I hereby give notice that an ordinary meeting of the Governing Body will be held on:

 

Date:

Time:

Meeting Room:

Venue:

 

Thursday, 23 June 2022

10.00am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

 

Tira Kawana / Governing Body

 

OPEN ADDENDUM AGENDA

 

 

 

 

MEMBERSHIP

 

Mayor

Hon Phil Goff, CNZM, JP

 

Deputy Mayor

Deputy Mayor Cr Bill Cashmore

 

Councillors

Cr Josephine Bartley

Cr Richard Hills

 

Cr Dr Cathy Casey

Cr Tracy Mulholland

 

Cr Fa’anana Efeso Collins

Cr Daniel Newman, JP

 

Cr Pippa Coom

Cr Greg Sayers

 

Cr Linda Cooper, JP

Cr Desley Simpson, JP

 

Cr Angela Dalton

Cr Sharon Stewart, QSM

 

Cr Chris Darby

Cr Wayne Walker

 

Cr Alf Filipaina, MNZM

Cr John Watson

 

Cr Christine Fletcher, QSO

Cr Paul Young

 

Cr Shane Henderson

 

 

(Quorum 11 members)

 

 

 

Sarndra O'Toole

Kaiarataki Kapa Tohutohu Mana Whakahaere / Team Leader Governance Advisors

 

21 June 2022

 

Contact Telephone: (09) 890 8152

Email: sarndra.otoole@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 

 

 

Note:     The reports contained within this agenda are for consideration and should not be construed as Council policy unless and until adopted.  Should Members require further information relating to any reports, please contact the relevant manager, Chairperson or Deputy Chairperson.

 


 

 

ITEM   TABLE OF CONTENTS            PAGE

 

13        Eden Park Trust Board submission to 2022/2023 Annual Plan                                         5

 


Governing Body

23 June 2022

 

 

Eden Park Trust Board submission to 2022/2023 Annual Plan

File No.: CP2022/08767

  

Te take mō te pūrongo

Purpose of the report

1.       To consider the request for funding received from Eden Park Trust during the Annual Plan 2022/2023 consultation process. 

Whakarāpopototanga matua

Executive summary

2.       The current development funding agreement between Auckland Council and the Eden Park Trust Board concludes in June 2022. Through their annual budget submission, the Eden Park Trust Board have requested $6.28 million of grant funding for the next financial year and ongoing. This request sits outside other existing grant/funding processes and allows consideration within the context of Auckland Council’s overall financial position.

3.       The request is based on an Ernst & Young report from 2018. This report outlines a $62.8 million 10-year maintenance/refurbishment capex plan. The $6.28 million per annum request aligns to one-tenth annually of the total identified in the plan from 2018.

4.       Eden Park Trust Board’s submission highlights that Eden Park will be hosting nine matches for the upcoming FIFA Women's World Cup 2023 and states that the funding sought is critical to ensure Tāmaki Makaurau maintains its reputation as a state-of-the-art modern and dynamic city as opposed to a city with failing assets.

5.       Council staff have corresponded with and met with MBIE, NZ Football, Tātaki Auckland Unlimited and Eden Park. These discussions have canvased asset condition and specific FIFA Women’s World Cup requirements.  As with any large asset, adequate capital expenditure is necessary to ensure the infrastructure is maintained to a high standard and meets delivery requirements.

6.       Funding for Eden Park Trust Board’s request has not been included in the Annual Budget 2022/2023 and there are no existing/planned funding sources for this. Given key decisions for the Annual Budget 2022/2023 were made on 7 June 2022, including rates levels and expenditure budgets, a decision to provide ratepayer funding for this third party would be funded through additional council debt.

7.       Staff recommend that Eden Park Trust use its existing loan capacity and Auckland Council forgives interest payment on any additional loan drawdown until 30 June 2023 whilst the council group, through Tātaki Auckland Unlimited and Eden Park Trust continue to work on a single stadium operating model for the city’s stadiums.

Ngā tūtohunga

Recommendation/s

That the Governing Body:

a)      agree to advise Eden Park Trust Board that their existing loan capacity with Auckland Council can be used to fund capital requirements if required

b)      agree and delegate all necessary powers to the chief executive for:

i)       Auckland Council to forgive interest payments on any additional loan drawdown by Eden Park Trust Board until 30 June 2023 whilst Eden Park Trust and the council group, through Tātaki Auckland Unlimited, continue to work on a single-stadium operating model for the city’s stadiums

c)       note council staff will engage with Eden Park Trust as required on its debt capacity limit if operating performance is impacted adversely by COVID-19.

 

Horopaki

Context

8.       On 19 March 2019, the Finance & Performance Committee agreed to provide the Eden Park Trust Board with funding as follows:

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

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

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

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

B.   a term of up to ten years

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

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

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

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

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

9.       Since the 2019 loan consolidation (clause a) above), Eden Park can draw on a council loan facility of up to $54 million (of which it has accessed $48.75 million as at 21 June 2022).

10.     The current development funding agreement between Auckland Council and the Eden Park Trust Board (clause b) concludes on 30 June 2022.

11.     In accordance with clause d), the Eden Park Trust Board presented on their performance, recent highlights, the impact of COVID-19 and high-level financial information to the 17 March 2022 Finance and Performance Committee meeting. Council staff considered the presentation prior to that meeting and as it signalled financial sustainability risks, the trust was advised that any request for future funding should be through an annual budget submission for formal consideration by the committee as part of the annual budget process. In accordance with that advice, the trust has submitted a funding request to Auckland Council through a submission on the draft Annual Plan 2022/2023 (Attachment A).

12.     Through their annual budget submission, the Eden Park Trust Board have requested $6.28 million of grant funding for the next financial year and ongoing. This request sits outside other existing grant/funding processes and allows consideration within the context of Auckland Council’s overall financial position.

13.     Eden Park Trust Board’s request is based on an Ernst & Young report from 2018. This report outlines a $62.8 million 10-year maintenance/refurbishment capex plan. The $6.28 million per annum request aligns to one-tenth annually of the total identified in the 2018 plan. A number of items in the plan have been funded through the current development funding agreement.

14.     The funding request identifies a schedule of projects (costing not included) (refer to Attachment A) which the trust intends to address over the next three years noting that it is appreciated that these cannot all be achieved and that the asset management plan is fluid over time.

15.     Eden Park Trust Board’s submission highlights that Eden Park will be hosting nine matches for the upcoming FIFA Women's World Cup 2023 and states that the funding sought is critical to ensure Tāmaki Makaurau maintains its reputation as a state-of-the-art modern and dynamic city as opposed to a city with failing assets.

16.     Council staff have corresponded with and met with MBIE, NZ Football, Tātaki Auckland Unlimited and Eden Park. These discussions have canvased asset condition and specific FIFA Women’s World Cup requirements. 

17.     Staff recognise that Eden Park’s asset maintenance programme has implications for asset quality now and in the future.

Tātaritanga me ngā tohutohu

Analysis and advice

Financial considerations

18.     As with many organisations, including the council, Eden Park’s post COVID-19 financial situation is uncertain. The council is in a position where it has challenging finances and has no funding in the Annual Plan 2022/2023 for this request.

19.     Eden Park Trust’s loan facility with Auckland Council has an additional $5.25 million that may be drawn down on. If this was fully drawn-down, Eden Park Trust would incur around $125,000 of additional interest costs, unless the council agreed to forgive interest payments on the loan. Forgiving any interest payments in 2022/2023 would need to be funded from additional council borrowings.

20.     Should Eden Park Trust find their operating performance to be worse than forecast as a result of adverse impacts from COVID-19, council staff would engage with them on the debt capacity limit as required.

21.     A decision to provide grant funding as requested by Eden Park Trust Board would require council borrowings to be increased by the amount of any funding agreed and the associated interest costs.

Longer-term considerations

22.     The current development funding agreement with Eden Park Trust Board ran for three years on the understanding that we would jointly prepare an operational partnering proposal by March 2020; and seek to amend the Eden Park Trust Deed to appropriately align the governance of Eden Park with funding.

23.     Further to this, in July 2020 the review of council-controlled organisations recommended that:

“[Tātaki Auckland Unlimited] explores, at the council’s direction, the critical need for joint management and operation of the city’s four stadiums with Eden Park Trust”.

24.     Tātaki Auckland Unlimited and council staff are continuing to progress a proposal for a single stadium operator for the city’s stadiums with the Eden Park Trust Board.

25.     While progress has been made these items, they have not been concluded.

26.     The council needs to decide how to get the best out of the stadiums that it owns and consider the extent to which it provides ongoing financial support to Eden Park.

 

 

 

Tauākī whakaaweawe āhuarangi

Climate impact statement

27.     There are no direct climate impacts or implications for delivering climate actions as a result of this report.

Ngā whakaaweawe me ngā tirohanga a te rōpū Kaunihera

Council group impacts and views

28.     Tātaki Auckland Unlimited is continuing to progress a single stadium operator proposal for the city’s stadiums with the Eden Park Trust Board.

29.     It is considered that a single stadium operating model for the city’s stadiums should improve the operational performance of the stadium network. As a result, it is the view of Tātaki Auckland Unlimited that the consideration of Eden Park Trust Board’s request should be limited to a 12 month horizon or until a decision has been made on the outcome of a single stadium operating model.

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

Local impacts and local board views

30.     All feedback, including funding requests received through the annual plan consultation, was presented to the Finance and Performance Committee and local board chairs at a workshop on 4 May 2022, along with the associated regional feedback report and its attachments which are available on the council’s website here.

31.     Each of the 21 local boards held workshops and meetings to consider the consultation results to inform their feedback on the budget. Local boards then presented their feedback on regional issues to the Finance and Performance Committee at a workshop on 25 May 2022. No local board feedback was received on the regional funding request from Eden Park Trust Board. As a result, local board views have not been specifically sought for this report.

Tauākī whakaaweawe Māori

Māori impact statement

32.     The financial decisions contained in this report do not have any particular impacts, either positive or negative for Māori.

Ngā ritenga ā-pūtea

Financial implications

33.     If the council agrees to forgive interest payment on the additional drawdown for a period of 12 months, additional $125,000 of interest costs would need to be funded.

34.     Given key decisions for the Annual Budget 2022/2023 were made on 7 June 2022, including rates levels and expenditure budgets, this would be funded through additional debt.

Ngā raru tūpono me ngā whakamaurutanga

Risks and mitigations

35.     There is a risk that the Eden Park Trust Board may decide not to use their existing loan capacity due to a desire to maintain debt headroom. To mitigate this risk, we suggest signalling that staff will engage with Eden Park Trust as required on its debt capacity limit if operating performance is impacted adversely by COVID-19. At the time of writing this report, engagement was still ongoing with Eden Park representatives and the Governing Body will be advised of any updates prior to decision-making.

Ngā koringa ā-muri

Next steps

36.     Council staff will communicate decisions from this meeting to Eden Park Trust Board and action any subsequent implementation.

 

Ngā tāpirihanga

Attachments

No.

Title

Page

a

Eden Park Trust Board submission to Annual Budget 2022/2023

11

      

Ngā kaihaina

Signatories

Author

Peter Gudsell - Group Chief Financial Officer

Authoriser

Jim Stabback - Chief Executive

 

 


Text, letter

Description automatically generated

A picture containing text

Description automatically generated

Text, letter

Description automatically generated

Text, letter

Description automatically generated