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

 

Date:

Time:

Venue:

 

Thursday, 9 December 2021

10.00am

This meeting will be held remotely and can be viewed on the Auckland Council website
https://councillive.aucklandcouncil.govt.nz/

 

 

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

 

OPEN AGENDA

 

 

MEMBERSHIP

 

Chairperson

Cr Desley Simpson, JP

 

Deputy Chairperson

Cr Shane Henderson

 

Members

Cr Josephine Bartley

Mayor Hon Phil Goff, CNZM, JP

 

IMSB Member Renata Blair

Cr Richard Hills

 

Cr Dr Cathy Casey

Cr Tracy Mulholland

 

Deputy Mayor Cr Bill Cashmore

Cr Daniel Newman, JP

 

Cr Fa’anana Efeso Collins

Cr Greg Sayers

 

Cr Pippa Coom

Cr Sharon Stewart, QSM

 

Cr Linda Cooper, JP

IMSB Chair David Taipari

 

Cr Angela Dalton

Cr Wayne Walker

 

Cr Chris Darby

Cr John Watson

 

Cr Alf Filipaina

Cr Paul Young

 

Cr Christine Fletcher, QSO

 

 

(Quorum 11 members)

 

 

 

Sandra Gordon

Kaitohutohu Mana Whakahaere Matua / Senior Governance Advisor

 

6 December 2021

 

Contact Telephone: (09) 890 8150

Email: sandra.gordon@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 


 


 

Terms of Reference

 

Responsibilities

 

The purpose of the committee is to:

 

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

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

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

 

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

 

·       advising and supporting the mayor on the development of the LTP and AP for consideration by the Governing Body including:

o   local board agreements

o   financial policy related to the LTP and AP

o   setting of rates

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

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

·       approving the financial policy of the council parent organisation

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

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

·       performance measures and monitoring

·       write-offs

·       acquisition of property in accordance with the LTP

·       disposals in accordance with the LTP

·       recommending the Annual Report to the Governing Body

·       funding for achieving improved outcomes for Māori.

 

Powers

 

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

(a)        approval of a submission to an external body

(b)        establishment of working parties or steering groups.

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

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


 

(iii)       The committee does not have:

(a)        the power to establish subcommittees

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

 

Code of conduct

 

For information relating to Auckland Council’s elected members code of conduct, please refer to this link on the Auckland Council website - https://www.aucklandcouncil.govt.nz/about-auckland-council/how-auckland-council-works/elected-members-remuneration-declarations-interest/Pages/elected-members-code-conduct.aspx

 


 

Exclusion of the public – who needs to leave the meeting

 

Members of the public

 

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

 

Those who are not members of the public

 

General principles

 

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

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

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

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

 

Members of the meeting

 

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

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

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

 

Independent Māori Statutory Board

 

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

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

 

Staff

 

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

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

 

Local Board members

 

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

 

Council Controlled Organisations

 

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

 

 


Finance and Performance Committee

09 December 2021

 

ITEM   TABLE OF CONTENTS            PAGE

1          Apologies                                                                                 9

2          Declaration of Interest                                          9

3          Confirmation of Minutes                                                         9

4          Petitions                                                                 9  

5          Public Input                                                           9

6          Local Board Input                                                 9

7          Extraordinary Business                                     10

8          Auckland Transport budget update - December 2021                                                                      11

9          Recovery Budget 2021/2031 - Asset Recycling Property Disposal - Titoki Street, Parnell – Section 1 SO 62979                                            15

10        2 Pompallier Terrace, Ponsonby disposal for redevelopment                                                    21

11        Auckland Council Group and Auckland Council Quarterly Performance Reports for the three months ended 30 September 2021         27

12        Recommendation from the Parks, Arts, Community and Events Committee, 11 November 2021 - Proposed land exchange Taniwha Reserve and Maybury Reserve, Glen Innes                                                                     87

13        Summary of Finance and Performance Committee information memoranda and briefings, including the Forward Work Programme - 9 December  2021                      111

14        Summary of Confidential Decisions and related information released into Open         129

15        Contributions Policy 2021                               133

16        Consideration of Extraordinary Items

PUBLIC EXCLUDED

17        Procedural Motion to Exclude the Public                         311

C1       CONFIDENTIAL: Land exchange with Watercare - Glen Innes                                     311

C2       CONFIDENTIAL: Recovery Budget 2021/2031 - Asset Recycling Implementation                    311


1          Apologies

 

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

 

 

2          Declaration of Interest

 

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

 

 

3          Confirmation of Minutes

 

That the Finance and Performance Committee:

a)         confirm the ordinary minutes of its meeting, held on Thursday, 21 October 2021 and the extraordinary minutes of its meeting, held on Wednesday, 8 December 2021 as a true and correct record.

 

 

4          Petitions

 

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

 

 

5          Public Input

 

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

 

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

 

 

6          Local Board Input

 

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

 

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

 

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

 


 

 

7          Extraordinary Business

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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


Finance and Performance Committee

09 December 2021

 

Auckland Transport budget update - December 2021

File No.: CP2021/18226

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To consider Auckland Transport’s request for continued financial support in respect of the financial year ending 30 June 2022 in light of projected revenue and operating result shortfalls.

Whakarāpopototanga matua

Executive summary

2.       Given the high likelihood of Auckland Transport (AT) reporting an adverse operating deficit this financial year (as the result of COVID-19 impacts), the Auckland Transport Board requests confirmation from Auckland Council that it can continue to financially support AT through this financial year.

3.       Predicting the size of the potential shortfall is difficult but based on first quarter results Auckland Transport is projecting an operating deficit which is around $50 million adverse to budget.

4.       The lockdowns have also impacted the delivery of AT’s capital programme and will continue to do so. An underspend of around $100 million is estimated which would net around $50 million of cashflow benefits when considering reduced Waka Kotahi funding.

5.       It is likely that the reduced cash inflow from operating revenues will be broadly offset by reduced capital outlay over the period, and that this will likely mitigate the pressure on group debt for the 2021/2022 financial year.

6.       However, because the deferred capital investment will ultimately still be needed the revenue shortfall still represents a real loss to ratepayers. This projected loss has been included in modelling the Annual Budget 2022/2023 financial position.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)         approve Auckland Council providing additional operating funding of up to $50 million to Auckland Transport during financial year 2021/2022 above current budgeted levels

b)         request Auckland Transport to continue to make all reasonable efforts to secure central government financial support to fully cover public transport revenue losses

c)         request Auckland Transport to pursue opportunities to minimise costs and maximise revenue opportunities where possible and provide updates on progress through the quarterly reporting process.

Horopaki

Context

7.       Auckland Transport finds itself in a challenging operating environment in the face of COVID-19 impacts.

8.       The Recovery Budget was prepared on the assumption of Auckland being at COVID-19 Alert Level 1 for the whole financial year. Lockdowns and the ongoing impacts of the Delta variant outbreak will mean that achievement of AT’s full year operating budget is unlikely to be achieved. 

9.       A key concern is public transport (PT) patronage which continues to be significantly impacted by COVID-19. PT patronage decreased from 73% in July to 7.1% of pre COVID-19 levels in September reflecting a full month of lockdown.

10.     Therefore, AT’s Board has requested from Auckland Council confirmation of ongoing funding to ensure from a compliance perspective AT remains a going concern.

Tātaritanga me ngā tohutohu

Analysis and advice

Analysis

11.     The start of the 2021/2022 financial year has been challenging with the COVID-19 lockdown significantly impacting on operations, capital delivery and both financial and non-financial results.

12.     AT’s net operating result was $15.1 million unfavourable against budget for the first quarter due to the impacts on PT, parking, and enforcement revenues. Operating revenues in total were $28.4 million below budget and operating costs were $13.3 million lower than budget.

13.     Predicting the size of the potential shortfall for the rest of the financial year is difficult but Auckland Transport is currently forecasting an operating deficit of around $50 million adverse to budget. This could be significantly higher under certain scenarios.

14.     Auckland Transport have been working hard to identify cost savings and these are reflected in this estimate. Based on projections at the end of the first quarter around $26 million of savings are expected from areas such as lower public transport costs due to running a weekend timetable as well lower utility cost.

15.     At this stage, the government is providing a standard top-up of 51 per cent of the revenue shortfall and this is funded from the approved three-year funding allocation by Waka Kotahi through the National Land Transport Programme. The $50 million estimated operating deficit would reduce to around $20 million if a 100 per cent PT top-up was provided without compromising other budgeted operating subsides.

16.     Lockdowns have impacted the delivery of the capital programme and will continue to do so. A projected under-delivery of around $100 million will net around $50 million of cashflow benefits when taking into account standard Waka Kotahi funding.

17.     It is likely that the reduced cash from operating revenues will be broadly offset by reduced capital outlay over the period, and that this will likely mitigate the pressure on the group debt from a debt perspective for the 2021/2022 financial year.

18.     However, because the capital investment will ultimately still be needed in the future, the revenue shortfall still represents a real loss to ratepayers. This projected loss has been included in modelling the Annual Budget 2022/2023 financial position.

Advice and options

19.     In the absence of continued financial support AT would need to reduce costs significantly. This would likely be through reducing PT services in low usage areas where the best financial savings can be made but result in social inequities. Reductions to services would also have negative climate change related outcomes.

20.     It is advised that the continued financial support be approved on the basis that AT:

·     pursue opportunities to minimise costs and maximise other revenue opportunities wherever possible

·     make all reasonable efforts to secure a full central government underwrite of public transport without compromising other budgeted operating subsidies


 

·     in the event that such central government support is not forthcoming, carefully consider the appropriate balance between the need to continue to run those public transport services with low utilisation rates and the need to make good use of funding from ratepayers

·     continue to make prudent capital investment decisions in light of current and future uncertainty.

Tauākī whakaaweawe āhuarangi

Climate impact statement

21.     Providing additional financial support to AT will allow PT service levels to be maintained. This will allow travellers to use PT rather than private vehicles and support longer-term mode-shift ambitions. This supports our climate commitments and aspirations as set out in Te Tāruke-ā-Tāwhiri: Auckland's Climate Plan.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

22.     In the absence of central government support to top up PT revenue losses, or service reductions, AT is reliant on ongoing financial support from Auckland Council to fund its operating deficit.

23.     AT have advised while it is difficult to materially reduce PT services without significant negative impacts, they have started a piece of work to ensure network and service levels are fit-for-purpose to meet new travel behaviours and usage patterns moving forward.  

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

Local impacts and local board views

24.     Local board views have not been sought for this report.

25.     If AT are required to make savings to compensate for the loss in revenue, local boards with low PT utilisation levels could be impacted if services are reduced.

Tauākī whakaaweawe Māori

Māori impact statement

26.     The decisions being considered in this paper could have an impact on Māori if AT were required to cut costs that resulted in service cuts in low usage areas.

Ngā ritenga ā-pūtea

Financial implications

27.     AT are estimating an operating deficit of around $50 million this financial year.

28.     If central government provide funding support by fully topping up PT revenue shortfalls, the operating deficit is estimated to reduce to around $20 million. Predicting the size of the potential revenue shortfall due to the impacts of COVID-19 is difficult.

29.     The slowdown in AT’s capital programme due to lockdown impacts could see net cashflow benefits of around $50 million.

30.     If continued financial support is approved the overall cashflow and borrowing impacts is likely to be immaterial as a result of the expected capital programme under-delivery. 


 

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

31.     AT have been working to identify cost savings to help mitigate the impact on revenues.

32.     If the COVID-19 situation worsens there would be impacts on PT patronage levels as well other revenue streams.

33.     AT continue to advocate for funding support from central government. If these efforts are successful any additional funding provided would reduce the operating deficit and the level of funding support needed from Auckland Council.

Ngā koringa ā-muri

Next steps

34.     Staff will continue to monitor the COVID-19 situation and group financial performance during the year.

35.     Quarterly reporting will continue to the Finance and Performance and CCO Oversight committees where progress against Recovery Budget settings and progress on mitigating actions will be provided.

Ngā tāpirihanga

Attachments

There are no attachments for this report.     

Ngā kaihaina

Signatories

Authors

Daniel Yoon - Financial Analyst

Pramod Nair - Head of Group Financial Planning

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Peter Gudsell - Group Chief Financial Officer

 


Finance and Performance Committee

09 December 2021

 

Recovery Budget 2021/2031 - Asset Recycling Property Disposal - Titoki Street, Parnell – Section 1 SO 62979

File No.: CP2021/18935

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To approve the disposal of a property on Titoki Street, Parnell – Section 1 SO 62979.

Whakarāpopototanga matua

Executive summary

2.       Approval is being sought for the disposal of a site not required for council services or public works. Titoki Street, Parnell - Section 1 SO 62979 is a vacant site with no public access. It was an unformed legal road that was stopped by the former Auckland City Council in 1992 for the purposes of a disposal but has remained in council ownership. Following a purchaser enquiry from the adjoining landowner, a council review identified the parcel as suitable for disposal. A rail tunnel runs under the parcel, and it is subject to an Auckland Unitary Plan (AUP) transport designation which applies to the subsoil space only.

3.       Consultation with council and its council-controlled organisations (CCOs), iwi and the Waitematā Local Board has taken place. Feedback received has been supportive of the proposed disposal of the subject parcel.

4.       Sales proceeds from the disposal will be allocated towards the $70 million asset recycling target contained in Auckland Council’s 2021-2031 Recovery Budget for the current year.

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      approve subject to the satisfactory conclusion of any required statutory processes the disposal of the parcel of land at Titoki Street, Parnell being Section 1 SO 62979 contained in Record of Title 439960; and

b)      agree that final terms and conditions be approved under the appropriate delegations.

 

Horopaki

Context

Asset Recycling Budget

5.       Asset recycling is an important lever for council, releasing capital from poorly performing and/or non-strategic assets to allow greater investment in the most important strategically aligned activities. 

6.       The recovery budget includes $70 million in 2021/2022, with $430 million proceeds to be realised from asset recycling over the full 10-year budget period.


 

 

Financial Year  

21/22

22/23

23/24

24/25

25/26

26/27

28/29

Recovery Budget Total

Budget
($ million)

70

70

70

70

70

60

20

430

7.       Eke Panuku separately have a Statement of Intent property disposal target of $115 million for 2021/2022.

Property rationalisation process

8.       The property rationalisation process is well developed. It includes identifying properties in the council portfolio that are no longer required for future council services or public work purposes and may be suitable for sale, and development if appropriate.

9.       Once a property has been identified as no longer required for current public work purposes, engagement is undertaken with relevant council business units and CCOs to establish whether the property must be retained for a strategic purpose or is required for a future funded public work. The rationalisation process also includes engagement with ward councillors, local boards and mana whenua. It is designed to ensure that the council complies with any statutory obligations in relation to the land, including under the Local Government Act 2002, the Public Works Act 1981 and the Reserves Act 1977.

10.     In September 2020, the Audit and Risk Committee reviewed the property rationalisation process and resolved the property rationalisation approach has reasonable and effective controls in place to ensure that risks are being appropriately managed (resolution AUD/2020/71).

Tātaritanga me ngā tohutohu

Analysis and advice

Property information

11.     Titoki Street, Parnell - Section 1 SO 62979 is a vacant 234m2 parcel surrounded on three sides by the adjoining property. It was unformed road vested in the former Auckland City Council. The parcel is fenced off from Domain Drive restricting public access.

12.     In 1992, the former Auckland City Council undertook a road stopping of the subject parcel to facilitate a disposal to the adjacent landowner. However, a sale did not occur, and the parcel has remained in council ownership.

13.     Titoki Street, Parnell - Section 1 SO 62979 is not part of the Auckland Domain, nor ever has been. A rail tunnel runs under both the private land and the subject parcel which may restrict future development.

14.     The AUP zoning is Residential - Terrace Housing and Apartment Building zone. The parcel is subject to an AUP designation – Newmarket Branch railway line (6301).

15.     Titoki Street, Parnell - Section 1 SO 62979 has a council rating valuation of $610,000. It is not subject to offer back obligations to the former owner in accordance with section 40 of the Public Works Act 1981.

Tauākī whakaaweawe āhuarangi

Climate impact statement

16.     The recommendations in this report have a neutral climate impact. However, it is not known at this point what the potential future use of the property will be and therefore what the potential impacts could be on carbon emissions.  The sale of the property could lead to a land use change. It is acknowledged that any form of construction and development can increase carbon emissions.

17.     At the same time the disposal provides funding for council to respond to climate impacts.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

18.     Council staff have confirmed the subject parcel is not required by council to meet open space provision targets or for a recreation purpose. Auckland Transport confirmed there are no known transport projects that would be impacted by a disposal.  Council’s Plans and Places team, Biodiversity team and the council’s arborist were asked to provide feedback regarding the site.

19.     No substantive feedback was received back, including regarding the mature trees in the adjacent Auckland Domain. Council’s existing AUP tree protection framework will provide sufficient protection given the large trees are not actually in the subject parcel proposed for disposal.

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

Local impacts and local board views

20.     The Waitematā Local Board feedback supports the sale of the property on Titoki Street, Parnell – Section 1 SO 62979 (Resolution number: WTM/2021/125):

a)      note the cultural significance interest by Te Runanga o Ngāti Whātua Ōrākei and request that Eke Panuku inform the Finance and Performance Committee of Te Runanga o Ngāti Whātua Ōrākei’s interest

b)      note that part of the site is within the drip line of a mature plane tree on Domain Drive

c)      endorse the proposed disposal of Titoki Street, Parnell - Section 1 SO 62979.

21.     A Parnell residents’ group has previously indicated concerns regarding the loss of any trees from council owned land. Information has been provided to the group that confirms no significant trees are present on the site but there are adjacent trees in Auckland Domain.

Tauākī whakaaweawe Māori

Māori impact statement

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

23.     Kia Ora Tāmaki Makaurau is the framework that brings together Māori aspirations, the council group’s contribution towards achieving those aspirations, and performance measurement of the council’s activity.

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

Titoki Street

25.     Nineteen mana whenua iwi authorities were contacted for site-specific feedback regarding Titoki Street, Parnell - Section 1 SO 62979. This engagement sought to understand if there were any issues of cultural significance with the proposed disposal. Information regarding the size and configuration of the property, and the proposed disposal to the adjoining property owner was provided as part of the engagement undertaken.

26.     Te Runanga o Ngāti Whātua advised that Titoki Street, Parnell - Section 1 SO 62979 is of cultural significance. Eke Panuku discussed with Te Runanga o Ngāti Whātua on how council can recognise the significance, including recording information regarding significance on council’s geospatial layers. Through subsequent discussions, Te Runanga o Ngāti Whātua has confirmed that no further action is required beyond noting its interest as part of the decision-making process.

27.     As part of Eke Panuku’s disposal process, should the Finance and Performance Committee approve the disposal of Titoki Street, Parnell - Section 1 SO 62979, all iwi entities will be advised of council’s decision to dispose of the subject parcel to the adjacent landowner.

Ngā ritenga ā-pūtea

Financial implications

28.     Receipts from asset recycling contribute to the 10-year Recovery Budget by providing the council with an efficient use of capital and prioritisation of funds to achieve its activities and projects.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

29.     Titoki Street, Parnell - Section 1 SO 62979 and part of the adjoining privately owned 1 Domain Drive, Parnell are subject to an AUP designation Newmarket Branch railway line (6301). The purpose of the designation is to develop, operate and maintain railways, railway lines, railway infrastructure, and railway premises as defined in the Railways Act 2005.

30.     The extent of the designation is limited to the subsoil space and is recorded on the certificates of title. Advice received from an AUP planning perspective indicates that this does not appear to restrict future development of the subject parcel at the surface. However, there may be restrictions as to what can be built on the surface from a geotechnical perspective.

31.     If Titoki Street, Parnell - Section 1 SO 62979 is approved for disposal, advice will be provided to the potential purchaser regarding the AUP designation.

Ngā koringa ā-muri

Next steps

32.     Subject to approval by the Finance and Performance Committee, the terms and conditions of the divestment of Titoki Street, Parnell - Section 1 SO 62979 will be approved under appropriate financial delegation.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Titoki Street Images

19

Ngā kaihaina

Signatories

Author

Chantelle Subritzky - Senior Project Manager

Authorisers

Ross Chirnside - General Manager Value For Money

Peter Gudsell - Group Chief Financial Officer

 


Finance and Performance Committee

09 December 2021

 

PDF Creator

PDF Creator


Finance and Performance Committee

09 December 2021

 

2 Pompallier Terrace, Ponsonby disposal for redevelopment

File No.: CP2021/16982

 

  

Te take mō te pūrongo

Purpose of the report

1.       To approve the disposal of 2 Pompallier Terrace, Ponsonby for redevelopment purposes by way of service property optimisation, subject to the provision of 43 public car parks and public toilet facilities within a mixed-use development that includes a plaza for public use.

Whakarāpopototanga matua

Executive summary

2.       2 Pompallier Terrace, Ponsonby is a 1,330m2 site operated by Auckland Transport (AT) as a public car park and includes public toilet facilities managed by the councils Community Facilities team. It has been identified for potential redevelopment utilising the principles of service property optimisation.

3.       Urban Collective (the proposed developer) is the adjoining owner of the site and has expressed an interest in acquiring it to incorporate within its mixed-use development, Pompallier on Ponsonby.

4.       Investigations by AT and Community Facilities determined that there is an ongoing requirement within the community for the existing car park and public toilet facilities operating on the current site.

5.       It is proposed that a new basement car park and public toilet facility is built, with the sub-strata title remaining in Auckland Council’s ownership. A mixed-use development will sit above the basement facility, incorporating a public plaza. This plaza is to be protected for ongoing future public use but is to be operated by the developer.

6.       By partnering with the adjacent landowner, there is the opportunity to enable redevelopment and intensification of the combined land area, which will deliver more comprehensive development, access, and urban design outcomes.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      approve, subject to the satisfactory conclusion of any required statutory processes and through utilising the service property optimisation policy, the disposal for redevelopment purposes of 2 Pompallier Terrace, Ponsonby described as an estate in fee simple being Lot 1 Deposited Plan 56733 contained in record of title NA10C/402

b)      note that the proposal enables ownership of the sub-strata title comprising the basement public car park and public toilet facility to be retained by Auckland Council and managed by Auckland Transport and council’s Community Facilities team, with the airspace to be sold to enable a plaza for public use to be created in one portion and the remaining area to be incorporated into the adjoining owners mixed-use development

c)       agree that final terms and conditions be approved under the appropriate delegations.

Horopaki

Context

7.       The service property optimisation policy (adopted by Finance and Performance Committee, March 2015 resolution FIN/2015/16) targets underperforming existing service assets owned by council. It seeks to improve levels of service to the community, while delivering on strategic outcomes such as urban regeneration without impacting on rates. 

8.       The Finance and Performance Committee in March 2018 (resolution FIN/2018/39) extended the optimisation of service property policy to include AT properties, noting that it enables reinvestment of net proceeds by AT in transport priorities arising from the commercial development of service property undertaken in partnership with Eke Panuku as part of an urban development project where airspace is being sold above a transport service site.

9.       2 Pompallier Terrace was acquired for and continues to operate as a 43-space public car park, which includes public toilets. AT and Community Facilities have determined that both facilities are still required for use by the community in their current location.

10.     The site is subject to a car parking designation and three easements in favour of three adjoining titles. Compounded with the disparity between the underlying zoning, current land use and no forecast future council development plans, the usability and value on the open market diminishes in its current state.

11.     This proposal unlocks the latent land value and enables the achievement of essential outcomes that link with Eke Panuku, AT and Auckland Council objectives. Working with the developer enables good urban design outcomes to be achieved on a rates neutral basis. 

12.     The site is not subject to offer-back obligations under the Public Works Act 1981.

Tātaritanga me ngā tohutohu

Analysis and advice

Proposed redevelopment opportunity

13.     The developer owns 268-306 Ponsonby Road and 1-3 Cowen Street, Ponsonby and approached AT and Eke Panuku with a proposal to incorporate 2 Pompallier Terrace into its boutique mixed-use development (commercial, retail, residential), Pompallier on Ponsonby.

14.     The proposal includes a 43-space basement public car park and public toilets, both of which have direct access to Pompallier Terrace and will remain in Auckland Council’s ownership upon completion. This space will be flexible enough to allow reconfiguration to better meet transport needs of the community, including a clean title if the space is considered for sale in the future.

15.     A public plaza will sit within a portion of the airspace above the basement car park, with the residual airspace being developed into a standalone two-level building. This new building will comprise ground level retail/commercial space to activate the plaza, while the first floor's use is still to be determined. The mechanism for management of the public plaza is to be determined following the appropriate approvals being given to proceed.

16.     Sale to the developer through direct negotiation is the recommended approach. Given its established interest in the property, it is the logical buyer due to the existing site constraints and synergistic value able to be attained, as well as the opportunity for better urban design outcomes to be achieved.  

Key considerations

17.     AT requires that any development of 2 Pompallier Terrace be subject to the following conditions:

a)   a minimum of 43 public car carks must be delivered to Auckland Transport’s requirements as part of any future development of the site

b)   the public car parks must remain in Auckland Council ownership and under AT’s management pursuant to Auckland Council’s Off-Street Parking Delegations - June 2015

c)   the public car parks must be easily accessible and identifiable as public parking

d)   AT’s car park designation is to be altered or retained to protect the public car parks.

18.     New public toilets are to be incorporated into the design within the public car park area and with direct access to Pompallier Terrace to replace the existing facilities. The council’s Community Facilities team has provided Auckland Council’s Design Guidelines for Changing Rooms and Public Toilets and will be required to endorse the final designs. 

19.     The development agreement will ensure the plaza demonstrates best practice universal design, will be available for people of all ages and abilities, and will include publicly accessible pedestrian connection between the plaza, Pompallier Terrace, Ponsonby Road and Cowen Street. A covenant will be registered on the title to ensure that the plaza remains physically open to the public into the future.

20.     Considerations for the plaza are to include planting, hardscape, seating and features that are suitable for public space within a town centre. This will include placement of public bike racks as requested by the Waitematā Local Board. The management and maintenance of the plaza is to be confirmed as part of the proposed sale negotiations.

Tauākī whakaaweawe āhuarangi

Climate impact statement

21.     The site is not flood prone nor is it subject to any other environmental instabilities.

22.     Utilising best practice universal design, the plaza will demonstrate climate mitigation and adaptation measures through discussion with the developer.

23.     The new basement public car park will be flexible enough to allow for future changes or re-configuration to suit changing transport habits. This includes but is not limited to the ability to modify car parks for bike facilities, addition of EV infrastructure and support ride share initiatives as required.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

24.     Staff from throughout the council group have contributed to the investigations regarding the proposed redevelopment, with AT, Eke Panuku and the council’s Community Facilities team working together to ensure a fully informed decision can be made.

25.     No issues were raised and no planned or funded alternative public work were identified via the internal consultation

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

Local impacts and local board views

26.     2 Pompallier Terrace was reported to the Waitematā Local Board’s 16 November 2021 business meeting, following a workshop on 12 October 2021. The Waitematā Local Board resolved (WTM/2021/268):

“That the Waitematā Local Board

a)      endorse the proposed redevelopment opportunity at 2 Pompallier Terrace, Ponsonby

b)      note that this proposal will enable 2 Pompallier Terrace, Ponsonby to be retained by council for public use as an underground paid car park, including provision for bicycles and electric car charging, undiminished in size, and a public toilet facility, with a significant part of the airspace being turned into an accessible covenant-protected public plaza and the remaining portion a mixed-use development.”

Tauākī whakaaweawe Māori

Māori impact statement

27.     Mana whenua have not yet been consulted on the proposed redevelopment as the underlying ownership of the land will be retained by council. If the proposal is approved, engagement will take place to ensure Māori outcomes and identity are reflected within the design of the plaza.

Ngā ritenga ā-pūtea

Financial implications

28.     The service property optimisation policy offers an alternative funding source that releases value from underperforming service assets for reinvestment in improved service outcomes with no increase in capital expenditure and no impact on rates.

29.     Two independent market valuations have been received and confirm the financial feasibility of the project with no additional funding required.

30.     AT has confirmed that a basement car park will increase operational expenditure costs. This extra cost has been accepted by AT, as the current income generated from the car park ($36,000 per annum) is forecast to exceed future costs ($10,000-$30,000). Opportunities to increase revenue will be investigated as the proposed development progresses.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

31.     The following table outlines the main risks and mitigations associated with the recommendations in this report.

Type of risk

Risk

Risk Level

Mitigation

Financial

Development value is market driven and any optimisation proposal must be commercially viable to proceed.

Medium

The desired outcomes to be achieved from sale have been weighed against the value able to be realised through the utilisation of the service property optimisation policy.

Financial

Escalating construction costs.

Medium

Sufficient cost escalation has been built into the projects financial forecast.

Long term public benefit

Plaza being maintained and meeting necessary guidelines for use by the public into the future.

Medium

A covenant will be placed on the title to ensure designated airspace is utilised as a public plaza. Mechanism of operation to be determined.

Ngā koringa ā-muri

Next steps

32.     Subject to Finance and Performance Committee approval to divest this property, the terms and conditions of sale including the identified essential outcomes will be approved under the appropriate delegation.

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Images of 2 Pompallier Terrace

25

Ngā kaihaina

Signatories

Authors

Andrew Elcoat – Portfolio Specialist, Eke Panuku Development Auckland

Philip Lim – Property Optimisation Manager, Auckland Transport

Authorisers

Letitia Edwards – Head of Strategic Asset Optimisation, Eke Panuku Development Auckland

Jane Small – Group Manager Property and Planning, Auckland Transport

Marian Webb – General Manager Assets and Delivery, Eke Panuku Development Auckland

Peter Gudsell - Group Chief Financial Officer

 


Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

Auckland Council Group and Auckland Council Quarterly Performance Reports for the three months ended 30 September 2021

File No.: CP2021/16651

 

  

Te take mō te pūrongo

Purpose of the report

1.       To provide an update on the performance for the Auckland Council Group and Auckland Council against year one of the Recovery Budget 2021-2031 (the Recovery Budget) for the three months to 30 September 2021.

Whakarāpopototanga matua

Executive summary

Group performance

2.       The group’s performance in the first quarter of the Recovery Budget shows a significant impact from the COVID-19 lockdowns which were in place for half of the quarter.

3.       Capital delivery was a challenge, with $415 million delivered against a $614 million budget. The COVID-19 Alert Level 3 and 4 lockdowns adversely affected almost all capital works including large projects such as the City Rail Link, Central Interceptor, property renewals and roading maintenance and upgrades. Also impacted were the Water Quality and Natural Environment Targeted Rate programmes.

4.       The COVID-19 lockdowns impacted revenues from key areas such as public transport, parking and enforcement which were significantly below budget. As our facilities were closed from mid-August, there was minimal revenue from the provision of community services.

5.       On the other hand, continued high levels of activity in the construction sector increased Watercare’s infrastructure growth charges, consenting volumes and other regulatory services against budget. High consent volumes placed pressure on statutory processing timeframes, however customer satisfaction remained steady

6.       There is emerging evidence of more substantive economic impacts from the ongoing COVID-19 pandemic. This includes increasing costs for construction materials, labour and professional services as a result of inflation and global and local supply chain issues. In addition, rising interest rates are increasing financing costs. A substantial increase in floating interest rates pushed up the interest expenses of the group’s unhedged debt during the quarter.

7.       Delays in work programmes and rescheduling of repairs and maintenance works until later in the year resulted in lower operating spend in areas such as consultancy, professional services, outsourced works and maintenance. This, combined with the increases in regulatory and infrastructure growth charges revenue meant that group net direct expenditure was $217 million for the quarter, $46 million lower than budget.

8.       The lower than anticipated capital spend combined with strong operating cash flows resulted in only a moderate $124 million increase in group net debt.

9.       Full-time equivalent employees for the group increased minimally by 36 to 10,965, mainly as a result of the filling of vacancies at Watercare along with hiring additional staff to handle increased shipping volumes at Ports of Auckland. Eke Panuku’s staff numbers declined temporarily due to unfilled vacancies following resignations.

10.     Representatives of the substantive council-controlled organisation (CCO) boards, chief executives and chief financial officers presented their 30 September 2021 results at the 23 November 2021 CCO Oversight Committee.

11.     Given the uncertainty created by both the COVID-19 lockdowns and shifts in major economic indicators during the first quarter, the ongoing impacts are hard to predict and will require continued prudent management, including maintenance of financial flexibility.

Auckland Council performance

12.     Auckland Council’s capital expenditure was tracking at 62 per cent of budget due to the COVID-19 lockdowns.

13.     Net direct expenditure was $34 million lower than budget, largely due to strong regulatory revenue and some delays to expenditure on repairs and maintenance. As at 30 September, $64 million of the $90 million operating cost savings target had been achieved.

14.     A total of 23 of the council’s 70 performance measures were updated this quarter: 52 per cent (12) were achieved or substantially achieved and 48 per cent (11) measures were not achieved.

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      receive the Auckland Council Group and Auckland Council quarterly performance reports for the quarter ended 30 September 2021.

 

Horopaki

Context

15.     The Recovery Budget was adopted in July 2021. The budget focussed on tackling the challenges arising from health restrictions and economic impacts associated with the COVID-19 pandemic while continuing to invest in the region’s infrastructure and natural environment. Key aspects of the budget for the 2021/2022 financial year included:

·   an average general rates increase of 5 per cent

·   $2.9 billion capital investment for the year

·   $90 million in savings and cost reductions

·   $70 million from targeted asset recycling.

16.     The committee is provided with management and statutory results on a quarterly basis. While these two sets of results reconcile, they are aggregated and analysed with different lenses. The quarterly performance report reflects management’s view of the group and the organisation and is tailored to highlight key performance areas (refer Attachments A and B respectively). The statutory results are externally focussed, based on financial reporting standards (refer Attachment C).

17.     Representatives of the substantive council-controlled organisation (CCO) boards, chief executives and chief financial officers presented their 30 September 2021 quarterly results at the 23 November 2021 CCO Oversight Committee.

Tātaritanga me ngā tohutohu

Analysis and advice

18.     The Auckland Council Group and Auckland Council quarterly performance reports are provided in the attachments to this report.


 

Summary of overall Auckland Council Group quarterly performance

19.     The group’s performance in the first quarter of the Recovery Budget shows a significant impact from the COVID-19 lockdowns which were in place for half of the first quarter.

20.     The COVID-19 Alert Levels 3 and 4 significantly impacted capital delivery. The largest impact was at Watercare where large projects such as the Central Interceptor were paused during the five weeks of COVID-19 Alert Level 4 lockdown. Eke Panuku, Auckland Council and Auckland Transport also had significant impacts on projects such as the Transform Manukau programme, WorkSmart programme, property renewals, roading capital maintenance, the Matakana Drive Link and Huapai improvement projects. Also impacted were the Water Quality and Natural Environment Targeted Rate programmes. City Rail Link experienced significant delays with sites closed during the Level 4 lockdown, however the tunnel boring machine continued. The impacts of this lockdown are not reflected in the group’s capital investment as the investment reflects the shareholder contributions paid to City Rail Link Limited.

21.     The COVID-19 lockdowns impacted revenue from key areas such as public transport, parking and enforcement which were significantly below budget. As our facilities were closed from mid-August, there was minimal revenue from the provision of community services.

22.     However, high levels of activity in the construction sector increased consenting volumes and other regulatory services compared to budget. These high consent volumes placed pressure on statutory processing timeframes, however customer satisfaction remained steady. Watercare’s infrastructure growth charges also increased.

23.     There is emerging evidence of the more substantive economic impacts from the ongoing COVID-19 pandemic. This includes increasing costs for construction materials, labour and professional services as a result of inflation, global and local supply chain issues. In addition, rising interest rates are increasing financing costs. A substantial increase in floating interest rates pushed up the interest expenses of the group’s unhedged debt during the quarter.

24.     Delays in work programmes and rescheduling of repairs and maintenance works until later in the year resulted in lower operating spend in areas such as consultancy, professional services, outsourced works and maintenance. This, combined with the increases in regulatory and infrastructure growth charges revenue meant that group net direct expenditure was $217 million for the quarter, $46 million lower than budget.

25.     The lower than anticipated capital spend combined with strong operating cash flows resulted in a moderate $124 million increase in group net debt. This was sourced from drawdowns of revolving credit facilities and a $75 million issuance of fixed rate notes to the Local Government Funding Agency.

26.     The group’s benchmark gross debt to adjusted revenue ratio is 270 per cent, and the policy limit is 290 per cent. Current projections indicate that the ratio is likely to be 275 per cent at 30 June 2022. Plans are in place to bring the ratio to prudent and sustainable levels in future years as the impacts of COVID-19 dissipate. However, future projections are inherently uncertain and the impacts of COVID-19 will continue to be monitored and reported so that implications on key parameters are well understood.

27.     Full-time equivalent employees for the group increased minimally by 36 to 10,965, mainly as a result of the filling of vacancies at Watercare along with hiring additional staff to handle increased shipping volumes at Ports of Auckland. Eke Panuku’s staff declined temporarily due to unfilled vacancies following resignations.

28.     The extension of COVID-19 restrictions and a consequential decline in economic conditions accompanied by labour and supply chain challenges, as well as increasing interest and inflation rates are considered to be the biggest threats to achieving the Recovery Budget targets.

29.     Given the uncertainty created both by the COVID-19 lockdowns and shifts in major economic indicators during the first quarter, the ongoing impacts are hard to predict and will require continued prudent management, including the maintenance of financial flexibility.

Summary of overall Auckland Council quarterly performance

30.     Auckland Council’s capital expenditure was tracking at 62 per cent of budget as almost all capital projects shut down for the five weeks of COVID-19 Alert Level 4. The largest impacts were on the Te Whau Pathway project and the Federal Street stage two project. Although Healthy Waters projects faced delivery delays, they expect no impact on the full year delivery.

31.     Net direct expenditure was $34 million favourable to budget. This is largely due to a combination of strong regulatory consenting volumes and higher than anticipated private plan changes, and deferral of repairs and maintenance. Employee benefits were $7 million favourable to budget due to higher levels of vacancies than anticipated.

32.     At 30 September, the council had achieved $64 million towards the $90 million operating cost savings target set in the Recovery Budget. An additional $4 million of savings is in delivery with the remaining $21 million still to be identified.

33.     A total of 23 of the council’s 70 performance measures were updated this quarter: 52 per cent (12) were achieved or substantially achieved and 48 per cent (11) measures were not achieved.

34.     Waste and stormwater services continue to perform well with all performance targets met. However, COVID-19 continues to significantly impact regional and local community services due to low visitor or attendance numbers. Increases in consenting volumes due to robustness in the construction sector have placed pressure on statutory processing timeframes. The Water Quality and Natural Environment programmes were negatively impacted by the five weeks of COVID-19 Alert Level 4 restrictions, while the severe weather event in the west and north-west Auckland also affected community facilities and waste services.

Auckland Council Group Statutory Financial Report

35.     The group statutory financial report in Attachment C has been prepared in accordance with applicable financial reporting standards. The results reconcile with the group quarterly performance report. A copy of the reconciliation is included in Attachment D.

Tauākī whakaaweawe āhuarangi

Climate impact statement

36.     This committee paper is in an information report providing an update on performance across the Auckland Council Group. No decision is sought in this paper that has a direct impact on the group’s greenhouse gas emissions nor the group’s approach to preparing for climate change. Climate action is a strategic focus area for the group and an update on the progress of climate action projects is provided in Attachment A.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

37.     The group quarterly performance reports reflect the results of the group for the three months ended 30 September 2021. Council-controlled organisations and Ports of Auckland Limited provide input into the preparation of these reports.

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

Local impacts and local board views

38.     Community investment is one of Auckland Council’s strategic focus areas. The Auckland Council quarterly report in Attachment B provides highlights, issues and risks related to local and regional projects.

39.     No decisions are being sought in this report that could have an impact on local boards.

Tauākī whakaaweawe Māori

Māori impact statement

40.     Māori outcomes is one of our group and council’s strategic focus areas. Attachments A and B provide key information and progress of delivery on the agreed programmes for the group and the council respectively.

41.     No decisions are being sought in this report that could have an impact on Māori.

Ngā ritenga ā-pūtea

Financial implications

42.     No financial decisions are sought and accordingly there are no financial implications directly arising from the information contained in the report.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

43.     There is a minor risk that the information in this report and the attachments may lack accuracy or completeness due to it not being subject to an audit. Management has performed due diligence by obtaining detailed explanations from all Auckland Council business units as well as group entities supplemented by representation letters provided by CCOs and Ports of Auckland Limited’s Audit and Risk committee chairs and chief executives.

44.     The financial risks and emerging trends impacting the council’s operating cost base are discussed in the body of the report.

45.     As New Zealand moves to the new COVID-19 Protection Framework with continued restrictions on some activities, there continues to be much uncertainty as to the effect on the demand for the group’s services and therefore the impact on revenue and capital projects. The emerging substantive changes in inflation, interest rates and the tightness of the labour market presents further uncertainty. Management will continue to closely monitor the situation and will keep the committee informed of any developing trends or significant changes. This will also be monitored and responded to as part of the Annual Budget 2022/2023 planning process with a view to maintaining financial flexibility in the potential responses available to the group.

Ngā koringa ā-muri

Next steps

46.     The committee will receive an update on the group and council’s performance to 31 December 2021 at its meeting on 17 March 2022.


 

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Auckland Council Group Quarterly Performance Report 30 September 2021

33

b

Auckland Council Quarterly Performance Report 30 September 2021

51

c

Auckland Council Group Statutory Financial Report 30 September 2021

77

d

Auckland Council Group reconciliation of management to statutory results 30 September 2021

85

     

Ngā kaihaina

Signatories

Authors

Karuna Dahya - Manager Group Performance Reporting

Tracy Gers - Group Accounting & Reporting Manager

Pramod Nair - Head of Group Financial Planning

Authorisers

Nicola Mills - General Manager Financial and Business Performance

John Bishop - Group Treasurer

Ross Tucker - General Manager, Financial Strategy and Planning

Peter Gudsell - Group Chief Financial Officer

 

 


Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

Recommendation from the Parks, Arts, Community and Events Committee, 11 November 2021 - Proposed land exchange Taniwha Reserve and Maybury Reserve, Glen Innes

File No.: CP2021/17653

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To receive the recommendation from the Parks, Arts, Community and Events Committee meeting held on 11 November 2021.

Whakarāpopototanga matua

Executive summary

2.       At its meeting on 11 November 2021, the Parks, Arts, Community and Events Committee considered the attached report and resolved as follows:

Resolution number PAC/2021/55

MOVED by Cr D Simpson, seconded by IMSB Member T Kake: 

That the Parks, Arts, Community and Events Committee:

a)      acknowledge that Mr Patrick O’Meara from Panmure Historical Society Incorporated submitted an objection and wishes to be heard in front of this committee, Auckland Council afforded Mr O’Meara the opportunity to speak to the committee and the committee considered his concerns in his absence

b)      approve the land exchange of 2,779m² (subject to survey) of Taniwha Reserve located at 193-195 Taniwha Street, Glen Innes and legally described as Lot 142 DP 42356 for the land held by Tamaki Regeneration Company, totalling approximately 10,472m², located at:

Adjacent to Maybury Reserve West (Southern Part)

i)        12A, 12B, 12C,12D,12E, 14A, 14B, 14C, 14D, 14E Maybury Street Legally described as Lot 4 DP 184600 Record of Title NA114C/639.

Area of land exchange: 1,286m²

ii)       1/12 Maybury Street

Legally described as Lot 2 DP 184600 Record of NA TitleA114C/637

Estimated area of land exchange: 118.8m² (subject to survey)

iii)      2/12 Maybury Street

Legally described as Lot 3 DP 184600 Record of Title NA114C/638

Area of land exchange: 617m²

iv)      Part 4 Maybury Street

Legally described as Part of Lot 7 DP 187240 Record of Title NA116B/742

Estimated area of land exchange: 70.1m² - subject to survey

v)       Part 8 Maybury Street

Legally described as Lot 1 DP 184600 Record of Title NA114C/636

Estimated area of land exchange: 110.7m² - subject to survey


 

Adjacent to Maybury Reserve - West

vi)      200A, 202 Taniwha Street

Legally described as Lot 165 DP 43833 Record of Title NA46A/197

Area of land exchange: 1,072m²

vii)     192, 192A, 198A Taniwha Street

Legally described as Lot 166 DP 43833 Record of Title NA46A/198

Area of land exchange: 2,008m²

viii)    184,184A, 184B,190A Taniwha Street

Legally described as Lot 167 DP 43833 Record of Title NA46A/199

Area of land exchange: 2,008m²

ix)      180-182A Taniwha Street

Legally described as Lot 168 DP 43833 Record of Title NA46A/200

Area of land exchange: 1216m²

Adjacent to Taniwha Reserve East

x)       45 Epping Street 

Legally described as Lot 128 DP 39662 Record of Title NA43A/178

Area of land exchange: 751m²

xi)      47 Epping Street

Legally described as Lot 129 DP 39662 Record of Title NA43A/179

Area of land exchange: 771m²

xii)     Part 49 Epping Street

Legally described as Lot 130 DP 39662 Record of Title NA43A/180

Estimated area of land exchange: 774m² - subject to survey

xiii)    Part 179A Taniwha Street (to be taken under the Public Works Act 1981)

Legally described as - Fee Simple 1/7share in 3423 m2, Lot 1-2 Deposited Plan 188991 and Leasehold Flat 7 Deposited Plan 189275 and Garage 7 Deposited Plan 189275 Part NA119B/168

Estimated area of land exchange: 329m² - subject to survey

xiv)    Part 179B Taniwha Street (to be taken under the Public Works Act 1981)

Legally described as Fee Simple 1/7 share in 3423 m², Lot 1-2 Deposited Plan 188991 and Leasehold Flat 5 Deposited Plan 189275 and Garage 5 Deposited Plan 189275 Record of Title NA119B/166

Estimated area of land exchange: 26.7m² - subject to survey

c)      recommend that the Finance and Performance Committee approve the disposal of 2,779m² (subject to survey) of Taniwha Reserve located at 193-195 Taniwha Street, Glen Innes and legally described as Lot 142 DP 42356 to Tamaki Regeneration Company to complete the land exchange.

d)      agree that the General Manager, Community Facilities, under delegation from the Chief Executive, approve the final location, configuration and size of the land exchange as part of the consent processes of the Maybury/Taniwha land exchange.

3.       The original report to the 11 November 2021 meeting is appended as Attachment A which provides detailed information.

4.       As a result, approval from the Finance and Performance Committee for the proposed land exchange under the Reserves Act 1977 of approximately 2,779m² of Taniwha Reserve with approximately 10,472m² of the land held by Tāmaki Regeneration Limited

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      note resolution PAC/2021/55 clause c) from the Parks, Arts, Community and Events Committee meeting held on 11 November 2021, recommending that the Finance and Performance Committee approve the disposal of 2,779m² (subject to survey) of Taniwha Reserve located at 193-195 Taniwha Street, Glen Innes and legally described as Lot 142 DP 42356 to Tamaki Regeneration Company to complete the land exchange

b)      approve the disposal of 2,779m² (subject to survey) of Taniwha Reserve located at 193-195 Taniwha Street, Glen Innes and legally described as Lot 142 DP 42356 to Tamaki Regeneration Company to complete the land exchange.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Report from Parks, Arts, Community and Events Committee, 11 November 2021 Proposed land exchange Taniwha Reserve and Maybury Reserve, Glen Innes

91

     

Ngā kaihaina

Signatories

Authors

Maea Petherick - Kaitohutohu Mana Whakahaere Matua / Senior Governance Advisor

Sandra Gordon - Kaitohutohu Mana Whakahaere Matua / Senior Governance Advisor

Authoriser

Peter Gudsell - Group Chief Financial Officer

 


Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

Summary of Finance and Performance Committee information memoranda and briefings, including the Forward Work Programme - 9 December
 2021

File No.: CP2021/16774

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To tuhi / note progress on the forward work programme 2021 and 2022 appended as Attachment A.

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

Whakarāpopototanga matua

Executive summary

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

4.       The following information has been circulated to members:

Date

Subject

5/11/2021

Confidential Memo – Sale of AIM Services – October, no attachment

18/11/2021

Memo - Review of the Business Improvement District (BID) Policy and Operating Standards, and extension to the formal feedback period to 28 February 2022 – Attachment B

30/11/2021

Memo – Revaluation 2021 – Attachment C

30/11/2021

Memo – MOTAT Annual Report 2020/21 – Attachment D

5.       The following workshops have taken place:

Date

Workshop/Briefing

13/10/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – confidential, no attachment

13/10/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – confidential, no attachment

20/10/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – confidential, no attachment

20/10/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – confidential, no attachment

27/10/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023), - confidential, no attachment

27/10/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) - confidential, no attachment

3/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – Attachment E

10/11/2021

Finance and Performance Committee workshop (Development Contributions) – Attachment F

17/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) - confidential, no attachment

17/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) - confidential, no attachment

23/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) - confidential, no attachment

24/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – confidential, no attachment

25/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – confidential, no attachment

1/12/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – confidential, no attachment

1/12/2021

Finance and Performance Committee workshop (Development Contributions) – confidential, no attachment

1/12/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023) – Attachment G

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

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

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

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

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      tuhi / note the progress on the forward work programme for 2021 and 2022 as appended in Attachment A of the agenda report.

b)      tūtohi / receive the Summary of Finance and Performance Committee information memorandum and briefings as at 9 December 2021.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Finance and Performance Committee work programme

115

b

Memo - Review of the Business Improvement District (BID) Policy and Operating Standards, and extension to the formal feedback period to 28 February 2022, 18 November 2021 (Under Separate Cover)

 

c

Memo – Revaluation, 30 November 2021 (Under Separate Cover)

 

d

Memo – MOTAT Annual Report 2020/21 (Under Separate Cover)

 

e

Finance and Performance Committee workshop (Annual Budget 2022/2023), 3 November 2021 (Under Separate Cover)

 

f

Finance and Performance Committee workshop (Development Contributions), 10 November 2021 (Under Separate Cover)

 

g

Finance and Performance Committee workshop (Annual Budget 2022/2023), 1 December 2021 (Under Separate Cover)

 

     

Ngā kaihaina

Signatories

Author

Sandra Gordon - Kaitohutohu Mana Whakahaere Matua / Senior Governance Advisor

Authoriser

Peter Gudsell - Group Chief Financial Officer

 



Finance and Performance Committee

09 December 2021

 

 

Te Komiti ā-Pūtea, ā-Mahi Hoki/Finance and Performance Committee
Forward Work Programme 2021/22

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

 

Area of work and Lead Department

Reason for work

Committee role

(decision and/or direction)

Expected timeframes

2021

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Planning and funding

Annual Budget
(2022/2023)

General Manager Financial Strategy and Planning

Statutory Process

Hold workshops regarding process/content/policies

Decision to agree Mayoral Proposal (December 2021)

Recommend consultation document to consult with public (February 2022)

Adopt consultation document to consult with public (February 2022) (Governing Body)

Consultation period – (28 February 2022 - 28 March 2022)

Hear feedback and deliberate budget scenarios (April/May 2022)

Decisions made for Annual Budget (June 2022)

Recommend final Annual Budget (June 2022)

Adopt final Annual Budget (Governing Body) (June 2022)

 

Progress to date:

Workshops held 15 September 2021, 22 September 2021,
29 September 2021, 13 October 2021, 20 October 2021, 27 October 2021, 3 November 2021, 17 November 2021, 23 November 2021, 24 November 2021, 25 November 2021 and 1 December 2021.

 

 

 

 

 

 

 

 

 

 

 

 

Half-yearly and annual reporting

Group Treasurer and Group Financial Controller

Statutory requirement and NZX listing requirement

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

Receive annual report (September)

Recommend adoption of annual report to Governing Body (September)

Note:  

·      NZX announcements are presented to the Audit and Risk Committee

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

·      Formal adoption of annual report is by the Governing Body

Progress to date:

Auckland Council Group and Auckland Council quarterly performance report for the 6 months to 31 December 2020 – 18 March 2021
Link to decision

Auckland Council Group and Auckland Council quarterly performance report to 30 June 2021 – 16 September 2021
Link to decision

CONFIDENTIAL: Recommendation of the draft Auckland Council Annual Report 2020/2021 and draft Auckland Council Summary Annual Report 2020/2021 – 16 September 2021
Link to decision

CONFIDENTIAL: Adoption of draft Auckland Council Annual Report 2020/2021 and draft Auckland Council Summary Annual Report 2020/2021 – 23 September 2021 (Governing Body)
Link to Governing Body decision

 

 

 

 

 

 

 

 

 

 

 

 

Financial and Budget Updates

General Manager Financial Strategy and Planning

Financial Management

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

Note:   This includes significant unbudgeted one-off expenditure.

 

Progress to date:

Emergency Budget 2020/2021 - Update February 2021 (considered in confidential; restatements only released to the open record) –18 February 2021
Link to decision

Emergency Budget 2020/2021 - Update March 2021 – 18 March 2021
Link to decision

Emergency Budget 2020/2021 – Update April 2021 – 22 April 2021
Link to decision

Emergency Budget 2020/2021 – Update May 2021 –20 May 2021
Link to decision

Emergency Budget 2020/2021 - Update June 2021 – 17 June 2021
Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan guarantees and grant funding

Group Treasurer

Financial management

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

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

Receive progress update memos when appropriate

 

Progress to date:

Q Theatre loan and funding (considered in confidential, resolutions released to the open record) – 18 February 2021
Link to decision

Presentation from Eden Park Trust Board – 18 March 2021
Link to decision

CONFIDENTIAL: Woodhill Sands Equestrian Centre – Support – 19 August 2021
Link to decision

Presentation from Eden Park Trust Board – 21 October 2021
Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

Reporting and performance

Performance reporting quarterly – parent

General Manager Financial and Business Performance

Financial management

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

Q2 (March), Q3 (May), Q4 (September), Q1 (December)

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

 

Progress to date:

Auckland Council Group and Auckland Council quarterly performance report for the 6 months to 31 December 2020 – 18 March 2021
Link to decision

Auckland Council Group and Auckland Council quarterly performance report for the 9 months to 31 March 2021 – 20 May 2021
Link to decision

Auckland Council Group and Auckland Council quarterly performance report to 30 June 2021 – 16 September 2021
Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance reporting quarterly – group

General Manager Financial Strategy and Planning

Financial management

Monitor Auckland Council group financial requirements on a quarterly basis.

Q2 (March), Q3 (May), Q4 (September), Q1 (December)

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

 

Progress to date:

Auckland Council Group and Auckland Council quarterly performance report for the 6 months to 31 December 2020 –18 March 2021
Link to decision

Auckland Council Group and Auckland Council quarterly performance report for the 9 months to 31 March 2021 –20 May 2021
Link to decision

Auckland Council Group and Auckland Council quarterly performance report to 30 June 2021 – 16 September 2021
Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational

Disposals

Auckland Council and Eke Panuku Development Auckland

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

 

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

·       Approve approach to implement a long-term lease for Bledisloe House as provided for in the 10-year Budget 2021-2031 (Aug)

 

Progress to date:

Recommendation from Parks, Arts, Community and Events Committee, 10 December 2020 - Proposed exchange of reserve land at Watchfield Close and Mayflower Park - Māngere East and West – 18 February 2021
Link to decision

Memorandum – Emergency Budget 2021/2021 – Asset Recycling – Reserve Revocation – 23 February 2021 – 18 March 2021
Link to memorandum

C40 development additional land disposal recommendation – 331 (part) Great North Road, Henderson – 22 April 2021
Link to decision

Disposal Recommendation report – part of 16 Amersham Way, Manukau – 20 May 2021
Link to decision

24 Upper Municipal Place, Onehunga disposal recommendation – 17 June 2021
Link to decision

 

 

Recommendation from Parks, Arts, Community and Events Committee, 8 July 2021 - Proposed land exchange - Bellgrove Reserves, Avondale – 19 August 2021
Link to decision

Te Wharau o Horotiu Bledisloe House – long-term lease – 19 August 2021
Link to decision

Recommendation from Parks, Arts, Community and Events Committee, 8 July 2021 - Proposed exchange of reserve land at Murray Halberg Park, Ōwairaka – 19 August 2021
Link to decision

CONFIDENTIAL: Land exchange at Three Kings – 19 August 2021
Link to decision

Asset recycling property disposal – 21 October 2021
Link to decision

Additional properties for inclusion in Unlock Old Papatoe
Link to decision

 

Note: Properties are recommended for acquisitions and disposal to the committee for approval in accordance with the Long-term Plan/Annual Budget.

Properties are also identified for disposal via the Emergency Budget 2020/2021 asset recycling process.

As required

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

Manager CCO/ External Partnerships team

Statutory process

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

Receive presentations from amenities via memorandum (May/Jun)

 

Progress to date:

Approval of the Auckland Regional Amenities Funding Levy – 18 March 2021
Link to decision (note this report was deferred to 22 April 2021)

Consideration of ARAFA, MOTAT and Auckland Museum annual plans and council funding contributions, 2021/2022 – 22 April 2021
Link to decision

Presentations from the Auckland Regional Amenities – 20 May 2021
Link to decision

Presentations from the Auckland Regional Amenities – 17 June 2021
Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Strategy and Placement

GM Risk and Assurance

 

Receive results of the insurance options assessment and approve option to progress (Oct)

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Review of Policies

 

Approve council policies:

·      Significance and Engagement Policy (Sept 2021 – Governing Body; decision February 2022)

·      Development Contribution Policy (September 2021/December 2021)

·      Business Improvement District Policy (2022)

Receive updates on:

·      Infrastructure Funding and Financing (IFF) (as required)

 

Progress to date:

Exploring alternative funding and financing opportunities – 17 June 2021
Link to decision

Significance and Engagement policy: Approval of draft policy for consultation – 23 September 2021
Link to Governing Body decision

Development Contributions Policy 2012 Consultation – 16 September 2021
Link to decision

 

 

 

 

 

 

 

 

 

 

 

 

 

Review of committee forward work programme

Governance

Regular reporting

Receive updates (monthly)

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

 

Progress to date:

Review of work programme – 18 February 2021
Link to decision

Review of work programme – 19 August 2021
Link to decision

 

 

Review work programme

 

 

 

 

 

Review work programme

 

 

 

 

 


 

 

Completed

Area of work

Committee role

(decision and/or direction)

Decision

10-year Budget (Long Term Plan)

2021-2031

General Manager Financial Strategy and Planning

Hold workshops regarding process/content/policies

Decision to agree Mayoral Proposal (9 Dec 2020)

Recommend consultation document to consult with public (Feb 2020)

Adopt consultation document to consult with public (18 Feb 2020) (Governing Body)

Consultation period – 22 February 2021 – 22 March 2021

Hear feedback and deliberate budget scenarios (Apr/May 2021)

Decisions made for Long-Term Plan (25 May 2021)

Recommend final Long-Term Plan (25 May 2021)

Adopt final Emergency Budget (Governing Body) (29 June 2021)

 

Progress to date:

Workshops held (26 August 2020, 9 September 2020, 16 September 2020, 23 September 2020, 14 October 2020, 21 October 2020, 28 October 2020, 4 November 2020, 11 November 2020, 18 November 2020, 25 November 2020, 2 December 2020, 10 February 2021, 10 March 2021, 14 April 2021, 21 April 2021, 28 April 2021, 3 May 2021, 5 May 2021, 10 May 2021, 12 May 2021, 19 May 2021 and 23 June 2021)

10-year Budget 2021-2031 – Process overview - 9 December 2020
Link to decision

10-year Budget 2021-2031 – 10-Year Budget 2021-2031 - Adoption of the Draft Tūpuna Maunga o Tāmaki Makaurau Operational Plan 2021/2022 and summary – 9 December 2020
Link to decision  Link to governing body decision

10-year Budget 2021-2031: regional topics for consultation - local board input – 9 December 2020
Link to decision

10-year Budget 2021-2031 - Mayoral Proposal items for consultation – 9 December 2020
Link to decision  Link to governing body decision

10-year Budget 2021-2031 - Other matters for consultation – 9 December 2020
Link to decision  – Link to Governing Body decision

Changes to the Urban Rating Area and Rating of Farm and Lifestyle Properties within the Urban Rating Area – 9 December 2020
Link to decision  Link to Governing Body decision

Other Rates and Fees Issues for 10-Year Budget 2021-2031 – 9 December 2020
Link to decision  Link to Governing Body decision

Upper Harbour Local Board Transport Targeted Rate for consultation – 15 December 2020
Link to decision 

Item withdrawn at Governing Body meeting, 17 December 2020.

Paremoremo Public Transport Targeted Rate – 18 February 2021
Link to decision  Link to Governing Body decision

Amendments to the Revenue and Financing Policy – 18 February 2021
Link to decision  Link to Governing Body decision

10-year Recovery Budget 2021-2031: Adoption of consultation material – 18 February 2021
Link to decision  Link to Governing Body decision

10-year Recovery Budget 2021-2031 Communications and Engagement Plan – 18 February 2021
Link to decision  Link to Governing Body decision

Accommodation Provider Targeted Rate Suspension – 22 April 2021
Link to decision

 

Overview to decision making for the Recovery Budget (10-year Budget 2021-2031) – 25 May 2021
Link to decision

Recovery Budget (10-year Budget 2021-2031) - local board feedback and advocacy – 25 May 2021
Link to decision

Recovery Budget (10-year Budget 2021-2031) - Mayor's final proposal – 25 May 2021
Link to decision   Link to Governing Body decision

Recovery Budget (10-year Budget 2021-2031): Other proposals –25 May 2021
Link to decision   Link to Governing Body decision

Paremoremo Public Transport Targeted Rate – 25 May 2021
Link to decision   Link to Governing Body decision

Changes to the Urban Rating Area and Rating of Farm and Lifestyle Properties within the Urban Rating Area – 25 May 2021
Link to decision   Link to Governing Body decision

Other Rates and Fees Issues for Recovery Budget (10-year Budget 2021-2031) – 25 May 2021
Link to decision   Link to Governing Body decision

Adoption of the Recovery Budget (10-year Budget 2021-2023 – 29 June 2021
Link to decision

Review of Policies

Approve council policies:

·          Treasury Management Policy (May)

·          Group Procurement Policy (June)

·          Revenue and Financing Policy (June)

 

Treasury Management Policy review – 20 May 2021
Link to decision

Auckland Council Group Procurement Policy – 17 June 2021
Link to decision

Adoption of the Revenue and Financing Policy – Governing Body 29 June 2021
Link to decision

Insurance Strategy and Placement

Approve the council group insurance strategy 2021-2023

Approve the annual insurance placement for Council Group 2021/2022

Insurance Renewal, Strategy and Progress on Options for Insurance Arrangements – 17 June 2021
Link to decision

CONFIDENTIAL: Insurance Renewal, Strategy and Progress on Options for Insurance Arrangements – 17 June 2021
Link to decision

 

 

 


 

 

Te Komiti ā-Pūtea, ā-Mahi Hoki/Finance and Performance Committee
Forward Work Programme 2022/23

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

 

Area of work and Lead Department

Reason for work

Committee role

(decision and/or direction)

Expected timeframes

2022

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Planning and funding

Annual Budget
(2022/2023)

General Manager Financial Strategy and Planning

Statutory Process

Hold workshops regarding process/content/policies

Decision to agree Mayoral Proposal (December 2021)

Recommend consultation document to consult with public (February 2022)

Adopt consultation document to consult with public (February 2022) (Governing Body)

Consultation period – (28 February 2022 - 28 March 2022)

Hear feedback and deliberate budget scenarios (April/May 2022)

Decisions made for Annual Budget (June 2022)

Recommend final Annual Budget (June 2022)

Adopt final Annual Budget (Governing Body) (June 2022)

 

Progress to date:

Workshops held 15 September 2021, 22 September 2021,
29 September 2021, 13 October 2021, 20 October 2021, 27 October 2021, 3 November 2021, 17 November 2021, 23 November 2021, 24 November 2021, 25 November 2021 and 1 December 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

Half-yearly and annual reporting

Group Treasurer and Group Financial Controller

Statutory requirement and NZX listing requirement

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

Receive annual report (Sept)

Recommend adoption of annual report to Governing Body (Sept)

Note:  

·        NZX announcements are presented to the Audit and Risk Committee

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

·        Formal adoption of annual report is by the Governing Body

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial and Budget Updates

General Manager Financial Strategy and Planning

Financial Management

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

Note:   This includes significant unbudgeted one-off expenditure.

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan guarantees and grant funding

Group Treasurer

Financial management

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

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

Receive progress update memos when appropriate

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Reporting and performance

Performance reporting quarterly – parent

General Manager Financial and Business Performance

Financial management

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

Q2 (March), Q3 (May), Q4 (September)

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

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance reporting quarterly – group

General Manager Financial Strategy and Planning

Financial management

Monitor Auckland Council group financial requirements on a quarterly basis.

Q2 (March), Q3 (May), Q4 (September)

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

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operational

Disposals

Auckland Council and Eke Panuku Development Auckland

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

 

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

 

Progress to date:

 

Note: Properties are recommended for acquisitions and disposal to the committee for approval in accordance with the Long-term Plan/Annual Budget.

Properties are also identified for disposal via the Emergency Budget 2020/2021 asset recycling process.

 

Progress to date:

 

 

As required

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

Manager CCO/ External Partnerships team

Statutory process

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

Receive presentations from amenities via memorandum (May/July)

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Insurance Strategy and Placement

GM Risk and Assurance

 

Approve the annual insurance placement for Council Group 2022/2023 (May)

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Review of Policies

 

Approve council policies:

·      Business Improvement District Policy

·      Significance and Engagement Policy (decision February 2022 – Governing Body)

·      Revenue and Financing Policy (annual budget consultation February, decision June)

·      Rates Remission and Postponement Policy (annual budget consultation February, decision June

Receive updates on:

·      Infrastructure Funding and Financing (IFF) (as required)

 

Progress to date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Review of committee forward work programme

Governance

Regular reporting

Receive updates (monthly)

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

 

Progress to date:

 

 

 

 

Review work programme

 

 

 

Review work programme

 

 

 

 

 

 

 

Updated: 6 December 2021



Finance and Performance Committee

09 December 2021

 

Summary of Confidential Decisions and related information released into Open

File No.: CP2021/16784

 

  

 

Te take mō te pūrongo

Purpose of the report

1.       To tuhi / note confidential decisions and related information released into the public domain.

Whakarāpopototanga matua

Executive summary

2.       This is a regular information-only report which aims to provide greater visibility of confidential decisions made which can now be released into the public domain.

3.       Confidential workshops were held for the Annual Budget 2022/2023.  It should be noted that the information contained in material considered at these workshops may differ from advice contained in the reports which appear on the Finance and Performance Committee extraordinary meeting agenda held on 8 December 2021. Workshop material contains the most up to date information at that time and is subject to change.

4.       The following minutes can now be released:

Date of Decision

Subject

15/9/2021

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Overview and scenarios) – attachment A

Note: Redactions have been made to this document as the withholding of the information is necessary to protect information where the making available of that information would be likely to unreasonably prejudice the commercial position  of the person who supplied or who is the subject of that information; and to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations under sections 7(2)(b)(ii) and 7(2)(i) of the Local Government Official Information and Meetings Act 1987.

22/9/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Fees, charges and rating issues) – attachment B

29/9/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 - Waste) – attachment C

13/10/2021

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 - Climate) – attachment D

13/10/2021

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 - Climate) – attachment E

20/10/2021

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Budget package) – attachment F

Note: Redactions have been made to this document as the withholding of the information is necessary to protect information where the making available of that information would be likely to unreasonably prejudice the commercial position  of the person who supplied or who is the subject of that information; and to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations under sections 7(2)(b)(ii) and 7(2)(i) of the Local Government Official Information and Meetings Act 1987.

20/10/2021

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Budget package) – attachment G

Note: Redactions have been made to this document as the withholding of the information is necessary to protect information where the making available of that information would be likely to unreasonably prejudice the commercial position  of the person who supplied or who is the subject of that information; and to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations under sections 7(2)(b)(ii) and 7(2)(i) of the Local Government Official Information and Meetings Act 1987.

27/10/2021

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 - Revaluations) – attachment H

Note:   Redactions have been made to this document as the withholding of the information is necessary to protect information which is subject to an obligation of confidence where the making available of the information would be likely otherwise to damage the public interest; to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations); and to prevent the disclosure or use of official information for improper gain or improper advantage, under sections 7(2)(c)(ii), 7(2)(i) and 7(2)(j) of the Local Government Official Information and Meetings Act 1987

27/10/2021

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Accommodation Provider Targeted Rate) – attachment I

17/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Local Board Input) – attachment J

17/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Local Board Input) – attachment K

23/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 Budget) – attachment L

Note: Redactions have been made to this document as the withholding of the information is necessary to protect information where the making available of that information would be likely to unreasonably prejudice the commercial position of the person who supplied or who is the subject of that information; and to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations under sections 7(2)(b)(ii) and 7(2)(i) of the Local Government Official Information and Meetings Act 1987.

23/11/2021

Memorandum from Andrew Duncan, Manager Financial Policy – Rates affordability

Note:   Redactions have been made to this document as the withholding of the information is necessary to protect information which is subject to an obligation of confidence where the making available of the information would be likely otherwise to damage the public interest; to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations); and to prevent the disclosure or use of official information for improper gain or improper advantage, under sections 7(2)(c)(ii), 7(2)(i) and 7(2)(j) of the Local Government Official Information and Meetings Act 1987.

24/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 - Climate) – attachment M

25/11/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Annual Budget) – attachment N

1/12/2021

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Annual Budget) – attachment O

 

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

 

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      tuhi / note the confidential decisions and related information that are now publicly available.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Overview and scenarios), 15 September 2021 (Under Separate Cover)

 

b

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Fees, charges and rating issues), 22 September 2021 (Under Separate Cover)

 

c

Finance and Performance Committee workshop (Annual Budget 2022/2023 - Waste), 29 September 2021 (Under Separate Cover)

 

d

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 - Climate), 13 October 2021 (Under Separate Cover)

 

e

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 - Climate), 13 October 2021 (Under Separate Cover)

 

f

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Budget package), 20 October 2021 (Under Separate Cover)

 

g

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Budget package), 20 October 2021 (Under Separate Cover)

 

h

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 - Revaluations), 27 October 2021 (Under Separate Cover)

 

i

Finance and Performance Committee confidential workshop (Annual Budget 2022/2023 – Accommodation Provider Targeted Rate), 27 October 2021 (Under Separate Cover)

 

j

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Local Board Input), 17 November 2021 (Under Separate Cover)

 

k

Finance and Performance Committee workshop (Annual Budget 2022/2023 – Local Board Input), 17 September 2021 (Under Separate Cover)

 

l

Finance and Performance Committee workshop (Annual Budget 2022/2023 Budget), 23 November 2021 (Under Separate Cover)

 

m

Memorandum from Andrew Duncan, Manager Financial Policy – Rates affordability, 23 November 2021 (Under Separate Cover)

 

n

Finance and Performance Committee workshop (Annual Budget 2022/2023 Climate), 24 November 2021 (Under Separate Cover)

 

o

Finance and Performance Committee workshop (Annual Budget 2022/2023 Budget), 25 November 2021 (Under Separate Cover)

 

p

Finance and Performance Committee workshop (Annual Budget 2022/2023 Mayoral Proposal), 1 December 2021 (Under Separate Cover)

 

     

Ngā kaihaina

Signatories

Author

Sandra Gordon - Kaitohutohu Mana Whakahaere Matua / Senior Governance Advisor

Authoriser

Peter Gudsell - Group Chief Financial Officer

 


Finance and Performance Committee

09 December 2021

 

Contributions Policy 2021

File No.: CP2021/18074

 

  

Te take mō te pūrongo

Purpose of the report

1.       To consider feedback on the draft Contributions Policy 2021, assess options for modifications to the proposal and adopt a Contributions Policy 2022.

Whakarāpopototanga matua

Executive summary

2.       The Contributions Policy 2019 reflects the investment planned in the Long-term Plan 2018 to 2028. The policy needs to be updated for changes to our capital expenditure and to reflect the latest forecasts of growth. In addition, the council is facing demands now, and will continue to do so in the future, to finance investment to manage the cumulative impacts of the rapid growth we forecast.

3.       At its meeting on 16 September 2021, the Finance and Performance Committee adopted the draft Contributions Policy 2021 for consultation. Consultation took place between 20 September 2021 and 17 October 2021. 71 responses were received including 22 submissions from developers.  14 organisations presented to the Finance and Performance Committee session on 12 October 2021.  A report summarising feedback is included as Attachment A. The key changes proposed by the council, the feedback on these and officers’ analysis is set out below.

10-year Budget 2021-2031 updates proposal

4.       The draft policy was updated for capital expenditure in the 10-year Budget 2021-2031 including a $500 million increase in the costs of the City Rail Link (CRL), adjustment of the proportion of CRL cost attributable to growth from 16 per cent to 23 per cent and the addition of $107 million of community infrastructure projects. Forecasts of growth were also updated.

5.       58 per cent of feedback supported the proposal although development industry feedback was 25 per cent in favour and 33 per cent against. The development industry expressed concern that new developers might be bearing CRL costs attributable to earlier developers, that the council was using development contributions (DCs) to fund historic underinvestment, and that development shouldn’t bear the cost of community infrastructure. Some specific concerns were also raised about other elements of the proposal.

6.       In response, officers note rates are funding the share of the CRL attributable to early developers and DCs do not fund historic underinvestment. New development benefits from community infrastructure so DCs should fairly reflect this, otherwise ratepayers would need to provide this funding. Officers recommend that the updates proposed be adopted including the adjustments made in response to specific feedback received.

Inclusion of projects beyond ten years to the policy in stages starting with Drury

7.       In response to the rapid growth expected in Auckland in the coming decades consultation on the draft Contributions Policy 2021 proposed the addition of investments beyond 2031 to address the cumulative effects of this growth. The intention was to ensure early developers paid a fair share of the cost of funding these new investments that they cause the need for and would benefit from. The proposal was to add these investments to Drury in the 2021 policy (adding $50,600 to the price), and over the next year to the other Investment Priority Areas (IPAs) identified in the 10-year Budget 2021-2031. IPAs identified are Inner Northwest, CRL stations and Auckland Housing Programme (AHP) areas (Tāmaki, Mangere, Northcote, Oranga, and Mt Roskill). This would avoid an unfair rates burden on future ratepayers or the risk of infrastructure shortfalls for the future residents of new developments.

8.       The proposal was supported by 48 per cent of respondents while 33 per cent were opposed. Support for the proposal noted that developers should pay their fair share of the new investment and not ratepayers. However, it was opposed by 82 per cent of developers.

9.       Developers noted there was substantial uncertainty around forecasting infrastructure needs and costs so far in the future and therefore assessing a fair level of DCs was difficult. In addition, the long time lag between the payment of contributions and receiving the physical benefit of the proposed investment was noted. They also commented that higher DCs would lead to higher house prices. More information was also requested on the proposals for Drury and to provide more time for feedback on such a major change.

10.     In response, officers note the driver for these investments is the cumulative impact of development including early development. As such, there is a clear causal link between the development and the need for the investment to address these impacts. It is accepted that a 30-year policy outlook, as opposed to a 10-year policy outlook, lengthens the time lag between “development” and “benefit” for at least some council capital expenditure.  But even under a 10-year policy physical benefits, at least from some capital expenditure that is funded by development contributions, will often take many years to accrue to a particular development.  While physical benefits won’t be received for some investments until they are delivered, early development benefits now from the increase in land values concomitant with council’s commitment to invest.

11.     Officers note the price of housing is driven by supply and demand, and higher DCs will ultimately be reflected in raw land prices. However, housing markets are imperfect, so this won’t happen overnight. Developers will endeavour to raise prices in response to higher DCs. Because the Auckland housing market is highly competitive with multiple developers in all areas and a relatively large stock of existing properties, developers’ ability to pass through DCs will be limited. Ultimately landowners will absorb the impact of higher DCs.

12.     Officers recommend that the council agree to include projects beyond 2031 in the DC policy over the next 15 months in stages as detailed information is developed and following consultation on proposed changes in each IPA. The council needs to plan now for the funding of the significant investments required to support growth. However, officers consider that a decision on the addition of projects beyond 2031 in Drury should be deferred until June 2022. This will allow the additional information that has been requested by developers to be provided and more time for developers to provide feedback. Taking more time and providing more information will also allow the council to review the information that underpins the contributions policy.

Payment timing

13.     The draft policy proposed to require payment for DCs due at building consent at the grant of consent, reversing the decision made when the 2019 policy was adopted. This would bring forward the payment of DCs by between six and 24 months. This was supported by 43 per cent of respondents and opposed by 46 per cent. The development industry feedback showed 92 per cent opposed, noting this was not practical as developers require a building consent before they can raise finance for the construction phase.

14.     Officers recommend that the current payment timing (as set out in the 2019 policy) be retained. Bringing forward payment timing would require developers to raise more initial capital which may hinder developments, particularly of the more intense type that council is seeking. While the council will forego the early receipt of an estimated additional $107 million of DCs over the next three years, it does not reduce our revenue over time.

Supporting the development of Māori land

15.     The council is required to support the development of Māori land in the contributions policy under the Local Government (Rating of Whenua Māori) Amendment Act 2021. The draft policy proposed supporting the development of Māori land via grants under the Cultural Initiatives Fund, retention of current payment timing and an exemption for non-commercial development of DCs for reserves.

16.     This proposal was supported by 26 per cent of respondents and 47 per cent were against. Submitters considered that all development should be treated equally irrespective of land ownership. The Tāmaki Makaurau Mana Whenua Forum supported the proposal including an increase to the budget for the Cultural Initiatives Fund.

17.     Officers recommend that the proposal be adopted with appropriate amendment to reflect the payment timing recommendations discussed above. An increase to funding for the Cultural Initiatives Fund will be as considered as part of development of the Annual Budget 2022/2023.

Other issues

18.     The draft policy proposed some amendments to definitions and specified that developers were liable for debt collection costs. No feedback was received on these proposals. Officers recommend these changes be adopted. 

19.     The draft policy also proposed amending funding areas to support stormwater and transport infrastructure.  Some questions were raised in the feedback on the Oakley stormwater funding area. Following investigation, officers consider that it has been set appropriately.  Recommendations on issues raised in relation to Drury are discussed in the section on extending the time horizon for investment to support growth.

Conclusion

20.     The overall impact of the changes to the proposal recommended above is to lower the weighted indicative average urban DC price from $21,500 in the proposal to $20,600, compared to $23,900 under the 2019 policy. The deferral of the Drury decision reduces the revenue over the period from 2021-2031 from $2.6 billion to $2.4 billion.  This may increase once decisions are made for Drury and the other IPAs. Officers recommend the adoption of the Contributions Policy 2022 (included as Attachment B) which includes the changes that are noted above and detailed in this report.

Next steps

21.     If the recommendations of this report are agreed, the new policy will come into effect on 10 January 2022. During 2022, officers will undertake the further work on Drury and the IPAs noted above. To support that work officers will be procuring independent external reviews of the key elements of the DC methodology. A review of demand factors is now underway and will be completed by November 2022.

Ngā tūtohunga

Recommendation/s

That the Finance and Performance Committee:

a)      agree in principle to add investments beyond 2031 to the Investment Priority Areas identified in the 10-year Budget 2021-2031 (specifically Inner Northwest, CRL stations and Auckland Housing Programme areas - Tāmaki, Mangere, Northcote, Oranga and Mt Roskill) in stages over the next 15 months to ensure that developments in these areas will pay a fair share of the infrastructure costs that they cause the need for and will benefit from

b)      agree to defer a decision on adding investment beyond 2031 to the Drury area until June 2022 to allow the provision of more information to developers and others and more time for them to make further submissions with the benefit of this information

c)       agree to include in the Contributions Policy 2022 the updates to capital expenditure and growth forecasts and other changes related to the recovery of investment up to 2031 discussed in this report

d)      agree to retain the current payment timing for development contributions due at building consent

e)      agree to note in the Contributions Policy 2022 that the council provides support for the development of Māori land with grants through the Cultural Initiatives fund and that non-commercial development on Māori land will be exempted from contributions for reserves

f)       agree to include the other minor amendments recommended in this report in the Contributions Policy 2022

g)      adopt the Contributions Policy 2022 in Attachment B to the agenda report and delegate the authority and responsibility for agreeing any required changes to the Contributions Policy 2022 to the Chair of the Finance and Performance Committee and the Group Chief Financial Officer.

Horopaki

Context

Growth and infrastructure investment

22.     Auckland’s population is expected to grow by 260,000 in the next ten years on top of the rapid population growth we have experienced in the last decade, bringing the projected population to approximately 1.9 million by 2031. We are forecasting the construction of 145,800 new dwellings in the next ten years. To support the development enabled by the Auckland Unitary Plan, we are facing both immediate and longer-term demands for infrastructure in growth areas. If we do not adequately plan for the delivery and funding of this infrastructure, the cumulative effects of this development could lead to an unfair rates burden on future ratepayers or a risk of infrastructure shortfalls for future residents.

23.     Development contributions allow for an equitable and proportionate share of the total cost of growth-related capital expenditure to be recovered from the development community. A detailed explanation of the process for setting development contributions is set out in Attachment C: How we set Development Contributions.

Updating the Contributions Policy 2019

24.     The Contributions Policy 2019 came into effect on 1 January 2019 reflecting the capital expenditure within the ten-year investment horizon of the Long-term Plan 2018-2028. The projects included reflected the law at the time which precluded the use of development contributions for most community infrastructure. The council reviewed the current policy to update it to reflect the changes to capital expenditure in the 10-year Budget 2021-2031.

25.     To manage constraints on our revenue and ability to borrow, investment to support growth is constrained in the 10-year Budget 2021-2031. The council will have greater capacity to invest in infrastructure in the decade beyond the horizon of the 10-year budget.

26.     The 10-year Budget 2021–2031 assumes that a Contributions Policy 2022 will be adopted reflecting the position in the Revenue and Financing Policy that growth-related infrastructure investment should be funded from development contributions.

Consultation process

27.     Between 20 September 2021 and 20 October 2021, the council undertook public consultation on the draft Contributions Policy 2021.  To support the consultation, extensive material was made available on the Have Your Say website and additional material was provided in response to requests from developers. A full description of the consultation process is set out in the report presented to the combined workshop of local board chairs and the Finance and Performance Committee on 10 November 2021.  This report is included as Attachment A: Analysis of feedback received.

28.     71 submissions were received, 22 of which were from the development industry. 21 people attended one of the two online Have Your Say events. In addition, 14 submitters presented to a Finance and Performance Committee session on 12 October 2021.

29.     All the submissions are available on the council’s website.  The report in Attachment A: Analysis of feedback received summarises the responses to the proposed changes and other key themes raised by submitters. The key issues raised in the feedback are discussed in the following sections.

Legal requirements and analytical criteria

30.     Officers’ advice to you, and your decision making on the Contributions Policy, is made in the context of highly prescriptive provisions of the Local Government Act 2002 (LGA) which cover the setting of a contributions policy and the assessment of contributions. These provisions are the only source of the council’s power to require development contributions and must be strictly complied with.

31.     Officers have reviewed the existing policy and considered the matters raised in submissions giving consideration to the legislative requirements in the LGA, including specific content requirements for development contributions policies, and the council’s Revenue and Financing Policy.

External review of development contributions calculation models

32.     A review of the functionality of the models the council used to calculate development contributions was conducted in November 2021. The financial models have been updated for the findings of the review and the resultant adjustments, that are not material, have been used to finalise the analysis in this report and the Contributions Policy 2022. The final report of the review was not available at the time this report was completed. Officers will update the committee on the outcome of the review at the meeting.

Tātaritanga me ngā tohutohu

Analysis and advice

33.     The draft policy included five key proposals for change.  The following sections set out for each proposal the:

·     proposal consulted on

·     feedback received on each proposal (other issues raised by submitters are also addressed)

·     analysis of feedback including recommendations for modifications to the proposal

·     conclusions and officers’ recommendations.

34.     Two other key issues were also raised in feedback that were not part of the change proposals. These were concerns about the delays in completing the review of demand factors directed when the Contributions Policy 2019 was adopted and that there was a risk of infrastructure required as a condition of consent also be included in DCs. Discussion of these issues and a detailed consideration of alternatives to DCs to recover the growth share of the cost of infrastructure are set out in Attachment E: Other issues raised in feedback and alternatives considered.

Capital expenditure updates and contributions pricing

Proposal

35.     The draft policy provided for the recovery of $2.4 billion of development contributions revenue from $9 billion of projects with a growth component included in the10-year Budget 2021-2031. The key changes reflected in the proposed policy were:

·    $500 million increase in the CRL budget decided in 2019

·    revising the share of the cost of the CRL attributable to growth from 16 per cent to 23 per cent

·    addition of $107 million of community infrastructure projects[1] (noting some investment is part of larger projects).


 

 

 

36.     The draft policy included updated forecasts of population growth and dwelling construction. The policy also reflects an increase in our forecast of funding from Waka Kotahi for growth projects as agreed with central government through the Auckland Transport Alignment Project. This agreement reduces the costs we need to recover through development contributions. The combined impact of these proposed changes is to lower the weighted average DC price from $23,900 to $20,800.

Feedback

37.     The proposal was generally supported overall with the sum of responses as follows:

·    56 per cent supported the proposal

·    25 per cent did not support the proposal

·    17 per cent made some other comment.

38.     Of the feedback received from the development industry, 25 per cent supported the proposal and 33 per cent did not support the proposal.

39.     Comments showed broad support for the underlying principle of funding growth infrastructure with DCs. However, comments from respondents (both in support and opposed) shared a concern that the proposed schedule of infrastructure investment included some programmes and projects:

·     without enough detail or description to allow scrutiny

·     with only a weak connection to growth

·     that appeared to be 100 per cent growth without a supporting explanation

·     of a historic nature that could not be supported

·     where future expenditure would be local but would be initially funded regionally.

40.     Key comments made in feedback by those opposed were that the increase in the CRL budget fell unfairly on new development and that DCs shouldn’t fund historic under investment. Some developers also considered DCs should not fund community infrastructure.

Analysis of feedback and recommendations for modification of proposal

41.     Only the portion of the CRL cost increase attributable to growth and that is expected to occur from the implementation date of the Contributions Policy 2022, will be recovered with DCs. The remainder of the cost will be recovered from ratepayers. The council cannot go back and ask early developers to pay a share in excess of that already levied.

42.     More generally, the council is not recovering the cost of any historical underinvestment from developers. The council will only recover from DCs the share of the cost of investments attributable to the growth we expect to take place from the date of the implementation of the Contributions Policy 2022. Developers’ concerns with this issue support the case the council has made to charge DCs for projects beyond 2031 to ensure early developers pay a fair share and to avoid future underinvestment and funding challenges.

43.     Development is causing the council to invest in additional community infrastructure. These are facilities that new and growing communities expect and will benefit from. Without developers paying for the growth share of these investments the costs would need to be met by existing ratepayers.

 


 

 

44.     While feedback was supportive of the small overall change to DC prices, it was noted that prices had risen markedly in some areas. These increases are primarily driven by an increase in the council’s investment commitment for these areas. Developments in these funding areas are causing the need to invest and are receiving the benefits of that investment. However, this means prices in some areas will be in excess of the broad average for the region.  For developers who have purchased land recently this will put pressure on their margins.  While officers acknowledge the impact, we do not consider that it is reasonable or within the scope of the legislation to require other developers or ratepayers to meet this cost when they are neither the beneficiaries nor causing the need for investment.

Conclusion and recommendation

47.     In addition to the general feedback received on the proposed changes, a number of developers raised specific issues regarding projects and funding areas in the policy.

48.     Officers considered these issues in a planned internal review of the capital expenditure schedule. The focus of the review was to ensure that all the expenditure to be funded by development contributions:

·     was clearly described

·     would provide benefits to growth or was required to allow growth to proceed

·     was allocated to the correct funding area.

49.     As a result of the review, officers have made adjustments to the capital expenditure schedule to provide additional detail and to ensure that it only includes projects with a connection to growth. Some small historical projects have been removed where the information to support a connection to growth is no longer available.

50.     Questions were also raised by developers regarding community infrastructure. In response a specific review was undertaken to ensure we had treated all sports parks and libraries planned across the region in a consistent manner and they were allocated to the appropriate funding areas; local, sub-regional or regional. Some adjustments were made to these allocations as a consequence of this review.

51.     In addition, Hugh Green Limited noted in their submission that developments in Hingaia do not benefit from stormwater projects delivered in the Manukau Central local funding area.  Officers have investigated this and agree that Hingaia should be removed from this funding area and added to the Other Auckland local stormwater funding area.

52.     Officers recommend that the policy be updated to reflect the capital expenditure programme in the 10-year Budget 2021-2031 and the revised growth forecasts as proposed including the revisions noted above. The draft Contributions Policy 2021 includes a list of projects and programmes for which the council will seek to recover the growth share of costs through development contributions, see Attachment F: Schedule 8 Assets, for which development contributions will be used.

Extending the time horizon for investment to support growth

Proposal

53.     Auckland is growing rapidly. Significant investment in infrastructure is required in the next 30 years to ensure future development has the same level of infrastructure as the rest of the city and climate impacts of growth are managed. The current development contributions price only recovers the growth share of investments within the ten years of the Long-term Plan 2018-2028. Therefore, the price for new developments doesn’t reflect a full share of the costs of growth that Auckland Council will incur to service them.

54.     To address this issue, the council proposed to gradually update the contributions policy to include the projects required to support growth in the investment priority areas. The council is committed to delivering these investments and will reflect these longer-term intentions in the next 10-year budget covering the period 2024-2034 and in the following planning cycles.

 

 

55.     The first step in this strategy is to add a programme of expenditure to fund the infrastructure required to support growth in the Drury area. To implement that step the draft Contributions Policy 2021 included a programme of expenditure to fund some of the key infrastructure required to support growth in the Drury area. The impact of this proposed change is to add $50,600 to the DC price in Drury. Combined with the other proposed changes in the draft policy this would see the total price increase to $84,900 from between $11,000 and $18,300. The addition of projects beyond 2031 in the other IPAs was to follow over the next 12 months.

Feedback

56.     Overall, feedback showed:

·    49 per cent supported the proposal

·    7 per cent agreed with the proposal, but did not agree with starting in Drury

·    38 per cent did not support the proposal

·    8 per cent made some other comment.

57.     Feedback received from the development industry shows that 6 per cent supported the proposal while 82 per cent did not support the proposal.

58.     Those who agreed with the proposal commented that it is fair that developers pay for the infrastructure from which they will benefit. Submitters commented that this would ensure that ratepayers would not have to bear the cost. They also noted that development in greenfield areas should meet the full costs in particular because of the impact this development has on climate change.

Long-term investment planning uncertainty

59.     Those who disagreed with the proposal suggested that that there is substantial uncertainty with investment plans beyond 2031 as costs and growth forecasts may change over time. They commented that this risks over-recovery of costs due to significant margins of error and uncertainty in the calculations of DCs and that it is also unclear how the developers who pay development contributions now will be traced and refunded if required. In addition, they consider it was inequitable that early developments pay DCs now for investments they won’t receive the benefits of for many years.

Impact of DCs on house prices

60.     Developers disagreed with the council’s suggestion that higher DCs would be reflected in lower land values. They noted that the housing market wasn’t perfectly competitive and commented that an increase in house prices was inevitable. Many of the major developers had already purchased land and would have to absorb the increased costs or pass them on to house buyers. It could also lead to a delay in development. This would have a particular impact on Drury and could lead to developers being incentivised to develop elsewhere. Submitters thought it was inequitable to raise prices in one part of the city whist not doing so elsewhere.

Information made available to support Drury proposals

61.     Submitters who did not agree with this proposal commented that insufficient information was provided to support the proposed changes in Drury.  Additional information was sought so they could understand how the proposed investments link to growth and the basis for the other assumptions used by the council. They also argued that the consultation period was insufficient, particularly as Auckland was under COVID-19 lockdown conditions at the time.

 

 

 

Drury funding areas and projects

62.     Feedback was also provided on matters relating to the funding area proposed for Drury and some of the projects proposed to be included. Drury developers also noted that while they were expecting to be required to make some major investments in roads to secure resource consent there was a question if the council had also included funding for these roads in the draft policy. They were concerned that this would lead to them paying twice for some infrastructure.

Staging of changes

63.     Feedback included comments that instead of starting in stages with Drury, projects beyond ten years should be included for the whole region to ensure parity and to address shortfalls in infrastructure in other areas. Another commented that staging the increases over the next five to ten years would assist developers who are negotiating for land purchases.

Responding to feedback

64.     The following sections set out officers’ response to the issues raised in submissions.

Long-term investment planning uncertainty

65.     A key role of Auckland Council is to plan for the future infrastructure needs of the city. This infrastructure is essential for modern urban living and will last decades. The council is required to update its ten-year long-term plan every three years. The Auckland Plan and Infrastructure Strategy look ahead 30 years. While the council is not able to predict the future with certainty, it is essential we plan now. Many of the challenges the council is facing now are inherited from under investment and lack of planning in previous decades.

66.     The council cannot predict with certainty future costs and growth and therefore updates its plans as new information becomes available and adopts a new long-term plan (looking ten years ahead) every three years. This gives us the opportunity to update our capital expenditure projections and growth forecasts and accordingly amend our contributions policy. We can also update our policy at any time as new information becomes available. Every contributions policy, even one with a ten-year outlook, is required to make significant assumptions about the nature and cost of projects in later years.

67.     Capital expenditure will only be proposed for inclusion in the contributions policy for Drury and other IPAs once there is a sufficient level of certainty as to the projects, recognising that the LGA anticipates (in s201(A)) changes being made to the schedule of assets. The LGA allows this to be done without consultation when this does not increase development contributions.

68.     Early developers paying contributions now for infrastructure to be built in future decades are paying for their share of the cumulative impact of development. It is these cumulative impacts that cause the need for the council to invest. Even under a ten-year policy physical benefits, at least from some capital expenditure that is funded by development contributions, will often take many years to accrue to a particular development. Those developing now benefit much earlier than later developers from the increment in land value from the council’s commitment to invest in infrastructure. The properties developed now will also benefit from the services provided by future infrastructure when it is built, recognising that some infrastructure will be built and used by developed properties shortly after development is complete, while other infrastructure will be built much later. 


 

 

 

Impact of DCs on house prices

69.     Economic research[2] indicates that increasing the development contribution price does not generally increase house prices as these are set by the market and not by developers. Increasing the contribution charge will likely lower the price of developable land as the true cost of infrastructure is incorporated into the value of land to developers.  Raising the price of development contributions will:

·     better align these costs with the actual cost of infrastructure

·     increase certainty that infrastructure will be delivered

·     encourage more accurate pricing of land purchases for development to reflect future development contribution prices

·     impact developers who have paid for land based on current development contribution prices.

70.     The market for houses is not a perfectly competitive market. Locations and houses are very different across the city, it takes time and investment to build a new house, so supply doesn’t respond to price changes over night.  Buyers and sellers vary widely in size and market understanding. However, the Auckland housing market is very competitive, unlike say supermarkets, and is made up of many property developers and the market for second-hand houses. Even key development areas like Drury and the inner Northwest have multiple landowners and developers and existing dwellings.

71.     Officers are confident that the above analysis will hold true in the medium term.  However, the increase in DC prices will impact on those who have purchased land based on the current policy. For these developers and landowners, the proposed changes will impact on their margins. Officers consider that this is one of the risks associated with land purchasing and should be borne by the investor and not passed to ratepayers. Given the competitive nature of the housing market and the fixed costs of development, officers do not consider that different timeframes to implement the strategy in the IPAs within a 15 month period will significantly shift development.

Information made available to support Drury proposals

72.     The information that was provided to support consultation exceeded that provided in any previous contributions policy consultation. Developers also requested further material and some of this was provided. However, the proposed increases in contributions payable in Drury are significant and exceed anything contemplated in the development of previous policies. Providing Drury developers with additional information and more time to consider it would give them a better opportunity to make further submissions and thereby assist the council in making a better and fairer decision.

73.     To respond to developers’ concerns, officers propose that this additional information is provided to those in the industry with a request for their feedback. This proposal will mean that developers will require time to consider this additional information and provide their feedback. officers consider that a decision on the addition of projects beyond 2031 in Drury should be deferred until June 2022.


 

 

74.     Deferring a decision to provide more information and give developers more time presents revenue risks to the council. If developers lodge consent applications prior to a decision on Drury they will be liable for DCs under the contributions policy in place at the time. Officers note consents have already been lodged (but not yet granted) in the Drury Opaheke Funding Area covering substantial areas in Drury West and Drury East (including via the Fast Track Consent process). This could equate to over 2,000 HUEs. If a decision to include projects for Drury beyond 2031 to the contributions policy is deferred, it is uncertain what additional consents could be lodged between now and the decision making date given the significant numbers already lodged. If, for example, 2000 consents are lodged, this is potential foregone revenue of more than $100 million.

Drury funding areas and projects

75.     Staff have considered feedback relating to funding areas for specific developments. These will be addressed in the further work noted below.

Staging of changes

76.     Given the financial risk with consents being lodged early noted above, officers recommend that decision making on Drury and the other IPAs is progressed as information becomes available rather than as a complete package that addresses all areas at the same time. For the same reason. officers do not recommend staging the introduction of these changes over a longer period.

Conclusion/officers’ recommendations

77.     Officers consider it fair that current developments causing the need for and benefiting from future infrastructure contribute an appropriate share of the costs of the infrastructure needed to support growth. If developers do not contribute to future capital investment from which they benefit, the shortfall will need to be met by existing ratepayers. This will lead to higher costs and/or service level problems for future generations of residents and ratepayers.

78.     Officers recommend that the proposal to gradually update the contributions policy to include the projects beyond 2031 required to support growth in the investment priority areas be agreed in principle. However, officers recommend that the first stage of the proposal, the inclusion of projects beyond 2031 in Drury, not be included in the Contributions Policy 2022 to be adopted at this meeting. Officers recommend that a decision on the inclusion of the Drury growth projects in the contributions policy be made in June 2022. This will allow additional information on the investments required in Drury to be produced and shared with developers and others. It will also give developers more time to consider this information before providing further feedback. This will reduce the DC revenue for the period from 2021-2031 from $2.6 billion in the proposal to $2.4 billion until decisions are made on Drury and the other areas.

79.     A detailed work programme is being developed to support the process of adding projects beyond 2031 to the IPAs. Following the development of the appropriately detailed background information and consultation, decision making on the individual IPAs is planned to occur in stages between December 2022 (inner Northwest) and March 2023 (AHP areas, CRL stations and additional Drury infrastructure).

80.     To support this process, it is also planned to seek external review of the key elements of the methodology for setting DCs including:

·     growth forecasts

·     cost estimation

·     determination of funding areas

·     establishment of share attributable to growth.

Future use of alternative funding tools

81.     This strategy will identify the long-term costs of supporting growth in the development areas and the share of costs to be recovered with DCs from developers. The development of the council’s Revenue and Financing Policy considered the use of alternative tools to fund growth infrastructure and determined that DCs were the appropriate approach. The Revenue and Financing Policy makes provision for the use of other tools such as targeted rates and would also allow the use of levies under the Infrastructure Funding and Finance Act. All these tools have the same effective net present value of revenue stream but are triggered at different times.

82.     For example, a special purpose vehicle under the Infrastructure Funding and Finance (IFF) Act could be used to finance some projects in this coming decade that the council does not have the debt capacity for. This could bring forward development in some areas compared to what could be achieved using the traditional approach. The financing would be repaid with an IFF levy if the proposed scheme had central government support. The council would then remove these projects from its DC policy. Any development that had already proceeded and paid DCs under a policy that included these projects would be exempt from the IFF levy.

83.     The council could alternatively use a targeted rate to spread the cost of some of the infrastructure over a longer time period. This wouldn’t change the net present value of the cost to be recovered but spread the cash flow requirements over time. However, a targeted rate would be incident on land that wasn’t immediately developing. This approach would have to fit within the council’s available debt headroom, meaning that there would not be the same opportunity to accelerate development.

84.     All of these options remain open to the council and can be used in combination. The first step under any of these options is to establish the investments required to support growth in the IPAs and the appropriate share to be recovered from developers or landowners. All tools need to be applied early in the process to ensure early developments pay their share. Delayed introduction means early developers would not pay a fair share. Imposing targeted rates and IFF levies later in the development cycle would limit cost recovery unless the council was prepared to impose the charge on properties that had recently developed and effectively paid for the benefit of the infrastructure in the purchase price.

Payment timing

Proposal

85.     The council is facing significant financial challenges in the next few years as a consequence of the impact of COVID-19 and in particular the extended lockdown in spring 2021. Additional capital revenue would relieve that pressure on our cashflow. Bringing forward the timing of payment of DCs is one option to achieve that but does not change the total revenue received over time. This could help maintain our current capital programme or bring forward investment that would otherwise be delayed.

86.     The draft policy proposed that DCs due at building consent be paid at the time of grant of building consent for all development (residential and non-residential) except non-commercial development on Māori land (explained further below). This would require DCs due at building consent to be paid six to 24 months earlier than under the current policy and would reverse the changes made to the policy in 2019.

87.     The proposal would benefit the council through earlier receipt of between $96 million and $107 million of revenue over the first three years of the policy. This would allow some capital investment to be bought forward. Earlier receipt of payment would reduce the interest costs to be recovered with DCs lowering the weighted average DC price. When combined with the other changes proposed, this would lower the weighted average DC price to $19,300.

88.     The consultation material also included an alternative option. This option proposed retaining the status quo with an amendment to make it clear that only residential developments of five or more attached dwellings are eligible for the longer payment period of 24 months or until code compliance certificate is issued whichever is earlier.

Feedback

89.     Overall, the feedback received showed:

·    43 per cent supported the proposal

·    46 per cent did not support the proposal

·    11 per cent made some other comment.

90.     The majority of the feedback received from the development industry did not support the proposal (92 per cent) while 8 per cent made some other comment.

91.     Those in support of the proposal argued that earlier payment would ensure developers would pay a fair share of the costs of infrastructure. Feedback from the development sector noted that these changes were not workable as developers cannot obtain funding unless building consents are in place yet would be required to pay DCs to receive their building consent. They also noted that it would have a significant impact on their cashflow and will unnecessarily increase developers’ costs.

Modification of the proposal in response to feedback

92.     Officers have sought further information from submitters regarding this issue and also sought advice independently from banks. The advice received confirms some of the concerns raised by developers. Banks will generally not provide developers with the finance required at the construction phase of development unless they have a building consent.

93.     Development finance is generally conditional on appropriate consents to enable the development to proceed being held. Finance is typically only able to be accessed on a cost-to-complete basis after the uplift of the building consent and finalisation of other funding conditions. This gives the bank confidence that if they have to exercise their security over the land and buildings that they will be able to recover their investment.

94.     Banks have concerns that the proposed change may have an unintended consequence of inhibiting the ability for some developers to proceed with a transaction due to availability of funding.

95.     On balance officers consider that the current payment timing (set out in the 2019 policy) should be retained. While the council is faced with some financial challenges at present, the proposed change would require developers to have more capital than they presently do to successfully secure financing. This may be disruptive in the market for the kind of multi-unit developments the council is seeking to support greater intensification. Building consent is vital to securing finance for this type of development.

Conclusion/officers’ recommendations

96.     Officers recommend that the current payment timing be retained with an amendment to make it clear that only residential developments of five or more attached dwellings are eligible for the longer payment period of 24 months or until code compliance certificate is issued. This will stop developers lodging consents for multiple stand-alone dwellings under a parent property consent to obtain an extended payment period. Some developers have been doing this since the Contributions Policy 2019 was adopted. This has created administrative issues and issues in the management of building inspections.  This recommendation has no impact on revenue but does raise the DC price slightly as more interest has to be recovered as a result of later receipt of payment.

Māori freehold land

Proposal

99.     Recent legislative changes require the council’s financial policies, including the contributions policy, to support the principles set out in the preamble to the Te Ture Whenua Māori Act 1993. These principles include facilitating the occupation, development, and utilisation of Māori land for the benefit of its owners, their whanau, and their hapu.

100.   The council presently supports the development of marae and papakāinga through grants from the Cultural Initiatives Fund. These grants can cover the cost of DCs. The Cultural Initiatives Fund budget for 2021/2022 is $1.2 million.

101.   The council proposed:

·     to continue to support the development of marae and papakāinga and Māori housing on Māori land through grants available through the Cultural Initiatives Fund

·     that not-for-profit development on Māori land will be exempt from the payment of contributions for reserves recognising that much of Auckland parkland was previously Māori land

·     to retain the current payment timing for contributions payable at building consent for non-commercial development on Māori land, if changes are otherwise made to payment timing.

102.   The option of providing a remission of development contributions for development on Māori land was also considered.

103.   When adopting this proposal, the council directed officers to report on an appropriate increase to the Cultural Initiatives Fund.

Feedback

104.   The majority of submitters were opposed to the proposals relating to supporting the development of Māori land. The key message in this feedback was that development contributions should be charged irrespective of the ownership structure of the land. Feedback in support of the proposal was based on the benefits of encouraging Māori land development. Of the feedback received:

·     26 per cent supported the proposal

·     47 per cent did not support the proposal

·     11 per cent made some other comment

·     17 per cent said they didn’t know.

105.   Feedback from the development industry had 50 per cent support for the proposal while 25 per cent didn’t support and 25 per cent made some other comment. One third of all submitters (mostly industry organisations) did not to respond to this question.

106.   Feedback from the Tāmaki Makaurau Mana Whenua Forum included:

·     as the council has proposed a grants-based approach then the budget provided for grants should be adequate to meet demands. The forum sought that the budget be increased so that mana whenua developments are not negatively impacted

·     that consideration should be given to extending support for development on Māori land to other types of development, not just marae and papakāinga. Developments that are primarily for the benefit of the iwi membership may have some level of commercial activity in order to be sustainable.

107.   The Waiohua-Tamaki Ropu supported the grants-based approach and that the budget available for the Cultural Initiatives Fund should be increased. They also asked that the council undertake further consultation on the reserve contributions exemption requirements and payment timing on Māori land.

Modification of the proposal in response to feedback

108.   A number of submitters argued that all development should be treated equally in regard to liability for development contributions. Officers note that the council is legally required to ensure its development contributions policy supports the development of Māori land.

Conclusion/officers’ recommendations

109.   Officers recommend that the council continue to support the development of Māori land through grants made through the Cultural Initiatives Fund. A grant can be used to fund any development costs and not just development contributions and other council fees. Grants also provide increased flexibility, transparency, and accountability and enable the council to make decisions on the level of funding provided that reflects the relative merits of individual proposals rather than automatically supporting, or rejecting applications, on predetermined criteria. Development contributions remissions for development of Māori land would overlap with grants made under the Cultural Initiatives Fund, as such no remission is necessary.

110.   Grants are currently only available for not-for-profit developers. Developments undertaken on a commercial basis, or by for-profit developers, are unable to access this support. Commercial developments will likely proceed regardless of whether development contributions are charged or not. In these cases, any additional support will only have a marginal benefit. Officers recommend that support is not provided for these developments.

111.   The budget for the Cultural Initiatives Fund is currently marginally over-subscribed. Increasing the fund will ensure the council is able to provide funding at the level necessary to support the current level of development of marae and papakāinga and to show that it is meeting our legislative requirement to support the development of Māori land.

112.   When the council adopted the draft Contributions Policy 2021 for consultation, the Finance and Performance Committee directed “officers to include consideration of the appropriate increase in the budget for the Māori Cultural Initiatives Fund scheme”, FINI/2021/84. An increase to the fund will be considered by staff as part of development of the Annual Budget 2022/2023.

113.   Officers are recommending that the council does not make changes to payment timing, accordingly the proposal to retain the current payment timing for non-commercial development on Māori land is not required. However, if payment timings do change, then officers recommend retaining deferred payment timings for non-commercial development on Māori land. Continuing with existing payment timings reduces the initial cashflow requirement of the developer until after the development is complete and provides additional time for marae, papakāinga and Māori housing developments to apply for a grant through the Cultural Initiatives Fund. The impact on council cashflow of continuing with payment deferrals on Māori land is likely to be immaterial.

114.   The council also proposed that not for profit development on Māori land be exempt from contributions for reserves. This was proposed because most of Auckland Council parkland was formerly Māori land. Officers recommend that this proposal be adopted.

Other proposed changes to the policy

Funding areas

115.   The draft Contributions Policy 2021 included one new funding area for stormwater with modifications to boundaries of three other stormwater funding areas.  The new funding area allocates the cost of stormwater infrastructure within the Oakley hydrological catchment.

116.   Four new funding areas were also proposed for transport infrastructure. These funding areas support infrastructure to benefit priority growth areas in Drury/Opaheke and surrounding areas, and the AHP areas of Mount Roskill and Mangere.

Other changes

117.   The draft Contributions Policy 2021 definitions proposed amendments to provide greater clarity and ensure alignment with changes to legislation.

118.   The draft policy also proposed an amendment to confirm that the costs in collecting outstanding development contributions may be recovered. The current policy does not specify this requirement which may preclude the recovery of these costs from developers.

 

Feedback

119.   A few respondents considered the reserves and transport funding areas for Drury/Opaheke, and surrounding areas might be too tight and did not include other areas that would benefit.  Other respondents considered that the transport funding area for Drury/Opaheke was too broad and included areas that would not benefit from the proposed infrastructure. Concerns were also expressed that the Tāmaki transport and Oakley stormwater areas were too broad.

120.   It was also suggested that the higher costs in some areas might drive development to areas where the costs of infrastructure are lower. A range of specific questions were also raised in the feedback about the allocation of projects to a range of funding areas.

Modifications to the proposal in response to feedback

121.   Officers have adjusted the Tāmaki transport funding area to closer align with the development precinct. The reserves and community infrastructure funding areas were also amended to align to the precinct. On review it was determined that these better reflected the area of benefit for the relevant investments.

122.   We have also investigated the questions raised regarding the Oakley stormwater funding area. Officers consider that it has been set appropriately. Recommendations on issues raised in relation to Drury are discussed in the section Extending the time horizon for investment to support growth.

Conclusion/officers’ recommendations

123.   Officers recommend that the other proposed changes to the policy be adopted with the adjustment noted above to the Tāmaki transport funding areas.

Tauākī whakaaweawe āhuarangi

Climate impact statement

124.   Recommendations in this report have a neutral climate impact as they address the recovery of the costs of infrastructure investments. The climate impact of the investments and their location were considered when those decisions were made.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

125.   The analysis in this report was prepared in conjunction with the following council-controlled organisations and council units:

·    Auckland Transport

·    Eke Panuku Development Auckland

·    Healthy Waters

·    Community Facilities

·    Regional Service Planning

·    Community and Social Policy

·    Development Programme Office

·    Nga Matarae.

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

Local impacts and local board views

126.   The DC price varies by location depending on the cost of infrastructure required to support development in an area. The funding areas were set out in the draft policy documents provided to support consultation.

 

 

127.   Officers provided briefings on the draft Contributions Policy 2021 to local board members.  Local board chairs were also invited to the Finance and Performance Committee workshops. At their November meetings, local boards were asked for their views on the draft policy.

128.   The majority of local boards were in support of the changes proposed in the draft Contributions Policy 2021.  A summary of local board views and the full resolutions are set out in Attachment D: Local board views.  Themes from the views expressed by local boards were:

·     concern was raised on unaffordability of housing in Tāmaki Makaurau with a request that staff undertake monitoring of any effects of development contributions on house prices

·     the focus should be on brownfields which are undergoing heavy intensification including eg Te Atatu Peninsula, Henderson Sunnyvale, Warkworth, Kumeū, Milldale, Waikowhai, Three Kings, Wesley, Mt Roskill and the Auckland Light Rail corridor.

Tauākī whakaaweawe Māori

Māori impact statement

129.   Development contributions are assessed against the demand that different types of development generate on council infrastructure. Māori developments are assessed under broader development types based on the demand they generate. For example, kaumātua housing is treated the same as retirement villages, and marae are considered under community facilities. As more Māori developments occur, evidence of demand generation can be used to reclassify developments or create new development types.

130.   Auckland Council has a dataset of Māori freehold and customary title land in Tāmaki Makaurau. Limited information is currently held on Māori land in general title, such as land returned under settlement. Analysis of the impacts of development contributions on Māori land have been undertaken based on the best information available at the time this report was prepared. Importantly this analysis does not include all land returned for cultural or commercial redress. A summary of the impacts is below:

·     around 98.4 per cent of Māori land by area has no, or very low, development potential. Development contributions would be charged for developments on this land if any development takes place, however revenue from developments on this land is not expected to be material as most of this land is in rural areas or on islands.

·     around 1.1 per cent of Māori land currently has a zone, or use, that means the landowners would likely be eligible to apply for a Cultural Initiatives Fund grant.

·     land with an urban business or residential zone currently makes up around 0.5 per cent of Māori land and could easily be developed. This land has various levels of development which would be eligible for credits when development contributions are assessed.  This land could potentially be charged up to around $13 million in development contributions under the draft Contributions Policy 2021 if all the land was developed. This is a very high-level estimate and actual charges would depend on the nature of development undertaken.

131.   Development contributions may act as a barrier to development and full utilisation of Māori land. Māori landowners have also previously commented that there are many other difficulties associated with developing Māori land, including gaining consent of owners and obtaining finance needed for development. They have raised their concerns in the historical context of Māori land confiscated by the Crown, or forcibly sold through rating sales, and the benefits that Aucklanders currently receive from this land and land gifted by Māori for parks.

 

 

132.   Feedback from iwi on the draft policy was sought as part of consultation and via engagement with the Tāmaki Makaurau Mana Whenua Forum. A memo was submitted on 23 August 2021 to the Tāmaki Makaurau Mana Whenua Forum. Written submissions were received from the Tāmaki Makaurau Mana Whenua Forum and Waiohua-Tamaki Ropu and their feedback is reported above in relation to the specific proposals. All stakeholders , as well as mana whenua, were informed of the opportunity to present their feedback in a more formal setting referred to in the consultation section above.

Ngā ritenga ā-pūtea

Financial implications

133.   The 10-year budget assumes development contributions revenue of $2.7 billion. Analysis on updated assumptions for consultation on the draft Contributions Policy 2021 in September adjusted the forecast to $2.6 billion. The modifications to the proposals recommended by officers in this report reduce the DC revenue over the period to 2031 from $2.6 billion to $2.4 billion.

134.   The revised forecast is lower than the revenue proposed in the draft policy because the officers are recommending deferral of the inclusion of projects beyond 2031 in Drury within the policy at this stage. The addition of these projects for Drury, and the subsequent addition of projects beyond 2031 in the other IPA areas over the next 15 months, would increase the DC revenue forecasts materially.

135.   This report also recommends that the Cultural Initiatives Fund be increased. A proposal to increase the fund will be considered as part of the development of the Annual Budget 2022/2023.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

136.   Investment in development contributions funded growth-related infrastructure carries the risk that forecast development projections, and therefore development contributions revenue, are not met. These risks will be managed through monitoring consent applications and development contributions revenue.

137.   Legislation and legal precedent provide clear guidelines on what costs the council may recover through development contributions. Development contributions are a substantial issue for developers and as a result this has sometimes led to litigation. The Northern busway case (Neil Construction) successfully taken against North Shore City Council is a key precedent for the costs that can be recovered through development contributions. The recent decision on the judicial review of Hamilton City Council’s development contributions policy further clarifies the requirements for a policy and a council’s ability to exercise policy judgements.

138.   The council is careful to ensure its contributions policy is compliant with legislation. However, the council has been subject to judicial review and a number of objections have been taken against the application of the council’s contributions policy. The council has only lost one judicial review in this respect, although as a result legislation was changed to confirm our position. We have also had several objections, all but one of which (Ryman Healthcare) was successfully defended. Council officers endeavour to work through concerns with objectors and resolve many in this way prior to a hearing.

139.   The proposal to provide more information to developers about the projects proposed to be added to the policy beyond 2031 for Drury and allow more time to provide feedback along with the reviews of our methodologies and demand factors reduce the risk of a successful judicial review of this proposal and the future implementation of changes to the other IPAs.

140.   The recommendations in this report and the Contributions Policy 2022 and consultation document have been checked by Legal Services for legislative compliance.

Ngā koringa ā-muri

Next steps

141.   The Contributions Policy 2022 will come into effect on 10 January 2022.  Officers will write to all those who provided feedback advising them of the council’s decision.

142.   To progress the strategy of adding projects beyond 2031 to the contributions policy for the IPAs, officers will work on providing additional information for further engagement on Drury with a decision scheduled for June 2022. The other IPA areas will be progressed for decision making in stages from November 2022 to March 2023. Officers will also seek external review of our DC calculation methodology to support the above process. A review of demand factors will also be undertaken with reporting scheduled for November 2022.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Development Contriubution consultation summary of feedback

153

b

Contributions Policy 2022

167

c

How we set Development Contributions

213

d

Local board feedback

249

e

Other issues raised in feedback and alternatives considered

279

f

Schedule 8 Assets, for which development contributions will be used

283

     

Ngā kaihaina

Signatories

Author

Andrew Duncan - Manager Financial Policy

Authorisers

Ross Tucker - General Manager, Financial Strategy and Planning

Peter Gudsell - Group Chief Financial Officer

 


Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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Finance and Performance Committee

09 December 2021

 

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

That the Finance and Performance Committee:

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

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

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

 

C1       CONFIDENTIAL: Land exchange with Watercare - Glen Innes

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

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

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

s48(1)(a)

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

 

C2       CONFIDENTIAL: Recovery Budget 2021/2031 - Asset Recycling Implementation

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

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

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

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

In particular, the report contains commercial sensitivity and may prejudice council's commercial position and future negotiations.

s48(1)(a)

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

 



[1] Following legislative amendments in 2019, there is now scope for council to use DC funding for a wider range of community infrastructure than was previously allowed.

[2] https://www.aucklandcouncil.govt.nz/about-auckland-council/business-in-auckland/docsoccasionalpapers/unshackling-growth%20-%20April%202018.pdf