West Coast Road, Glen Eden.

 

Horopaki

Context

9.       Asset recycling is an important lever for the council allowing capital to be invested in the most strategically important activities.

10.     The 10-year budget has financial targets from asset recycling (excluding asset sales linked directly to specific projects and programmes such as the unlock and transform programme).

11.     A key consideration for asset recycling is the opportunity cost of holding an asset which is not providing a service or generating an appropriate financial return against the opportunity of investing in new assets which deliver council services.

12.     The Emergency Budget includes $244m proceeds to be realised from asset recycling in 2021/2022. This is an increase of $220m from the 10-year budget and will be achieved from 2 focus areas.

Focus area

Low ($m)

High ($m)

Property rationalisation

100

150

Alternative commercial arrangements (leasing, sale of lease interests) including carparks

100

200

Total

200

350

13.     The context of developing the Emergency Budget is important. The 10-year budget had a budget of $24m from asset sales for 2020/2021 and a plan existed to achieve that. The increased budget has required staff across the council group to rapidly develop a list of asset recycling opportunities with further investigation now required on some of these. Not all opportunities will be realised and in order to meet the budget the overall portfolio must be greater than the budget.


 

Tātaritanga me ngā tohutohu

Analysis and advice

Status update

14.     Progress has been made in implementing the asset recycling budget. Overall progress is on track with cash realisation forecast to commence in quarter two 2020/2021.

Property rationalisation – key activities

·    Properties previously approved being prepared for sale.

·    Engagement with local boards on those properties to be considered as part of this report (tranche 2).

·    Developing further opportunities to be considered by the committee in future meetings (tranches 3 and 4).

Car park concession – key activities

·    Reviewed current car parking strategy.

·    Scoped a financial model for valuation analysis.

·    Completed market research to understand the Central Auckland car parking competition and their pricing structures.

·    Market scan of potential investors/operators underway.

·    Reviewed accounting treatment of car park concessions to understand impact on balance sheet.

Fleet optimisation – key activities

·    Fleet optimisation added to asset recycling portfolio.

·    Target of reduction of 180 vehicles. To date 35 vehicles have been sold with a further 25 vehicles at Turners awaiting sale.

Financial summary

·    Unconditional sales have been entered into for $21m of property which will settle in quarter 4 FY2020/21.  The current top 10 properties in the portfolio are worth more than $80m with progress monitored monthly.

15.     There is a high degree of uncertainty on the overall asset recycling budget. In particular, the car park concession proposition is still being developed and the value opportunity unknown at this stage. The ongoing uncertainty with COVID-19 indicates financial pressure will continue beyond the current financial year. In response opportunities for property rationalisation should continue where there are current properties which do not meet councils current and future service needs.

16.     Attachment D includes more details on the status of the asset recycling budget.

Applying the principles to implementing the asset recycling budget

17.     A set of principles were agreed by the Finance and Performance Committee and Governing Body in July. These are being applied as the budget is implemented.

Principle

What has been done

Effective governance and decision-making

-    Memos sent to all elected members (councillors and local board members) on 23 July and 30 July 2020 outlining process and next steps.

-    Reports provided to local boards (where they had not previously resolved on the specific property).

Alternative use

-    Further due diligence identified appropriate reasons why some identified properties should not be disposed.

Value for money

-    Valuation parameters are in place. Independent valuations when:

o sold contestably on the open market, one independent valuation will be obtained.

o sold via a non-contestable process, two independent valuations will be obtained.

o high value property or high levels of public interest, additional valuations may be obtained.

Transparency

-    Monthly reporting from September 2020.

-    Memos to elected members have been made public.

-    Committee consideration on public agenda.

Efficient and effective processes

-    Audit and Risk Committee considering process on 15th September 2020.

-    Identifying key indicators for market conditions to be included in reporting.

Statutory obligations

-    Statutory process include compliance with Local Government Act 2002, Reserves Act 1977 for reserve revocations, plan changes, Public Works Act 1981 obligations.

-    Legal are involved early in the process.

Property rationalisation

18.     The property rationalisation process is managed by Panuku. Panuku operate across the council group identifying property (land and buildings) which do not have a current or future service use and could be candidates for rationalisation. This includes identifying properties in the council portfolio that are no longer required for future services (or public work) purposes and may be suitable for sale, and development if appropriate. It also includes open space where there is an over provision in certain areas to allow re-investment where there is less provision.

19.     The property rationalisation process is well developed. Once a property has been identified as no longer required for current public work purposes, Panuku engages with the council and its CCOs to establish whether the property must be retained for a strategic purpose or is required for a future funded public work. The rationalisation process also includes engagement with ward councillors, local boards and mana whenua.

Review of property rationalisation process by Audit and Risk Committee

20.     The Committee requested that the Audit and Risk Committee review the property rationalisation process to determine whether effective controls are in place. The Audit and Risk Committee will consider this at their meeting on 15th September 2020.

21.     An improvement identified when preparing the report for the Audit and Risk Committee is in the process of being implemented. The involvement of the legal team was identified as occurring too late in the rationalisation process. Legal will now be engaged following the initial staff investigation rather than at the sale phase.

Changes in the property rationalisation portfolio

22.     Property rationalisation is dynamic. New opportunities are being identified and some opportunities are no longer candidates for disposal.

23.     There has been one new property added (65 Haddington Drive, Flatbush) and several properties removed. The properties have been removed due to an alternative use being identified (e.g. retention for stormwater management) and restrictions making the property difficult to sell.

24.     Two properties in Waitakere Ranges were approved for disposal in July 2020. Both these sites are subject to flooding and any development may adversely impact other properties nearby. Following a review of the property file these properties should now be retained to manage the flooding risks. It is noted that deletions of properties previously approved by Governing Body will require revocation recommendations in due course.

25.     Attachment E includes the details of movements in the portfolio.

26.     Staff have identified further properties which are currently being assessed as to whether they should be brought to the Committee for consideration.

Consideration of further properties for disposal

27.     The Emergency Budget included a list of properties identified as candidates for disposal. In July the Finance and Performance Committee and Governing Body considered and approved 48 properties for disposal with a capital value (rating value) of $34.5m.

28.     The balance of the properties (Schedule B) in the Emergency Budget has been reviewed with properties categorised with one of the following statuses:

       Proceed. Properties with this status are to be considered as part of this agenda item.

       Hold. Properties with this status have an identified issue (or condition) to be resolved prior to any decision making. Once resolved these may become a candidate for rationalisation.

       Delete. Properties with this status are no longer deemed suitable candidates for rationalisation at this time (see Attachment E).

29.     Approval in this report is sought for the disposal of 14 properties with a capital value (rating value) of $20m. No alternative uses have been identified for these properties.

30.     The legal details (Attachment A) and the detailed analysis (Attachment B) are summarised in the table below.

Board

Ref.

Property

Rationale for disposal

Albert-Eden

A

2 Wiremu Street, Balmoral

-    Commercially leased premises (Early childhood). Property has operated as childcare facility since it was acquired in 1984.

-    Uses considered for the property by the Albert-Eden Local Board include:

o Community hub

o Civic space

o Public managed child-care facility

o Seniors hub

o Horticulture Society base

o Communal office space

o Settlement hub for refugees and migrants.

-    Community Facilities have advised:

o There is no identified need for an additional facility in this location

 

o These premises have limited functionality due to the nature and configuration which limits potential uses and therefore is not suitable for community leasing purposes.

-    The location (in rail corridor) and size (too small) mean it is not suitable for the settlement hub.

Howick

B

20 (part) Uxbridge, Howick

-    Undeveloped open space adjacent to car park.

-    Air rights over this site were sold by former Manukau City Council.

-    The owner of air rights plan to develop over the land (at 17m height) making the council owned land inoperable. The owner of the air rights is interested in purchasing.

 

C

2R Bucklands Beach Road, Bucklands Beach

-    Undeveloped open space adjacent to a walkway.

-    Part to be retained to expand existing walkway balance does not contribute to open space network.

 

D

65 Haddington Drive, Flatbush

-    Undeveloped open space.

-    Acquired for Flatbush aquatic centre but alternative location selected.

-    There is adequate open space provision in the area (Barry Curtis Park less than 100m from site) and this site does not make an effective contribution to the open space network.

-    Locations have also been identified to meet other community facility needs in the area.

 

E

116R Reeves Road, Pakuranga Heights

-    Car park adjacent to reserve which is being used as private business parking.

-    Adequate car parking provided in the area and not required to access the reserve.

 

F

2R Ti Rakau Drive, Pakuranga

-    Land adjacent to petrol service station.

-    Service station petrol tanks are under this land. Proposed sale to petrol station owner to clarify liabilities for petrol tanks.

-    Land is adjacent to Pakuranga shopping centre where council owns the majority of the car parking.

 

G

80 Vincent Street, Howick

-    At grade car park not required by Auckland Transport.

-    Adjacent to commercial (shop) premises and used for staff parking.

 

H

9R Fortyfoot Lane, Sunnyhills

-    Undeveloped open space.

-    Open space is at the end of a one-way street with limited connections.

-    There is adequate open space provision in the area and this site does not make an effective contribution to the open space network.

 

I

76R Aberfeldy Avenue, Highland Park

-    Undeveloped open space.

-    Open space is very close to Lloyd Elsmore Park and this site does not make an effective contribution to the open space network.

 

J

111R Golfland Drive, Howick

-    Undeveloped open space.

-    There is adequate open space provision in the area and this site does not make an effective contribution to the open space network.

 

K

31 Aspiring Avenue/ 17R Hilltop Road, Clover Park

-    Undeveloped open space (portion is an unformed legal road).

-    There is adequate open space provision in the area and this site does not make an effective contribution to the open space network.

Puketapapa

L

119A May Road, Mt Roskill

-    Undeveloped open space.

-    There is adequate open space provision in the area and this site does not make an effective contribution to the open space network.

Waiheke

M

7 Waitai Road, Waiheke

-    Commercially leased site to roading contractor (contracted to Auckland Transport).

-    Site has been a works depot for over 60 years and has contamination issues.

-    Roading contractor interested in purchasing.

Waitakere Ranges

N

300 West Coast Road (part), Glen Eden

-    Former landfill which is currently undeveloped open space.

-    Part of this site is to be formed as a neighbourhood reserve with the balance disposed of. Staff have identified the optimum area for the reserve and there is other open space in the area.

31.     All these properties (apart from 65 Haddington Drive, Flatbush) were identified as potential disposals in the Emergency Budget consultation document and none of these properties are deemed significant under Auckland Council’s Significance and Engagement Policy.

Public consultation views on asset recycling

32.     As previously reported, feedback was received on asset recycling as part of the Emergency Budget:

Description

Number supporting

Number opposing

General submissions

175

186

Submission on an identified property

1

20

33.     No specific feedback was received supporting specific properties recommended for disposal as part of this report. Feedback was received that did not support the sale of the following properties:

Property address

Number opposing

300 West Coast Road, Glen Eden

1

9R Fortyfoot Lane, Sunnyhills

1

34.     The Tree Council has expressed concern at the loss of mature trees at the property at 119A May Road. The Tree Council recommends that rather than sale of this site the local board should plant more trees on the site.

Tauākī whakaaweawe āhuarangi

Climate impact statement

35.     Recommendations in this report have a neutral climate impact. However, should these properties be sold future development may have an adverse climate impact.

36.     At the same time should these sites be sold the cash receipts allow council to respond to climate impacts.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

37.     Asset recycling takes a group approach. Council and CCO’s all identify potential opportunities and prior to any disposal checks are made that council or a CCO do not have an alternative use.

38.     Implementing the resolutions in this report will require input from council, Auckland Transport and Panuku.

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

Local impacts and local board views

39.     Local boards have provided mixed feedback on asset recycling with some boards supporting, some conditionally supporting and some opposing. Some opposition is on specific properties while some is on all opportunities. This feedback has been provided via Local Board feedback resolutions, or to staff from ward councillors.

40.     Local boards have also asked for greater communication and early engagement which has been incorporated in the principles approved by the Finance and Performance Committee and Governing Body in July 2020.

41.     For the properties in this report local boards views and preferences are as follows:

Board

Ref.

Property

Local board views and preferences

Albert-Eden

A

 

2 Wiremu Street

-    The local board do not support the disposal of this property.

-    They wish to retain as community space.

Howick

B

C

D

E

F

G

H

I

J

K

Various

-    The local board support the disposal of:

·   20 (part) Uxbridge

·   2R Bucklands Beach Road

·   65 Haddington Drive (condition proceeds re-invested into Flatbush aquatic centre)

·   116R Reeves Road (following investigation on utilisation of car park)

·   2R Ti Rakau Drive (following confirmation no impact on commercial agreement with shopping centre owners)

·   80 Vincent Street (following consideration of safe vehicle access to the site).

-    The local board do not support the disposal of:

·   9R Fortyfoot Lane

·   76R Aberfeldy Avenue

·   111R Golfland Drive

·   31 Aspiring Avenue/ 17R Hilltop Road.

-    The board views these sites to be in the interests of the wider community.

Puketapapa

L

119A May Road, Mt. Roskill

-    The local board support the disposal of this property. The board notes their concern about the loss of mature trees.

Waiheke

M

7 Waitai Road, Waiheke

-    The local board do not support the disposal of this property.

-    They wish to develop a business case to use the site for social housing.

Waitakere Ranges

N

300 West Coast Road (part)

-    Part of this site is to be formed as a neighbourhood reserve. The local board do not support the disposal of the balance of this property.

-    They wish to include as part of the reserve being developed.

42.     Resolutions of the above local boards are included as Attachment C. Albert-Eden and Waiheke Local Boards have provided additional information for the Committee.

Tauākī whakaaweawe Māori

Māori impact statement

43.     Māori have an active and specific role in Auckland, including kaitiakitanga (guardianship) of our land and marine resources. Land has a specific role in protecting, enabling and building Māori social and cultural capital. Local marae, kohanga reo, and other Māori entities offer spiritual, cultural, as well as a range of social, educational, health and justice services for the community.

44.     The importance of effective communication and engagement with Māori about land is understood. The process to date undertaken by Panuku is engagement with mana whenua groups across the region. Each relevant mana whenua group is contacted independently regarding council-owned land subject to rationalisation and requested to give feedback. This provides mana whenua the opportunity to respond with any issues of cultural significance the group would like to formally express in relation to the subject properties.

45.     Mana Whenua consultation is underway for a number of the properties. As part of Panuku’s disposal process, all iwi entities will be given early notice before subject properties are taken to market.

46.     Mana Whenua engagement to date is summarised below:

Ref.

Property

Mana whenua engagement

A

2 Wiremu Street, Balmoral

No site-specific feedback was received through the engagement undertaken.

B

20 (part) Uxbridge, Howick

-    No feedback was received through the mana whenua engagement undertaken.

-    Information regarding the restrictive covenants in place at the site limiting any use or future development was provided as part of the engagement undertaken.

C

2R Bucklands Beach Road, Bucklands Beach

-    Mana whenua engagement is currently underway.

D

65 Haddington Drive, Flatbush

-    Mana whenua engagement is currently underway.

E

116R Reeves Road, Pakuranga Heights

-    Mana whenua engagement is currently underway.

F

2R Ti Rakau Drive, Pakuranga

-    No site specific feedback was received through the engagement undertaken.

-    Information regarding the service station assets in place at the site limiting alternate use or future development was provided as part of the engagement undertaken.

G

80 Vincent Street, Howick

-    Waikato-Tainui signalled both cultural and commercial interest in the site and recommended any development align with the Waikato-Tainui Environmental Plan including consultation with marae.

-    Panuku advised Waikato-Tainui that only a disposal is recommended for the site and council would not lead in a development that could subsequently occur.

 

-    The cultural interest in the site has been noted on the disposal file and information to potential purchasers will include the comments received from Waikato-Tainui.

H

9R Fortyfoot Lane, Sunnyhills

-    Mana whenua engagement is currently underway.

I

76R Aberfeldy Avenue, Highland Park

-    Mana whenua engagement is currently underway.

J

111R Golfland Drive, Howick

-    Mana whenua engagement is currently underway.

K

31 Aspiring Avenue / 17R Hilltop Road, Clover Park

-    Mana whenua engagement is currently underway.

L

119A May Road, Mt Roskill

-    No feedback was received through the mana whenua engagement undertaken.

M

7 Waitai Road, Waiheke

-    Ngai Tai ki Tamaki noted that their interest includes properties of both cultural significance and commercial redress that Ngai Tai ki Tamaki may receive from the Crown as 'fee title transfer sites'.

-    7 Waitai Road is not a Crown owned site and due diligence undertaken has not identified that the site is included in settlement discussions.

-    Ngāti Paoa advised they were seeking to explore with council the possibility of acquiring at no cost council owned properties on Waiheke Island for the purposes of constructing and operating up to thirty social housing units for older people.

-    Ngāti Paoa want not just to exercise their kaitiaki role over their customary land, but also to nurture people, in the spirit of whanaungatanga, and to play a significant role in their community. Ngāti Paoa Iwi Trust and the Waiheke Local Board have considered using the land for social housing.

N

300 West Coast Road (part), Glen Eden

-    Ngāti Whatua Ōrakei and Te Akitai Waiohua expressed commercial interests in the property.

47.     Ngāti Te Ata - Waiohua advised of a general interest in any council owned property approved for sale.

48.     Should Mana Whenua raise any issues of cultural significance these will be referred to the Finance and Performance Committee.

49.     Mana whenua groups are also invited to express potential commercial interest in the subject sites. In the event the sites are approved for sale, all groups will be alerted of the decision, and all groups are alerted once a property comes on the market.

Ngā ritenga ā-pūtea

Financial implications

50.     Capital receipts from the sale of properties not required by Auckland Council contribute to the Emergency and 10-year Budgets by providing the Council with an efficient use of capital and prioritisation of funds to achieve its activities and projects.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

51.     The properties in this report are not required for a council service use. The following are potential risks of retaining the properties:

·   Increased current and future maintenance costs

·   The opportunity cost of not being able to invest in strategically important activities

·   Economic downturn making it more difficult to attract potential purchasers at the optimum price.

52.     There may be a perceived risk that disposing of these properties means that they will not be available for future council group use if required and further purchases may be necessary. This risk is considered low because we have carefully confirmed throughout the group that these properties are not required now or in the future for a council service use.

Ngā koringa ā-muri

Next steps

53.     Should the Finance and Performance Committee approve the proposed disposals, the following will be completed (in accordance with the principles):

a.   Completion of consultation with mana whenua groups

b.   Completion of any statutory obligations

c.   Prepare property for sale and complete sales process.

54.     The Finance and Performance Committee will receive regular reporting on progress.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Schedule of properties proposed for disposal

53

b

Detailed information on properties (no longer confidential)

55

c

Local board resolutions

189

d

Asset Recycling Monthly update September

205

e

Movements in property rationalisation portfolio

213

     

Ngā kaihaina

Signatories

Author

Ross Chirnside – Programme Lead – Value for Money

Authoriser

Kevin Ramsay - Acting Group Chief Financial Officer

 


Finance and Performance Committee

17 September 2020

 

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17 September 2020

 

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Finance and Performance Committee

17 September 2020

 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


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17 September 2020

 

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Finance and Performance Committee

17 September 2020

 

Summary of Finance and Performance Committee information memoranda and briefings, including the Forward Work Programme - 17 September 2020

File No.: CP2020/11719

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To note the progress on the forward work programme appended in Attachment A.

2.       To receive a summary and provide a public record of memoranda or briefing papers that may have been held or been distributed to Finance and Performance Committee members.

Whakarāpopototanga matua

Executive summary

3.       This is a regular information-only report which aims to provide greater visibility of information circulated to committee members via memoranda/briefings or other means, where no decisions are required.

4.       The following information has been circulated to members:

Date

Subject

18/8/2020

Confidential Memorandum from Group Treasurer – Retrofit Your Home Programme – Compliance/Remediation Update (no attachment)

5.       The following workshops/briefings have taken place:

Date

Workshop/Briefing

26/8/2020

Finance and Performance Committee workshop – 10-year Plan 2021-2031- Attachment B

Note: The information contained in the presentations attached to these minutes are for internal discussion purposes only, and should not be construed as council policy unless and until adopted.

2/9/2019

Finance and Performance Committee confidential workshop – Asset Recycling (no attachment)

2/9/2020

Finance and Performance Committee workshop – Panuku and Auckland Transport Park and Ride integrated development programme - Attachment C

9/9/2020

Finance and Performance Committee workshop – Strategic Discussion with Council Controlled Organisations – Attachment D

These documents can be found on the Auckland Council website, at the following link: http://infocouncil.aucklandcouncil.govt.nz/

at the top left of the page, select meeting/Te hui “Finance and Performance Committee” from the drop-down tab and click “View”;

under ‘Attachments’, select either the HTML or PDF version of the document entitled ‘Extra Attachments’.

6.       Note that, unlike an agenda report, staff will not be present to answer questions about the items referred to in this summary.  Committee members should direct any questions to the authors.

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      note the progress on the forward work programme.

b)      receive the Summary of Finance and Performance Committee information memorandum and briefings as at 17 September 2020.

 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Finance and Performance Committee - Forward Work Programme

219

b

Finance and Performance Committee workshop – 10-year Plan 2021-2031 - 26 August 2020 (Under Separate Cover)

 

c

Finance and Performance Committee workshop – Panuku and Auckland Transport Park and Ride integrated development programme - 2 September 2020 (Under Separate Cover)

 

d

Finance and Performance Committee workshop – Strategic Discussion with Council Controlled Organisations - 9 September 2020 (Under Separate Cover)

 

     

Ngā kaihaina

Signatories

Author

Sandra Gordon - Kaitohutohu Mana Whakahaere Matua / Senior Governance Advisor

Authoriser

Kevin Ramsay - Acting Group Chief Financial Officer

  


Finance and Performance Committee

17 September 2020

 

 

Te Komiti ā-Pūtea, ā-Mahi Hoki/Finance and Performance Committee
Forward Work Programme 2020

This committee controls expenditure across the Auckland Council Group and deals with the overall financial management and performance of the council parent organisation and Auckland Council Group and makes financial decisions outside of the annual budgeting processes.  The full terms of reference can be found here: Auckland Council Governing Body Terms of Reference

 

Area of work and Lead Department

Reason for work

Committee role

(decision and/or direction)

Expected timeframes

2020

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Planning and funding

10-year Budget (Long Term Plan)

General Manager Financial Strategy and Planning

Statutory Process

Hold workshops regarding process/content/policies

Decision to agree Mayoral Proposal (Nov)

Recommend consultation document to consult with public (Feb)

Adopt consultation document to consult with public (Feb) (Governing Body)

Consultation period – 15 February 2021 – 15 March 2021

Hear feedback and deliberate budget scenarios (Apr/May)

Decisions made for Long-Term Plan (May)

Recommend final Long-Term Plan (May)

Adopt final Emergency Budget (Governing Body) (June)

Progress to date:

Workshops held (26 August 2020, 9 September 2020)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Half-yearly and annual reporting

Group Treasurer and Group Financial Controller

Statutory requirement and NZX listing requirement

Receive and approve half-year and preliminary full year NZX release (delegation to chair and deputy chair) (March)

Receive annual report (Sept)

Recommend adoption of annual report to Governing Body (Sept)

Note:  

·    NZX announcements are presented to the Audit and Risk Committee

·    There is a delegation from the Committee to Chair and Deputy Chair of Finance and Performance to approve the release of the interim and full year Auckland Council group financial results to the NZX for each reporting period through to 30 June 2022.

·    Formal adoption of annual report is by the Governing Body

Progress to date:

Delegation for approval for releasing the interim and full year Auckland Council Group results to the NZX – Link to decision

Councillor approval of results announcement to the market for the half year ended 31 December 2019 – NZX Half Year Announcement – Link to document

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial and Budget Updates

General Manager Financial Strategy and Planning

Financial Management

Receive updates and make decisions on any recommended budget changes outside of the Annual Budget/Long-term Plan, as required

Note:   This includes significant unbudgeted one-off expenditure.

Progress to date:

Monthly updates – August - Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan guarantees and grant funding

Group Treasurer

Financial management

Review information and make decisions on loan guarantees and restructuring (including Parks)

Receive an update on the Eden Park loan guarantee and grant funding (six-monthly)

Receive progress update memos when appropriate

Progress to date:

Presentation from the Eden Park Trust Board – Link to decision

Woodhill Sands Trust - Guarantee (Loan Reset Request) – Link to decision

Community Loans Under $1 million – Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reporting and performance

Performance reporting quarterly – parent

General Manager Financial and Business Performance and Manager Corporate and Local Board Performance

Financial management

Monitor council parent financial and non-financial performance results on a quarterly basis, including Māori outcomes expenditure.

Q1 (Nov), Q2 (Mar), Q3 (Jun), Q4 (September)

Note:   Reporting in September must be considered as a confidential report until results are sent to NZX at the end of September.

Progress to date:

Auckland Council Group and Auckland Council 2019/2020 quarter one performance report to 30 September 2019 – Link to decision – Link to decision

Auckland Council Group and Auckland Council quarter two performance report to 31 December 2019 – Link to decision

Auckland Council Group and Auckland Council quarter three performance report to 31 March 2020 – refer to information memorandum contained on the agenda for 18 June 2020 – Link to decision

Memorandum from General Manager Financial Strategy and Planning, General Manager Financial and Business Performance, Group Treasurer and Group Financial Controller regarding the Summary of Auckland Council and Auckland Council Group quarter three performance – Link to information memorandum

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance reporting quarterly – group

General Manager Financial and Business Performance and Manager Corporate and Local Board Performance

Financial management

Monitor Auckland Council group financial requirements on a quarterly basis.

Q1 (Nov), Q2 (Mar), Q3 (Jun), Q4 (Sept)

Note:   Reporting in September must be considered as a confidential report until results are sent to NZX at the end of September.

Progress to date:

Auckland Council Group and Auckland Council 2019/2020 quarter one performance report to 30 September 2019 – Link to decision – Link to decision

Auckland Council Group and Auckland Council quarter two performance report to 31 December 2019 – Link to decision

Auckland Council Group and Auckland Council quarter three performance report to 31 March 2020 – refer to information memorandum contained on the agenda for 18 June 2020 – Link to decision

Memorandum from General Manager Financial Strategy and Planning, General Manager Financial and Business Performance, Group Treasurer and Group Financial Controller regarding the Summary of Auckland Council and Auckland Council Group quarter three performance – Link to information memorandum

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational

Disposals

Auckland Council and Panuku Development Auckland

Panuku, working with all areas of council, is required through its Statement of Intent to identify and recommend to council properties that are surplus to requirements and can be considered for disposal.  These include general disposals to fund Long-term Plan projects.

Properties are recommended for acquisitions and disposal to the committee for approval in accordance with the Long-term Plan.

Agree to proceed with recommended disposals or acquisition, as required.

Progress to date:

 

 

 

As required

Funding and Levies (including Auckland Regional Amenities Funding Board, Museum of Transport and Technology and Auckland War Memorial Museum)

Manager CCO/ External Partnerships team

Statutory process

Approve annual funding levies for Auckland Regional Amenities Funding Board (Apr); Museum of Transport and Technology (Apr); and Auckland War Memorial Museum (Jun)

Approve Auckland Regional Amenities Funding Board (Apr)

Receive presentations from amenities via memorandum (Jun)

Progress to date:

Auckland Regional Amenities Funding Board: Delegate approval of Auckland Council’s submission for the 2020/2021 Funding Levy – Link to decision

Approval of the Auckland Regional Amenities Funding Levy 2020-2021 – Item had been deferred from the Finance and Performance Committee meeting held on 19 March 2020 to the meeting scheduled to be held on 23 April 2020.  Due to COVID-19, the item was considered at the Emergency Committee meeting held on 23 April 2020- Link to decision

MOTAT Annual Plan 2020-2021 – Item had been deferred from the Finance and Performance Committee meeting held on 19 March 2020 to the meeting scheduled to be held on 23 April 2020.  Due to COVID-19, the item was considered at the Emergency Committee held on 30 April 2020 – Link to decision

Auckland War Memorial Museum 2020/2021 levy – Item had been deferred from the Finance and Performance Committee meeting held on 19 March 2020 to the meeting scheduled to be held on 18 June 2020 – Link to decision 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Review of committee forward work programme

Governance

Regular reporting

Approve forward work programme (Mar)

Receive updates (bi-monthly)

Review content of the forward work programme (six-monthly, commencing Sept)

Progress to date:

Finance and Performance Committee Forward Work Programme – Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Completed

Lead Department

Area of work

Committee role

(decision and/or direction)

Decision

Annual Budget

General Manager Financial Strategy and Planning

Statutory Process including review of rating policies

Decision to agree to the Consultation items

Recommend consultation document to consult with public (Feb); Emergency Budget (May)

Adopt consultation document to consult with public (Governing Body)

Consultation period – 21 February 2020 – 22 March 2020; 29 May 2020 – 19 June 2020 (Emergency Budget)

Hear feedback and deliberate budget scenarios (Apr)

Decisions made for Emergency Budget (Jul)

Recommend final Emergency Budget (Jul)

Adopt final Emergency Budget (Governing Body) (Jul)

February

Mayoral Proposal for the Annual Budget 2020/2021 - Link to decision

Annual Budget 2020/2021 – consultation material overview - Link to decision  Link to Governing Body decision

Rates and Fees Issues for Annual Budget 2020/2021 - Link to decision Link to Governing Body decision

Adoption of consultation Material: Annual Budget 2020/2021 – Link to decision; Link to Governing Body decision

Amendments to the Revenue and Financing Policy – Link to decision; Link to Governing Body decision

Annual Budget 2020/2021 communication and engagement approach – Link to decision; Link to Governing Body decision

Annual Budget 2020/2021 consultation part 1 - local board feedback – Link to Emergency Committee decision

May

Rates and Fees Issues for the Emergency Budget 2020/2021 - Link to Emergency Committee decision

Rates Postponement for properties affected by COVID-19 - Link to Emergency Committee decision

Annual Budget 2020/2021 Emergency Budget public consultation approach - Link to Emergency Committee decision

Adoption of Consultation material: Emergency Budget Annual Budget 2020/2021- Link to Emergency Committee decision

Recommendations from the Emergency Committee 28 May 2020 on the Adoption of Consultation Material: Emergency Budget Annual Budget 2020/2021 -Link to Governing Body decision

July

Emergency Budget 2020/2021 - Asset Recycling   Link to decision   Link to Governing Body decision

Rates Issues for the Emergency Budget 2020/2021   Link to decision    Link to Governing Body decision

Budget decision-making for 2020/2021 / Emergency Budget 2020/2021 - Mayoral Proposal   Link to decision    Link to Governing Body decision

Adoption of the Emergency Budget 2020/2021 (Annual Budget) – Link to Governing Body decision

Rates setting 2020/2021 – Link to Governing Body decision

 

Insurance Strategy and Placement

Chief Risk Officer

 

Approve the council insurance strategy

Approve the annual insurance placement for Council

 

Collection for data for insurance renewals currently underway and preparations being made for insurance roadshows where deductibles, limits and policy coverage will be assessed against market expectations.

Council Group Insurance Renewal 2020 – Link to decision

 

 

 

 

 

 

Updated: 11 September 2020

     

 


Finance and Performance Committee

17 September 2020

 

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

That the Finance and Performance Committee

a)      exclude the public from the following part(s) of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

 

C1       CONFIDENTIAL: Auckland Council Group and Auckland Council quarterly performance reports to 30 June 2020

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains financial information which can only be made public following its release to the NZX

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

 

C2       CONFIDENTIAL: Exchange of Land with Watercare Services Limited (Covering report)

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

In particular, the report contains details regarding negotiations not yet finalised.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.