Agenda of Extraordinary Finance and Performance Committee

Finance and Performance Committee

09 December 2020

10-year Budget 2021-2031 - Process overview

File No.: CP2020/17837

Te take mō te pūrongo

Purpose of the report

1. This report recaps the 10-year Budget 2021-2031 (long term plan) process to date, provides an overview of the decisions required now and sets out the next steps that will be undertaken to consult with Aucklanders and finalise the 10-year Budget 2021-2031.

Whakarāpopototanga matua

Executive summary

2. All councils are required, under the Local Government Act 2002, to adopt a long-term plan and review it every three years. The process to develop council’s fourth long term plan (which we refer to as the 10-year Budget) for the period 2021-2031 began in August 2020.

3. Today the Finance and Performance Committee will consider, and make recommendations to the Governing Body on, draft budgets, policies and other material for the purpose of supporting consultation on the 10-year Budget 2021-2031 with Aucklanders.

4. Following the decisions that will be made today:

· Staff will update budgets and prepare a consultation document and supporting information for consultation with Aucklanders. The primary focus of the consultation document will be to provide a fair representation of the matters the council proposes to include in the 10-year Budget, and to clearly set out the key issues of importance for Auckland, along with options for addressing each issue and the implications for rates, debt and levels of service. Key issues for local boards will also be included.

· During December 2020, local boards will finalise and adopt their local material for inclusion in the consultation document and supporting information.

· The consultation material will be audited during December 2020 and January 2021 by Audit NZ and the consultation document will include an opinion from the Office of the Auditor-General.

5. The Governing Body will then meet to adopt the consultation document and supporting material on 18 February 2021. On this date the final communications and engagement approach will also be formally agreed.

6. The consultation process is planned to run from 22 February to 22 March 2021.

7. Following feedback from the community, local boards and the Governing Body will reconsider the draft budgets and make final decisions in May 2021. The Governing Body will then adopt the final 10-year Budget 2021-2031 in June 2021.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) note the contents of this report, which sets the context for the other reports and decisions on today’s agenda.

Horopaki

Context

8. The Local Government Act 2002 requires all councils to adopt a long-term plan and review it every three years. The long term plan (which we refer to as the 10-year Budget) sets out Council’s activities and the community outcomes of the Auckland region, and provides integrated decision-making and co-ordination of the council’s resources as well as a long-term focus for the council’s decisions and activities.

9. The 10-year Budget must be adopted before the commencement of the first year it relates to, after having consulted with the community through a special consultative procedure.

Tātaritanga me ngā tohutohu

Analysis and advice

Developing the 10-year budget 2021-2031

10. The process to develop council’s 10-year Budget 2021-2031 began in August 2020. This was later than previous years due to the Emergency Budget being adopted in July 2020. Attachment A sets out the key phases and the political engagement process throughout the process. Key elements of the process to date have been:

· inaugural long term plan workshop covering: Mayor’s introduction, process overview, strategic scene setting, performance information overview and asset management 101

· workshops between August and November 2020 on various key topics leading up to the Mayoral Proposal

· Mayoral Proposal released on 1 December 2020

· A workshop to discuss the Mayoral Proposal and other items required for consultation

11. Council-controlled organisations (CCOs) have been involved in the development of the 10-year Budget topics. All CCO board chairs and senior staff were invited to a workshop with the Finance and Performance Committee on 9 September 2020 to collectively discuss strategy on how best to tackle the financial challenge the council is facing. CCOs had follow up workshops on their relevant plans, pressures, options available and risks associated with these options. A capex prioritisation workshop was held 24 November 2020 at the CCO Oversight Committee where all CCO board chairs and chief executives were invited.

12. Today the Finance and Performance Committee will consider indicative budgets, funding mechanisms, policies and other material for the purpose of supporting consultation on the 10-year Budget 2021-2031 with Aucklanders. The other reports on the agenda today, require consideration and decisions in order to prepare a consultation document and supporting information. These reports cover such items as the Mayoral Proposal, proposed changes to rating and fees, local board views, and other items required for consultation.

Finalising the 10-year Budget 2021-2031

13. Consultation for the 10-year Budget 2021-2031 is planned to take place between 22 February and 22 March 2021.

14. The table below sets out the remaining steps in the process (at a high level) to finalise the 10-year Budget 2021-2031.

Table One: Finalising the 10-year budget following decisions made today

Phase	Timing
Local boards hold workshops and meetings to finalise local content for consultation	December 2020
Finalise consultation document and supporting material ready for audit purposes	10 Dec – 22 Dec 2020
Consultation Document and Supporting Information is audited by Audit NZ	Nov 2020 – Early Feb 2021
Finance and Performance Committee meets at a workshop to review the draft consultation document and supporting information document, and consider the proposed consultation and engagement approach	10 Feb 2021
Audit and Risk Committee meet to confirm the process has been sound and confirm there are no outstanding items in the Audit NZ review process.	9 Feb 2021
Finance and Performance/Governing Body meets to recommend/adopt consultation document and supporting material and approve the consultation and engagement approach	18 February 2021
Public consultation (special consultative procedure)	22 Feb – 22 March 2021
Finance and Performance Committee on consultation feedback	21 April 2021
Finance and Performance Committee workshops on decision making for the 10-year Budget	14, 28 April, 3, 5, 10 May 2021
Finance and Performance Committee workshop to receive local board input on decision making for the 10-year Budget	12 May 2021
Finance and Performance Committee workshop on final decisions for the 10-year Budget	19 May 2021
Finance and Performance Committee/Governing Body make recommendations/final decisions on the content for the 10-year Budget	25 May 2021
Local boards workshop local board agreements	31 May – 11 June 2021
Local boards meet to adopt the local board agreements	14 -18 June 2021
Audit and Risk Committee meet to confirm the process has been sound and confirm there are no outstanding items in the Audit NZ review process.	22 June 2021
Finance and Performance Committee workshop the final 10-year Budget	23 June 2021
Finance and Performance Committee/Governing body meet to recommend/adopt the final 10-Year Budget, including agreeing Local Board Agreements	29 June 2021
Final 10-year Budget 2021-2031 documentation and information relating to the decisions made will be made available to the public	July 2021

Tauākī whakaaweawe āhuarangi

Climate impact statement

15. This report outlines the process for developing the 10-year Budget 2021-2031 and as such has no specific impacts on the climate.

16. As part of the 10-year Budget process, there was a climate ‘lane’ and this topic was discussed at the Finance and Performance Committee workshops on 23 September and 4 November 2020 ahead of the Mayoral Proposal.

17. Another part of the process introduced a climate change outcomes lens (along with three other lenses) which was applied across all lanes and activities that were presented to the Finance and Performance Committee between September and November 2020. An overall assessment was provided to the same committee on 11 November 2020.

18. The legal team has drawn the Finance & Performance Committee’s attention to the introduction of section 5ZN of the Climate Change Response Act 2002, which enables the council to have regard to the 2050 emissions target, an emissions budget and/or an emissions reduction plan as part of its LTP decision-making. The Legal team will work closely with the Finance team to ensure that these considerations form part of the council’s decision-making process on the LTP going forward.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

19. All council departments will be affected by decisions made for the 10-year Budget 2021-2031. Budget updates are made on a regular basis to the executive leadership team and updates are provided from the finance team via the Commercial Managers or CCO conduit to the wider Council group.

20. As mentioned above CCOs have been involved the development of the 10-year Budget 2021-2031 both with the Finance and Performance Committee and also the staff working closely with the council’s finance team.

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

Local impacts and local board views

21. Local boards have been engaged throughout the development of the 10-year Budget 2021-2031. Local board Chairs were invited to attend most Finance and Performance workshops held between August and November 2020. Input on regional issues was presented by local boards to the Finance and Performance Committee on 11 November 2020. Formal feedback given by local boards has been captured in a separate report on the agenda today.

22. Local boards will adopt their local content for inclusion in the consultation material in early December 2020. This will include the proposed key priorities for each local board for 2021/2022, to be included in Local Board Agreements.

Tauākī whakaaweawe Māori

Māori impact statement

23. The Independent Statutory Māori Board has been an active participant in all the Finance and Performance Committee workshops and meetings relating to the development of the 10-year Budget 2021-2031.

24. As part of the 10-year Budget process, a Māori outcomes lens (along with three other lenses) was applied across all lanes and activities that were presented to the Finance and Performance Committee between September and November. An overall assessment was provided to the same committee on 11 November 2020.

25. Māori outcomes were discussed at Finance and Performance Committee workshop on 21 October 2020.

26. On 22 October 2020 the members of the Mana Whenua Kaitiaki Forum were briefed on the 10-year Budget 2021-2031.

27. The three co-governance entities (Tūpuna Maunga o Tāmaki Makaurau Authority, Ngāti Whātua Ōrākei and Te Poari o Kaipātiki ki Kaipara) presented their strategic ambitions and financial needs at the Finance and Performance Committee workshop on 28 October 2020.

Ngā ritenga ā-pūtea

Financial implications

28. The 10-year Budget project has been budgeted at $1.2 million excluding Audit NZ’s fee. For comparison the 2018 LTP budget was $1.6 million, however this cost included a separate consultation process on the refresh of the Auckland Plan.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

29. Annual budgets (including the 10-year Budget every third year) enable rates to be set for the following financial year. Not completing the 10-year Budget 2021-2031 in accordance with statutory requirements has the potential to impact on the council’s revenue, and its ability to continue to deliver the services and projects that Auckland needs.

30. Another risk is compliance with the prescriptive requirements of the Local Government Act 2002. Legal Services will review the consultation material for legislative compliance before it’s submitted to Audit NZ for review in January 2021.

31. The timeline for the 10-year Budget 2021-2031 has significant risk associated with it. A high level of project management and political engagement is required in order to meet the key milestones and adopt by the statutory deadline of 30 June 2021.

32. The Audit and Risk Committee has an important oversight role for risks associated with the 10-year Budget and will receive updates on key risk and mitigations throughout the process.

Ngā koringa ā-muri

Next steps

33. Decisions made today will inform the preparation of the consultation document and supporting information for the 10-year Budget 2021-2031.

34. The consultation document must include an opinion from the Auditor-General on whether the document gives effect to its purpose and on the quality of the information and underlying assumptions. The audit process is underway, and the consultation material review is planned to be completed ahead of the adoption of the consultation material in early February 2021.

35. The supporting information will include more detailed information (i.e. the information that is relied on by the content of the consultation document, is necessary for audit purposes, and provides the basis for the preparation of the 10-year Budget) and will made readily available to the public in February 2021, alongside the consultation document.

36. Staff will also prepare material to support the communication and engagement campaign for consultation, including an information pack for elected members.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	LTP 2021-2031 Roadmap	15

Ngā kaihaina

Signatories

Author

Kylie Thompson - Programme Manager

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Kevin Ramsay - Acting Group Chief Financial Officer

No.	Title	Page
a ⇩	Draft Tūpuna Maunga o Tāmaki Makaurau Operational Plan 2021/2022	21
b ⇩	Draft Summary of the Tūpuna Maunga Authority Operational Plan 2021/2022	109

No.	Title	Page
a ⇩	10-year Budget 2021-2031 Mayoral Proposal	123
b ⇩	Draft 10-year Budget for consultation	141
c ⇩	Climate action investment options	203
d ⇩	Housing and growth infrastructure investment options	211
e ⇩	Community investment options	217
f ⇩	Natural Environment Targeted Rate extension	223
g ⇩	Water Quality Targeted Rate extension	227

Finance and Performance Committee

09 December 2020

10-year Budget 2021-2031 - Other matters for consultation

File No.: CP2020/18280

Te take mō te pūrongo

Purpose of the report

1. To consider potential items for consultation for the 10-year Budget 2021-2031 (the council’s Long-term Plan or LTP), that are not covered other reports on this agenda.

Whakarāpopototanga matua

Executive summary

2. This report covers matters that need to be considered by this committee to enable the preparation of the consultation document and supporting information for public consultation.

3. The matters for consideration in this report are:

a) A proposal for a long-term lease of the Bledisloe House building to a developer (with conditions attached) to avoid additional cost liability, to protect heritage and achieve wider Aotea Precinct integrated outcomes. Consultation via the LTP is necessary because of the heritage status of the building. The primary alternative to proceeding with this proposal is to retain the building in full council control, in the knowledge that:

i) it is surplus to council operational requirements and is not fit-for-purpose for Auckland Emergency Management

ii) there are substantial unfunded renewal maintenance cost requirements over the next 10 years

iii) Bledisloe House ‘turns its back’ to the adjacent Aotea station, the overstation development, ground level retail and the laneways development, and that any plans to achieve integrated outcomes are not provided for in current budgets

iv) delaying Bledisloe House refurbishment and integrated outcomes will lead to an extended period of disruption in the area where commuters emerge from the Aotea station and overstation developments.

b) Consultation on a proposal to divest two council-owned buildings located at 2 The Strand, Takapuna and 3 Victoria Road, Devonport. Both properties are heritage scheduled buildings, have been identified as surplus to the council’s operational requirements and previously approved for sale by this committee subject to the completion of statutory process (including consultation as part of the LTP, which is necessary because of the heritage status of the two buildings).

c) Consultation on a proposal to provide for long-term leases on seven council-owned development sites in the city centre waterfront precinct, where Panuku plans to partner with private developers as part of its existing plans to transform the waterfront area. Consultation via the LTP is necessary because the city centre waterfront land is categorised as a strategic asset. If following public consultation the council decides to provide for this proposal in the final LTP, then individual lease proposals for each site will be submitted to this committee for final approval over the coming years as the development plan for each site is progressed.

d) A draft revised Council Controlled Organisation (CCO) Accountability Policy that has been prepared to:

i) align to relevant CCO review recommendations

ii) reflect the merger of ATEED and RFAL (effective 1 December 2020)

iii) make clear that the policy is part of a wider accountability framework (which includes Statements of Intent, Statement of Expectations etc.)

iv) remove some common expectations of CCOs, which are instead to be included in statements of expectation

v) remove some CCO specific expectations and focus CCO specific expectations on Auckland Plan outcomes and high-level activities.

e) A draft revised Auckland Airport Shareholding policy that has been prepared to reflect:

i) the disestablishment of Auckland Council Investment Limited (ACIL)

ii) the current level of the council’s shareholding

iii) changes to explicitly provide for council to sell-down any shares acquired through the dividend reinvestment plan (or other corporate actions such as rights issues), provided that the number of shares council holds doesn’t drop below the current number of shares held

iv) provision for a group of elected members to make decisions on any such opportunities under delegation (after receiving advice from the Chief Executive) in circumstances where it is not practicable to hold an extraordinary committee or Governing Body meeting within the timeframe required to make a decision.

f) A proposed update to the Regional Fuel Tax (RFT) scheme to reflect an updated list of projects to be funded from the RFT. An update to the scheme is necessary due to some central government funding decisions that have occurred since the scheme was originally put in place. The specific list of projects will be determined in conjunction with the Regional Land Transport Plan (RLTP) process.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) recommend to the Governing Body that the 10-year Budget 2021-2031 consultation document and supporting information include the following items for consultation:

i) a proposal for the transfer of ownership and a change in use for Bledisloe House through entering into a development agreement for a long-term ground lease of 125 years.

ii) a proposal to divest the following heritage scheduled council-owned buildings:

A) 2 The Strand, Takapuna

B) 3 Victoria Road, Devonport

iii) a proposal to provide for long-term leases on the following council-owned development sites in the city centre waterfront precinct, on which Panuku plans to partner with private developers to develop these sites:

A) North Wharf – site 14

B) Jellicoe Street – site 19

C) Silo 6 – site 12

D) Wynyard Point east to west – Block A

E) Wynyard Point north to south – Block B

F) 44-56 Hamer Street – SeaLink ferry terminal

G) 101 Pakenham Street West – Lysaght Building

b) recommend to the Governing Body that it approve for consultation as part of the 10-year Budget 2021-2031 these draft policies attached to this report:

i) the draft revised CCO Accountability Policy

ii) the draft revised Auckland Airport Shareholding Policy.

c) recommend to the Governing Body that it agree to consult on a proposal to revise the Regional Fuel Tax scheme once a draft list of specific projects to be funded by the Regional Fuel Tax has been determined in conjunction with the Regional Land Transport Plan process.

Horopaki

Context

4. The agenda for this meeting includes a number of reports on items for consultation for the 10-year Budget 2021-2031. The items within this report include three proposals to provide in the long-term plan for the transfer of ownership or control of strategic assets, two updates to council policies and the update of the council’s Regional Fuel Tax scheme.

5. Other items that will need to be consulted on are:

· The Local Board Funding Policy – there are no proposed changes to the Local Board Funding Policy, but it is required to be consulted on as part of the LTP process. The draft (current) policy will be included as part of the consultation material presented to the Governing Body for approval on 18 February 2021.

Tātaritanga me ngā tohutohu

Analysis and advice

Section 97 Local Government Act 2002

6. Under section 97 of the Local Government Act 2002 (LGA 2002), a decision to transfer ownership or control of a strategic asset to or from a local authority must not be made unless the local authority has explicitly provided for the decision in its LTP, and consulted on the proposal through a consultation document in accordance with section 93E.

7. Strategic assets are defined in both the LGA 2002 and Auckland Council’s Significance and Engagement policy. The policy defines strategic assets as iconic assets with strategic significance and those assets that are vital for delivering services to Auckland on a network basis.

8. Included in the list of strategic assets in the Significance and Engagement policy are “cemeteries, heritage scheduled buildings and structures” and “freehold interest in waterfront land held by the Ports of Auckland Limited and the Auckland Waterfront Development Agency” (this is understood to also include freehold interests in waterfront land now held directly by the council).

Bledisloe House

9. Bledisloe House, built in the late 1950’s, is a category B heritage scheduled building. As Bledisloe House may be viewed as a strategic asset under the Significance and Engagement Policy, officers recommend that this item be consulted on in the 10-year Budget 2021-2031.

10. The future of Bledisloe House was raised with the Finance and Performance Committee in 2019, with the principal driver being a desire to leverage the City Rail Link (CRL) project and overstation developments to deliver a re-developed Bledisloe House in a similar timeframe that achieves wider Aotea Precinct integrated public realm outcomes for Auckland.

11. The current configuration of Bledisloe House has no ground level activation on the Aotea Station side which compromises the outcomes agreed in the Aotea Precinct Framework, 2015 and compromises CRL overstation development outcomes contemplated by Auckland Council and the Ministry of Transport as CRL sponsors.

12. The building is of an age that it requires significant expenditure for renewal maintenance in the near to medium term. Only a small proportion of those estimated costs are funded under the current 10-year Budget 2018-2028. If significant renewal work is undertaken in the later part of this period (once the CRL and then the overstation development construction works are completed), then this would mean that the surrounding area will face disruption from construction activity for an extended period.

13. COVID-19 has accelerated trends in flexible and remote working. As such, the building is now surplus to the council’s operational requirements. All staff are moving out of Bledisloe House during December 2020 and the Corporate Property team is now working with Auckland Emergency Management and the Customer Services teams on providing alternative fit-for-purpose solutions to meet their requirements. This provides flexibility and impetus on determining the future of Bledisloe House, given the council no longer requires Bledisloe House for operational purposes.

14. Four options were reviewed in detail to enable full consideration of the potential outcomes related to the future of Bledisloe House, as highlighted in the attached presentation (Attachment A).

15. Officers’ preferred option, endorsed by the council’s Executive Leadership Team on 7 October 2020 was, subject to consultation, to enter into a development agreement with appropriate development conditions for Bledisloe House under a long term 125-year lease, to achieve the desired commercial, heritage protection and integrated Aotea Precinct public realm outcomes in a timely manner.

16. Any delay to the Bledisloe House refurbishment and integrated outcomes risks an extended period of disruption in the area where commuters emerge from the Aotea station and overstation developments.

17. The principal risks associated with the preferred option are:

a) Commercial negotiations and any development agreement fail to provide integrated public realm outcomes and commercial terms that meet the council’s requirements – this can be mitigated by undertaking a phased approach:

i) Phase 1: progress confidential negotiations with the successful Aotea overstation developer, to agree acceptable commercial terms and public realm design outcomes that are aligned with council and key stakeholder expectations.

ii) Phase 2 (if required): If the council fails to reach acceptable commercial and public realm terms with the overstation developer, then the team would undertake a normal market driven approach to deliver a better deal

b) The developer changes the design and or extends timelines compromising and delaying the desired Aotea Precinct outcomes – this can be mitigated through appropriate conditions in the development agreement.

c) Losing the heritage characteristics through inappropriate design – this will principally be controlled through the council consenting processes, but additional safeguards may be written into the development agreement in consultation with the council’s heritage team as required.

18. If this proposal is approved for public consultation through the 10-year Budget, staff will report back to this committee and the ELT with an updated recommendation that will include up-to-date valuation advice, consultation feedback outcomes and outcomes from interim confidential negotiations with the overstation developer in Q2-Q3 2021, prior to confirming any commercial deals.

Consultation on the proposed sale of heritage scheduled properties

19. 2 The Strand, Takapuna and 3 Victoria Road, Devonport were approved for sale in July 2020 subject to the completion of statutory processes (including any statutory consultation requirements) as they are no longer required by Auckland Council for service or infrastructure purposes (resolution FIN/2020/31 and resolution GB/2020/71).

20. 2 The Strand, Takapuna is a category B Heritage building with identified seismic issues. It was donated to the former Borough of Takapuna by Auckland City Buildings Limited for the purpose of a library in 1940. It ceased to be utilised for this purpose when the new Takapuna Library opened in 1989. The property was subsequently used as corporate accommodation but is no longer required for this purpose.

21. 3 Victoria Road, Devonport is a category A Heritage building with identified seismic issues. It was acquired by the Devonport Borough Council from the Crown in 1941 for Public Offices. In recent years it was used as corporate accommodation but is no longer required for this purpose and has been vacant for the last two years.

22. As both these properties are heritage scheduled buildings and so may be viewed as strategic assets under the Significance and Engagement Policy, officers recommend that this item be consulted on in the 10-year Budget 2021-2031.

Consultation on an integrated approach to long-term leases on Waterfront property

23. Panuku is leading the regeneration of Wynyard Quarter located within Auckland’s city centre waterfront area. This involves working on behalf of Auckland Council with private sector partners to deliver an agreed strategic vision through continued commercial and residential development, as well as the creation of high-quality public spaces designed with people and play at the heart.

24. Several committed commercial and public projects in Wynyard Quarter are nearing completion. This means work has started on planning for the future with the development of the Wynyard Point draft masterplan document. This is a refresh of the thinking contained in the 2012 Waterfront Plan and reflects the changes on the ground since the March 2018 Governing Body decision to hold the America’s Cup in Wynyard Quarter and the neighbouring Viaduct space.

25. The masterplan sets out the context and the future vision for public and private development of Wynyard Quarter, including Wynyard Point as well as the use of Hobson Extension Wharf. It will guide the work Panuku does on the waterfront, both on the land and the water, determining what and when we deliver, and the outcomes we seek when we partner with others.

26. Once the draft masterplan is approved by the Planning Committee and the public consulted, Panuku will incorporate the findings into a final masterplan. The final masterplan will need to be endorsed by the Panuku Board and the Planning Committee – the timing of this likely to be mid to late 2021.

27. The regeneration of Wynyard Quarter has been extremely successful with commercial, residential, and marine development delivered by our development partners. These partnerships include private developments on various council owned waterfront properties in Wynyard Quarter. Private development complements the delivery of public realm projects by Panuku and combined, they have transformed Wynyard Quarter into a vibrant and liveable community.

28. Panuku has identified seven properties in Wynyard Quarter that it intends to negotiate and agree long-term leases for during the 10-Year Budget 2021-2031 period:

Next stage of urban regeneration

1. North Wharf – site 14

2. Jellicoe Street – site 19

3. Silo 6 – site 12

4. Wynyard Point east to west – Block A

5. Wynyard Point north to south – Block B

Wynyard Central and marine services

6. 44-56 Hamer Street – SeaLink ferry terminal

7. 101 Pakenham Street West – Lysaght Building

29. Partnering with the private sector on these properties enables Panuku to channel private investment and innovation. Development agreement and leasing mechanisms enable the public to maintain ownership over the Waterfront land as a strategic and integral asset. The long-term nature of the leasehold tenure provides developers with the certainty and the mandate to fund and deliver on the shared aspirations for the Precinct.

30. Long-term leases with terms that provide for exclusive use and the ability to restrict public access may constitute a transfer of control under the Local Government Act 2002 (LGA). In order to meet the requirements of section 97 of the LGA the council would need to amend the LTP for one or more of the seven identified properties each time a decision to enter a new lease which triggers section 97 is proposed. To avoid the continued amendment of the LTP, staff recommend that a proposal to provide for long-term leases for all seven of the identified properties is consulted on as part of the 10-year Budget 2021-2031.

31. Consulting on the proposed long-term leases through the 10-year Budget 2021-2031 will enable Panuku to start a programme of work to look for opportunities to lease these waterfront properties. Entering long-term leases for each of the identified properties will be subject to Panuku Board and Finance and Performance Committee approval on each occasion. These would be brought to the committee for approval as the development plan for each site progresses over the coming years.

CCO Accountability Policy

Background

32. Under section 90 of Local Government (Auckland Council) Act 2009, Auckland Council must adopt an accountability policy for its substantive CCOs. This policy must be included in the council’s LTP, and the council may adopt it as part of the LTP. Amendments to the policy can only be done through an amendment to the LTP.

33. A substantive CCO must give effect to the aspects of the council’s LTP relevant to it.

34. The CCO accountability policy is unique to Auckland Council and is intended to be complementary to other accountability mechanisms, although more enduring as it is generally only revised every three years alongside the LTP process. As such the content is more high level in nature.

35. Under section 90 of the Local Government (Auckland Council) Act 2009, the policy must include:

a) a statement of the council’s expectations for the CCOs contributions to, and alignment with, the council’s objectives and priorities

b) a statement of the council’s expectations for the CCOs contributions to, and alignment with, any relevant central government objectives and priorities.

c) any additional reporting requirements

d) any additional planning requirements

e) a list of strategic assets, and set out requirements for their management, including the process for approval of major transactions.

Scope of review

36. The development of the 10-year Budget 2021-2031 provides an opportunity to revise and update the policy. The scope of this review is not a fundamental overhaul but primarily updates the Policy in order to:

a) align to relevant CCO review recommendations

b) update for currency, particularly the merger of ATEED and RFAL (effective 1 December 2020)

c) maintain the policy’s status as an enduring document, which is generally reviewed every three years

d) make clear that the policy is part of a wider accountability framework (which includes Statements of Intent, Statement of Expectations etc.)

e) update CCO specific expectations by removing or streamlining purpose sections; focusing on alignment with/contribution to Auckland Plan outcomes and high-level activities; and adjusting the methods sections as appropriate.

37. A high-level summary of the proposed changes is set out in Attachment B and the full draft revised policy is provided in Attachment C.

38. This approach reflects there is work underway or still to be progressed during 2021 and beyond (for example strategy development on water and economic development; and amendments to CCO constitutions as per CCO Review recommendations).

39. The current CCO accountability policy includes content on expectations common to all CCOs. A key proposed change is to remove some sections of the common expectations which relate primarily to best practice governance principles, relationships, culture and collaboration and domicile this content in a statement of expectations.

40. The statement of expectations is a tool recently provided for through a 2019 amendment to the LGA 2002 (under section 64B) and was not available during the development of the last LTP. It is considered this content more appropriately resides there as it reflects the method and manner of achieving objectives and priorities. In contrast to the CCO Accountability Policy, statements of expectations do not need to be included in the LTP and can be amended other than by way of an amendment to the LTP.

Engagement process

41. A workshop of the CCO Oversight Committee was held on 27 October 2020, to which all Local Board chairs were invited. At the workshop the scope of the review was outlined, along with a summary of proposed changes in each part of the policy and next steps/timeframes.

42. Subsequently, staff narrated a voice recording of the slides presented at the workshop, which was made available to all Local Board members. A dedicated inbox was set up for local board members to submit any questions on the presentations.

43. Following the workshop, a mark-up of proposed revisions to the policy was circulated concurrently to substantive CCO representatives and key council and IMSB staff for feedback. Staff have worked through this feedback.

Auckland Airport Shareholding Policy

44. As at November 2020, the council owns 266,328,912 shares in Auckland International Airport Limited (AIAL), which equates to an 18.09 per cent shareholding.

45. Section 5 of the LGA 2002 defines any equity securities held by the council in airport company as a strategic asset. The Auckland Airport Shareholding Policy sets out the strategy for managing the council’s investment in the airport.

46. The policy was last refreshed in the Long-term Plan 2012-2022 and requires updating.

47. The main proposed updates to the Auckland International Airport Limited Shareholding policy are:

a) Removing outdated references to Auckland Council Investment Limited (ACIL)

b) Updating the council’s shareholding to reflect the current position

c) Changes to explicitly provide for council to sell-down any shares acquired through the dividend reinvestment plan (or other corporate actions such as rights issues), provided that the number of shares council holds doesn’t drop below the current number of shares held. In interpreting the policy, any changes to the number of shares purely as a result of a share split would be looked through to ensure an “apples with apples” comparison.

d) Provisions for a group of elected members to make decisions on any such opportunities under delegation (after receiving advice from the Chief Executive) in circumstances where it is not practicable to hold an extraordinary committee or Governing Body meeting within the timeframe required to make a decision.

Regional Fuel Tax Scheme

48. The 10-year Budget 2018-2028 included significant capital investment in transport infrastructure and one of the funding sources to support this was a new Regional Fuel Tax (RFT) for the Auckland region.

49. This was enabled by the central government passing the Land Transport Management (Regional Fuel Tax) Amendment Act 2018. This act sets out a detailed statutory process to introduce or vary a RFT scheme, which includes mandatory public consultation on the scheme and the specific transport projects to be funded via the scheme.

50. In 2018 the council consulted with Aucklanders on an RFT scheme that included a regional tax of 10 cents plus GST per litre to fund a prescribed set of transport projects. Following public consultation, this proposal was submitted to central government, approved by the responsible minister and the tax was enacted by an Order in Council.

51. In recent years government decisions through both the New Zealand Upgrade Programme (NZUP) and the Shovel Ready Programme have provided funding towards projects included within this scheme.

52. The council therefore needs to publicly consult on a proposed revision to the current RFT scheme with an updated set of projects to be funded from the RFT revenue, and then submit that proposed revised scheme to central government for approval.

53. The specific list of projects will be determined in conjunction with the Regional Land Transport Plan (RLTP) process, and informed by the Auckland Transport Alignment Project (ATAP).

Tauākī whakaaweawe āhuarangi

Climate impact statement

54. This report and related decisions on items for consultation with the public have no specific climate impacts. Climate impacts will be taken into account when appropriate and required when substantive decisions are made.

55. In the case of Bledisloe House, climate change considerations are driving a requirement to renew the property to a higher standard.

56. The CCO Accountability Policy forms part of the CCO governance framework which directs each substantive CCO to contribute towards reducing carbon emissions and contributing towards a climate resilient future.

57. In the case of the Waterfront properties proposal, sustainability initiatives will be assessed on a site by site basis and will be a key criteria against which any long-term lease proposal is evaluated against.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

58. Staff from across the Auckland Council group have informed the material included in this report. Panuku have contributed extensively to the waterfront property proposal.

59. As noted above, feedback from CCO representatives have provided feedback on the proposed revisions to the CCO Accountability Policy and this feedback has been worked through.

60. The proposed revisions to the RFT scheme will be developed in close collaboration with Auckland Transport who lead the RLTP process, and with Auckland Council’s Transport Strategy team who play a key leadership role with the ATAP process.

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

Local impacts and local board views

61. Local Board representatives have participated in the workshops leading up to the Mayoral Proposal and expressed their views through this process including a specific opportunity to feedback on regional issues held on 11 November 2020.

62. The views of Local Boards have been formalised within a separate report on this agenda.

63. Local Boards will have further opportunities to express their views on the impacts of regional decisions on their local community before final decisions are made in May 2021.

Tauākī whakaaweawe Māori

Māori impact statement

64. The proposals in this report do not impact the Māori community significantly differently to the community at large.

65. Consultation on the 10-year budget includes engagement with the 19 Iwi Authorities. Targeted engagement to include Mataawaka is also being planned for. This approach is still being finalised and will be presented to the Finance and Performance Committee on 18 February 2021 ahead of public consultation.

66. Local Iwi have previously expressed interest in purchasing commercial and social assets which may include: Bledisloe House, the waterfront city centre properties, 2 The Strand, Takapuna and 3 Victoria Road, Devonport. As part of each lease or disposal local Iwi will be informed and consulted with if desired.

67. Consultation on Wynyard Point commenced in October 2019 in the Panuku Mana Whenua Governance Forum. Hui to date have covered the development process, values, narratives and opportunities for Wynyard Point. Future hui will cover the masterplan for the next stage of urban regeneration.

68. In relation to the SeaLink ferry terminal, engagement with iwi occurred for the purposes of the AC36 and relocation works. Ngāti Whātua Ōrākei, Ngāti Whātua o Kaipara, Te Patukiriki, Ngaati Whanaunga, Ngāti Maru and Te Ākitai Waiohua blessed the Site when it was completed by Wynyard Edge Alliance and handed over to SeaLink on 20 October 2019.

69. Panuku will facilitate consultation between mana whenua and each intended lessee of the Lysaght building and the SeaLink ferry terminal. This is expected to occur early next year and will be considered by the Finance and Performance Committee as part of the LTP approval process.

Ngā ritenga ā-pūtea

Financial implications

70. The financial implications of the proposals will be included in the consultation document and supporting information.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

71. Key risks associated with the Bledisloe House proposal are discussed in the body of the report and in Attachment A.

72. There is also a risk for any long-term lease or disposal proposal that the commercial interest in a property may be less than anticipated at the time the council is seeking to enter into a transaction. This will be mitigated by close monitoring of property market trends and ensuing the council is receiving expert advice from qualified property professionals.

73. The statutory requirements to public consult and undertake an LTP amendment process to make decisions in relation to the council’s airport shareholding creates a risk that the council cannot act quickly enough to manage risks or take up opportunities associated with that shareholding. Some of the proposed revisions to the Auckland Airport Shareholding Policy seek to mitigate that risk.

Ngā koringa ā-muri

Next steps

74. Staff will develop draft consultation materials for the 10-year Budget 2021-2031 in accordance with the decisions made at this meeting and submit these for audit review.

75. On 18 February 2021, the Governing Body will be asked to adopt the consultation material, with public consultation running from 22 February 2021 to 22 March 2021.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Corporate Property Strategy Update & Post-Covid Optimisation Opportunity Recommendation	247
b ⇩	Summary of proposed changes to the CCO Accountability Policy	287
c ⇩	Draft revised CCO Accountability policy	289
d ⇩	Auckland Airport Shareholding Policy	303

Ngā kaihaina

Signatories

Authors

Alistair Falkner - Principal Advisor Investment Advice

Michael Burns - Manager Financial Strategy

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Kevin Ramsay - Acting Group Chief Financial Officer

Finance and Performance Committee

09 December 2020

Changes to the Urban Rating Area and Rating of Farm and Lifestyle Properties within the Urban Rating Area

File No.: CP2020/18097

Te take mō te pūrongo

Purpose of the report

1. To recommend changes to the Urban Rating Area and the rating of farm and lifestyle properties in the Urban Rating Area for consultation as part of the 10-Year Budget 2021-2031.

Whakarāpopototanga matua

Executive summary

Urban Rating Area extension

2. Residential and business properties outside the Urban Rating Area (URA) pay 90 per cent of the respective urban rates. The URA was set prior to Auckland Unitary Plan becoming operative.

3. The city is now expanding and new developments outside the URA are being provided with infrastructure and levels of service similar to properties located within the URA. Developing areas and towns near the current URA have similar levels of access to services as nearby properties inside the URA so should pay urban rates.

4. To ensure rates are set fairly in the future and to accommodate growth the URA should be aligned with the Rural Urban Boundary (RUB) set in the Unitary Plan. However, the RUB includes land zoned for future development, Future Urban, which can’t yet be built on. Land zoned Future Urban can only be developed when it is rezoned for urban development or has received a resource consent. In addition, not all of the land in the RUB has the same level of access to council services as land closer to the current urban area.

5. Officers recommend that the council consult on setting the URA to include all land within the RUB that is zoned or currently consented for urban development except Warkworth which doesn’t yet have urban service levels. This will exclude land zoned Future Urban which can’t yet be developed. As land zoned Future Urban is zoned for development it will be moved to urban rating.

6. Consultation should also include an option where the townships of Kumeū, Huapai and Riverhead are not included in the URA at this stage. At present these townships have higher levels of services than rural areas but aren’t yet receiving urban services levels although the council is planning investments to raise service levels as the areas develop.

Farm and Lifestyle properties in the Urban Rating Area

7. There are also a number of farms and lifestyle properties in the Urban Rating Area that are now zoned for residential or business use. These properties presently pay 80 per cent of the urban residential rate. The council has provided services to these properties to allow development. Officers recommend that to ensure they pay a fair share of the costs of providing services farm and lifestyle properties in the Urban Rating Area be charged the Urban residential rates differential.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) recommend to the Governing Body that it agree to consult as part of the draft 10-year Budget 2021-2031 on:

i) aligning the Urban Rating Area with the Rural Urban Boundary in the unitary plan and charging urban rates for all land within the Rural Urban boundary except land located in Warkworth and land zoned Future Urban, but including the Future Urban zoned Ockleston Landing and Halls Farm developments.

ii) charging farm and lifestyle properties located in the Urban Rating Area urban residential rates

b) recommend to the Governing Body that it agree to consult on the amendments to the Revenue and Financing Policy.

Horopaki

Context

Decision making

5. The council is required to consult on changes to its rating policy. The council can also choose to consult where it considers it appropriate to do so.

6. The council is also required to consult on changes to the Revenue and Financing Policy when proposing changes to the factors used to determine rates differentials.

Tātaritanga me ngā tohutohu

Analysis and advice

8. The following sections set out for each of the proposed changes to council’s rating policies the key issues to be considered when making a decision. More detailed analysis of each issue is set out in attachments. Each attachment is presented in the format that will be used for the Supporting Information for consultation if the council decides to consult on the issue. The material will be updated to reflect the decisions the council makes on consultation.

Urban Rating Area and process for adjusting urban rating boundary in response to growth

9. The Urban Rating Area determines which properties pay the urban general rates differential. The current Urban Rating Area is based on the planning rules that existed before the Unitary Plan became operative in 2016. Under the Unitary Plan rules, urban development is now occurring outside the current Urban Rating Area. These new properties are charged rural rates even though they receive similar levels of council services to other urban areas.

Proposal

10. The extension of the Urban Rating Area proposal (attachment A) sets out an option to align the Urban Rating Area with the Unitary Plan. Under the proposal, the Urban Rating Area would include all land within the Rural Urban Boundary, excluding land in Warkworth and land that is zoned Future Urban (other than the developments at Ockelston Landing at Hobsonville and Halls Farm in Orewa, which we propose to include in the Urban Rating Area). The proposal also includes the option of excluding land in the Kumeū, Huapai and Riverhead townships from the Urban Rating Area.

Consideration

11. Officers consider that land zoned for urban development within the Rural Urban Boundary should be included in the Urban Rating Area because developing areas and towns near the current Urban Rating Area have similar levels of access to services to nearby areas that pay urban rates and higher levels of access to council services than rural areas.

12. The proposal will include some areas which are zoned for urban development but where development has not yet started. Officers consider it reasonable to include this land, as council is already incurring costs for the provision of services to this land as follows:

a) Provision of bulk infrastructure to enable development: General rates fund the share of the capital costs of this infrastructure that benefits existing properties and also fund the associated operational costs that are incurred whether the land is developed or not

b) Planning costs: Areas still awaiting bulk infrastructure are benefiting from the extensive planning required from council to enable infrastructure delivery

c) Community facilities: The analysis of service levels included in the proposal shows that most of the land proposed for inclusion in the Urban Rating Area is within catchments for council facilities. Most of the operational costs of these services are fixed and moving developable land to urban rates would ensure they are paying a fair share of these costs relative to their urban neighbours.

13. The proposal excludes Future Urban Zoned land apart from the Ockleston Landing and Halls Farm developments that have occurred under earlier planning rules or through a resource consent. Most land in the Future Urban zone cannot be developed due to a lack of bulk infrastructure such as roads, stormwater and water services. This land remains predominantly rural in nature and will continue to be charged rural rates. Council expects that any further development in the Future Urban zone will be preceded by a plan change to rezone the land for urban development. Under the proposal, this land will automatically be charged urban rates following the change to urban zoning.

14. The proposal also excludes Warkworth. Warkworth’s service levels are considered lower than other towns proposed to be included, and its distance means it receives less benefit from services in the existing urban area.

15. The proposal also provides the option of excluding the Kumeū, Huapai and Riverhead townships from the Urban Rating Area. These towns are considered to have a greater level of services than Warkworth, but a lower level of services than other areas to be included. These towns are also further from the existing urban area.

16. Under the proposal, 7,460 properties (or 4,070 if Kumeū /Huapai and Riverhead are excluded) will change from being rated Rural Residential or Rural Business to Urban Residential or Urban Business. Properties moving from the rural to the urban rates differential will have an increase of rates of 11 per cent of the value-based general rate (around 10 per cent of total rates). 140 properties currently in the Urban Rating Area will move from urban rated to rural rated because they are now outside the Rural Urban Boundary (RUB) or zoned Future Urban use but aren’t yet able to be developed. The rates on these properties will fall by 10 per cent. These rates impacts would be in addition to any other changes to rates agreed through the 10-year budget process.

Recommendation

17. Officers recommend that council consults on the proposed options to extend the Urban Rating Area as part of the 10-year Budget 2021-2031.

Removing the farm and lifestyle rates differential in the Urban Rating Area

18. Currently, properties across Auckland that have a lifestyle or rural industry (farming, market gardens or forestry activities) land use are charged the farm lifestyle rates differential. These properties pay 80 per cent of the general rate charged to urban residential properties. Farm and lifestyle properties in the Urban Rating Area have the same access to services as their urban rated neighbours but pay much lower general rates.

Proposal

19. The proposal to remove farm and lifestyle rates differential in the Urban Rating Area (attachment B) sets out the option of rating all lifestyle or rural industry use properties in the Urban Rating Area as urban residential.

Consideration

20. Under the proposal, properties in the Urban Rating Area currently charged the farm and lifestyle differential will instead be rated as urban residential. These properties will have a one-off increase in their general rates of around 25 per cent, on top of the council’s average rates increase.

21. Officers recommend this proposal for consultation because these properties:

a) have the same access to council services as their urban rated neighbours

b) have access to much higher levels of council services than farm and lifestyle properties in rural areas

c) most of these properties have a residential use, and place similar demands on council services to other residential properties.

22. The council also wants to encourage land that is zoned for urban development to be used for development and we consider that this proposal will help achieve that outcome.

23. This proposal does not affect Auckland’s rural production lands. The protection of our prime food production land, our rural landscapes and lifestyles was a major consideration in the development of the council’s Unitary Plan. This land has been zoned for rural use under the Unitary Plan and is outside the Urban Rating Area.

24. This proposal impacts 500 properties currently rated farm and lifestyle in the current Urban Rating Area. The average rates increase for these properties as a result of this change is $1,085 per year. If the proposal to align the Urban Rating Area with the Rural Rating Area proceeds, then a further 115 properties currently rated farm and lifestyle would be affected.

Recommendation

25. Officers recommend that council consults on the proposed option to remove the farm and lifestyle rates differential in the Urban Rating Area as part of the 10-year Budget 2021-2031.

Tauākī whakaaweawe āhuarangi

Climate impact statement

26. Recommendations in this report have a neutral climate impact as they relate to the allocation of charges rather than decisions on activities to be undertaken.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

27. The proposals in this report have been reviewed by the following departments or business units of the Auckland Council group:

a) Chief Economist Unit

b) Legal

c) Parks Sports and Recreation

d) Arts Community and Events

e) Community Facilities

f) Plans and Places

g) Auckland Transport.

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

Local impacts and local board views

28. Local Boards will have opportunities to express their views on the impacts of regional decisions on their local community before final decisions are made in May 2021.

Extension of the Urban Rating Area Local Impacts

29. The following table shows the number of properties that will move from rural rates to urban rates under the proposal, by local board area.

Local Board	Number Rating Units	Average Rates Change ($)	Average Total Rates Change (%)
Franklin	485	$250	8%
Henderson-Massey	300	$338	9%
Hibiscus and Bays	37	$1,717	10%
Howick	8	$330	8%
Māngere-Ōtāhuhu	36	$2,267	10%
Ōtara-Papatoetoe	12	$6,022	11%
Papakura	417	$470	9%
Rodney (including Kumeū, Huapai, Riverhead)	3,804	$250	8%
Rodney (excluding Kumeū, Huapai, Riverhead)	419	$300	7%
Upper Harbour	2,333	$244	8%
Waitākere Ranges	98	$160	8%

30. The following table shows the number of properties that will move from urban rates to rural rates under the proposal, by local board area.

Local Board	Number Rating Units	Average Rates Change ($)	Average Total Rates Change (%)
Franklin	35	-$688	-9%
Henderson-Massey	14	-$196	-7%
Howick	52	-$267	-8%
Māngere-Ōtāhuhu	3	-$3,500	-10%
Papakura	1	-$1,710	-9%
Upper Harbour	7	-$1,709	-9%
Waitākere Ranges	26	-$195	-7%

Farm and Lifestyle in the Urban Rating Area

31. The following table shows the number of properties that would move from the farm and lifestyle rates to urban residential rates under the proposal, by local board area.

Local Board	Number Rating Units	Average Rates Change ($)	Average Total Rates Change (%)
Franklin	51	$1,664	21%
Henderson-Massey	20	$2,215	19%
Hibiscus and Bays	101	$1,034	20%
Howick	97	$1,383	21%
Māngere-Ōtāhuhu	29	$1,632	21%
Maungakiekie-Tāmaki	1	$491	17%
Ōtara-Papatoetoe	11	$4,467	21%
Papakura	60	$2,077	22%
Rodney	67	$1,453	21%
Upper Harbour	140	$1,040	20%
Waitākere Ranges	78	$400	17%
Whau	2	$1,076	20%

Tauākī whakaaweawe Māori

Māori impact statement

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

33. The proposal to extend the Urban Rating Area does not affect any Māori land^{^[1]} properties. All identified Māori land properties in Auckland are either within the current Urban Rating Area or are located outside the Rural Urban Boundary.

34. The proposal to remove the farm and lifestyle differential in the Urban Rating Area does not affect any Māori land properties.

35. Consultation on the 10-year budget includes engagement with the 19 Iwi Authorities. Targeted engagement to include Mataawaka is also being planned for. This approach is still being finalised and will be presented to the Finance and Performance Committee on 18 February 2021 ahead of public consultation.

Ngā ritenga ā-pūtea

Financial implications

36. The financial implications of the recommended charges are noted in the relevant sections of this report and its attachments.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

37. Some ratepayers may be concerned about the proposed level of increase in their rates. Officers will design consultation to ensure each potentially affected ratepayer is written to advising them of the changes the council is considering and letting them know how they can get more information and the opportunities for them to make their views known both in person and in writing.

Ngā koringa ā-muri

Next steps

38. Resolutions passed by the Governing Body at its meeting on 9 December 2020 will be used to develop the consultation material for the 10-year Budget 2021-2031.

39. In February 2021, the Governing Body will be asked to agree the consultation material. In designing the recommended consultation process officers will develop targeted approaches to ensure that ratepayers affected by the proposed changes are made aware of the proposals and the ways in which they can provide feedback. At this meeting the Governing Body will also be asked to agree consultation material for amendments to the Revenue and Financing Policy.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	LTP Proposal: Extension of Urban Rating Area	315
b ⇩	LTP Proposal: Removing Farm and Lifestyle differential in the Urban Rating Area	353

Ngā kaihaina

Signatories

Authors

Beth Sullivan - Principal Advisor Policy

Andrew Duncan - Manager Financial Policy

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Kevin Ramsay - Acting Group Chief Financial Officer

Finance and Performance Committee

09 December 2020

Other Rates and Fees Issues for 10-Year Budget 2021-2031

File No.: CP2020/18432

Te take mō te pūrongo

Purpose of the report

1. To recommend changes to rating policy and fees for consultation as part of the 10-year Budget 2021-2031. To also recommend consequential amendments to the Revenue and Financing Policy for consultation alongside the 10-year Budget 2021-2031.

Whakarāpopototanga matua

Executive summary

2. The recommendations in this report bring together all the rating issues and fees material, not covered elsewhere on this agenda, proposed for consultation as part of the 10-year Budget 2021-2031.

Electricity Network Resilience Targeted Rate

3. Vector has proposed that the council levy a targeted rate on them of $10.5 million per year to fund enhanced maintenance of our trees that present a risk to the electricity lines network. This will increase the overall spending on tree maintenance by $5 million per year, improving supply security and public safety by reducing the risks associated with downed power lines. The extra rates borne by Vector can be included in power bills, costing residential electricity consumers on average an additional $1 per month.

4. Vector will spend $500,000 per year from the targeted rate on increased tree planting to compensate for canopy lost from enhanced maintenance. Vector fully funding tree maintenance will free up $1.5 million of current council spending. $500,000 of that current council spending is proposed to be redirected to additional tree planting and $1 million to be redirected to more regular tree pruning in parks and town centres.

5. Officers recommend that the council consult on this proposal.

Reinstatement of the Accommodation Provider Targeted Rate

6. Officers recommend that the council consult on the reinstatement of the Accommodation Provider Targeted Rate for the 2021/2022 year. This change implements the decision the council took as part of developing the Emergency Budget 2020/2021 and so represents the status quo option. Officers also recommend consulting on options to extend the suspension of this rate and the activities it funds until December 2021 or June 2022 to allow decision making to consider new developments in the management of COVID-19 and our borders and any consequent changes to the focus of expenditure.

City Centre Targeted Rate Extension

7. Officers recommend extending the timeframe for the City Centre Targeted Rate to align with the timeframe of the 10-year Budget 2021-2031, so that it will expire in 2030/2031. The City Centre Targeted Rate is currently due to expire in 2024/2025. The extension will allow additional investment of $157.7 million in the period 2028/2029 to 2030/2031 to:

a) support safe pedestrian and cycling access around the new City Rail Link Aotea and Karangahape Road station

b) streetscape enhancement and placemaking activities for new residential development

c) regeneration of midtown as the city’s civic and cultural hub.

Rating policy changes as a consequence of other decisions

8. Officers recommend that the council consult on the changes to rating policy set out below. These changes implement decisions the council has taken as part of developing the draft 10-year Budget 2021-2031, the Emergency Budget 2020/2021 or through other decision making, specifically:

a) implement changes to the Waitākere Rural Sewerage Targeted Rate to recover the costs of providing the service from the beneficiaries (decided as part of the Emergency Budget 2020/2021)

b) allow a cost inflation adjustment for the waste management targeted rates, local board swimming pool entry targeted rates, Swimming/Spa Pool Compliance Targeted Rate and the City Centre Targeted Rate.

c) reinstating interest on various loan repayment targeted rates.

9. The Puketāpapa Local Board has asked the Governing Body to review its decision to gradually reduce the share of rates paid by business properties, the Long-term Differential Strategy (LTDS). Officers recommend retaining the LTDS.

10. The council has also asked for advice of the rating of vacant land. Officers recommend that if the council wishes to give further consideration to this issue, staff undertake additional analysis and report back.

Local board and local area targeted rates

11. Officers recommend that the council consult on the following local area targeted rates and other targeted rates proposed by local boards:

a) Clevedon Water and Wastewater Connection Targeted Rate to be paid by Clevedon residents who participate in the targeted rate scheme to recover the costs of connection to Watercare’s reticulated water and/or wastewater system

b) targeted rate on the benefiting properties in two remaining drainage districts in the former Rodney District Council area (Te Arai and Okahukura) to fund the sustainable provision of stormwater services

c) change to the Business Improvement District Targeted Rates proposed by the relevant business associations including the extension of the boundaries for the Manurewa BID, Glen Innes BID and Dominion Rd BID.

12. Officers will report separately to the Upper Harbour Local Board on a proposal considering setting a targeted rate to fund additional public transport services in their area. If the Upper Harbour Local Board support this proposal, then it will be referred by the local board directly to the 17 December 2020 Governing Body meeting.

Fees and charges

13. Officers recommend that the council consult on increasing venue hire fees by 6 per cent, as they haven’t been adjusted for inflation since 2014, as well as some minor technical changes to regulatory fees. Officers also recommend that the council consult on whether to continue charging late return fines on library books and other items. As provided for in the Revenue and Financing Policy other regulatory fees are increasing in line with council cost inflation of one per cent where necessary to maintain cost recovery.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a) recommend to the Governing Body that it agree to consult as part of the draft 10-year Budget 2021/2031 on:

i) introducing an electricity network resilience targeted rate to be set on Vector’s utility assets of $10.5 million to fund enhanced maintenance of our trees that present a risk to the electricity network

ii) reinstating the Accommodation Provider Targeted Rate for the 2021/2022 year, and also consulting on options to extend the suspension until December 2021 or June 2022

iii) extending the duration of and investment programmes for the City Centre Targeted Rate until 2031 to align with the 10-year Budget 2021-2031

iv) setting the Waitākere Rural Sewerage Targeted Rate at $290 for the 2021/2022 year and adjusting it annually for the council rate of inflation in costs

v) adjusting for cost inflation the waste management targeted rates, local board swimming pool entry targeted rates, Swimming/Spa Pool Compliance Targeted Rate and the City Centre Targeted Rate

vi) reinstating interest on loan repayment targeted rates

vii) amending the Clevedon Water and Wastewater Connection Targeted Rate to a differentiated rate based on the nature of connection and timing of joining to be paid by Clevedon residents who participate in the scheme to connect to Watercare’s reticulated water and/or wastewater system

viii) changes to the Business Improvement District Targeted Rates proposed by the business associations, including the extension of the boundaries for the Manurewa BID, Glen Innes BID and Dominion Rd BID

ix) that stormwater services be undertaken in a joint management arrangement with the relevant communities for the Te Arai and Okahukura drainage districts, with the provision of those services to be funded from a targeted rate on the benefiting properties in the Te Arai and Okahukura drainage districts

x) that the provision of stormwater services be undertaken by a private management arrangement with the community for the Glorit drainage district with funding provided directly by the benefiting landowners.

xi) changes to fees and charges as set out in this report

xii) amendments to the Revenue and Financing Policy.

b) recommend to the Governing Body that it agree to reallocate decision making responsibility for the Te Arai, Okahukura and Glorit drainage districts from the Rodney Local Board to the Governing Body

c) agree to retain the current long-term differential strategy as set out in the Revenue and Financing Policy.

d) note that the Upper Harbour Local Board may recommend to the Governing Body for consultation as part of the 10-Year Budget 2021-2031 a transport targeted rate to fund public transport services in the Paremoremo and Albany Heights area.

Horopaki

Context

Decision making

14. The council is required to consult on changes to its rating policy and certain changes to regulatory fees and charges, including where fees are prescribed under the Resource Management Act 1991 or where the changes are considered “significant” under its Significance and Engagement Policy. The council can also choose to consult where it considers it appropriate to do so. The council is also required to consult on changes to the Revenue and Financing Policy when proposing changes to sources of funding.

Tātaritanga me ngā tohutohu

Analysis and advice

15. The following sections set out for each of the proposed changes to council’s rating policies and fees the key issues to be considered when making a decision. More detailed analysis of each issue is set out in attachments. Each attachment is presented in the format that will be used for the Supporting Information for consultation if the council decides to consult on the issue. The material will be updated to reflect the decisions the council makes on consultation.

Introducing the Electricity Network Resilience Targeted Rate

16. Vector supplies electricity to most of the population within the Auckland region. Council owns a significant number of trees along the network of overhead power lines (around 80% in urban areas and around 30% in rural areas). The requirements for the management of trees near power lines are set out in the Electricity (Hazards from Trees) Regulations 2003. Vector is concerned that trimming trees to the distances under the regulations could go further to ensure adequate power network resilience.

Proposal

17. The Electricity Network Resilience Targeted Rate proposal (attachment A) sets out an option to introduce a targeted rate of $10.5 million per annum on Vector’s utility assets to fund an enhanced, risk-based service around the Vector electricity supply network. This will more effectively manage risk to Vector’s powerlines from Council owned trees.

Consideration

18. As trees that are near power lines grow, they may come into contact with Vector’s electricity supply network. Council undertakes tree maintenance around the power lines to help improve public safety, reduce power outages and improve the resilience of public trees.

19. Under the proposal council will be taking an enhanced risk-based approach to management of our trees under, or near, power lines. This will be undertaken in accordance with best arboriculture practice and in compliance with the Auckland Unitary Plan. Some tree maintenance may require additional applications for resource consent. The immediate focus (first few years) will be on management of risk posed by trees near the most important parts of the network. $500,000 will be spent on additional tree planting to mitigate the impact of enhanced pruning on the tree canopy.

20. Around $5.5 million is currently spent annually on Council-owned trees near power lines ($4 million by Vector and $1.5 million by council). This proposal will free up around $1.5 million of current council spending which is proposed to be redirected to fund:

a) $500,000 additional investment in tree planting activity to manage the impact on the tree canopy of increased pruning. In combination with new and existing budgets this will triple the tree planting budget to $1.5 million and result in around 3,000 trees being planted annually

b) $1 million to increase service levels by reducing pruning rotation from eight years to five years in parks and town centres.

21. Only Vector will pay the targeted rate will and we understand that they intend to pass the cost of the proposed tree trimming programme through to their customers, which will mean that the electricity bills for Vector electricity users will increase by around $1 per month for the average residential customer. The proposal will eventually result in an estimated $3.9 million to $20.3 million of economic benefits to the Auckland region from reduced power outages caused by trees. It will also result in improved public safety around power lines, increased tree planting and canopy cover, and increased tree maintenance service levels in parks and town centres.

22. To ensure the enhanced tree trimming programme meets the goals of both parties the council will enter into a joint agreement with Vector.

23. Undergrounding the entire Vector electricity network is not a viable alternative option. It would cost Vector more than $6.4 billion and result in an increase of around $1,609 per year for the average residential Vector electricity consumer.

24. This proposal will require amendments to the Revenue and Financing Policy to include the Electricity Network Resilience Targeted Rate as a funding source for council services.

Recommendation

25. Officers recommend that council consult on the proposed introduction of the Electricity Network Resilience Targeted Rate as part of the 10-year Budget 2021-31. Officers also recommend that the council consult on the consequential amendments required to the Revenue and Financing Policy.

Reinstatement of the Accommodation Provider Targeted Rate

26. The Accommodation Provider Targeted Rate (APTR) seeks to recover from accommodation providers a fair proportion of visitor attraction, major events, and destination marketing activity spending by Auckland Unlimited (previously ATEED). When restrictions on international travel, mass gatherings, and domestic travel due to COVID-19 are in place then the immediate benefits that accommodation providers receive from Auckland Unlimited’s visitor attraction, major events, and destination marketing activities may be reduced. There are, however, benefits to accommodation providers to funding investment in domestic visitor attraction to Auckland, securing future events as well as international marketing to maintain Auckland’s profile to international visitors.

Proposal

27. The Accommodation Provider Targeted Rate 2021/22 proposal (attachment B) sets out options, these are:

a) Option 1 (Status quo): resume the APTR as currently planned from 1 April 2021 raising around $14.2 million in 2021/2022

b) Option 2: reinstate the APTR from 1 January 2022 and remit the APTR for the fourth quarter of 2020/2021 reducing the APTR revenue to around $7.2 million in 2021/2022 and lower spending on visitor attraction, major events, and destination marketing activity to around $21.8 million in 2021/2022

c) Option 3: reinstate the APTR from 1 July 2022 and remit the APTR for the fourth quarter of 2020/2021 and lower spending on visitor attraction, major events, and destination marketing activity to around $14.5 million in 2021/2022.

Consideration

28. There is currently uncertainty around how long the disruption to Auckland’s visitor economy which has been caused by COVID-19 will last. This may impact on the focus and amount that council wants to spend on the visitor attraction, major events, and destination marketing activity. If disruption continues, then the benefits accommodation providers receive will likely remain although the timing of the receipt of those benefits may change.

29. Our planned spending on visitor attraction, major events, and destination marketing works alongside the governments funding ear-marked for Auckland via the Regional Events Fund. A reduction in this activity will have an impact on our ability to access government funding. It will also have implications that extend into future years as the preliminary work required to attract these events may not be able to be undertaken.

30. Reduced visitor attraction, major events, and destination marketing will delay any international marketing beyond ‘keeping the lights on’, and also reduce the spend in areas such as international students and via our contestable annual events programme. This would directly impact suppliers, contractors and deliverers of events across the city. It would also mean the focus of visitor attraction, major events, and destination marketing expenditure remains on the domestic tourism market.

31. Under each option the council will continue to spend on visitor attraction, major events, and destination marketing and collect the APTR prior to the reopening of borders. This expenditure will deliver immediate benefits from attracting domestic visitors and promote Auckland as a destination for when borders open delivering benefits at that time and into the future.

32. Potential changes to rates for 2021/2022 must be consulted on as part of consultation on the 10-year Budget 2021-2031. Consulting on three options for the APTR allows the council to make its final decisions when it has better information about the immediate future of the visitor economy.

33. If the suspension of the APTR is extended to 30 December 2021 or 30 June 2022, officers would then also recommend remitting APTR charges (around $3.3m) in the 4th quarter rates invoice for 2020/2021 and reduce funding to Auckland Unlimited by the equivalent amount.

Recommendation

34. Officers recommend council consult on the three proposed options on the APTR for 2021/2022 to provide flexibility when making decisions on the 10-year Budget 2021-2031 in May 2021.

Extend the duration of the City Centre Targeted Rate

35. The City Centre Targeted Rate partially funds the city centre redevelopment program from benefiting residential and business properties. The city centre redevelopment programme is designed to enhance the city centre as a place to live, work, visit and do business. The Auckland City Centre Advisory Board (ACCAB) which represents city centre residents, businesses and other city centre interest groups, provides advice to the council on the priorities for the city centre targeted investment portfolio as well as commenting on any proposed changes to the City Centre Targeted Rate policy. The City Centre Targeted Rate is due to expire in 2024/2025.

Proposal

36. Extend the duration of the City Centre Targeted Rate proposal (Attachment C) and the associated investment program from 2024/2025 until 2030/2031 to align with the 10-year Budget 2021-2031.

Consideration

37. The City Centre Targeted Rate has funded significant investments in the city centre to improve the visitor experience and attractiveness by funding street and public spaces improvements such as Freyberg Square, Albert Street, Karangahape Road enhancements, Quay Street and Lower Queen Street; as well as contributing to the vibrancy of the city centre through activation, events and marketing activities such as Artweek.

38. The need to fund further development in the city centre will continue beyond 2025 as the city continues to grow. The targeted rate currently finishes in 2024/2025 and it is recommended that the rate is extended to 2030/2031 to fund further development.

39. The proposed extension of the City Centre Targeted Rate would provide an additional $157.7m over the 2025/2026 to 2030/2031 period.

40. The targeted rate from 2025/2026 will support safe pedestrian and cycling access around the new City Rail Link Aotea and Karangahape Road stations. New residential communities are anticipated as a result of intensification around the stations. The targeted rate will support streetscape enhancement and placemaking activities to connect these communities to the city centre and create a sense of belonging to urban neighbourhoods.

41. From 2025, the targeted rate will help fund the regeneration of midtown as our civic and cultural hub through the streetscape and laneway projects identified in the City Centre Masterplan. The targeted rate will continue to be used to fund activation and destination marketing programmes that will encourage people to visit the city centre and provide safe, exciting and welcoming environment that is distinctly Tāmaki Makaurau.

42. The ACCAB has expressed their support for the continuation of the rate. The ACCAB is working with the council on the priorities for the future investment of the City Centre Targeted Rate.

Recommendation

43. Officers recommend the council consult on the proposal to extend the duration of the City Centre Targeted Rate until 2030/2031.

Waitakere rural septic tank pump-out programme

44. The Waitākere rural septic tank pump-out programme provides a three-yearly pump-out of onsite wastewater management systems for 3,210 properties in the Waitākere Ranges local board area and 656 properties in the Henderson-Massey and Upper Harbour local board areas. The service is funded by a targeted rate on these properties.

Proposal

45. As part of the Emergency Budget 2020/2021 the council resolved to, effective from 1 July 2021:

a) stop providing the septic tank pump-out service to 656 ratepayers in the Henderson-Massey and Upper Harbour local board areas

b) continue to provide the septic tank pump-out service to the 3,210 ratepayers in the Waitākere Ranges Local Board area, funded from an increased targeted rate (likely to be between $260 and $320 per year) to fully recover costs.

Consideration

46. Procurement is underway for the ongoing provision of the service in the Waitākere Ranges Local Board area and accordingly the end of the service in the other board areas. To fully recover the costs of the service in the Waitākere Ranges Local Board area the rate is planned to be set $290 for 2021/2022, subject to final contract negotiations. The rate will be amended by the council rate of cost inflation annually to fully recover the costs of the service in the Waitākere Ranges Local Board area.

Recommendation

47. Officers recommend that the consultation document for the 10-year Budget 2021-2031 include the proposal that the Waitākere Rural Septic Tank Pump Out Targeted Rate be set at $290 for the 2021/2022 year for consultation.

Waste management targeted rate

48. The Waste Management Targeted Rate funds refuse collection and disposal services (including the inorganic refuse collection), recycling, food scraps collection, waste transfer stations and resource recovery centres within the solid waste and environmental services activity.

Proposal

49. Increase the base Waste Management and Refuse Targeted Rates for underlying inflationary increases in 1.2 and 0.9 per cent respectively.

Consideration

50. In the 2020/2021 year the council entered into new long-term contracts for refuse collection. As these were replacing contracts set several years ago the cost had risen and this was reflected in the increase required for the refuse targeted rate. In addition, the base waste management rate was increased to accommodate the additional cost of managing recycling as international markets for recyclable material continued to contract.

51. As the key changes to waste management services were managed by the changes to rates last year the cost movements this year are solely as a result of inflationary movements in costs.

Recommendation

52. Officers recommend that the council consult on the changes to the waste management targeted rates in the proposal above.

Business differentials

53. The council set its original business differential based on the proportion of rates that the former councils collected from businesses. The differential charges higher rates to business properties. As part of the Long-Term Plan 2012-2022 the council determined that businesses received more benefit from and imposed more costs on council services than residential properties and were better able to afford rates. However, at the time, the council also considered that the level of rates being paid by business was too high and decided to slowly lower the amount of rates that business pay over 10 years.

54. The council adjusted the long-term differential strategy (LTDS) as part of the Long-Term Plan 2015-2025. The LTDS shifted from determining the differential target as a ratio between business and residential rates to setting it on the basis of the share of rates that business properties would pay. The time frame over which the LTDS was to operate was also extended. The LTDS now aims to lower the share of rates the council will collect from business properties, currently at 31.68 per cent, to 25.8 per cent by 2037/2038.

Proposal

55. Retain the current long-term differential strategy as set out in the Revenue and Financing Policy.

Consideration

56. The council has been gradually reducing the share of the general rates requirement collected from businesses since amalgamation. However, the actual ratio of business rates to residential rates, 2.73 for 2020/2021, remains similar to what it was in 2012 when the long-term differential strategy was originally adopted (which was 2.77 for the 2012/2012 year). This is because the total value of residential property has risen faster than the value of business property.

57. Officers haven’t undertaken a detailed review of the issues originally considered by the council when adopting this policy. At this time officers are not aware of any new information or approaches to economic analysis that would fundamentally change the advice the council has previously considered. Should a review be undertaken officers would explore these issues. However, it is clear that many businesses are struggling as a result of the impact of COVID-19.

58. The LTDS provides a small benefit to business properties for the 2020/2021 year at a cost to the average residential ratepayer of only $0.17 per week or $8.76 per year.

Recommendation

59. Officers recommend that the council retain the current long-term differential strategy.

Rating of vacant land

60. The council has asked for advice on the application of higher rates to vacant land to encourage development. Officers advise that the council cannot set a differentiated general rate, or a targeted rate, solely for the purpose of encouraging the development of vacant land nor could a rate be set at the level required to strongly incentivise the development of vacant land.

61. Under capital value rating, owners of vacant land pay lower rates than developed properties. The council could consider setting a higher general rates differential on vacant land to bring the share of the costs of providing council services paid by owners of vacant land closer to the level paid by owners of developed properties. The revenue from a vacant land differential could be used to lower the share of rates paid by other ratepayers. Alternatively, it could be used to increase the overall general rates take. This would increase the funding available for council services and raise our capacity to borrow for investment in infrastructure.

62. In determining whether to set a higher differential on vacant land the council would need to weigh the:

a) extent to which vacant and developed land benefit from the services provided by council activities (in terms of higher land values and directly from the use of services)

b) relative cost of providing those activities to vacant and developed land

c) relative ability of owners of vacant land and developed land to meet rates charged

d) administrative costs of applying a vacant land differential.

63. If the council wishes to give further consideration to the application of a vacant land differential, officers will undertake further work and report back. Any decision to consider this matter further would allow the council to decide whether to consult on a vacant land differential as part of development of the Annual Budget 2022/2023.

Alternative options for targeted rates

64. Officers also investigated options for additional medium-term investment in climate change, water quality and natural environment. Advice also considered the options for funding these investments including with a new climate action targeted rate and by increasing the Water Quality Targeted Rate and Natural Environment Targeted Rate by 3.5 per cent per year. If the council wishes to give further consideration to the use of targeted rates to fund these investments officers will undertake further work and report back. Any decision to consider this matter further would allow the council to decide whether to consult as part of development of the Annual Budget 2022/2023.

Recommence charging interest on loan repayment targeted rates

65. The council maintains a number of targeted rates that are repaying financial assistance property owners received to make their homes more energy efficient, connect to reticulated water and wastewater schemes in the former Rodney District Council area and to upgrade their septic tanks. As part of the Emergency Budget 2020/2021 the council paused the payment of interest on these rates to update its compliance.

Proposal

66. Reinstate interest on loan repayment targeted rates when it is appropriate to do so.

Consideration

67. The operation of these financial assistance schemes requires the council to comply with a range of consumer finance legislation. The council suspended interest payments on these schemes for the 2020/2021 year in order to update its compliance programme.

Recommendation

68. Officers recommend that the council consult on re-instating interest on loan repayment targeted rates when it is appropriate to do so.

Clevedon reticulated water connection scheme

69. A reticulated wastewater and water supply system has been installed in the Clevedon village to support growth. As a result, around 140 existing properties with private onsite systems will be able to connect to the reticulated network from April 2021. The council adopted a financial assistance targeted rate as part of the Emergency Budget 2020/2021 to support property owners to connect to the system.

Proposal

70. The proposal to amend the Clevedon wastewater and water connection scheme (attachment D) sets out the option of replacing the current financial assistance scheme with a fixed targeted rate for a period of 15 years to enable Council and Watercare to recover the costs to the boundary of connecting participating properties to the reticulated system.

Consideration

71. The total costs of connection (including private works) range between $21,000 to $44,000 per property depending on onsite issues and whether connection is to either one of or both networks.

72. Connection to the reticulated system provides benefits to property owners as well as environmental benefits. In order to encourage connection a discount will be offered to property owners who opt into the scheme before 31 March 2021.

73. The scheme adopted as part of the Emergency Budget 2020/2021 was a financial assistance scheme that would have funded cost to the boundary and onsite costs. Since the scheme was adopted by the council, officers have further considered the implications of the scheme and recommend changing the structure of the scheme so that instead of providing financial assistance to property owners, council provides the service of connecting the properties to Watercare’s infrastructure, with the targeted rate set to recover the cost of providing that service. Property owners will need to meet the onsite costs.

74. The targeted rate will be set on a differentiated basis with the rate set depending on the whether the ratepayer is eligible for the discount and whether they connect to the reticulated wastewater network or connect to both the reticulated wastewater and water networks. If the targeted rate is not adopted property owners who opt in before 31 March 2021 will still be eligible for the discount but will have the choice to pay Watercare directly or drop out.

75. This proposal will require amendments to the Revenue and Financing Policy to include the targeted rate as a funding source for council services.

Recommendation

76. Officers recommend that the council consult on the adoption of a differentiated targeted rate. Officers also recommend that the council consult on the consequential amendments required to the Revenue and Financing Policy.

Rodney Drainage Targeted Rate

77. Following amalgamation, the council retained responsibility for three drainage districts in the former Rodney District Council (RDC) area; Glorit, Te Arai and Okahukura. These remain the only areas of rural Auckland where the council provides stormwater management services. The services had historically been funded by a targeted rate since their establishment in the 1950s. This was converted to general rates funding by the RDC in the 1990s. The funding inherited is no longer sufficient to maintain the assets and the council recently invested $260,000 in upgrades.

Proposal

78. The Rodney drainage districts targeted rate proposal (attachment E) sets out options to provide for the sustainable provision of stormwater services in the three remaining drainage districts in the former Rodney District Council area that the council is responsible for. These options are to:

a) transfer responsibility for the districts from the Rodney Local Board to the Governing Body

b) consult on:

i) jointly managing the stormwater assets in association with the relevant communities, to be funded by a targeted rate for Te Arai and Okahukura

ii) jointly managing the Glorit scheme with the private landowners who will fund works directly.

Consideration

79. The council retains ownership and legal responsibility for the stormwater assets in each drainage district. The general rates funding provided for the districts is managed by the Rodney Local Board and has been insufficient to maintain the assets. The council has recently invested $260,000 to upgrade the assets, but the current funding model is not sustainable.

80. The landowners in the three drainage districts are the beneficiaries of the stormwater services and officers consider it is fair that they should meet the costs of maintaining the assets, given that the three drainage districts are the only areas of rural Auckland where the council provides stormwater management services, and other rural properties manage their own stormwater.

81. A targeted rate is proposed to fund the joint management model for Te Arai and Okahukura drainage districts. It is proposed that the rate be assessed based on land area and location (class of land) which would provide a direct and strong link between targeted rate charged, benefit and costs caused.

82. This proposal will require amendments to the Revenue and Financing Policy to include Rodney Drainage Districts Targeted Rate as a funding source for council services.

Recommendation

83. Officers recommend that the council amend the Allocation of Decision Making in the proposal and consult on the management arrangements and targeted rates proposed along with the associated amendments required to the Revenue and Financing Policy.

Potential changes to the Business Improvement District Programme

84. Business improvement districts (BIDs) support improvements to local business areas and help attract new business and customers.

Proposal

85. The business improvement district targeted rates proposal (attachment F and attached maps) sets options to extend the Manurewa BID, Glen Innes BID, and Dominion Rd BID targeted rate boundaries and adjust the targeted rates for the BIDs proposed by their business associations.

Consideration

86. The council’s BID policy requires that a ballot be held of all businesses (ratepayers and occupiers) in the BID targeted rate area. In order to proceed these ballots require a 25 per cent return rate and, of those, over 51 per cent must be in support of the proposal.

Recommendation

87. Officers recommend that the council consult on the changes in the proposal above.

Other local board targeted rates

88. The Upper Harbour Local Board is considering the provision of bus services from Paremoremo to Albany and Albany Heights funded by a targeted rate on the properties able to access the service. If the board decides to proceed with the proposal this will be referred directly to the Governing Body on 17 December 2020 for consideration.

89. If this proposal proceeds it will require amendments to the Revenue and Financing Policy to include this targeted rate as a funding source for council services.

Proposed fees and charges

90. The council standardised the fees inherited from the legacy councils in the period from 2012 to 2015. Since that time reviews have been conducted of some fee areas and ongoing adjustments made to reflect changes in costs. Officers are developing a fee review schedule that will ensure all fee areas are reviewed at least once every three years. This will ensure that the fees are meeting the objectives set when they were put in place and that they continue to fairly recover the costs of the services they fund.

91. Some minor technical adjustments are proposed to regulatory fees. An increase to venue hire fees to accommodate inflation over a period of 6 years is also proposed. During 2021/2022 officers will investigate the fees for filming in parks, cemeteries, bach rental and will investigate the benefits of establishing coastal occupation charges.

92. As provided for in the Revenue and Financing Policy other fees are increasing in line with council cost inflation, currently one per cent, where necessary to maintain cost recovery.

Proposal

93. The following fee changes are proposed:

· a six per cent increase in revenue budgets relating to venue hire fees

· increase the multiple dog licence fee to $79 for the first application and $50 for an additional application if a licence holder moves address

· new fee of $70 for a first call out for livestock nuisance complaints. A further charge of $120 for subsequent call outs and an after-hours charge of $75 between 9pm and 6am

· an increase in the deposit for an application for minor engineering approval to $1200

· replace the current standard and complex pre-application fees for building consents with a new fee for pre-application meetings set at $311 deposit

· a new fee of $200 for high risk Producer Statement Author fees is proposed

· a new fee of $90 for hard copy applications for building and resource consents.

· removal of the late return fines on library books and other items.

Consideration

Venue hire fees

94. Venue hire fees have not been adjusted for inflation since 2014 when the Hire Fee Framework was developed and adopted by all local boards. An increase of six per cent is recommended to adjust for cumulative inflation increases since that time. Local boards may wish to consider a variation to the proposed increases by offsetting the estimated revenue using locally driven initiative funding.

95. The range of impact on regular hirers is between $56 (Young at Heart Franklin) to $1980 (Church North West of Henderson-Massey).

96. The below shows the impact of the proposed fee increase.

Number of Unique Customers	Total Attendees	Total Booking Hours	Total Venue Hire Revenue	Proposed revenue increase *
Approximately 6,000	2,658,702	266,366	$3,091,431	$185,486
*increase through 6% inflation on standard hire

Multiple dog licence fees

97. In urban zoned properties, a licence is required if residents want to keep more than two dogs. Each licence requires at least one inspection to ensure the property meets the conditions in the Policy on Dogs. Additional site visits may be required. Dog owners are required to apply for a new licence if they move to a different property, requiring an inspection of the new property.

98. The average charge for multiple dog licences nationwide is $63, the highest charge is $225 and the lowest is $25. The council currently charges $45 for this licence which does not cover the costs of inspection.

Stock management

99. Stock animals include horses, sheep, goats, cattle, deer, llamas, alpacas, donkeys, mules and pigs. There is currently no charge set for attending to livestock nuisance complaints involving matters such as odour, noise and vermin. Charges for stock management issues may encourage compliance.

100. Animal management officers may be required to attend to roaming stock issues after 9pm and before 6am. The council does not currently charge a fee for this service. The average nationwide charge is $112 with the highest set at $185 and the lowest at $29.

Regulatory fees

101. A deposit for an application for minor engineering approval is currently set at $600 and covers approval of works such as public stormwater and wastewater connections to the network and raising or lowering a public manhole lid. The deposit is too low in relation to the final cost of the majority of applications. An increase in the deposit to $1200 would give customers a better estimate of the final costs.

102. The council currently has two fees for pre-application meetings, a standard fee and a complex fee. The standard pre-application meeting is set at $311, whereas the complex pre-application meeting requires a deposit of $311. The standard fee is now rarely used as nearly all pre-application meetings are complex in nature. The proposal is to replace both fees with a single pre-application meeting deposit of $311. This will provide more transparency and clarity for customers. Applicants will then be charged a final fee reflective of the work required.

103. Hardcopy lodgement of building and resource consent applications requires additional administrative resource to process these applications in comparison to applications lodged through digital channels. A higher charge of $90 for hard copy lodgement would ensure the full costs are recovered and encourage digital lodgement.

104. The introduction of a high risk producer statement author fee of $200 will better reflect the complexity and cost involved. This would be a one-off fee which only applies to existing producer statement authors who would like to issue high risk producer statements. A producer statement confirms the building work complies with the Building Code.

105. As provided for in the Revenue and Financing Policy other regulatory fees are increasing in line with inflation in council costs of one per cent where necessary to maintain cost recovery.

Removal of late return fines

106. Auckland Libraries charges late return fines on library books and other items. Annual revenue from fines net of administration costs is around $1.2 million. Administrative costs to recover the fines include staff time in correspondence and conversation, updating customer records and postage costs where members have no email.

107. However, fines are a barrier to library use, particularly among low income groups. Each year 35,000 library members stop using our services because they owe us more than $10.

108. Revenue from fines has been diminishing for many years, partly because E-issues as a percentage of issues is steadily increasing (22 per cent in November 2020). An auto renewal service introduced during lockdown assists customers in managing their loans and will decrease the volume of fines. Recovery rates are low and every year periodic write-offs of older debt are undertaken.

109. Auckland Libraries charge among the highest late return fines in the world. When they were raised in 2016 in a bid to increase revenue, the following years instead saw decreases in revenue and drops in borrowing. This pattern is reflected in overseas studies including the City of Sydney which show higher return rates where there are no fines.

110. Officers recommend that the council consult on whether to continue charging late return fines on library books and other items.

Recommendation

111. Officers recommend that the fee changes proposed above be adopted for consultation.

Tauākī whakaaweawe āhuarangi

Climate impact statement

112. Recommendations in this report have a neutral climate impact as they primarily relate to the allocation of charges rather than decisions on activities to be undertaken.

113. The impacts of the enhanced tree maintenance funded by the proposed Electricity Network Resilience Targeted Rate on the tree canopy is managed by the additional tree planting funded from the rate and additional investment funded from the council resource freed up by the rate.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

114. The proposals in this report and the changes already agreed by the Governing Body for inclusion in the Emergency Budget 2020/20201 have been communicated to and agreed on by the following departments or business units of the Auckland Council group:

a) Healthy Waters

b) Watercare Services Limited

c) Parks Sports and Recreation

d) Waste Solutions

e) Regulatory Services

f) Arts Community and Events

g) Libraries and Information

h) Auckland Unlimited

115. The proposals in this report have been reviewed by Legal Services.

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

Local impacts and local board views

116. Local Board representatives have participated in the workshops leading up to the Mayoral Proposal and expressed their views through this process including a specific opportunity to feedback on regional issues held on 11 November 2020. The views of Local Boards have been formalised within a separate report on this agenda.

117. Local Boards will have opportunities to express their views on the impacts of regional decisions on their local community before final decisions are made in May 2021.

118. The Puketāpapa Local Board has requested that the Governing Body as part of its 10-year budget:

i) review the current policy that reduces the differential between business and residential rates

ii) investigate introducing a rates differential for undeveloped properties

iii) investigate introducing a rates differential for unoccupied developments

119. The Franklin Local Board supported the adoption of the Clevedon Wastewater and Water Connection Targeted Rate as part of the Emergency Budget 2020/2021. The board has been informed of the proposed changes through a memorandum from officers and will be able to consider the proposal and provide their feedback as part of the 10-year Budget 2021-2031 process.

120. The proposed extension of the Manurewa BID, Glen Innes BID, and Dominion Rd BID will be considered by the relevant local boards at their December 2020, January 2021 or February 2021 meetings.

121. The Rodney Local Board has been working with the Healthy Waters department on the provision of stormwater services in the former drainage district areas. The board resolved at its September meeting that:

a) it has not been adequately funded to carry out the responsibility for drainage districts in Rodney

b) request the decision-making responsibility for the drainage districts be transferred to the Governing Body of Auckland Council

c) supports public consultation on funding mechanisms for drainage districts in Auckland through the 2021-2031 Long-term Plan process.

Tauākī whakaaweawe Māori

Māori impact statement

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

123. Consultation on the 10-year budget includes engagement with the 19 Iwi Authorities. Targeted engagement to include Mataawaka is also being planned for. This approach is still being finalised and will be presented to the Finance and Performance Committee on 18 February 2021 ahead of public consultation.

Ngā ritenga ā-pūtea

Financial implications

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

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

125. Some Aucklanders may be concerned about the proposed level of increase in their rates and/or fees under the proposals in this report. The council will write to each potentially affected ratepayer to advise them of the changes the council is considering. Current customers will be alerted to the proposed fee changes and consultation will be designed to raise wider awareness. We will let affected ratepayers and customers know how they can get more information and the opportunities to make their views known both in person and in writing.

Ngā koringa ā-muri

Next steps

126. Resolutions passed by the Governing Body at its meeting on 9 December 2020 will be used to develop the consultation material for the 10-year Budget 2021-31.

127. In February 2021, the Governing Body will be asked to agree the consultation material.

128. In designing the recommended consultation process officers will develop targeted approaches to ensure that ratepayers affected by the proposed changes are made aware of the proposals and the ways in which they can provide feedback.

129. At this meeting the Governing Body will also be asked to agree consultation material for amendments to the Revenue and Financing Policy.

Ngā tāpirihanga

Attachments

No.	Title	Page
a ⇩	Electricity Network Resilience Targeted Rate proposal	373
b ⇩	Options for Reinstating the Accommodation Provider Targeted Rate proposal	381
c ⇩	Extend the duration of the City Centre Targeted Rate proposal	387
d ⇩	Amending the Clevedon Wastewater and Water Connection Scheme proposal	391
e ⇩	Rodney Drainage Districts Targeted Rate proposal	395
f ⇩	Business Improvement Districts Targeted Rates proposal	407

Ngā kaihaina

Signatories

Authors

Andrew Duncan - Manager Financial Policy

Beth Sullivan - Principal Advisor Policy

Aaron Matich - Principal Advisor – Financial Policy

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Kevin Ramsay - Acting Group Chief Financial Officer

[1] Māori land includes land with a status of Māori freehold land, Māori customary land, and some types of general land in Māori ownership such as marae, land returned under settlement, and land converted from Māori freehold land title under the Māori Affairs Act 1967

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